Cimato, Jr. v. State Farm Fire and Casualty Company
ORDER granting 25 Motion to Compel Disclosure of Documents #3114-3117 and directing that the remaining documents be provided to the Court for in camera inspection within 10 days of the entry of this Decision and Order. Signed by Hon. H. Kenneth Schroeder Jr. on 1/31/2018. (KER)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ANTHONY CIMATO, JR.,
STATE FARM FIRE AND CASUALTY COMPANY,
DECISION AND ORDER
This case was referred to the undersigned by the Hon. Richard J. Arcara,
pursuant to 28 U.S.C. § 636(b)(1), for all pretrial matters. Dkt. #8.
Plaintiff commenced this action in New York State Supreme Court, County
of Erie, on January 6, 2016, claiming breach of a homeowner’s insurance contract and
seeking to enforce the appraisal provision in his contract of insurance after his home
and personal property was damaged by a burst water pipe on January 8, 2014. Dkt.
#1. On June 21, 2014, defendant remitted a partial payment of $109,552.85 for the
loss. Dkt. #1. The matter was removed to this Court on February 4, 2016 based upon
diversity of citizenship. Dkt. #1. Defendant denied plaintiff’s claim on March 14, 2016.
Dkt. #31, p.9.
Currently before the Court is plaintiff’s motion to compel defendant to
disclose approximately 48 documents which defendant claims are privileged. Dkt. #25.
Documents Created Subsequent to Commencement of
Litigation but prior to the Denial of the Claim
Plaintiff seeks disclosure of documents prepared prior to the denial of the
insurance claim as documents prepared in the ordinary course of business. Dkt. #27,
Defendant argues that the documents at issue consist of communications
regarding the lawsuit commenced by plaintiff and not the decision making regarding
whether to pay or reject plaintiff’s claim. Dkt. #31, p.10. Thus, defendant argues that
these documents were prepared in relation to the litigation, not in the ordinary course of
business. Dkt. #31, p.10.
Plaintiff replies that the documents are discoverable regardless of their
purpose if they were prepared prior to the decision to pay or reject the claim. Dkt. #33,
Rule 501 of the Federal Rules of Evidence provides that, “[i]n a civil case,
state law governs privilege regarding a claim or defense for which state law supplies the
rule of decision.” “In a diversity case, the issue of privilege is to be governed by the
substantive law of the forum state, here, New York.” Dixon v. 80 Pine St. Corp., 516
F.2d 1278, 1280 (2d Cir. 1975).
Because the payment or rejection of claims is a part of the regular
business of an insurance company, New York provides that reports which aid in the
process of deciding whether to pay or reject a claim are discoverable. Lalka v. ACA Ins.
Co., 128 A.D.3d 1508, 1508-09 (4th Dep’t 2015); Donohue v. Fokas, 112 A.D.3d 665,
666-67 (2d Dep’t 2013); Bombard v. Amica Mut. Ins. Co., 11 A.D.3d 647, 648 (2d Dep’t
2004). Even when such reports are motivated in part by the potential for litigation with
the insured, reports prepared by insurance investigators, adjusters or attorneys before
the decision is made to pay or reject a claim are not privileged as materials prepared in
anticipation of litigation, but are discoverable. Lalka, 128 A.D.3d at 1509; Donohue 112
A.D.3d at 667; Bombard, 11 A.D.3d 648. Thus, documents cannot be deemed
privileged as documents prepared in anticipation of litigation when they are prepared
prior to the determination of whether to accept or reject a claim. In addition, it seems
axiomatic that documents created subsequent to the commencement of litigation
cannot be categorized as prepared in anticipation of litigation.
The only disputed documents which are not claimed to be subject to
attorney-client privilege are numbered 3114-3117. Dkt. #30-2, p.19 & Dkt. #31, pp.7-9.
These documents are dated January 13, 2016, which precedes defendant’s denial of
plaintiff’s claim and are not, therefore, subject to the privilege afforded documents
prepared in anticipation of litigation. As a result, it is ordered that they be disclosed.
Plaintiff argues that the privilege log fails to substantiate that many of the
documents claimed to be protected by attorney-client privilege were communications
with an attorney or were created for the sole purpose of obtaining or providing legal
advice. Dkt. #27, pp.9-11.
Defendant responds that the documents withheld pursuant to attorneyclient privilege are communications with outside counsel regarding its legal rights and
obligations and were intended to be and remain confidential. Dkt. #31, p.6. Defendant
seeks to clarify that specific bates stamped documents are claim notes authored by
State Farm investigators regarding communications with outside counsel, Scott D.
Storm, Esq. and/or Michael A. Troisi, Esq., wherein counsel provided legal advice
and/or State Farm provided information to counsel for purposes of obtaining legal
advice. Dkt. #31, p.8.
Plaintiff responds that documents created prior to a determination of
coverage are exempt from the protection afforded by the attorney-client privilege. Dkt.
“Under New York law, the attorney-client privilege protects confidential
communications between client and counsel where such communications are made for
the purpose of providing or obtaining legal advice.” HSH Nordbank AG N.Y. Branch v.
Swerdlow, 259 F.R.D. 64, 70 (S.D.N.Y. 2009), citing N.Y. C.P.L.R. § 4503(a)(1). “A
corporation’s communications with counsel, no less than the communications of other
clients with counsel, are encompassed within the legislative purposes of C.P.L.R. 4503,
which include fostering uninhibited dialogue between lawyers and clients in their
professional engagements, thereby ultimately promoting the administration of justice.”
Rossi v. Blue Cross & Blue Shield, 73 N.Y.2d 588, 592 (1989).
“In order for the privilege to apply, the communication from attorney to
client must be made ‘for the purpose of facilitating the rendition of legal advice or
services, in the course of a professional relationship.’” Spectrum Sys. Int’l Corp. v.
Chemical Bank, 78 N.Y.2d 371, 377-78 (1991), quoting Rossi, 73 N.Y.2d at 593. “For
the privilege to apply when communications are made from client to attorney, they must
be made for the purpose of obtaining legal advice and directed to an attorney who has
been consulted for that purpose.” Spectrum, 78 N.Y.2d at 593. “So long as the
communication is primarily or predominantly of a legal character, the privilege is not lost
merely by reason of the fact that it also refers to certain nonlegal matters.” Rossi, 73
N.Y.2d at 594. However, “an investigative report does not become privileged merely
because it was sent to an attorney.” Spectrum, 78 N.Y.2d at 379. The critical inquiry is
whether the communication was made in order to render legal advice or services to the
client. Id. The burden of establishing attorney-client privilege is on the party asserting
it. Spectrum, 78 N.Y.2d at 377.
The remainder of the disputed documents were created prior to
defendant’s determination to deny plaintiff’s claim. That fact does not preclude a
determination that the documents are protected by the attorney-client privilege, but
does require the Court to conduct an in camera review of the documents to determine
whether “they are primarily reports of an investigation of plaintiff’s claim,” and therefore
discoverable, Melworm v. Encompass Indem. Co., 37 Misc. 3d 389, 393 (S.Ct. Nassau
Cty 2012), aff’d 112 A.D.3d 794 (2nd Dep’t 2013), or “primarily and predominantly of a
legal character,” and therefore protected by the attorney-client privilege. Melworm, 112
A.D.3d at 796. The documents shall be provided to the Court within 10 days of the
entry of this Decision and Order. The portions of the documents which defendant
seeks to protect as privileged shall be highlighted.
Buffalo, New York
January 31, 2018
s/ H. Kenneth Schroeder, Jr.
H. KENNETH SCHROEDER, JR.
United States Magistrate Judge
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