Elk City Golf and Country Club v. Philadelphia Indemnity Insurance Company

Filing 98

ORDER granted in part and reserved in part 43 Plaintiff's Motion to Compel Discovery. Signed by Honorable Timothy D. DeGiusti on 11/15/2019. (mb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ELK CITY GOLF AND COUNTRY
CLUB, INC.,
Plaintiff,
v.
PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
Defendant.

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Case No. CIV-18-196-D

ORDER
Before the Court is Plaintiff’s Motion to Compel Discovery [Doc. No. 43].
Defendant responded in opposition [Doc. No. 48], and Plaintiff replied [Doc. No. 50].
Upon consideration of these filings, the Court finds no need for a hearing, and issues its
ruling.
BACKGROUND
Plaintiff’s breach of contract and bad faith claims arise out of an insurance policy
issued by Defendant to Plaintiff. Plaintiff alleges that its real and personal property was
damaged and destroyed by a tornado on May 16, 2017. Plaintiff seeks to compel the
production of Defendant’s entire claim file and information regarding Defendant’s loss
reserves for Plaintiff’s claims. Defendant contends that Plaintiff’s request for the entire
claim file is overly broad, unduly burdensome, and purportedly requires Defendant to

produce documents that are privileged and irrelevant.1 Further, Defendant argues that
information concerning its loss reserves is not relevant to Plaintiff’s claims or likely to lead
to the discovery of admissible evidence. Plaintiff clarifies in its reply brief that it does not
seek to discover communications between Defendant and its counsel or any attorney work
product, and that to the extent any such privileged information is contained in the claim
file, Defendant may properly redact it.
DISCUSSION
Pursuant to FED. R. CIV. P. 26(b)(1), “[p]arties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim or defense and proportional to the
needs of the case ….” The considerations that bear on proportionality include: “the
importance of the issues at stake in the action, the amount in controversy, the parties’
relative access to relevant information, the parties’ resources, the importance of the
discovery in resolving the issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit.” FED. R. CIV. P. 26(b)(1). “Information within this
scope of discovery need not be admissible in evidence to be discoverable.” Id. Thus,
relevance for purposes of discovery remains broader than relevance for purposes of trial
admissibility. However, discovery is not intended to be a “fishing expedition.” See McGee
v. Hayes, 43 Fed. Appx. 214, 217 (10th Cir. July 22, 2002) (unpublished).2 “[B]road

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Defendant asserts, however, that it “went ahead and produced the entirety of its claim file
related to this claim, saving only the privileged documents and any documents post-dating
the commencement of litigation.” [Doc. No. 48 at 1].
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Unpublished opinion cited pursuant to FED. R. APP. P. 32.1(a) and 10TH CIR. R. 32.1. 
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discovery is not without limits and the trial court is given wide discretion in balancing the
needs and rights of both plaintiff and defendant.” Gomez v. Martin Marietta Corp., 50
F.3d 1511, 1520 (10th Cir. 1995). When the request is overly broad, or relevance is not
clear, the party seeking the discovery has the burden to show the relevance of the request.
Design Basics, L.L.C. v. Strawn, 271 F.R.D. 513, 523 (D. Kan. 2010).
“The party seeking to assert a privilege has the burden of establishing its
applicability.” Motley v. Marathon Oil Co., 71 F.3d 1547, 1550 (10th Cir. 1995); accord
In re Grand Jury Proceedings, 616 F.3d 1172, 1183 (10th Cir. 2010). In this diversity case,
Defendant’s claim of attorney-client privilege is governed by Oklahoma law. See Seneca
Ins. Co. v. W. Claims, Inc., 774 F.3d 1272, 1275 (10th Cir. 2014); FED. R. EVID. 501.
Oklahoma has codified its legal rules regarding the attorney-client privilege, which protects
“confidential communications made for the purpose of facilitating the rendition of
professional legal services to the client.” OKLA. STAT. tit. 12, § 2502(B). “[T]he mere fact
that an attorney was involved in a communication does not automatically render the
communication subject to the attorney-client privilege”; rather, the “‘communication
between a lawyer and client must relate to legal advice or strategy sought by the client.’”
In re Grand Jury Proceedings, 616 F.3d at 1182 (quoting Motley, 71 F.3d at 1550-1551);
United States v. Johnston, 146 F.3d 785, 794 (10th Cir. 1998).
In all federal court litigation, attorney work product is governed by Rule 26(b)(3) of
the Federal Rules of Civil Procedure. See Frontier Ref., Inc. v. Gorman-Rupp Co., 136
F.3d 695, 702 n. 10 (10th Cir. 1998) (“Unlike the attorney client privilege, the work product
privilege is governed, even in diversity cases, by a uniform federal standard embodied in
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FED. R. CIV. P. 26(b)(3).”) (internal quotation omitted). This rule generally protects from
disclosure documents “prepared in anticipation of litigation or for trial” by a party’s
attorney or other representative. See FED. R. CIV. P. 26(b)(3)(A). “Rule 26(b)(3) prevents
discovery of an attorney’s work product unless (1) the discovering party can demonstrate
substantial need for the material and (2) the discovering party is unable to obtain the
substantial equivalent of the material by other means without undue hardship.” Frontier
Ref., 136 F.3d at 704 (footnote omitted). The rule provides additional protection for “the
mental impressions, conclusions, opinions, or legal theories of a party’s attorney or other
representative concerning the litigation.” FED. R. CIV. P. 26(b)(3)(B).
Defendant asserts in its response that it produced the entire claim file, absent
privileged documents and documents created since the commencement of litigation.
Plaintiff clarifies in its reply brief that it does not seek to discover communications between
Defendant and its counsel or any attorney work product, and that to the extent any such
privileged information is contained in the claim file, Defendant may properly redact it.
Plaintiff does seek Defendant’s “complete claim file for this claim which should include
all of the claim adjusters’ claim activity to the present” and Defendant’s loss reserves.
[Doc. No. 50].
Defendant is not required to produce documents that it has already produced, and
Defendant has produced a redacted version of its claim file with a privilege log to Plaintiff.
To determine whether Defendant has met its burden of proving the existence of a privilege,
the Court will need to review the unredacted documents in camera.

Accordingly,

Defendant shall submit the unredacted documents to chambers within 14 days of this Order
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for an in camera review by the Court. An order will issue thereafter as to whether, or to
what extent, the documents will be released to Plaintiff.
The Court now turns to issue concerning Defendant’s loss reserves. The Court finds
that discovery of Defendant’s loss reserves is relevant to Plaintiff’s bad faith claim and is
proportional to the needs of the case. FED. R. CIV. P. 26(b)(1); see e.g., Shadid, L.L.C. v.
Aspen Specialty Ins. Co., Case No. CIV-15-595-D, 2018 WL 3420816, at *5 (W.D. Okla.
July 13, 2018) (on a motion in limine, the court held that evidence of the insurance
company’s loss reserves was relevant to the insured’s bad faith claim). Plaintiff contends
that Defendant set a $2,575,703.80 loss reserve on Plaintiff’s insurance claim [Doc. No.
45-5], and Defendant’s own adjuster, Ronald Murchek, preliminarily estimated the total
loss at $2.5 million [Doc. Nos. 45-3 at 2, 45-4 at 2]. Discovery of Defendant’s loss reserves
is relevant to show Defendant’s internal assessment of the claim’s potential value and is
relevant to the subjective component of Plaintiff’s bad faith claim. See ONEOK, Inc. v.
Nat’l Union Fire Ins. Co., Case No. CIV-06-200-GKF-SAJ, 2007 WL 2891519, at * 4-5
(N.D. Okla. Sept. 28, 2007) (sustaining the plaintiff’s motion to compel and finding that
the defendant’s loss reserves were discoverable because they were relevant to the
subjective intent component of the plaintiff’s bad faith claim); see also Fox v. Country Mut.
Ins. Co., Case No. CIV-17-1228-SLP (W.D. Okla. Nov. 27, 2018) [Doc. No. 118] (denying
the defendant’s motion in limine and finding that evidence of the defendant’s loss reserves
was relevant and not substantially outweighed by any danger of unfair prejudice).
Accordingly, Defendant shall provide Plaintiff with the date and amount of all
reserves established for Plaintiff’s claim within 14 days from the date of this Order.
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CONCLUSION
Based on the foregoing, Plaintiff’s Motion to Compel Discovery [Doc. No. 43] is
GRANTED in part and RESERVED in part, as set forth herein.
IT IS SO ORDERED this 15th day of November 2019.

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