Muhler Company Inc, The v. State Farm Fire & Casualty Co

Filing 36

ORDER granting in part and denying in part 26 Motion to Compel Signed by Honorable David C Norton on September 25, 2018.(kwhe, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
THE MUHLER COMPANY, INC.,
individually and as assignee of Window
World of North Charleston, LLC,

)
)
)
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Plaintiff,
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v.
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STATE FARM FIRE & CASUALTY
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CO.,
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Defendant.
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____________________________________)

No. 2:17-cv-01200-DCN
ORDER

This matter is before the court on plaintiff The Muhler Company, Inc.’s
(“Muhler”) motion to compel, ECF No. 26. For the reasons set forth below, the court
grants in part and denies in part the motion to compel and further instructs State Farm to
submit supplemental briefing arguing whether any of the following are protected by the
work product doctrine: (1) challenged State Farm internal log notes, (2) Muhler SF 1201–
07, and (3) any challenged documents that State Farm designated as work product in its
privilege log.
I. BACKGROUND
This case arises out of prior litigation (the “Underlying Case”) between Muhler
and Window World of North Charleston, LLC (“Window World”). Muhler is a South
Carolina corporation and a judgment creditor of Window World. ECF No. 1 at ¶ 1.
Defendant State Farm Fire and Casualty Co. (“State Farm”) is an insurance company
organized outside of South Carolina that issued a commercial general liability policy,
policy number 99-BF-Q704-6 (“the Policy”), to Window World. Id. ¶¶ 2–3. When

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Muhler brought suit against Window World in 2011, State Farm provided a defense for
Window World against Muhler’s claims and hired counsel, Ian Ford (“Ford”), for that
purpose. Id. ¶¶ 6–8; ECF No. 27 at 2. State Farm also retained its own coverage counsel
to provide an opinion on whether the damages alleged by Muhler were covered under
State Farm’s policy with Window World. ECF No. 27 at 2.
State Farm later withdrew its defense of Window World, and Muhler obtained a
$3,241,316.26 judgment against Window World on August 8, 2014. ECF No. 1 at ¶¶ 9–
10. The judgment was tendered to State Farm on October 10, 2014, and State Farm
refused to indemnify Window World for the judgment or to pay Muhler. Id. ¶¶ 11–12.
After the judgment was entered, Muhler requested that this court issue an order
transferring any of Window World’s potential claims against State Farm to Muhler in
partial satisfaction of the judgment. Motion for Assignment and to Amend Complaint to
Sue State Farm, Muhler v. Window World of N. Charleston, No. 2:11-cv-0851-DCN
(D.S.C. Aug. 1, 2016), ECF No. 127. As a result, this court ordered that “[a]ny and all
claims and/or proceeds from claims defendant may have against State Farm shall be
transferred to plaintiff in partial satisfaction of plaintiff’s judgment,” effectively
assigning Window World’s claims to Muhler. Order, Muhler v. Window World of N.
Charleston, No. 2:11-cv-0851-DCN (D.S.C. Sept. 27, 2016), ECF No. 130. Now Muhler
alleges that, pursuant to the Policy, State Farm is responsible for the entire judgment that
Muhler obtained against Window World, plus interest. ECF No. 1 at ¶ 4.
Muhler brings the following causes of action against State Farm: (1) negligence
for failing to provide a defense for Window World and then failing to indemnify it in the

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Underlying Case; (2) a declaratory judgment action seeking a declaration of the parties’
rights under the Policy; and (3) breach of contract of the Policy. Id. ¶¶ 18–29.
Muhler originally filed suit on May 8, 2017. ECF No. 1. On February 12, 2018,
Muhler filed a motion to compel production of documents. ECF No. 26. Muhler
attached to its motion State Farm’s privilege log and a list of challenged redactions and
withholdings with each challenge falling into one or more of four sections of objections:
(i) non-privileged material conveyed to counsel; (ii) privilege belonging to Window
World, not State Farm; (iii) defense budget in underlying case; and (iv) team manager
recommendations. ECF No. 26-3. State Farm responded on February 26, 2018, ECF No.
27, and Muhler replied on March 5, 2018, ECF No. 28. On April 4, 2018, the court
ordered State Farm to produce unredacted versions of the disputed documents to the court
for in-camera review.
The matter has been fully briefed and is now ripe for the court’s review.
II. STANDARD
The Federal Rules of Civil Procedure provide that a party “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.” Fed. R. Civ. P. 26(b)(1). “Information within this
scope of discovery need not be admissible in evidence to be discoverable.” Id. “The
court may, for good cause, issue an order to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense.” Fed. R. Civ. P. 26(c)(1). “The
scope and conduct of discovery are within the sound discretion of the district court.”
Columbus-Am. Discovery Grp. v. Atl. Mut. Ins. Co., 56 F.3d 556, 568 n.16 (4th Cir.

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1995) (citing Erdmann v. Preferred Research, Inc. of Ga., 852 F.2d 788, 792 (4th Cir.
1988)).
III. DISCUSSION
First, the court will consider the relationships between Window World, State
Farm, Ford, and State Farm’s coverage counsel to determine whether attorney-client
privilege exists between any of the parties. Then it will address the question of whether
Window World assigned its attorney-client privilege to Muhler when Window World
assigned its claims to Muhler, allowing Muhler to waive the privilege and requiring State
Farm to produce the privileged documents. The court will then analyze the documents
Muhler challenges to determine if they are in fact privileged. State Farm claims attorneyclient privilege or work-product protection for a variety of different documents, and
Muhler disputes these claims. Finally, the court will discuss the work product doctrine
and its applicability to the challenged documents in this case.
A. Attorney-Client Privilege Among the Parties
Before determining if the assignment of claims included the assignment of
attorney-client privilege, the court must first decide if attorney-client privilege applies to
the various relationships between Window World, State Farm, Ford, and State Farm’s
coverage counsel. The court’s in-camera review of the withheld documents indicates the
following relationships under which there may be attorney-client privilege: (1) Window
World and Ford; (2) State Farm and Ford; and (3) State Farm and its coverage counsel.
A federal court sitting in diversity jurisdiction must apply the privilege law of the
state’s highest court—here, the Supreme Court of South Carolina. Fed. R. Evid. 501;
Private Mortg. Inv. Servs., Inc. v. Hotel & Club Assocs., Inc., 296 F.3d 308, 312 (4th Cir.

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2002). Under South Carolina law, “[t]he attorney-client privilege protects against
disclosure of confidential communications by a client to his attorney.” State v. Owens,
424 S.E.2d 473, 476 (S.C. 1992). The privilege consists of the following essential
elements:
(1) Where legal advice of any kind is sought (2) from a professional legal
adviser in his capacity as such, (3) the communications relating to that
purpose (4) made in confidence (5) by the client, (6) are at his instance
permanently protected (7) from disclosure by himself or by the legal
adviser, (8) except the protection be waived.
Tobaccoville USA, Inc. v. McMaster, 692 S.E.2d 526, 529–30 (S.C. 2010) (quoting State
v. Doster, 284 S.E.2d 218, 219–20 (S.C. 1981)). “Because the attorney-client privilege
exists for the benefit of the client, the client holds the privilege.” In re Grand Jury
Proceedings #5 Empanelled January 28, 2004, 401 F.3d 247, 250 (4th Cir. 2005). “[T]he
burden of establishing the privilege rests upon the party asserting it.” Wilson v. Preston,
662 S.E.2d 580, 584 (S.C. 2008).
The scenario at issue here is the attorney-client relationship formed when an
insurance company retains counsel to represent one of its insured. 1 The South Carolina
Supreme Court is clear that an attorney-client relationship, and therefore attorney-client
privilege, exists between the insured and the attorney hired to represent her. Sentry
Select Ins. Co. v. Maybank Law Firm, LLC, __ S.E.2d __, 2018 WL 2423694, at *1 (S.C.
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The court notes that this issue is distinct from a related issue—whether an insurance
company waives its attorney-client privilege when it denies liability in a bad faith case by
the insured. See, e.g., ContraVest Inc. v. Mt. Hawley Ins. Co., 2016 WL 11200705
(D.S.C. Dec. 12, 2016). This question was recently certified to the South Carolina
Supreme Court by the Fourth Circuit. In re Mt. Hawley Ins. Co., 2018 WL 3203033 (4th
Cir. June 19, 2018). Here, the issue is whether there is attorney-client privilege between
an insurance company and the attorney it hires to represent the insured in a suit between
the insured and a third party, not whether a privilege existed between the insurance
company and its own coverage counsel that was subsequently waived by asserting an
affirmative defense during a bad faith suit.
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May 30, 2018). The more difficult question arises with regard to the insurance company.
As the South Carolina Supreme Court explained, the insurance company is in a “unique
position” because “pursuant to the insurance contract, the insurer has a duty to defend its
insured” and “compensate the attorney.” Id. Moreover, insurance contracts normally
“require[] the insurer to pay the settlement or judgment” imposed against the insured, and
the insurer “has a right to investigate and settle claims as a representative of its insured.”
Id. These rights and responsibilities are consistent with an attorney-client relationship.
However, the court also explicitly stated that “[t]he attorney owes no separate duty to the
insurer” and “the insurer may not intrude upon the privilege between the attorney it hires
and the attorney’s client—the insured.” Id. at *3.
While South Carolina law does not appear to recognize attorney-client privilege
between an insurance company and the attorney it retains to represent the insured, there is
still some lesser protection for their communication under the common interest doctrine.
See State Farm Fire & Cas. Co. v. Admiral Ins. Co., 225 F. Supp. 3d 474, 480–82 (D.S.C.
Feb. 4, 2016) (finding the common interest doctrine to be available under South Carolina
law in a relationship between an insurer, an insured, and counsel retained for the insured
by the insurer). The common interest doctrine, while “not a privilege itself,” “protects
the transmission of data to which the attorney-client privilege or work product protection
has attached when it is shared between parties with a common interest in a legal matter.”
Tobaccoville USA, Inc., 692 S.E.2d at 531. Yet because “[a] common interest does not
create an attorney-client relationship,” this doctrine “protects a narrower range of
communication between [the insurer] and [the counsel retained by the insurer for the
insured] than would be privileged if [the insurer] were [the counsel]’s client.” State Farm

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Fire & Cas. Co., 225 F. Supp. 3d at 482. 2 Therefore, the only privileged communication
between the insurer and the insured’s counsel is communication that is privileged as to
the insured and its counsel, which is then disclosed by the counsel to the insurer. Id.
1. Window World and Ford
As discussed above, there is clearly an attorney-client relationship between an
insured party and the counsel retained to represent the party. Therefore, communication
solely between Window World, the insured, and Ford, the counsel representing Window
World, is potentially privileged. As the client, Window World holds this privilege.
2. State Farm and Ford
State Farm argues that email correspondence between State Farm and Ford are
attorney-client privileged. ECF No. 27 at 6. As the party asserting privilege, State Farm
bears the burden of establishing the privilege. See Wilson, 662 S.E.2d at 584. Yet State
Farm cites no cases that support the principle that communication between an insurance
company and the counsel it retains for an insured party is privileged. As a result, State
Farm fails to meet its burden to establish an attorney-client privilege with Ford.
For some reason, State Farm did not alternatively argue that the common interest
doctrine protects its communications with Ford; however, the court believes it is
important to discuss this issue. As explained in State Farm Fire & Cas. Co., South
Carolina law supports the use of the common interest doctrine in the relationship between
State Farm, Window World, and Ford. 225 F. Supp. 3d at 481. Under this doctrine, not

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While the range of communication protected under attorney-client privilege is
narrower under the common interest doctrine, the court notes that “a broader set of
communications might be protected as work product.” State Farm Fire & Cas. Co., 225
F. Supp. 3d at 482
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all communications between State Farm and Ford are protected by attorney-client
privilege. The only communications protected are communications from Ford to State
Farm that transmit Window World’s privileged information. As a result, the only
communication between State Farm and Ford that is privileged is correspondence from
Ford that sends information that is privileged between Window World and Ford.
3. State Farm and Coverage Counsel
State Farm retained coverage counsel to provide an opinion on whether Muhler’s
alleged damages were covered under the Policy. ECF No. 27 at 2. Muhler contends that
State Farm improperly claims privilege over “the substance of information provided by
State Farm to counsel, whether coverage counsel or the counsel hired by State Farm to
defend its insured in the underlying suit.” ECF No. 26-1 at 3 (internal quotations
omitted). Muhler argues that this description “suggests that the information is protected
simply because it was, at some point, shared with counsel,” which does not make the
information privileged. ECF No. 26-1 at 4. The court interprets this argument to apply
to both Ford and State Farm’s coverage counsel. As discussed above in footnote 1, the
issue of whether communications between an insurance company and its coverage
counsel is privileged in a claim for denial of insurance benefits is currently being decided
by the South Carolina Supreme Court. As such, the court reserves ruling on this issue.
B. Assignment of Window World’s Privilege to Muhler
The next issue is whether the assignment of claims from Window World to
Muhler includes the assignment of Window World’s attorney-client privilege with Ford.
Muhler argues that the assignment of Window World’s claims includes the assignment of
its privileges. ECF No. 26-1 at 5–6. If that is the case, then State Farm may not withhold

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documents related to the Underlying Case on the basis of Window World’s privilege
because the privilege actually belongs to Muhler now. 3 In response, State Farm asserts
that because there was no express assignment of privileges, the privilege still belongs to
Window World, and State Farm cannot waive Window World’s privilege. ECF No. 27 at
2–4. However, State Farm concedes that if the court holds that the assignment included
attorney-client privilege, State Farm will produce portions of the claim file and
correspondence to which Window World, as the holder of the privilege, would be
entitled. Id. at 4.
South Carolina state law has not squarely addressed the issue of whether merely
assigning a claim includes the assignment of attorney-client privilege. However, other
jurisdictions have found that an assignment of claims does not include an assignment of
attorney-client privilege absent an explicit waiver of privilege. In Klein v. Fed. Ins. Co.,
2014 WL 3408355 (N.D. Tex. July 14, 2014), the United States District Court for the
District of Northern Texas held that a party cannot waive its attorney-client privilege

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In Muhler’s motion to compel, Muhler phrased the issue as whether Window World’s
attorney-client privilege with Ford in the Underlying Case is now assigned to Muhler.
ECF No. 26-1 at 5. Therefore, the question is whether the privilege belonging to
Window World in Window World’s privileged communications with Ford about the
Underlying Case now belongs to Muhler. If the privilege now belongs to Muhler, Muhler
can waive the privilege, and State Farm must produce Window World’s privileged
documents relating to the Underlying Case. In Muhler’s reply, it frames the issue
differently than it did in its motion to compel. In its reply, Muhler explains that the issue
is “whether State Farm can assert a privilege belonging to Window World against
Window World’s assignee, Muhler, with regard to claims originally belonging to
Window World against State Farm.” ECF No. 28 at 1 (emphasis added). This issue
relates to whether State Farm can claim attorney-client privilege against Muhler, as
Window World’s assignee, in the instant case challenging State Farm’s denial of
coverage in the Underlying Case. This question is the question currently pending before
the South Carolina Supreme Court, see footnote 1, and therefore, the court reserves ruling
on this issue.
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simply by assigning its rights without explicitly addressing the waiver of privilege. Id. at
*10–11. It explained that “[n]othing in the language of [the] assignment suggests that
[the assignor] intended to waive the attorney-client privilege or to assign to the [assignee]
the right to assert the privilege.” Id. at *11. The court in Catino v. Travelers Ins. Co.,
Inc., 136 F.R.D. 534 (D. Mass. May 28, 1991), engaged in a similar discussion. Id. at
536. The court reserved ruling on the attorney-client privilege issue but explained that
when the insured/assignor assigned her rights, she also executed a waiver of attorneyclient privilege. Id. As a result, the assignee “possess[ed] all of [the insured/assignor]’s
rights” and there could be “no attorney-client privilege between [the counsel retained to
represent the insured/assignor] and [the insurer] as against [the assignee].” Id.
In Klein, the court relied on a Texas state case, In re Cooper, 47 S.W.3d 206 (Tex.
Ct. App. 2001), that closely parallels the facts of the instant case. 2014 WL 3408355 at
*10. In In re Cooper, there was an underlying suit in which the plaintiff sued the insured.
47 S.W.3d at 207. After losing the suit, the insured assigned his claims against his
insurer to the plaintiff, who then filed suit against the insurer to satisfy the judgment in
the underlying suit. Id. The trial court, in determining that the insured waived his
attorney-client privilege when he assigned his claims and rights to the plaintiff, reasoned
that the waiver of privilege is “an integral and fundamental part of the assignment” and
without the waiver, the assignment was not effective. Id. at 208–09. The Texas Court of
Appeals disagreed, first observing that under Texas state law, attorney-client privilege
may only be waived under enumerated exceptions, including voluntary disclosure. Id. at
208. It then explained that the insured’s assignment did not contain language waiving his

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attorney-client privilege, and without explicit language of a voluntary disclosure, the
privilege was not waived. Id. at 209.
In South Carolina, the attorney-client privilege “is based upon a wise policy that
considers that the interests of society are best promoted by inviting the utmost confidence
on the part of the client in disclosing his secrets to this professional adviser.”
Tobaccoville USA, Inc., 692 S.E.2d at 529 (quoting Owens, 424 S.E.2d at 476). The
South Carolina Supreme Court explained that “the rule of evidence which holds as
inviolable professional communications between attorney and client is one of the most
important, and in all forms must be maintained in all its integrity.” State v. James, 12
S.E. 657, 660 (S.C. 1891). Under South Carolina law, a client may waive her attorneyclient privilege only if the waiver is “distinct and unequivocal.” State v. Hitopoulus, 309
S.E.2d 747, 749 (S.C. 1983) (citing James, 12 S.E. at 661). “[W]here an implied waiver
is claimed, caution must be exercised, for waiver will not be implied from doubtful acts.”
State v. Thompson, 495 S.E.2d 437, 439 (S.C. 1998) (quoting 28 Am. Jur. 2d Estoppel
and Waiver § 160 (1966)).
Given the sanctity of the attorney-client privilege and South Carolina’s disfavor
of implied waiver of the privilege, the court declines to hold that an assignment of claims
includes an assignment of attorney-client privilege without an explicit waiver. In the
instant case, Window World did not explicitly waive its privilege in a manner that was
“distinct and unequivocal.” Window World’s only assignment was for “[a]ny and all
claims and/or proceeds from claims defendant may have against State Farm.” Order,
Muhler v. Window World of N. Charleston, No. 2:11-cv-0851-DCN, ECF No. 130. This
assignment contains no language about waiving privileges. Moreover, Window World

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did not voluntarily assign its potential claims against State Farm to Muhler, as this court
ordered it to do so, making it impossible for Window World to implicitly and voluntarily
waive its privilege. As a result, Window World still holds its attorney-client privilege
with Ford, and State Farm may not produce the documents that contain Window World’s
privileged information absent a distinct and unequivocal waiver by Window World.
C. Application of Attorney-Client Privilege
Having determined that Muhler may not waive Window World’s privilege to any
documents for which Window World holds the privilege, the court must now discern
which of the documents requested by Muhler are in fact privileged as to Window World.
In order to determine which State Farm documents are privileged, the court conducted an
in-camera review of the following groups of documents: (1) communication between
Window World and Ford; (2) communication between State Farm and Ford; (3) invoices
sent from Ford to State Farm for his legal representation of Window World; and (4) State
Farm’s internal log notes within its claim file for Window World regarding the
Underlying Case. In addition, the court will determine whether State Farm’s litigation
budget and a State Farm team manager’s recommendations related to the Underlying
Case are privileged. ECF No. 26-1 at 6–7.
“The determination of whether or not a communication is privileged and
confidential is a matter for the trial judge to decide after a preliminary inquiry into all the
facts and circumstances.” Tobaccoville USA, Inc., 692 S.E.2d at 529 (citing State v.
Love, 271 S.E.2d 110, 112 (S.C. 1980)). In order for communication between an
attorney and a client to be privileged, the communication must be confidential in nature,
Love, 271 S.E.2d 112, and it “must relate to a fact of which the attorney was informed by

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his client without the presence of strangers for the purpose of securing primarily either an
opinion on law or legal services or assistance in some legal proceeding,” Marshall v.
Marshall, 320 S.E.2d 44, 47 (S.C. Ct. App. 1984) (citations omitted). The privilege
applies when the communication originates either from the client or the attorney. Id.
However, “[n]ot every communication within the attorney and client relationship is
privileged.” Doster, 284 S.E.2d at 220. This is due to the fact that“[t]he public policy
protecting confidential communications must be balanced against the public interest in
the proper administration of justice. Id. (citing N.L.R.B. v. Harvey, 349 F.2d 900 (4th
Cir. 1965), Sepler v. State, 191 So.2d 588 (Fla. App. 1966)). For example,
“[c]orrespondence that merely transmit[s] documents to or from an attorney, even at the
attorney’s request for purposes of rendering legal advice to a client, are neither privileged
nor attorney work product.” Hege v. Aegon USA, LLC, 2011 WL 1791883, at *5
(D.S.C. May 10, 2011) (quoting Guidry v. Jen Marine LLC, 2003 WL 22038377, at *2
(E.D. La. Aug. 25, 2003)).
1. Communications Between Window World and Ford
After an in-camera review, the court determines the following communications
between Window World and Ford do not contain any confidential information related to
Ford’s legal opinion or services and must be produced: Muhler SF 200, Muhler SF 212,
Muhler SF 356, Muhler SF 369, Muhler SF 573, Muhler SF 582,
MUHLER00000052PROD, MUHLER00000586PROD, MUHLER00000453PRIV–
MUHLER00000454PRIV, MUHLER00000474PRIV, and MUHLER00000475PRIV.
The following communications between Window World and Ford consist of
correspondence simply transmitting documents to or from Ford and must be produced:

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Muhler SF 372, Muhler SF 373, Muhler SF 397, Muhler SF 566, Muhler SF 608, Muhler
SF 610, Muhler SF 633, Muhler SF 641, Muhler SF 643, Muhler SF 648, Muhler SF 658,
Muhler SF 704, Muhler SF 713, Muhler SF 776, Muhler SF 789, Muhler SF 804, Muhler
SF 811, Muhler SF 829, Muhler SF 839, Muhler SF 856, Muhler SF 952, Muhler SF 969,
Muhler SF 984, Muhler SF 1044, Muhler SF 1069, Muhler SF 1071, Muhler SF 1102,
MUHLER00000056PROD, MUHLER00000065PROD, MUHLER00000082PROD,
MUHLER00000130PROD, MUHLER00000139PROD, MUHLER00000148PROD,
MUHLER00000244PROD, MUHLER00000290PROD, MUHLER00000325PROD,
MUHLER00000762PROD, MUHLER00000764PROD, MUHLER00000050PRIV,
MUHLER00000051PRIV, MUHLER00000056PRIV, MUHLER00000057PRIV,
MUHLER00000197PRIV, MUHLER00000317PRIV, MUHLER00000344PRIV,
MUHLER00000368PRIV, MUHLER00000369PRIV, MUHLER00000373PRIV,
MUHLER00000427PRIV, MUHLER00000471PRIV, and MUHLER00000473PRIV.
The following communications between Window World and Ford involve
confidential information related to Ford’s legal opinion or services and are privileged:
Muhler SF 355, Muhler SF 360, Muhler SF 366, Muhler SF 596, Muhler SF 915, Muhler
SF 998, Muhler SF 1027, Muhler SF 1082–99, Muhler SF 1149,
MUHLER00000049PRIV, MUHLER00000052PRIV, MUHLER00000053PRIV–
MUHLER00000054PRIV, MUHLER00000055PRIV, MUHLER00000216PRIV,
MUHLER00000314PRIV, MUHLER00000322PRIV–MUHLER00000341PRIV,
MUHLER00000342PRIV, MUHLER00000374PRIV, and MUHLER00000389PRIV.

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2. Communications between State Farm and Ford
After an in-camera review, the court determines the following communications
between State Farm and Ford do not contain any confidential information related to
Ford’s legal opinion or services that was communicated between Window World and
Ford, and thus must be produced: Muhler SF 129–30, Muhler SF 131, Muhler SF 147–
51, Muhler SF 152, Muhler SF 201, Muhler SF 204, Muhler SF 214, Muhler SF 351–52,
Muhler SF 353–54, Muhler SF 517, Muhler SF 525, Muhler SF 528, Muhler SF 531,
Muhler SF 553, Muhler SF 723, Muhler SF 1178–79, MUHLER00000050PROD,
MUHLER00000157PROD, MUHLER00000160PROD–MUHLER00000161PROD,
MUHLER00000166PROD, MUHLER00000169PROD, MUHLER00000190PROD,
MUHLER00000193PROD–MUHLER00000194PROD, MUHLER00000289PROD,
MUHLER00000007PRIV–MUHLER00000008PRIV, MUHLER00000016PRIV,
MUHLER00000017PRIV–MUHLER00000019PRIV, MUHLER00000026PRIV–
MUHLER00000027PRIV, MUHLER00000033PRIV, MUHLER00000034PRIV–
MUHLER00000035PRIV, MUHLER00000036PRIV, MUHLER00000063PRIV–
MUHLER00000064PRIV, MUHLER00000128PRIV, MUHLER00000146PRIV–
MUHLER00000148PRIV, MUHLER00000164PRIV–MUHLER00000166PRIV,
MUHLER00000174PRIV–MUHLER00000176PRIV, MUHLER00000187PRIV,
MUHLER00000189PRIV–MUHLER00000192PRIV, MUHLER00000195PRIV–
MUHLER00000196PRIV, MUHLER00000218PRIV, MUHLER00000222PRIV,
MUHLER00000239PRIV, MUHLER00000260PRIV–MUHLER00000263PRIV,
MUHLER00000265PRIV, MUHLER00000293PRIV, MUHLER00000304PRIV,
MUHLER00000315PRIV, MUHLER00000372PRIV, MUHLER00000379PRIV,

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MUHLER00000380PRIV, MUHLER00000390PRIV–MUHLER00000392PRIV,
MUHLER00000399PRIV, MUHLER00000406PRIV– MUHLER00000408PRIV,
MUHLER00000409PRIV– MUHLER00000410PRIV, MUHLER00000429PRIV,
MUHLER00000439PRIV–MUHLER00000443PRIV, MUHLER00000444PRIV–
MUHLER00000448PRIV, MUHLER00000455PRIV–MUHLER00000456PRIV,
MUHLER00000463PRIV, MUHLER00000464PRIV, MUHLER00000465PRIV,
MUHLER00000466PRIV–MUHLER00000469PRIV, MUHLER00000470PRIV, and
MUHLER00000472PRIV.
The following communications between State Farm and Ford consist of
correspondence simply transmitting documents to or from Ford; they are not privileged
and must be produced: Muhler SF 142, Muhler SF 371, Muhler SF 506, Muhler SF 543,
Muhler SF 849, Muhler SF 1110, Muhler SF 1153, MUHLER00000099PROD,
MUHLER00000640PROD, MUHLER00000806PROD, MUHLER00000095PRIV,
MUHLER00000162PRIV, MUHLER00000294PRIV, MUHLER00000371PRIV,
MUHLER00000397PRIV, and MUHLER00000424PRIV.
In addition, the following communications between State Farm and Duffy &
Young, the law firm that Window World retained after Ford withdrew from the
Underlying Case, are not privileged as there is no relationship between State Farm and
Duffy & Young. As such, these documents must be produced: Muhler SF 205,
MUHLER00000449PRIV–MUHLER00000450PRIV, and MUHLER00000451PRIV–
MUHLER00000452PRIV.
The following communications between State Farm and Ford retransmit
confidential and privileged information communicated between Window World and Ford

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and are privileged: Muhler SF 209–10, Muhler SF 211, Muhler SF 519–24, Muhler SF
1121, MUHLER00000177PRIV, MUHLER00000321PRIV, MUHLER00000387PRIV–
MUHLER00000388PRIV, MUHLER00000403PRIV, MUHLER00000416PRIV–
MUHLER00000417PRIV, and MUHLER00000457PRIV–MUHLER00000462PRIV.
The following communications are internal State Farm communication that are
not privileged: MUHLER00000141PRIV, MUHLER00000188PRIV,
MUHLER00000316PRIV, MUHLER00000367PRIV, and MUHLER00000428PRIV.
3. Invoices for Legal Services Sent from Ford to State Farm
“[C]ourts have held that correspondence relating to a legal services bill generally
does not qualify under the attorney-client privilege.” Southampton Pointe Prop. Owners
Ass’n, Inc. v. OneBeacon Ins. Co., 2013 WL 12241840, at *3 (D.S.C. July 15, 2013)
(citations omitted). This applies with equal force under the common interest doctrine.
See State Farm Fire & Cas. Co., 225 F. Supp. 3d at 482 n.4 (citing United States v.
(Under Seal), 774 F.2d 624, 628 (4th Cir. 1985)).
Several entries on State Farm’s privilege log describe emails from Ford to State
Farm “attaching invoice[s]” for “legal services rendered in defense of suit by Muhler
against insured-client.” See, e.g., entries 98; 110; 116. Communications between Ford
and State Farm that do not involve Window World’s privileged information are not
privileged, but even if they were, legal service bills are not covered by the common
interest doctrine. As a result, this correspondence is not privileged, and the court orders
State Farm to produce these emails and invoices.
4. State Farm’s Litigation Budget
Muhler argues that the litigation budget for the Underlying Case prepared by Ford
for State Farm is not privileged. ECF No. 26-1 at 6. In response, State Farm contends
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that the budget is privileged because “it reveals or reflects the attorney’s mental
impressions and advice as to the defense.” ECF No. 27 at 6. Neither party cites any case
law to support its argument.
As discussed above, the only communication between State Farm and Ford that is
privileged is privileged information between Ford and Window World that is
subsequently sent to State Farm. A litigation budget prepared by Ford for State Farm is
likely not a document that would be shared with Window World. As a result, the budget
is not privileged, and the court orders its production.
D. Work Product Doctrine
Many of the documents on State Farm’s privilege log that Muhler challenges are
designated as both attorney-client privileged and work product. Both parties cursorily
mention the work product doctrine in their pleadings; however, neither provides any
substantive argument as to why any of the challenged documents are or are not protected
work product.
The work product doctrine protects from discovery any “documents and tangible
things that are prepared in anticipation of litigation or for trial by or for [a] party or its
representative (including the . . . party’s attorney, consultant, surety, indemnitor, insurer,
or agent).” Fed. R. Civ. P. 26(b)(3)(A). The proponent of work product protection must
establish that the “driving force behind the preparation of each requested document” is
the prospect of litigation. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Murray Sheet
Metal Co., 967 F.2d 980, 984 (4th Cir.1992). Moreover,“[t]he application of the work
product doctrine is particularly difficult in the context of insurance claims.” Kidwiler v.
Progressive Paloverde Ins. Co., 192 F.R.D. 536, 541–42 (N.D. W. Va. 2000). This is due

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in large part to the difficulty of distinguishing between an insurance company’s ordinary
business handling insurance claims and “the prospect of litigation when the preparer
faces an actual claim or a potential claim following an actual event or series of events that
reasonably could result in litigation.” Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 967
F.2d at 984. As a result, in order for the court to determine whether certain documents
are protected by the work product doctrine, it must know the “driving force behind the
preparation of each requested document.”
1. State Farm’s Internal Log Notes Reflecting Communications with
Ford
Muhler contends that some of State Farm’s internal log notes are either not
privileged or if privileged, the privilege belongs to Window World, not State Farm. ECF
No. 26-3 at 1. State Farm’s internal log notes are notes made by State Farm employees in
Window World’s claim file that provide information and updates on the Underlying
Case. State Farm responds that the log notes reflect communications with Ford and, as
such, are privileged.
After an in-camera review, the court orders State Farm to clarify whether it
considers its internal log notes to be protected under the work-product doctrine and why.
The log notes all appear to be the same type of document, yet in its privilege log, State
Farm labels only some as “work product” and not others. In an effort to avoid
unnecessarily adding to the jurisprudence by deciding if these documents are privileged,
the court instructs State Farm to submit supplemental briefing explaining why each of the
challenged privilege log entries for State Farm log notes is or is not work product. State
Farm should provide an explanation for each challenged privilege log entry.

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2. State Farm Team Manager Recommendation
Finally, Muhler asserts that a new suit memo containing redactions of State
Farm’s team manager recommendations are not privileged. ECF No. 26-1 at 7. This
document is an internal memo from a State Farm team manager and a State Farm claim
representative to a State Farm section manager providing information about the
Underlying Case. Muhler objects to a redaction that occurs after the text that reads “TM
recommends that we (1) monitor the discovery in the defense case to see what factual
documentation is submitted by the plaintiff to substantiate their claim and then
[redacted].” Id.; see also ECF No. 26-11 at 7. In response, State Farm clarifies that it has
redacted both advice from Ford and advice from its own coverage counsel in this
document, and State Farm argues that confidential advice from counsel does not lose its
privilege simply because it is reiterated internally within State Farm. ECF No. 27 at 6–7.
After its in-camera review, the court has determined that the specific portion
Muhler cites as being part of the team manager’s recommendation is information from
State Farm’s coverage counsel. As mentioned above in footnote 1, it is premature to rule
on whether this information is privileged until the South Carolina Supreme Court rules on
the certified question. The only portion of redacted information that reflects
communication with Ford is the portion in the final paragraph beginning with “Defense.”
This information is similar to the information that appears in State Farm’s internal
log notes. The court determines that State Farm needs to explain whether Muhler SF
1201–07 is protected by the work product doctrine. While State Farm did not label this
document work product in its privilege log, like the log notes, the court wishes not to
unnecessarily add to the jurisprudence and determine if privilege exists. The court

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instructs State Farm to submit supplemental briefing explaining if and why this document
is work product.
Given the lack of argument from either party on this issue, the court simply does
not have enough information to determine whether any of the other documents claiming
protection under the work product doctrine are in fact protected work product. If State
Farm wishes to continue to assert that certain documents are covered by the work product
doctrine, the court requires State Farm to identify each challenged document it believes is
protected work product and explain why the “driving force behind the preparation” of the
document was to prepare for litigation. As discussed above, the court also orders State
Farm to explain if and why each of the challenged State Farm internal log notes and the
State Farm team member recommendation is protected by the work product doctrine.

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IV. CONCLUSION
For the foregoing reasons, the court GRANTS in part and DENIES in part
Muhler’s motion to compel and further instructs State Farm to submit supplemental
briefing identifying whether any of the following are protected by the work product
doctrine: (1) challenged State Farm internal log notes, (2) Muhler SF 1201–07, and (3)
any challenged documents that State Farm designated as work product in its privilege log.
AND IT IS SO ORDERED.

DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
September 25, 2018
Charleston, South Carolina

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