Sousie et al v. Allstate Indemnity Company

Filing 99

ORDER by Judge Benjamin H. Settle denying 92 Motion for Reconsideration.(TG)

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1 2 3 4 5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 6 7 8 ALEXANDER N. SOUSIE and AMY M. SOUSIE, 9 Plaintiff, v. 10 CASE NO. C17-5078 BHS ORDER DENYING DEFENDANT’S MOTION FOR RECONSIDERATION ALLSTATE INDEMNITY COMPANY, 11 Defendant. 12 13 14 15 16 17 18 19 20 21 22 This matter comes before the Court on Defendant Allstate Indemnity Company’s (“Allstate”) motion for reconsideration (Dkt. 92). On April 3, 2018, the Court granted Plaintiff Alexander and Amy Sousie’s (“Sousies”) motion to reopen discovery to take the deposition of Rick Wathen. Dkt. 90. On April 11, 2018, Allstate filed a motion for reconsideration arguing that the Court “mistakenly applied the incorrect law.” Dkt. 92 at 2. Motions for reconsideration are governed by Local Rule of Procedure 7(h), which provides as follows: Motions for reconsideration are disfavored. The court will ordinarily deny such motions in the absence of a showing of manifest error in the prior ORDER - 1 1 ruling or a showing of new facts or legal authority which could not have been brought to its attention earlier with reasonable diligence. 2 LCR 7(h). 3 In this case, Allstate moves for reconsideration on numerous grounds. First, 4 before addressing the merits of the motion, attorneys Rick Wathen and A. Elyse O’Neill 5 signed a document that contains the following: 6 7 8 9 Plaintiffs make bald assertions, attempting to use buzz words, from [Cedell v. Farmers Insurance Company of Washington, 176 Wn.2d 686 (2013)], that counsel: • helped in investigating, evaluating, and/or processing the Sousies’ claim. ECF 46 at 11:1-2. • authored the letters denying the claim. ECF 46 at 9:5-6. None of these assertions are supported by evidence in the record. 10 Dkt. 92 at 4. To the extent that “counsel” refers to Mr. Wathen, the record contains 11 letters that he authored (1) requesting that the Sousies sit for examinations under oath, 12 Dkt. 64-6, (2) denying the Sousies’ claim, Dkt. 14-3 at 7–8, and (3) denying the Sousies’ 13 request for reconsideration, id. at 16–17. The first two letters establish that Mr. Wathen 14 both assisted in processing the claim and “authored [a letter] denying the claim.” Dkt. 92 15 at 4. It is also undisputed that Mr. Wathen conducted the Sousies’ examinations under 16 oath, which is a fact-finding activity that, absent an unusual circumstance, would be 17 considered investigating the claim. Thus, Allstate’s motion begins with a 18 mischaracterization of the evidence. 19 Second, Allstate argues that Rygg v. Hulbert, C11-1827JLR, 2013 WL 64769 20 (W.D. Wash. Jan. 4, 2013), controls the issue of Mr. Wathen testifying. Dkt. 92 at 5–6. 21 In Rygg, the Court addressed a situation in which a property dispute between neighbors 22 ORDER - 2 1 developed into a single claim for wiretapping. Id. at *1. Although the Court declined to 2 resolve any discovery disputes because the parties had failed to file proper motions, the 3 Court “provide[d] guidance to the parties should similar [discovery] requests be filed in 4 the future.” Id. at *3. As part of that “guidance,” the Court informed the parties that it 5 would “follow the principles outlined in Shelton v. American Motors Corp. [805 F.2d 6 1323, 1327–28 (8th Cir. 1986)] with respect to whether the Plaintiffs will be allowed to 7 depose attorneys in this matter.” Id. To the extent that Rygg is a decision, the Court did 8 not commit manifest error in not following the principles outlined in Shelton. Instead, the 9 Court explicitly stated why Cedell v. Farmers Ins. Co. of Washington, 176 Wn.2d 686, 10 698 (2013), “governs the Sousies’ IFCA claim.” Dkt. 70 at 3–4. The Court concluded 11 that an IFCA claim was a specific subset of the more general bad faith tort. Id. 12 Under Cedell, “in first party insurance claims by insured’s claiming bad faith in 13 the handling and processing of claims, other than UIM claims, there is a presumption of 14 no attorney-client privilege.” Cedell, 176 Wn.2d at 700. In the absence of this privilege, 15 it is irrelevant whether Mr. Wathen is a necessary witness. See, e.g., Babai v. Allstate 16 Ins. Co., C12-1518 JCC, 2015 WL 1880441, at *3 (W.D. Wash. Apr. 24, 2015) (“Nor 17 does the attorney-client privilege protect Mr. Wathen’s testimony regarding the 18 investigation of Plaintiff’s claim because while Mr. Wathen participated in the 19 investigation and handling of Plaintiff’s claim, he was not acting in his capacity as 20 Allstate’s advisor.”). When Mr. Wathen was investigating and denying the Sousies’ 21 claim, he was not acting as Allstate’s advisor. Instead, he was acting as an agent of 22 Allstate and would be considered a lay witness for a certain period of time. The standard ORDER - 3 1 to call a lay witness is whether the testimony is relevant, not whether the witness is 2 necessary. Therefore, the Court denies the motion on this issue. 3 Third, Allstate argues that if the Sousies depose Mr. Wathen, then they may move 4 to disqualify him from representing Allstate in this matter, depriving Allstate of counsel 5 on the eve of trial. Allstate asserts that this is a “litigation tactic.” Dkt. 92 at 7. When 6 Mr. Wathen previously advanced this exact argument, the Court found that “requiring 7 Mr. Wathen to testify will not impose an undue burden on Allstate because Allstate had 8 sufficient notice that Mr. Wathen would be called.” Babai, 2015 WL 1880441 at *4. 9 Likewise, Allstate had sufficient notice that Mr. Wathen could be called as a witness in 10 this case because it filed a motion for protective order regarding this issue in November 11 2017. Dkt. 28. Even if Mr. Wathen is called as a witness, he is not automatically 12 disqualified from representing Allstate. Under the Rules of Professional Conduct, Mr. 13 Wathen may not advocate for Allstate if he is a witness. RPC 3.7. Even then, there are 14 exceptions to this rule. Id. The Court finds that Allstate bore the burden of these risks 15 and, despite the possibility of disqualification or limited representation, proceeded with 16 Mr. Wathen’s representation. Therefore, the Court DENIES Allstate’s motion for 17 reconsideration. 18 IT IS SO ORDERED. 19 Dated this 16th day of April, 2018. 20 21 A BENJAMIN H. SETTLE United States District Judge 22 ORDER - 4

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