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Water's Edge v. Affiliated FM Ins. Co.

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE
Feb 2, 2021
CASE NO. C19-1553JLR (W.D. Wash. Feb. 2, 2021)

Opinion

CASE NO. C19-1553JLR

02-02-2021

WATER'S EDGE, A CONDOMINIUM OWNERS ASSOCIATION, Plaintiff, v. AFFILIATED FM INSURANCE COMPANY, et al., Defendants.


ORDER ON IN CAMERA REVIEW

On December 21, 2020, the court ordered Plaintiff Water's Edge, a Condominium Owners Association ("the Association") and Defendant Affiliated FM Insurance Company ("AFM") to simultaneously submit letter briefs regarding various discovery issues. (See 12/21/20 Dkt. Entry; Pl. Statement (Dkt. # 52); Def. Statement (Dkt. # 54).) The court further ordered AFM to submit the documents at issue for an in camera review. // (12/21/20 Dkt. Entry.) On January 29, 2021, the court held a telephonic motion hearing and resolved two of the three discovery issues. (See 1/29/21 Min. Entry (Dkt. # 56).)

The court now addresses the remaining issue of which, if any, of AFM's withheld or redacted documents should be produced pursuant to Cedell v. Farmers Ins. Co., 295 P.3d 239 (Wash. 2013). (See id.) The court has reviewed the 173 documents at issue. Based on the court's in camera review, the parties' submissions, and the parties' representations during the telephonic motion hearing, the court GRANTS in part and DENIES in part the Association's motion to compel.

As the court has articulated in past discovery disputes (see 10/27/20 Min. Entry (Dkt. # 48); 11/10/20 Order (Dkt. # 49)), Cedell creates a presumption that "there is no attorney-client privilege relevant between the insured and the insurer in the claims adjusting process," 295 P.3d at 246. However, the insurer may overcome this presumption by showing that its attorney was "not engaged in the quasi-fiduciary tasks of investigating and evaluating or processing the claim, but instead in providing the insurer with counsel as to its own potential liability." Id. The insured is thus entitled to discovery of documents involving attorney work on quasi-fiduciary tasks. See Linder v. Great N. Ins. Co., No. C15-5002RBL, 2016 WL 740261, at *3 (W.D. Wash. Feb. 25, 2016) (ordering production of legal invoices involving attorneys' performance of quasi-fiduciary tasks).

But even if the insurer successfully overcomes the initial presumption, the insured may still pierce the attorney-client privilege through the "fraud" exception. Cedell, 295 P.3d at 246-47. The insured must assert that the insurer has engaged in "an act of bad faith tantamount to civil fraud" and make "a showing that a reasonable person would have a reasonable belief that an act of bad faith has occurred." Id. Upon triggering the "fraud" exception, the court conducts an in camera review to determine whether there is "a foundation to permit a claim of bad faith . . . to proceed." Id. at 247. To strip a communication of its attorney-client privilege, the insured must show that "(1) [the insurer] was engaged in or planning a fraud at the time the privileged communication was made, and (2) the communication was made in furtherance of that activity." Barry v. U.S.A.A., 989 P.2d 1172, 1176 (Wash. Ct. App. 1999).

However, Cedell and its progeny are inapplicable when an insurer withholds documents under the work product doctrine in federal court. MKB Constructors v. Am. Zurich Ins. Co., No. C13-0611JLR, 2014 WL 2526901, at *8 (W.D. Wash. May 27, 2014). The primary purpose of the work product rule is to "prevent exploitation of a party's efforts in preparing for litigation." Admiral Ins. Co. v. U.S. Dist. Court, 881 F.2d 1486, 1494 (9th Cir. 1989). To qualify as protected work product, the document must be prepared in anticipation of litigation or for trial. Holmgren v. State Farm Mut. Auto. Ins. Co., 976 F.2d 573, 576 (9th Cir. 1992).

Accordingly, based on the foregoing legal standards, the parties' submissions, and the court's in camera review, the court ORDERS AFM to produce the following documents with the indicated alterations: // // //

DocumentPrivilegeLog ID

Alteration(s)

003_00007

Produce and leave unredacted legal service charge on 6/21/19starting with "For FM Global Matter . . ." Remaining charges maybe redacted.

006_00012

Produce and leave unredacted legal service charge on 11/8/19.Remaining charges may be redacted.

010_00020

Remove all redactions

020_00030

Produce the entire document

021_00031

Produce the entire document

025_00037

Produce and leave unredacted the two charges on 6/21/19; thecharge on 7/15/19 re. the call with client's adjuster; and the 8/26/19charge re. claim investigation. Remaining charges may be redacted.

029_00043

Produce and leave unredacted the charge on 8/16/19 by K. Librera;the portion of the charge on 8/19/19 by K. Librera at "call withclient . . . D. Bentson regarding claims letter"; the 8/23/19 charge byK. Librera; and the 8/27/19 charge. Remaining charges may beredacted.

035_00052

Produce and leave unredacted the charges on 9/10/19 "Review andAnalyze draft letter . . ."; 9/11/19 "Review and analyze . . ."; and9/25/19 "Telephone calls from and to . . ." Remaining charges maybe redacted.

041_00061

Produce and leave unredacted the charge on 9/9/19 by H. Kurzwellfrom "analysis of further letter from Ashbaugh . . . "; 9/10/19 by H.Kurzwel at "Miscellaneous problems . . . Comments relating tosame"; and 9/19/19 by H. Kurzwell. Remaining charges may beredacted.

047_00070

Produce and leave unredacted the charge on 10/16/19 from "workon strategy . . ." Remaining charges may be redacted.

049_00073

Produce and leave unredacted the charges on 10/1/19 by K. Librerare. "call regarding inspection"; 10/2/19 by H. Kurzweil at"Conference call with . . . Relevant to inspection"; and 10/2/19 byK. Librera at "updates regarding investigation and site inspection."Remaining charges may be redacted.

057_00085

Produce and leave unredacted the charges on 1/6/20 by H. Kurzweilfrom "Attention to follow up . . ."; 1/8/20 by H. Kurzweil from"Telephone conference . . ."; 01/23/20 by H. Kurzweil at "attentionto. . . claim notice"; 1/24/20 by H. Kurzweil at "Work on responseto. . . additional information"; 1/27/20 by H. Kurzweil from "Updateon response . . ."; and 1/29/20 by H. Kurzweil at "further attention to. . . of same." Remaining charges may be redacted.

DocumentPrivilegeLog ID

Alteration(s)

079_00122

Produce the entire document

081_00124

Produce the entire document

083_00128

Produce the entire document

088_00133

Produce the entire document

093_00140

Produce the entire document

102_00149

Produce the entire document

106_00153

Remove redactions from the paragraph beginning with "We arepuzzled . . ." The remainder of the redactions can remain.

112_00160

Remove all redactions

114_00162

Produce the entire document

115_00163

Produce the entire document

116_00164

Produce the entire document

117_00165

Produce and redact sentence beginning with "Ourrecommendation . . ."

122_00170

Produce the entire document

149_00205

Produce the entire document

150_00206

Produce the entire document

151_00207

Produce the entire document

152_00208

Produce the entire document

153_00209

Produce the entire document

154_00210

Produce the entire document

155_00211

Produce the entire document

156_00212

Produce the entire document

157_00213

Produce the entire document

158_00214

Produce the entire document

159_00215

Produce the entire document

160_00216

Produce the entire document

161_00217

Remove all redactions

AFM shall produce these documents within seven days of the filing date of this order.

Dated this 2nd day of February, 2021.

/s/_________

JAMES L. ROBART

United States District Judge


Summaries of

Water's Edge v. Affiliated FM Ins. Co.

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE
Feb 2, 2021
CASE NO. C19-1553JLR (W.D. Wash. Feb. 2, 2021)
Case details for

Water's Edge v. Affiliated FM Ins. Co.

Case Details

Full title:WATER'S EDGE, A CONDOMINIUM OWNERS ASSOCIATION, Plaintiff, v. AFFILIATED…

Court:UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

Date published: Feb 2, 2021

Citations

CASE NO. C19-1553JLR (W.D. Wash. Feb. 2, 2021)