Evanston Insurance Company v. Murphy

District Court, D. Arizona·Decided November 23, 2020·No. 2:19-cv-04954·Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Evanston Insurance Company, No. CV-19-04954-PHX-MTL

10 Plaintiff, ORDER

11 v.

12 Tracey Portee Murphy, et al.,

13 Defendants. 14 15 Before the Court is the Motion for Protective Order filed by non-party Ryan 16 McCarthy. (Doc. 112.) For the following reasons, the motion is granted in part and denied 17 in part.1 18 I. BACKGROUND 19 As relevant to the pending motion,2 non-party Ryan McCarthy is an attorney at the 20 law firm Jones, Skelton & Hochuli, PLC. He defended Pearce Lincoln Properties LLC 21 (“Pearce Lincoln”), Par-Tech Limited Partnership (“Par-Tech”), and Art’s Fisheries II, 22 LLC (“Arts Fisheries”), in connection with the underlying wrongful death matter in the 23 Superior Court of Arizona for Maricopa County (the “Underlying Action”). See Murphy v. 24 Pearce Lincoln Props., LLC, No. CV2019-001932 (Ariz. Super. Ct. July 1, 2020). Mr. 25

26 1 Mr. McCarthy requested oral argument. Both parties have submitted legal memoranda and oral argument would not have aided the Court’s decisional process. See Partridge v. 27 Reich, 141 F.3d 920, 926 (9th Cir. 1998); see also LRCiv 7.2(f); Fed. R. Civ. P. 78(b). 28 2 The Court has previously provided general background information on this case. (See Docs. 74, 100.) It need not repeat the same here. 1 McCarthy’s clients owned and operated the property at which Arthur Murphy, Jr. was 2 fatally shot on April 6, 2017. An associate attorney, Sam Arrowsmith, who is no longer 3 affiliated with Jones, Skelton & Hochuli, was also counsel to these entities. 4 Plaintiff/Counter-Defendant Evanston Insurance Company (“Evanston”) filed its 5 complaint for declaratory relief in the present action on August 13, 2019. (Doc. 1.) It 6 initially named Mr. McCarthy’s clients as defendants; they have since been dismissed. 7 (Doc. 47.) 8 On November 25, 2019, the adverse parties in the Underlying Action entered into a 9 Damron agreement.3 It assigned a $9 million stipulated judgment against the insureds, 10 including Mr. McCarthy’s clients, to Tracee Portee Murphy (“Murphy”), a defendant and 11 counter-claimant in the present action. 12 Evanston issued a subpoena for Mr. McCarthy’s deposition on July 17, 2020. (Doc. 13 72.) On July 31, Mr. McCarthy’s counsel sent a letter to Evanston’s counsel asserting, in 14 part, that they had not received the deposition “topics, questions, or subject matter.” (Doc. 15 112-1 at 7.) Mr. McCarthy’s counsel intended “to object to any line of questioning that 16 seeks to violate the attorney-client privilege, work-product privilege, or ER 1.6, Arizona 17 Rules of Professional Conduct.” (Id.) On August 20, Evanston’s counsel sent an outline of 18 anticipated deposition topics. Counsel also met and conferred that same day. (Id. at 12.) 19 Evanston’s counsel deposed Mr. McCarthy on September 14, 2020. Although Mr. 20 McCarthy answered multiple questions during the deposition, his counsel asserted 21 privilege objections in response to 19 questions. Those objections are the subject of the 22 23 3 Under Arizona law, a Damron agreement is a “settlement agreement between an insured and an injured party in circumstances where the insurer has declined to defend a suit against 24 the insured. In such an agreement, the insured agrees to liability for the underlying incident and assigns all rights against the insurance company to the injured party.” Quihuis v. State 25 Farm Mut. Auto Ins. Co., 748 F.3d 911, 912 n. 1 (9th Cir. 2014). Damron agreements do 26 not “create coverage that the insured did not purchase. . .To the contrary, [the insurer] is liable for the stipulated judgment only if the judgment constituted a liability falling within 27 its policy.” Colorado Casualty Ins. Co. v. Safety Control Co., 230 Ariz. 560, 567, 288 P.3d 28 764, 771 (Ct. App. 2012) (internal quotations and citations omitted).” 1 present motion. Following the deposition, Evanston’s counsel asserted that the privilege 2 objections were improper. (Doc. 112 at 6.) The parties have since conferred “multiple 3 times.” (Id.) 4 Mr. McCarthy filed the present motion on October 30, 2020. (Doc. 112.) He 5 attached, as Exhibit 10 to the motion, a numbered list of the 19 questions to which his 6 counsel asserted privilege objections. (Doc. 112-1 at 63.) The motion is now fully briefed. 7 (Docs. 121, 125.) Murphy also filed a joinder in support of the motion. (Doc. 118.) 8 II. LEGAL STANDARD 9 Rule 45 of the Federal Rules of Civil Procedure governs discovery of non-parties 10 by subpoena. Rule 45 provides, in relevant part, that a party may command a non-party to 11 testify at a deposition. Fed. R. Civ. P. 45(a)(1)(A)(iii). The scope of discovery “through a 12 subpoena under Rule 45 is the same as the scope of discovery permitted under Rule 26(b).” 13 Intermarine, LLC v. Spliethoff Bevrachtingskantoor, B.V., 123 F. Supp. 3d 1215, 1217 14 (N.D. Cal. 2015). Under Rule 26(b), a party may obtain discovery “regarding any 15 nonprivileged matter that is relevant to any party’s claim or defense and proportional to the 16 needs of the case considering the importance of the issues at stake in the action, the amount 17 in controversy, the parties’ relative access to relevant information, the parties’ resources, 18 the importance of the discovery in resolving the issues, and whether the burden or expense 19 of the proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). The 20 limitations set forth in Rule 26(b)(2)(C) apply to discovery served on non-parties. See 21 Amini Innovation Corp. v. McFerran Home Furnishings, Inc., 300 F.R.D. 406, 409 (C.D. 22 Cal. 2014). 23 A district court has “broad discretion” to permit or deny discovery. Hallett v. 24 Morgan, 296 F.3d 732, 751 (9th Cir. 2002). The “discovery process in theory should be 25 cooperative and largely unsupervised by the district court.” Sali v. Corona Reg. Med. Ctr., 26 884 F.3d 1218, 1219 (9th Cir. 2018). Nonetheless, a party from whom discovery is sought 27 may move for a protective order to prevent annoyance, embarrassment, oppression, or 28 undue burden or expense. Fed. R. Civ. P. 26(c)(1). The party seeking a protective order 1 bears the burden of persuasion to show “good cause” for its issuance. U.S. E.E.O.C. v. 2 Caesars Entm’t, Inc., 237 F.R.D. 428, 432 (D. Nev. 2006). 3 III. DISCUSSION 4 Mr. McCarthy moves for a protective order shielding himself, and all other attorneys 5 and staff associated with Jones, Skelton & Hochuli, from attempts to gather privileged 6 information. As noted, he has provided 19 deposition questions to which his counsel 7 objected on the basis of the attorney-client privilege and work-product doctrine. (Doc. 112 8 at 8; 112-1 at 64-68.) Evanston responds that Mr. McCarthy should be required to answer 9 the questions for various reasons.

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