Garibaldi v. Everest National Insurance Company

• Court: District Court, D. Arizona
• Decided: October 21, 2020
• Docket: 2:19-cv-02558
• Status: Unknown

Opinion

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

9 Jorge Garibaldi, No. CV-19-02558-PHX-DLR

10 Plaintiff, ORDER

11 v.

12 Everest National Insurance Company, et al.,

13 Defendants. 14 15 16 Before the Court is the parties’ discovery dispute regarding the applicability of the 17 attorney-client privilege to the claims file. (Docs. 55, 58, 59.)1 Particularly, Jorge 18 Garibaldi asks that Everest National Insurance Company (“Everest”) produce unredacted 19 portions of the claims file that have been previously redacted or withheld on the basis of 20 attorney-client privilege. For the following reasons, the Court concludes that the attorney- 21 client privilege applies. 22 Under Arizona law, the attorney-client privilege may be found waived where “(1) 23 the assertion of the privilege was a result of some affirmative act, such as filing suit [or 24 raising an affirmative defense], by the asserting party; (2) through this affirmative act, the 25 asserting party put the protected information at issue by making it relevant to the case; and 26 (3) application of the privilege would have denied the opposing party access to information

27 1 This dispute was brought to the Court’s attention during the October 9, 2020 conference. (Doc. 85.) Unfortunately, because the opening brief was not filed as a motion, 28 it did not appear on the docket as a pending matter or on the Court’s motions reports. The Court apologizes for the delay in addressing the dispute. 1 vital to his defense.” Ingram v. Great Am. Ins. Co., 112 F. Supp. 934, 937 (D. Ariz. 2015) 2 (quoting State Farm Mut. Auto. Inc. Co. v. Lee, 13 P.3d 1169, 1173 (2000)). However, 3 merely raising a good faith affirmative defense in response to a bad faith claim does not 4 waive the attorney-client privilege. Id. Rather, “to waive the attorney-client privilege, a 5 party must make an affirmative claim that its conduct was based on its understanding of 6 the advice of counsel—it is not sufficient that the party consult with counsel and receive 7 advice.” Everest Indem. Ins. Co. v. Rea, 342 P.3d 417, 419 (Ariz. Ct. App. 2015). 8 Here, the claims adjustor, Perla Salcido, did not confer with or receive advice from 9 counsel prior to issuing a denial of Plaintiff’s claim. In fact, counsel was only retained 10 after the denial’s issuance. Defendant makes no affirmative claim that its conduct—up to 11 and including the denial—was dependent on advice of counsel, nor could it. Turning to 12 the events following counsel’s retention, while Ms. Salcido admits that she consulted with, 13 received, and abided by the advice of counsel, she explicitly denied that counsel’s advice 14 was a basis for her belief that she acted reasonably in administering Mr. Garibaldi’s claim: 15 Q. (By Mr. Dennis) Is Mr. Cushing’s advice, would that be part of the information that you’re—you have in your mind 16 about why you believe you acted reasonable [sic] in this case? 17 Mr. Kethcart: Form. 18 The Witness: No. 19 (Doc. 59-1 at 105.) Similarly, she confirmed that counsel’s “involvement didn’t move the 20 needle one way or another.” (Id. at 117.) Everest has in no other way “affirmatively 21 injected any advice it received from counsel into the bad faith action.” Twin City Fire Ins. 22 Co. v. Burke, 63 P.3d 282, 287 (2003). For example, there has been no “showing that 23 Everest was in doubt as to any legal issue. Rather, it made decisions during the course of 24 litigation and, of necessity, involved lawyers in that litigation.” Rea, 342 P.3d at 420 25 (concluding that statements by Everest that it acted “with a subjective belief in the good 26 faith nature of its actions” and admissions that it consulted with counsel throughout the 27 process were insufficient “to suggest that Everest’s subjective belief in the legality of its 28 actions necessarily included or depended on the advice it received from counsel.”). 1 Next, Mr. Garibaldi argues that the attorney-client privilege does not apply because Everest’s counsel performed a role not only as a legal adviser but also as an investigator 3|| and adjuster. However, the attorney-client privilege may be asserted only for 4|| communications concerning legal advice and not for communications with an attorney who 5 || has stepped outside his role as an attorney. U.S. v. Martin, 278 F.3d 988, 999 (9th Cir. || 2002). Nevertheless, Mr. Garibaldi supplies no evidence to suggest that counsel did assume an investigative or adjuster role. 8 Based on the foregoing, Everest has not impliedly waived the attorney-client 9|| privilege. Accordingly, 10 IT IS ORDERED that Everest’s assertion of attorney-client privilege is deemed valid. 12 Dated this 21st day of October, 2020. 13 14 15 {Z, 16 {UO 17 Uaited States Dictric Judge 18 19 20 21 22 23 24 25 26 27 28

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