[Cite as Ryan v. State Farm Mut. Auto Ins. Co., 2023-Ohio-3731.]
IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY
CHRISTOPHER P. RYAN : : Appellee : C.A. No. 29778 : v. : Trial Court Case No. 2021 CV 04801 : STATE FARM MUTUAL AUTOMOBILE : (Civil Appeal from Common Pleas INSURANCE COMPANY, ET AL. : Court) : Appellants :
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OPINION
Rendered on October 13, 2023
JAMES R. GALLAGHER & LAURA PLANK FOUNDS, Attorneys for Appellant
JOHN A. SMALLEY, Attorney for Appellee
.............
HUFFMAN, J.
{¶ 1} Defendant-Appellant State Farm Mutual Automobile Insurance Company,
properly known as State Farm Fire and Casualty Company (“State Farm”), appeals from
the trial court’s decision granting, in part, Plaintiff-Appellee Christopher P. Ryan’s motion
to compel disclosure of State Farm’s claims file, ordering State Farm to immediately -2-
disclose certain materials within its claims file that State Farm sought to withhold from
discovery pending the trial outcome of Ryan’s underlying uninsured motorist (UM) claim
against State Farm. State Farm contends that the trial court erred in ordering State Farm
to produce privileged and confidential information to Ryan, including its valuation of
Ryan’s UM claim, in advance of trial where the value of Ryan’s claim is the primary issue
to be litigated. For the reasons outlined below, we reverse the decision of the trial court.
I. Factual and Procedural Background
{¶ 2} On November 25, 2019, Ryan was involved in a motor vehicle collision with
uninsured motorist Brandy Wallace, as a result of which Ryan was injured, required
medical treatment, and incurred medical expenses. Following the accident, Ryan made
a claim for UM benefits to his insurer, State Farm, with which he maintained UM coverage
with an “each person” limit of $25,000; Ryan claimed that his medical expenses related
to the accident totaled $19,377. State Farm offered Ryan $15,363.90 to resolve Ryan’s
UM claim, but Ryan refused State Farm’s offer, asserting that its offer did not cover the
medical expenses that he had incurred and that remained outstanding because of the
accident. Thereafter, Ryan filed a complaint against Wallace, alleging negligence, and
against State Farm, alleging breach of contract due to State Farm’s failure to pay the
$25,000 UM policy limit and bad faith in State Farm’s determination that the value of
Ryan’s UM claim was $15,563.90 and in its refusal to consider the gross amount of Ryan’s
medical bills in valuing his UM claim. The trial court granted default judgment against
Wallace on February 24, 2022.
{¶ 3} In March 2022, Ryan served State Farm with written discovery requests, -3-
including a request for State Farm’s entire claims file related to Ryan’s claim. In April
2022, State Farm filed a motion to bifurcate the bad faith claim from the breach of contract
claim and to stay discovery on the bad faith claim. State Farm also responded to Ryan’s
written discovery requests but withheld from production certain documents contained in
the claims file on the grounds that State Farm would be prejudiced if required to produce
those documents while Ryan’s UM and bad faith claims were pending simultaneously and
because certain documents were protected by privilege. In May 2022, the trial court stated
that it would bifurcate the compensatory and punitive damages issues for trial but
overruled State Farm’s request to bifurcate the breach of contract and bad faith claims;
the trial court also denied State Farm’s request to stay discovery on the bad faith claim.
{¶ 4} In October 2022, Ryan filed a motion to compel, seeking an order compelling
State Farm to produce its entire claims file and arguing that materials within the file,
described as claim handling notes and claim handling reports, should be disclosed, as
those materials were not privileged in any way and were relevant to Ryan’s bad faith
claim. In response, State Farm asserted that it had produced all but 103 pages of its 920-
page claims file and that the remaining undisclosed materials were documents that
related to State Farm’s evaluation and analysis of Ryan’s UM claim, were privileged
attorney-client communications, or were materials created in preparation of litigation and
thus protected work product. State Farm argued that it should not be compelled to
disclose any of the materials that it had withheld prior to the adjudication of the UM claim,
including some materials that were neither privileged nor work product, as disclosure of
any of those materials would unfairly prejudice State Farm’s ability to defend against the -4-
underlying breach of contract claim.
{¶ 5} State Farm submitted the undisclosed materials to the trial court for an in-
camera inspection, arguing that it would be unfairly prejudiced in its ability to defend
against the underlying breach of contract claim if it were required to produce privileged
materials that were arguably relevant to the bad faith claim and related to its valuation of
the UM claim prior to the adjudication of the breach of contract claim. State Farm argued
that, in addition to attorney-client privileged and protected work-product materials, it
should not be required to disclose certain nonprivileged and non-work-product materials
pertaining to its evaluation and opinion of Ryan’s UM claim. According to State Farm,
those nonprivileged and non-work-product materials contained State Farm’s thought
processes and opinions, and therefore went “to the very heart” of the underlying UM value
dispute and should not be disclosed.
{¶ 6} The trial court conducted an in-camera review of State Farm’s undisclosed
materials, separating the documents into five different groups: claims handling notes that
had been redacted, asserting privilege; claims handling notes that had been entirely
withheld, asserting protected work product; correspondence between State Farm and
hired counsel that had been entirely withheld, asserting attorney-client privilege;
intracompany emails that had been entirely withheld, asserting attorney-client privilege or
protected work product; and claims handling reports, asserting protected work product.
{¶ 7} In April 2023, the trial court amended its decision on bifurcation, sustaining
State Farm’s earlier motion and ordering that the underlying breach of contract and bad
faith claims be bifurcated into separate stages for trial to the same jury. The trial court -5-
ordered that, immediately following the jury’s decision on the underlying breach of
contract claim, the same jury would hear further evidence and deliberate on the bad faith
claim.
{¶ 8} With respect to Ryan’s motion to compel, the trial court found that the
communications between the parties had taken a turn toward litigation during a phone
call on the morning of October 29, 2021, when Ryan’s counsel made settlement demands
and threatened litigation for bad faith if State Farm did not comply with those demands.
The trial court noted that State Farm subsequently sent an impasse letter to Ryan,
indicating to the trial court that, from that point forward, State Farm was likely anticipating
litigation. In so finding, the trial court concluded that any materials produced by State
Farm after the claim log note at 10:41 a.m. on October 29, 2021, were work product
prepared in anticipation of litigation and thus subject to the in-camera review. The trial
court further found that State Farm’s investigation and review of Ryan’s UM claim had
been terminated on November 24, 2021, when State Farm was served with Ryan’s
complaint, and thus any materials prepared by State Farm after November 24, 2021, were
not discoverable, as those materials would not otherwise be probative of any alleged bad
faith by State Farm in its handling of Ryan’s claim.
{¶ 9} The trial court found no prejudice to State Farm in ordering State Farm to
immediately disclose the nonprivileged and non-work-product materials in State Farm’s
claims file. The court reasoned that all nonprivileged and non-work-product materials
were irrelevant to the underlying breach of contract claim and provided no meaningful
insight into State Farm’s defense of said dispute. The trial court further found that there -6-
was no authority that provided for protecting nonprivileged or non-work-product materials
from disclosure and ordered State Farm to immediately disclose those materials.
{¶ 10} The trial court also determined that none of the privileged attorney-client
materials should be disclosed, as the documents had been generated after State Farm
concluded its review of Ryan’s claim, and therefore they were not relevant to the bad faith
{¶ 11} Finally, with respect to other evidentiary materials in State Farm’s claims
file, as itemized in its privilege log and specifically including work-product materials, the
trial court also found that, although State Farm’s immediate disclosure of certain work-
product materials may have provided Ryan with slight insight into State Farm’s defense
of the value dispute in the breach of contract claim, “any minimal prejudice that might
occur to State Farm as a result of immediate disclosure is substantially outweighed by
the interest of judicial economy served by not delaying discovery.” In so finding, the trial
court set forth specific disclosure rulings on each item, ultimately granting in part and
overruling in part Ryan’s motion to compel and ordering State Farm to immediately
disclose certain materials, including work product.
II. Assignment of Error
{¶ 12} State Farm asserts the following sole assignment of error:
The trial court erred in ordering State Farm to produce privileged and
confidential information to Plaintiff-Appellee, including, but not limited to, its
valuation of Appellee’s claim in advance of a trial where the value of his
claim is the primary issue to be litigated. -7-
{¶ 13} A trial court has broad discretion in regulating the discovery process. State
ex rel. Grandview Hosp. & Med. Ctr., 51 Ohio St.3d 94, 95, 554 N.E.2d 1297 (1990).
“Parties 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, considering the
importance of the issues at stake in the action, the amount in controversy, the parties’
relative access to relevant information, the parties’ resources, the importance of the
discovery in resolving the issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit.” Civ. R. 26(B)(1). “Relevant evidence” means
evidence having any tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable than it would be without
the evidence. Evid. R. 401. In the discovery context, both relevant evidence and evidence
reasonably calculated to lead to relevant evidence are properly discoverable. Bogart v.
Blakely, 2d Dist. Miami No. 2010-CA-13, 2010-Ohio-4526, ¶ 10.
{¶ 14} However, some relevant evidence is protected from disclosure if it is
privileged, including evidence that is attorney-client communications or work product. “In
Ohio, the attorney-client privilege is governed both by statute, R.C. 2317.02(A), which
provides a testimonial privilege, and by common law, which broadly protects against any
dissemination of information obtained in the confidential attorney-client relationship.”
State ex rel. Dawson v. Bloom-Carroll Local School Dist., 131 Ohio St.3d 10, 2011-Ohio-
6009, 959 N.E.2d 524, ¶ 27, citing State ex rel. Toledo Blade Co. v. Toledo-Lucas Cty.
Port Auth., 121 Ohio St.3d 537, 2009-Ohio-1767, 905 N.E.2d 1221, ¶ 24. The attorney-
client privilege protects communications between a client and an attorney made in -8-
confidence and related to the legal advice sought by the client. R.C. 2317.02(A); State ex
rel. Lanham v. DeWine, 135 Ohio St.3d 191, 2013-Ohio-199, 985 N.E.2d 467, ¶ 27.
{¶ 15} Courts have also recognized the need for attorneys to be able to work “free
from unnecessary intrusion by opposing parties and their counsel.” Hickman v. Taylor,
329 U.S. 495, 510, 67 S.Ct. 385, 91 L.Ed. 451 (1947). The work-product doctrine was
born out of this concern and is found in Civ.R. 26(B)(4), which states that “* * *[a] party
may obtain discovery of documents, electronically stored information and tangible things
prepared in anticipation of litigation or for trial by or for another party or by or for that other
party’s representative (including his attorney, consultant, surety, indemnitor, insurer, or
agent) only upon a showing of good cause therefor. * * *” Civ.R. 26(B)(4). Additionally,
the work-product doctrine generally protects a broader range of materials than the
attorney-client privilege because it applies to any materials prepared in preparation for
litigation or trial. Frank W. Schaefer v. C. Garfield Mitchell Agency, 82 Ohio App.3d 322,
329, 612 N.E.2d 442 (2d Dist.1992).
{¶ 16} “Documents containing work product materials typically reflect mental
impressions, theories, or legal conclusions of an attorney or those working on behalf of
the attorney.” Drummond v. State Farm Mut. Auto Ins. Co., 10th Dist. Franklin No. 22AP-
100, 2023-Ohio-283, ¶ 36, citing In re Special Grand Jury Investigation, 10th Dist.
Franklin No. 18AP-730, 2019-Ohio-4014, ¶ 8, citing Squire, Sanders & Dempsey, L.L.P.
v. Givaudan Flavors Corp., 127 Ohio St.3d 161, 2010-Ohio-4469, 937 N.E.2d 533, ¶ 60.
“[I]nformation in an insurer’s claims file sought to be protected from discovery as work
product must have actually been ‘prepared in anticipation of litigation,’ and not merely in -9-
the ordinary course of business.” Dennis v. State Farm Ins. Co., 143 Ohio App.3d 196,
203, 757 N.E.2d 849 (7th Dist. 2001). “The ordinary business reports of an insurer during
the initial investigation of a claim made by one of its insureds are not generally considered
to have been ‘prepared in anticipation of litigation.’ ” Id. “The party seeking protection
under the work product doctrine bears the burden of establishing that the doctrine
applies.” Id., citing Special Grand Jury Investigation at ¶ 12.
Jurisdiction
{¶ 17} Before this court can exercise jurisdiction over an appeal, the order of the
lower court must meet the finality requirements of R.C. 2505.02. “Under R.C.
2505.02(B)(4), an order that grants or denies a provisional remedy is a final order if (a)
‘[t]he order in effect determines the action with respect to the provisional remedy and
prevents a judgment in the action in favor of the appealing party with respect to the
provisional remedy,’ and (b) ‘[t]he appealing party would not be afforded a meaningful or
effective remedy by an appeal following final judgment as to all proceedings, issues,
claims, and parties in the action.’” Loukinas v. State Farm Mut. Auto. Ins. Co., 1st Dist.
Hamilton No. C-180462, 2019-Ohio-3300, ¶ 15.
{¶ 18} Discovery orders by a trial court are generally neither final nor appealable.
Id. at ¶ 16, citing Summitbridge Natl. Invests., L.L.C. v. Ameritek Custom Homes, Inc., 1st
Dist. Hamilton No. C-120476, 2013-Ohio-760, ¶ 6. However, “a proceeding for discovery
of privileged matter is a ‘provisional remedy’ within the meaning of R.C. 2505.02(A)(3).”
Id., citing Smith v. Chen, 142 Ohio St.3d 411, 2015-Ohio-1480, 31 N.E.3d 633, ¶ 5.
{¶ 19} “[A] party is not required to conclusively prove the existence of privileged -10-
matter as a precondition to appellate review under R.C. 2505.02(B)(4).” Id. at ¶ 17,
citing Byrd v. U.S. Xpress, Inc., 1st Dist. Hamilton No. C-140260, 2014-Ohio-5733, ¶ 12.
“To impose such a requirement would force an appellate court ‘to decide the merits of an
appeal in order to decide whether it has the power to hear and decide the merits of an
appeal.’ ” Id. at ¶ 17, quoting Bennett v. Martin, 10th Dist. Franklin No. 09AP-294, 2009-
Ohio-6195, ¶ 35. “Instead, a party need only make a ‘colorable claim’ that materials
subject to discovery are privileged in order to qualify as a provisional remedy.” Id.
{¶ 20} “Any order compelling the production of privileged or protected materials
certainly satisfies R.C. 2505.02(B)(4)(a) because it would be impossible to later obtain a
judgment denying the motion to compel disclosure if the party has already disclosed the
materials.” Id. at ¶ 18, citing Burnham v. Cleveland Clinic, 151 Ohio St.3d 356, 2016-
Ohio-8000, 89 N.E.3d 536, ¶ 21. In the case before us, State Farm makes a colorable
claim to prevent the disclosure of privileged and protected information. Because the trial
court’s order compels the production of materials allegedly protected as work product and
by attorney-client privilege, the order satisfies R.C. 2505.02(B)(4)(b) because there is no
effective remedy other than an immediate appeal. See Burnham at ¶ 25.
Standard of Review
{¶ 21} Ordinarily, a discovery dispute is reviewed under an abuse-of-discretion
standard. Harvey v. Cincinnati Ins. Co., 2d Dist. Montgomery No. 27470, 2017-Ohio-
9226, ¶ 7. However, where a trial court’s discovery order involves an alleged privilege, as
in this case, we review the order de novo. Ward v. Summa Health Sys., 128 Ohio St.3d
212, 2010-Ohio-6275, 943 N.E.2d 514, ¶ 13; see also Loukinas at ¶ 21; Cherryhill Mgmt., -11-
Inc. v. Branham, 2d Dist. Montgomery No. 28438, 2020-Ohio-596, ¶ 43; Med. Mut. of
Ohio v. Schlotterer, 122 Ohio St. 3d 181, 183, 2009-Ohio-2496, 909 N.E.2d 1237 (2009);
Bausman v. Am. Family Ins. Group, 2d Dist. Montgomery No. 26661, 2016-Ohio-836, ¶ 8.
Merits of the Appeal
{¶ 22} In its sole assignment of error, State Farm argues that, in general, when
there is a dispute as to the value of an uninsured or underinsured motorist claim, a trial
court commits reversible error in ordering the insurer to divulge the value it placed on the
claim and its analysis of the claim prior to the time of a trial on the merits of that issue. In
so arguing, State Farm first contends that an insurer defending a UM claim may assert
the same rights and defenses as the uninsured motorist could have asserted in defending
the same claim. We agree.
{¶ 23} “In an uninsured-underinsured motorist situation the rights of the insured
become adverse to his insurer as a result of the uninsured and underinsured provisions
of the insurance contract.” Bertolo v. Liberty Mut. Ins. Co., 8th Dist. Cuyahoga No. 53796,
1988 WL 86963, *3 (July 28, 1988). “When a suit is originated by the insured, the interests
of the insurer become aligned with those of the uninsured or underinsured motorist.” Id.
In other words, “[i]f a trial is held on the merits, counsel is retained to defend the interests
of the uninsured motorist and, thereby, the insurer.” Nationwide Mut. Ins. Co. v. Sams,
6th Dist. Erie No. E-88-27, 1989 WL 61722, *3-4 (June 9, 1989). As the Ohio Supreme
Court has noted:
It is a universal legal maxim that an insurance company must be able
to assert the same defenses as the party for whose injurious action it is -12-
requested to provide compensation. There is no reason why carriers should
be refused the right to assert the very same rights and defenses available
to the person whose alleged negligence they are required to indemnify.
State Farm v. Webb, 54 Ohio St.3d 61, 64, 562 N.E.2d 132 (1990).
{¶ 24} In this case, Ryan was injured by an uninsured motorist, and thus he
submitted a claim for UM coverage to his insurer, State Farm. When the parties were
unable to reach an agreement as to the value of Ryan’s UM claim, Ryan filed suit against
Wallace, the uninsured motorist, and against State Farm. As the UM insurer, State Farm
stepped into Wallace’s shoes and had the legal right to assert the same defenses that
Wallace would have been able to assert against Ryan’s claim. In other words, when Ryan
originated this action against State Farm for UM coverage, State Farm’s interests became
aligned with Wallace’s interests, and counsel for State Farm was to defend the interests
of the uninsured motorist and, thereby, State Farm, the insurer. At oral argument, Ryan
acknowledged that were his claim a third party one, he would not be entitled, at any time,
to any documents in the State Farm claims file.
{¶ 25} State Farm next argues that the trial court erred when it ordered State
Farm to immediately produce certain documents from its claims file. The trial court
concluded that the documents in the claims file were not protected by the work-product
doctrine or by attorney-client privilege and that any minimal prejudice to State Farm due
to the immediate disclosure of certain work-product documents would be substantially
outweighed by the interest of judicial economy served by not delaying discovery. State
Farm specifically contends that the trial court erred in concluding that State Farm must -13-
produce the foregoing information from its claims file because production of that
information would prejudice State Farm’s ability to defend against Ryan’s UM claim. State
Farm also contends that the trial court erred in concluding that State Farm must produce
work-product information from its claims file after the trial court concluded that production
of the information would not be sufficiently prejudicial to State farm.
{¶ 26} The crux of State Farm’s argument is that the trial court erred in ordering
State Farm to produce certain documents from its claims file because, regardless of
whether those documents constituted information protected as work product or by the
attorney-client privilege, the materials should have been deemed protected from
discovery so long as determination of the value of the underlying UM claim remained
pending. State Farm contends that, where the insured is simultaneously pursuing a claim
for UM coverage and bad faith, the protections that are normally afforded to an insurer
who is insuring a tortfeasor should not be thrown out in the interest of judicial economy,
while prejudicing the insurer’s ability to negotiate or try the value of the claim. We agree.
{¶ 27} “In an action alleging bad faith denial of insurance coverage, the insured is
entitled to discover claims file materials containing attorney-client communications related
to the issue of coverage that were created prior to the denial of coverage.” Boone v.
Vanliner, 91 Ohio St.3d 209, 213-214, 744 N.E.2d 154 (2001). Ohio courts have also held
that “Boone’s rationale extends to work-product materials, such that both attorney-client
materials and work-product materials are subject to disclosure during discovery on bad-
faith claims.” Loukinas, 1st Dist. Hamilton No. C-180462, 2019-Ohio-3300, at ¶ 24, citing
Garg v. State Auto. Mut. Ins. Co., 2d Dist. Miami No. 2003-CA-12, 2003-Ohio-5960, ¶ 16. -14-
However, the Boone court recognized that “the release of work product or attorney-client
privileged materials related to the issue of coverage might inhibit an insurer’s ability to
defend itself on the underlying claim.” Id. at ¶ 25, citing Boone at 214. In so recognizing,
the Boone court suggested that the trial court “may issue a stay of the bad faith claim and
related production of discovery pending the outcome of the underlying claim.” Id.
{¶ 28} In support of its argument, State Farm relies Loukinas,. In Loukinas, the
plaintiff filed an UM claim with State Farm after being injured in an automobile accident
with an uninsured driver. Loukinas at ¶ 2. When State Farm refused to pay the plaintiff’s
UM claim, the plaintiff filed a lawsuit against State Farm, asserting claims for breach of
contract and bad faith and requesting a declaratory judgment. Id. The trial court granted
State Farm’s request to bifurcate the plaintiff’s bad faith claim from the remaining claims
for trial, finding that bifurcation was appropriate because the bad faith cause of action
hinged upon an initial determination of coverage. Id. at ¶ 3-6. The trial court determined
that, “ ‘before a jury can assess whether State Farm has unfairly evaluated Mr. Loukinas’s
claim, purposely delayed processing his claim, or offered unreasonably low settlements
as alleged in the bad faith cause of action,’ the issue of coverage must first be
adjudicated.” Id. at ¶ 6.
{¶ 29} After bifurcating the case and conducting an in-camera review of State
Farm’s claims file, the Loukinas trial court granted State Farm’s request to stay discovery
on the bad faith claim until the underlying claims were resolved, recognizing that State
Farm’s ability to defend the underlying claims “would be inhibited by a release of claims
file materials containing privileged or work-product protected materials related to the bad- -15-
faith claim.” Id. at ¶ 7. The trial court also granted in part and denied in part the plaintiffs’
motion to compel discovery, denying the motion to compel with respect to some of the
documents identified in State Farm’s privilege log as being either “attorney-client
privileged” or “work product.” Id. at ¶ 8. However, despite its stay on discovery related to
the bad faith claim, the trial court ordered State Farm to immediately turn over all
documents created prior to the filing of the plaintiffs’ first complaint and any items
identified by State Farm as an “evaluation” that was “created by claims representatives
at any time,” finding that those evaluations were “relevant to the issue of coverage and
may cast light on the bad faith cause of action.” Id. at ¶ 9. The trial court also ordered
State Farm to turn over several documents after adjudication of the declaratory judgment
and breach of contract claims, because those documents were “not relevant to the
declaratory action,” but “may, however, cast light on the bad faith cause of action.” Id. at
¶ 10.
{¶ 30} State Farm appealed the Loukinas trial court’s order granting in part the
plaintiffs’ motion to compel discovery of State Farm’s evaluations contained in the claims
file and denying in part its motion to stay discovery on the plaintiffs’ bad faith claim. Id. at
¶ 21. In its evaluation of the merits of the appeal, the First District pointed to Boone, 91
Ohio St.3d 209, 213-214, 744 N.E.2d 154, recognizing that the release of work product
or attorney-client privileged materials related to the issue of coverage might inhibit an
insurer’s ability to defend itself on the underlying claim and that, in such a situation, the
bad faith claim and related production of discovery pending the outcome of the underlying
claim may be stayed. Id. at ¶ 25. The court ultimately held that the plaintiffs were not -16-
entitled to discover the materials protected by the work-product doctrine or attorney-client
privilege in State Farm’s claims file for purposes of their declaratory judgment and breach
of contract claims. Id. at ¶ 30. The court reasoned that, “[a]lthough these documents may
cast light on whether State Farm acted in bad faith in handling the plaintiffs’ claim and,
thus, are discoverable for purposes of the bad-faith claim, they retain their privileged
status for the underlying claims.” Id. The court further reasoned:
Requiring State Farm to divulge its otherwise protected information prior to
a resolution of those other claims would undoubtedly affect State Farm’s
ability to defend against them, and would, as State Farm contends, render
the bifurcation order “toothless.”
Id. at ¶ 31.
{¶ 31} State Farm also directs us to Garg v. State Auto. Mut. Ins. Co., 2d Dist.
Miami No. 2003-CA-12, 2003-Ohio-5960, wherein we found that the trial court had erred
in denying a stay of discovery on the plaintiffs’ bad faith claim and held (1) claims file
documents created prior to the denial of the insureds’ claim were not protected from
discovery by the attorney-client privilege or the work-product doctrine for purposes of the
insureds’ bad faith claim and (2) the bad faith claim was required to be bifurcated from
other claims and discovery stayed until resolution of the other claims. In Garg, we
reasoned:
We agree with [the insurer] Grange that the trial court’s failure to
bifurcate the bad-faith claim for trial and to stay discovery on that claim
would be grossly prejudicial to Grange and, thus, an abuse of discretion. -17-
The Gargs are not entitled to discover Grange’s attorney-client
communications and attorney work-product materials for purposes of their
breach-of-contract and unfair-claims-practices claims, absent waiver of
those privileges. See Moskovitz [v. Mt. Sinai Med. Ctr., 69 Ohio St.3d 638,
635 N.E.2d 331 (1994)]. Documents numbered 1742-1772 contain [an
attorney’s] analysis of the factual investigation of the claim and of the
defense of arson. Although that correspondence may cast light on whether
Grange acted in bad faith in handling the Gargs’ claim and, thus, is
discoverable for purposes of the bad-faith claim, it is also highly relevant to
Grange’s defense of the breach-of-contract and unfair-claims-practices
claims. To require Grange to divulge its otherwise privileged information
prior to a resolution of those other claims would unquestionably impact
Grange’s ability to defend against them.
As noted by the parties, Boone has provided guidance for preventing
the prejudice that may result from the disclosure of attorney-client
communications and work-product materials due to a bad-faith claim.
Specifically, Boone instructs that courts may bifurcate the trial on a bad-faith
claim from the remaining claims and may stay the discovery for a bad-faith
claim until after a resolution of those claims. In light of the prejudice to
Grange that likely will result from the disclosure of the attorney-client
communications and the work-product materials in the claims file, we
conclude that the trial court acted unreasonably when it failed to prevent -18-
that prejudice by bifurcating the trial and staying discovery on the bad-faith
Id. at ¶ 29-30.
{¶ 32} In distinguishing the facts in Garg, the trial court concluded that the
documents at issue in this case were created as part of State Farm’s ordinary course of
business, not in preparation for trial, and thus were not protected. However, the trial court
disregarded that the Garg court did not conclude that the plaintiff was never entitled to
receive the documents sought but, rather, that the plaintiffs should not have the
documents until the underlying claims were resolved.
{¶ 33} The trial court opined that the circumstances in this case were almost
identical to those in Drummond v. State Farm Mut. Auto Ins. Co., 10th Dist. Franklin No.
22AP-100, 2023-Ohio-283. In Drummond, the plaintiff and the insurer, State Farm,
disputed the value of an underinsured motorist (UIM) claim, resulting in the plaintiff’s filing
a complaint against State Farm alleging breach of contract and bad faith. Id. at ¶ 3-5.
State Farm later filed a motion seeking to bifurcate the bad faith claim from the breach of
contract claim and to stay discovery on the bad faith claim pending resolution of the
breach of contract claim. Id. at ¶ 6. The trial court initially issued an order bifurcating the
breach of contract claim and the bad faith claim upon finding “it would prejudice the
defense to have to litigate the bad faith claim while litigating the underlying issue of
economic and non-economic damages”; it ordered State Farm to submit any disputed
documents and a privilege log to the court for an in-camera review to determine whether
the documents were protected by any privilege. Id. at ¶ 7. -19-
{¶ 34} Thereafter, the Drummond trial court modified its ruling on bifurcation due
to “foot dragging” by State Farm, discovery abuses, and further delays by deciding to try
the bad faith claim to the same jury immediately following the verdict on the breach of
contract claim. Id. at ¶ 9. The trial court also found that the plaintiff had demonstrated
good cause to obtain otherwise-protected work-product materials. Id. at ¶ 8. State Farm
appealed the trial court’s ruling, asserting that the trial court had erred in denying State
Farm’s motion to stay discovery as to the bad faith claim and in ordering State Farm to
produce privileged and confidential information, including its valuation of its claim in
advance of trial, where the value of the claim was the primary issue to be litigated, and to
also produce post-suit communications regarding the defense of the case. Id. at ¶ 12. On
appeal, the Tenth District held that the trial court had properly determined that the
insurer’s defense of the breach of contract claim would not be prejudiced by immediate
disclosure of purported work-product materials but that materials relevant to the insurer’s
defense against the bad faith claim were work-product materials that were not
discoverable. Id. at 60-62.
{¶ 35} In Ryan’s case, the trial court had bifurcated the breach of contract claim
from the bad faith claim by ordering that the underlying breach of contract and bad faith
claims be tried in separate stages by the same jury. Specifically, in mirroring the
bifurcation ruling in the Drummond case, the trial court ordered that, immediately following
the jury’s decision on the underlying breach of contract claim, the same jury would hear
further evidence and deliberate on the bad faith claim, without finding the extraordinary
circumstances of “foot dragging” and discovery abuses that existed in Drummond and -20-
which supported a trial on the bad faith claim immediately following the trial on the breach
of contract claim in that case. The trial court also ordered State Farm to turn over several
work-product documents, reasoning that, to the extent immediate disclosure of work-
product materials may provide Ryan some “slight” insight into State Farm’s defense of
the value of the dispute, “any minimal prejudice that might occur to State Farm as a result
of immediate disclosure is substantially outweighed by the interest of judicial economy
served by not delaying discovery.”
{¶ 36} We find the holdings in Loukinas and Garg to be persuasive in this matter.
Like in Loukinas, State Farm acknowledges that protected attorney-client
communications and work-product materials are generally discoverable with respect to
bad faith claims but contends that it cannot prepare and present a defense in the
underlying UM claim if it is required to turn over its claims file materials containing its
evaluations and strategies for defending the underlying case.
{¶ 37} As we stated in Garg, not bifurcating breach of contract and bad faith
claims is “grossly prejudicial” to the insurance company. While the trial court ordered
bifurcation of the issues, it allowed discovery related to Ryan’s bad faith claim to proceed
immediately, which would also be grossly prejudicial to State Farm. In doing so, like the
Loukinas court found, we find that requiring State Farm to divulge its otherwise protected
information prior to a resolution of Ryan’s other claims would undoubtedly affect State
Farm’s ability to defend and would render the bifurcation order “toothless.”
{¶ 38} Additionally, attorney-client privilege or the privilege associated with work-
product materials should not yield to judicial economy, under any circumstance, until such -21-
time as the privileged information becomes relevant. Judicial economy is not served by
merely bifurcating the breach of contract and bad faith claims, without staying all
discovery related to the bad faith claims, as an immediate interlocutory appeal will very
likely ensue, as occurred here, when the trial court makes decisions related to the
disclosure of attorney-client privileged or work-product materials, thereby causing delay
in the adjudication of the UM claim.
{¶ 39} Moreover, as State Farm contends, if the trial court’s decision in this case
were to stand, future plaintiffs-insureds would have an incentive to include a claim for bad
faith in any lawsuit involving a claim for UM/UIM coverage, because a claim for bad faith
would automatically permit the insured to gain access to information in the claims file of
its insurer, potentially as to the insurer’s assessment and valuation of the claim to which
the insured would otherwise not be entitled.
{¶ 40} Also, as argued by State Farm, and in general, even if a jury does not hear
evidence of an insurer’s opinion regarding the strengths and weaknesses of a claim, the
insured’s counsel, having the information, can use it to the insured’s advantage for
purposes of settlement negotiations or during the underlying trial, potentially creating a
scenario in which the insured alleges bad faith based on the insurer’s allegedly
undervaluation of the claim, utilizes the privileged information to obtain a larger jury
verdict than may otherwise have been rendered, and then uses that verdict as proof of
bad faith.
{¶ 41} State Farm is not arguing that Ryan should never be entitled to the
documents he is seeking and State Farm does not challenge the trial court’s decision as -22-
to the discoverability of the documents at issue; rather, it argues that the trial court should
have refrained from ordering State Farm to produce such documents until after the
underlying UM claim is resolved. Similarly, we are not suggesting that Ryan would never
be entitled to receive the documents that he is seeking, but, in accordance with Garg, we
conclude that Ryan should not have that information until the underlying claim for breach
of contract related to UM benefits is resolved.
{¶ 42} We hold today that, as a matter of law, in an action based on an insurance
contract, a trial court errs in failing to bifurcate a bad faith claim from a breach of contract
claim and in failing to stay all discovery in the bad faith claim until after the adjudication
of the breach of contract claim. In light of the prejudice to State Farm that likely would
result from the disclosure of the materials in the claims file potentially relevant to State
Farm’s breach of contract defense, we conclude that the trial court erred as a matter of
law when it failed to prevent that prejudice by granting Ryan’s motion to compel, thereby
ordering State Farm to immediately disclose any materials within its claims file that State
Farm previously had sought to withhold from discovery pending the trial outcome of
Ryan’s UM claim.
{¶ 43} State Farm’s sole assignment of error is sustained.
III. Conclusion
{¶ 44} Having sustained State Farm’s assignment of error, the trial
court’s decision compelling State Farm to produce the disputed documents prior to the
adjudication of the UM claim is reversed. This case is remanded for further proceedings
consistent with this opinion. -23-
TUCKER, J. and LEWIS, J., concur.