1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 12 SKANSKA USA CIVIL WEST Case No.: 3:20-cv-00367-WQH-AHG CALIFORNIA DISTRICT INC., 13 ORDER RESOLVING JOINT Plaintiff, MOTION FOR DETERMINATION 14 OF DISCOVERY DISPUTE v. 15 NATIONAL INTERSTATE [ECF No. 44] 16 INSURANCE COMPANY, 17 Defendant. 18
19 Before the Court is Plaintiff Skanska USA Civil West California District Inc. 20 (“Plaintiff”) and Defendant National Interstate Insurance Company’s (“Defendant”) Joint 21 Motion for Determination of Discovery Dispute. ECF No. 44. Plaintiff seeks an order from 22 the Court compelling Defendant to produce documents it withheld based on attorney-client 23 privilege. Id. For the reasons set forth below, the Court DENIES Plaintiffs’ motion to 24 compel. 25 I. FACTUAL BACKGROUND 26 On February 27, 2020, Plaintiff filed its complaint, on behalf of itself and as assignee 27 of Zurich American Insurance Company (“Zurich”), alleging that Defendant breached its 28 1 duty to defend Plaintiff in a 2016 lawsuit. ECF No. 1. Plaintiff brought claims for 2 (1) declaratory relief; (2) breach of insurance contract; (3) breach of implied covenant of 3 good faith and fair dealing; (4) assigned claim for equitable indemnity; and (5) assigned 4 claim for equitable contribution. Id. On January 8, 2021, Plaintiff filed an amended 5 complaint,1 the operative complaint in this matter. ECF No. 42. 6 Plaintiff is “a contractor that was involved in a highway reconstruction project at 7 Interstate 805 in San Diego County.” ECF No. 42 at ¶ 28. In February 2016, Plaintiff hired 8 “Reeve Trucking Co., Inc. and/or Reeve Trucking Company” (“Reeve”) “to transport 9 thirteen 100-foot long steel I-beams from a construction site near Sorrento Valley, 10 California to a storage site in Lakeside, California.” Id. at ¶¶ 12, 29. On February 12, 2016, 11 Peter Chavarin was driving a motorcycle heading northbound on State Route 67 when he 12 collided with Reeve’s tractor-trailer carrying the I-beams, driven by Reeve employee 13 Christopher Collins, as the tractor-trailer was making a left turn from southbound State 14 Route 67 toward the entrance of the storage site. Id. at ¶¶ 33–34. “Chavarin sustained 15 severe injuries, including traumatic brain injury, coma, thoracic spine fracture, and other 16 bone fractures.” Id. at ¶ 35. 17 On April 6, 2016, Chavarin and his wife filed a complaint for damages against 18 Skanska, Reeve, and Collins in the Superior Court for the State of California County of 19 San Diego: Peter Chavarin, et al. v. Christopher Collins, et al., No. 37-2016-00011241- 20 CU-PA-CTL (the “Chavarin action”). Id. at ¶ 36. “[O]ne of the Chavarins’ theories of 21 liability against Skanska was that Skanska is vicariously liable for the conduct of Reeve 22 and/or Collins under the doctrine of peculiar risk[.]” Id. at ¶ 39. 23 Plaintiff is insured under “a commercial general liability policy” issued by Zurich 24 American (the “Zurich American Policy”). Id. at ¶ 23. The Zurich American Policy affords 25
26 27 1 Though Plaintiff’s amended complaint was not yet filed at the time Plaintiff propounded the discovery requests, given that Plaintiff still requests the information in light of the 28 1 coverage to Skanska “in excess of any and all ‘other insurance, whether primary, excess, 2 contingent on or on any other basis,’ in cases where the loss arises out of the maintenance 3 or use of an ‘auto’ not owned or operated by Skanska.” Id. at ¶ 25. Under the Zurich 4 American Policy and subject to Skanska’s $500,000 deductible obligation, Zurich 5 American provided a defense in the Chavarin action. Id. at ¶¶ 24, 38. 6 Plaintiff alleges it is also “an insured under commercial motor carrier liability 7 insurance and excess liability insurance policies issued” to Reeve by Defendant. Id. at ¶ 3. 8 Defendant issued Reeve a commercial motor carrier liability insurance policy (the 9 “Primary National Interstate Policy”) with limits of $1,000,000 per accident for “all sums 10 an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ 11 to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, 12 maintenance or use of a covered ‘auto.’” Id. at ¶ 12. “The Reeve-owned tractor-trailer 13 involved in the accident is a ‘covered auto’ under the Primary National Interstate Policy.” 14 Id. at ¶ 14. Thus, Defendant “has a duty to defend an insured in a suit asserting a claim for 15 which a potential for coverage under the Primary National Interstate Policy exists.” Id. at 16 ¶ 13. Defendant also issued to Reeve an excess liability insurance policy (the “Excess 17 National Interstate Policy”) with a limit of “$5,000,000 Each Incident.” Id. at ¶¶ 19, 21. 18 “Status as an insured under the Excess National Interstate Policy is conferred to those same 19 persons and entities which qualify as an insured under the Primary National Interstate 20 Policy.” Id. at ¶ 22. 21 “On or about April 15, 2016, tender was made to [Defendant] for [Plaintiff]’s 22 defense and indemnity against the claims asserted against [Plaintiff] in the Chavarin 23 action.” Id. at ¶ 44. “On April 21, 2016, [Defendant] denied its obligation under the 24 National Interstate Policies, or either of them, to defend and indemnify [Plaintiff] in the 25 Chavarin action.” Id. at ¶ 45. After the Chavarins filed first and second amended 26 complaints, Defendant again declined to provide any defense to Plaintiff. Id. 27 “[I]n early May of 2017 [Defendant] agreed to pay $6,000,000 to settle the 28 Chavarins’ claims against Reeve and Collins only . . . .” Id. at ¶ 69. On or about 1 May 26, 2017, a copy of the Chavarins’ proposed Third Amended Complaint was provided 2 to Defendant, and Plaintiff demand that Defendant provide a defense. Id. at ¶ 78. On 3 June 2, 2017, Defendant “wrote a letter advising that it will agree to participate in the 4 defense of Skanska.” Id. at ¶ 80. Defendant agreed to “continue to contribute toward the 5 cost of the defense of [Plaintiff] in the Chavarin action . . . .” Id. at ¶¶ 91, 93. 6 In April 2018, “[t]he Chavarins agreed to settle their claims against [Plaintiff] in the 7 Chavarin action in exchange for payment of $2,950,000.” Id. at ¶ 112. Zurich American, 8 without contribution by Defendant or by any other insurer, “paid $2,950,000, subject to 9 reservation of rights, to indemnify [Plaintiff] in settlement of the Chavarins’ liability claims 10 asserted against [Plaintiff] in the Chavarin action.” Id. at ¶ 117. Plaintiff alleges that 11 Defendant “has not paid its full and equitable share of the fees and costs, incurred after 12 May 26, 2017, of [Plaintiff]’s defense in the Chavarin action.” Id. at ¶ 95. Defendant “has 13 paid no amount for the fees and costs incurred in Skanska’s defense in the Chavarin Action 14 incurred prior to May 26, 2017.” Id. at ¶ 96. 15 Though Plaintiff had originally asserted that “Zurich American had assigned to 16 Skanska all of its rights and claims against National Interstate regarding the Chavarin 17 Action, including without limitation those rights and claims it obtained by virtue of its 18 payments for Skanska’s defense [and indemnity] in the Chavarin Action[,]” in support of 19 its assigned claims for equitable indemnity and equitable contribution, these claims were 20 removed from the operative amended complaint. Compare ECF No. 1 at ¶¶ 100, 118, 146– 21 63 with ECF No. 38-4 and ECF No. 42. 22 II. PROCEDURAL BACKGROUND 23 Plaintiff propounded discovery requests to Defendant on September 1, 2020. ECF 24 No. 44-1 at 17–27. Defendant served its responses on October 1, 2020. ECF No. 44-1 at 25 30–49. Pursuant to the Court’s Chambers Rules, on November 25, 2020, the parties alerted 26 the Court that they disagreed about six discovery issues but sought to continue meeting and 27 conferring. Email to Chambers (Nov. 25, 2020 at 4:53 p.m.); see Chmb.R. at 2. On 28 December 9, 2020, Defendant provided Plaintiff a supplemental privilege log. ECF No. 1 44-1 at 2, 52–100. After further meet and confer efforts, certain issues were resolved. The 2 parties jointly notified the Court about the remaining discovery issues on 3 December 14, 2020. Email to Chambers (Dec. 14, 2020 at 9:59 a.m.). In an effort to resolve 4 the disputes, the Court held a telephonic discovery conference on December 15, 2020. ECF 5 No. 36. The Court found it appropriate to issue a briefing schedule. ECF No. 37. The parties 6 timely filed their Joint Motion for Determination of Discovery Dispute. ECF No. 44. This 7 order follows. 8 III. DISCOVERY REQUESTS AT ISSUE 9 Plaintiff seeks to compel responsive documents to its first set of Requests for 10 Production of Documents (“RFPs”), specifically, numbers 1, 2, 4, 5, and 19–23. ECF No. 11 44 at 4. In RFP No. 1, Plaintiff requests: 12 Any and all DOCUMENTS maintained by YOU pertaining to any claim or claims by SKANSKA under the NIIC PRIMARY POLICY concerning the 13 CHAVARIN ACTION. DOCUMENTS responsive to this Request shall 14 include, but are not limited to, any claim file or files, claim notes, adjuster notes, logs or log notes, documentation of supervisor, management or other 15 internal review, documentation of authority and/or reserve requests and 16 responses to authority and/or reserve requests, COMMUNICATIONS, and documentation of COMMUNICATIONS. If YOU contend that the 17 DOCUMENTS requested in this Request have been or will be produced either 18 voluntarily or in response to an earlier Request, please identify by Bates number the responsive DOCUMENTS which have been or are being 19 produced. 20 ECF No. 44-1 at 20–21. In RFP No. 2, Plaintiff requests: 21 Any and all DOCUMENTS maintained by YOU pertaining to any claim or 22 claims by SKANSKA under the NIIC EXCESS POLICY concerning the 23 CHAVARIN ACTION. DOCUMENTS responsive to this Request shall include, but are not limited to, any claim file or files, claim notes, adjuster 24 notes, logs or log notes, documentation of supervisor, management or other 25 internal review, documentation of authority and/or reserve requests and responses to authority and/or reserve requests, COMMUNICATIONS, and 26 documentation of COMMUNICATIONS. If YOU contend that the 27 DOCUMENTS requested in this Request have been or will be produced either voluntarily or in response to an earlier Request, please identify by Bates 28 1 number the responsive DOCUMENTS which have been or are being produced. 2
3 Id. at 21. In RFP No. 4, Plaintiff requests: 4 Any and all DOCUMENTS maintained by YOU pertaining to any claim or claims by REEVE under any insurance policy issued by YOU concerning the 5 CHAVARIN ACTION. DOCUMENTS responsive to this Request shall 6 include, but are not limited to, any claim file or files, claim notes, adjuster notes, logs or log notes, documentation of supervisor, management or other 7 internal review, documentation of authority and/or reserve requests and 8 responses to authority and/or reserve requests, COMMUNICATIONS, and documentation of COMMUNICATIONS. If YOU contend that the 9 DOCUMENTS requested in this Request have been or will be produced either 10 voluntarily or in response to an earlier Request, please identify by Bates number the responsive DOCUMENTS which have been or are being 11 produced. 12 Id. at 22. In RFP No. 5, Plaintiff requests: 13 Any and all DOCUMENTS maintained by YOU pertaining to any claims by 14 Christopher Collins under any insurance policy issued by YOU concerning 15 the CHAVARIN ACTION. DOCUMENTS responsive to this Request shall include, but are not limited to, any claim file or files, claim notes, adjuster 16 notes, logs or log notes, documentation of supervisor, management or other 17 internal review, documentation of authority and/or reserve requests and responses to authority and/or reserve requests, COMMUNICATIONS, and 18 documentation of COMMUNICATIONS. If YOU contend that the 19 DOCUMENTS requested in this Request have been or will be produced either voluntarily or in response to an earlier Request, please identify by Bates 20 number the responsive DOCUMENTS which have been or are being 21 produced.
22 Id. In RFP No. 19, Plaintiff requests: 23 To the extent not produced in response to the foregoing Requests, any and all 24 DOCUMENTS consisting of, relating to, documenting, or reflecting COMMUNICATIONS between YOU and any other PERSON or PERSONS 25 concerning the limit or limits of insurance of the NIIC PRIMARY POLICY. 26 Id. at 25. In RFP No. 20, Plaintiff requests: 27 To the extent not produced in response to the foregoing Requests, any and all 28 1 DOCUMENTS consisting of, relating to, documenting, or reflecting COMMUNICATIONS between YOU and any other PERSON or PERSONS 2 concerning the limit or limits of insurance of the NIIC EXCESS POLICY. 3 Id. In RFP No. 21, Plaintiff requests: 4 To the extent not produced in response to the foregoing Requests, any and all 5 DOCUMENTS consisting of, relating to, documenting, or reflecting 6 COMMUNICATIONS between YOU and any other PERSON or PERSONS concerning any settlement demand, including without limitation YOUR 7 response to and/or negotiations concerning such settlement demand, in 8 connection with the CHAVARIN ACTION. If YOU contend that the DOCUMENTS requested in this Request have been or will be produced either 9 voluntarily or in response to an earlier. 10 Id. at 25–26. In RFP No. 22, Plaintiff requests: 11 To the extent not produced in response to the foregoing Requests, any and all 12 DOCUMENTS consisting of, relating to, documenting, or reflecting 13 COMMUNICATIONS between YOU and any other PERSON or PERSONS concerning the settlement of claims against REEVE and Christopher Collins, 14 in connection with the CHAVARIN ACTION. If YOU contend that the 15 DOCUMENTS requested in this Request have been or will be produced either voluntarily or in response to an earlier Request, please identify by Bates 16 number the responsive DOCUMENTS which have been or are being 17 produced.
18 Id. at 26. In RFP No. 23, Plaintiff requests: 19 To the extent not produced in response to the foregoing Requests, any and all 20 DOCUMENTS consisting of, relating to, documenting, or reflecting COMMUNICATIONS between YOU and any other PERSON or PERSONS 21 concerning the determination of good faith settlement in regards to the 22 settlement of claims against REEVE and Christopher Collins in the CHAVARIN ACTION, including without limitation DOCUMENTS 23 concerning the negotiation and drafting of terms relating to determination of 24 good faith settlement as a condition to the settlement of claims against REEVE and Christopher Collins, the application for and other briefing supporting 25 determination of good faith settlement of that settlement, and the drafting of 26 the application for and other briefing supporting determination of good faith settlement of that settlement. If YOU contend that the DOCUMENTS 27 requested in this Request have been or will be produced either voluntarily or 28 in response to an earlier Request, please identify by Bates number the 1 responsive DOCUMENTS which have been or are being produced.
2 Id. Defendant objects to all nine discovery requests on the grounds2 that responsive 3 documents are protected from disclosure by the privileges afforded to attorney-client 4 communications, work product, or confidential information related to Defendant’s 5 insurance business. Id. at 33, 35–36, 44–46. Defendant produced its nonprivileged 6 documents, and detailed the documents withheld in a supplemental privilege log. ECF No. 7 44-1 at 2, 52–100. 8 IV. LEGAL STANDARD 9 Under Rule 26 of the Federal Rules of Civil Procedure, “[p]arties may obtain 10 discovery regarding any nonprivileged matter that is relevant to any party’s claim or 11 defense[.]” FED. R. CIV. P. 26(b)(1). Courts have broad discretion to determine relevancy 12 for discovery purposes. See Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002). Here, 13 the issue is whether the discovery sought is nonprivileged. While the attorney-client 14 privilege “protects the confidentiality of communications between attorney and client made 15 for the purpose of obtaining legal advice[,]” the work product privilege “‘protects the 16 attorney’s thought processes and legal recommendations.’” Genentech, Inc. v. United 17 States ITC, 122 F.3d 1409, 1415 (Fed. Cir. 1997) (quoting Zenith Radio Corp. v. United 18 States, 764 F.2d 1577, 1580 (Fed. Cir. 1985)). 19 20
21 2 Defendant also objected on the grounds that the requests are overbroad and are not 22 relevant to any party’s claims or defenses. ECF No. 44-1 at 35, 36, 44, 45. However, these 23 objections were not reasserted in the instant motion, and are therefore deemed waived. See, e.g., SolarCity Corp. v. Doria, No. 16cv3085-JAH-RBB, 2018 WL 467898, at *3 (S.D. 24 Cal. Jan. 18, 2018) (courts in this district “generally consider[ ] only those objections that 25 have been timely asserted in the initial response to the discovery request and that are subsequently reasserted and relied upon in response to the motion to compel.”); Sherwin- 26 Williams Co. v. Earl Scheib of Cal., Inc., No. 12cv2646-JAH-JMA, 2013 WL 12073836, 27 at *2 n.1 (S.D. Cal. Mar. 4, 2013) (deeming all objections raised in response to the discovery requests but not addressed in the discovery motion to be moot or waived, limiting 28 1 When federal courts exercise diversity jurisdiction over a case, “questions of 2 privilege are controlled by state law.” In re Cal. Pub. Utilities Comm’n, 892 F.2d 778, 781 3 (9th Cir. 1989); ECF No. 42 at ¶¶ 1–2, 7–9 (alleging federal jurisdiction premised on 4 diversity of citizenship); see FED. R. EVID. 501. Unlike attorney-client privilege, the work 5 product doctrine is governed by federal law, even in pure diversity cases.3 Eagle Precision 6 Techs., Inc. v. Eaton Leonard Robolix, Inc., No. 03cv352-BEN-WMc, 2005 U.S. Dist. 7 LEXIS 47173, at *8 n.3 (S.D. Cal. Aug. 11, 2005); see, e.g., Century Sur. Co. v. Saidian, 8 No. CV-12-7428-SS, 2015 WL 12765555, at *2 (C.D. Cal. July 28, 2015) (finding that the 9 work product doctrine in diversity cases is determined under federal law because the 10 doctrine is not an evidentiary privilege); U.S. Inspection Services, Inc. v. NL Engineered 11 Solutions, LLC, 268 F.R.D. 614, 617 n.2 (N.D. Cal. 2010) (because the work product 12 doctrine is not an evidentiary privilege “but rather, [a] procedural limitation[] on discovery, 13 the scope of [the] asserted protection[] is determined by federal law, even when the federal 14 court sits in diversity.”). 15 The California attorney-client privilege is codified in California Evidence Code 16 §§ 950 et seq. The privilege protects confidential communications between a client and an 17 attorney. “The privilege authorizes a client to refuse to disclose, and to prevent others from 18 disclosing, confidential communications between attorney and client.” Mitchell v. Superior 19 Court, 691 P.2d 642, 645 (Cal. 1984). “Confidential communications include information 20 transmitted between attorney and client, and ‘a legal opinion formed and the advice given 21 by the lawyer in the course of that relationship.’” Calvert v. State Bar, 819 P.2d 424, 431 22 (Cal. 1991) (quoting CAL. EVID. CODE § 952). 23 Under California law, “[t]he party claiming the [attorney-client] privilege has the 24 burden of establishing the preliminary facts necessary to support its exercise, i.e., a 25
26 27 3 “Courts that have applied federal law to the work product doctrine have reasoned that it is not a privilege within the meaning of Rule 501.” Eagle Precision Techs., 2005 U.S. Dist. 28 1 communication made in the course of an attorney-client relationship.” Costco Wholesale 2 Corp. v. Superior Court, 219 P.3d 736, 741 (Cal. 2009) (citations omitted); see also CAL. 3 EVID. CODE § 952. Once the party claiming privilege has made a prima facie showing that 4 the material claimed to be privileged is a communication made in the course of an attorney- 5 client relationship, a presumption of privilege then applies to the communication, and the 6 burden shifts to the party opposing the claim “to establish the communication was not 7 confidential or that the privilege does not for other reasons apply.” Costco, 219 P.3d at 741 8 (citing CAL. EVID. CODE § 917(a) and Wellpoint Health Networks, Inc. v. Superior Court 9 of L.A. Cty., 68 Cal. Rptr. 2d 844, 852–53 (Cal. Ct. App. 1997)). 10 California law recognizes an implied at-issue waiver of attorney-client privilege in 11 limited circumstances. A party seeking to discover privileged information can show waiver 12 by demonstrating that the client has (1) “put the otherwise privileged communication 13 directly at issue” and (2) “that disclosure is essential for a fair adjudication of the action.” 14 S. Cal. Gas Co. v. Pub. Utilities Comm’n, 784 P.2d 1373, 1378 (Cal. 1990) (“SoCal Gas”). 15 Similarly, to determine whether implied waiver applies to the work product doctrine 16 under federal law, courts in this circuit consider (1) whether the party is asserting the 17 doctrine as the result of some affirmative act, (2) whether through this affirmative act, the 18 asserting party puts the privileged information at issue, and (3) whether allowing the 19 privilege would deny the opposing party access to information vital to its case. United 20 States v. Amlani, 169 F.3d 1189, 1195 (9th Cir. 1995); SoCal Gas, 784 P.2d at 1379 n.11. 21 V. PARTIES’ POSITIONS 22 Plaintiff seeks information through discovery to support its bad faith claim. ECF No. 23 44 at 2. Plaintiff seeks information to refute Defendant’s claim that, because it had no 24 choice but to settle, it did not commit bad faith when it settled the underlying action on 25 behalf of Reeve and Collins. Id. Thus, Plaintiff seeks information regarding whether 26 counsel’s decision to settle the case was reasonable. Id. at 7. Plaintiff argues that 27 Mr. McFaul’s declaration is not solely a recitation of facts, protected by attorney client 28 privilege or the work product doctrine, because he also included his legal opinions and 1 evaluations of the case. Id. at 2, 6–7. Thus, by affirmatively putting before the Court 2 testimony regarding the reasonableness of Defendant’s conduct, Plaintiff argues that any 3 privilege objections have been impliedly waived. Id. Plaintiff also contends that it needs 4 the information to refute and contest the remainder of Mr. McFaul’s testimony. Id. at 7. 5 In sum, Plaintiff seeks to discover Mr. McFaul’s “other legal opinions and 6 conclusions, and the documents and other materials in his files in which his opinions are 7 based or set out, so that Skanska has the opportunity to contest the evidence NIIC has put 8 forth.” Id. Specifically, Plaintiff is trying to find out 9 (1) whether McFaul’s other legal opinions about this matter are consistent or divergent with those he expressed in his declaration, (2) how he arrived at and 10 justifies his opinions in the declaration including the opinion that there were no 11 other options but to settle without obtaining a release of the claims against Skanska, contrary to California case law which specifies other options, (3) how 12 it is that he concluded that NIIC’s applicable policy limits were $6,000,000 for 13 the Chavarin matter, and (4) how it is that he concluded that Skanska was fully protected from any exposure when he declares, in the same declaration, that 14 John Petze sent him a copy of the Zurich policy, which the exhibit shows had 15 a post-it (or other yellow marking) indicating the page showing Skanska had a $500,000 deductible. 16
17 Id. at 7–8. 18 Defendant contends that Plaintiff amending the complaint moots the issue. Id. at 11. 19 Because Plaintiff removed its assignment claims from Zurich from its amended complaint, 20 Defendant argues that the underlying settlements in Chavarin are no longer at issue. Id. at 21 10–11 (referring to ECF No. 38-4 at ¶ 6). Further, since Mr. McFaul and Defendant had an 22 attorney-client relationship, Defendant contends that it has established a prima facie case 23 that privilege applies. ECF No. 44 at 13. According to Defendant, Plaintiff has not met its 24 burden of showing that a waiver occurred. Id. at 13–14. Defendant also reiterates that the 25 McFaul declaration does not include communications between Mr. McFaul and Defendant, 26 and instead recounts Mr. McFaul’s communications with plaintiff’s counsel in the 27 Chavarin action. Id. at 11. 28 / / 1 VI. DISCUSSION 2 Here, it is undisputed that there was an attorney-client relationship between 3 Defendant and Mr. McFaul, where Mr. McFaul provided legal advice to Defendant while 4 representing it in the Chavarin action. See ECF No. 15-3 at ¶ 2–3; ECF No. 44-2 at ¶ 2–4. 5 Thus, Defendant has satisfied its burden to make a prima facie showing. Costco, 219 P.3d 6 at 741 (“The party claiming the privilege has the burden of establishing the preliminary 7 facts necessary to support its exercise”). Thus, the burden has shifted to Plaintiff to 8 establish that the privilege does not apply. Id. 9 A. Express Waiver - Analysis of McFaul Declaration 10 In support of its waiver argument, Plaintiff points to four paragraphs of the McFaul 11 declaration that purport to expose his legal reasoning and therefore waive privilege. ECF 12 No. 44 at 6–7 (referring to ECF No. 15-3 at ¶¶ 17, 26, 34, 38).4 In paragraph 17, Mr. McFaul 13 stated: 14 Although NIIC strongly disagreed with Zurich’s contention that the Chavarins were asserting vicarious liability claims against Skanska that would have 15 triggered a potential for coverage for Skanska under the NIIC policies, we 16 made every effort to convince Petze and his clients to include Skanska in the proposed policy limits settlement. 17
18 ECF No. 15-3 at ¶ 17. Plaintiff contends that this paragraph “opine[d] whether sufficient 19 efforts were undertaken to protect Skanska.” ECF No. 44 at 6. The Court agrees with 20 Defendant that this paragraph is a summary of factual events, and not a summary of any 21 legal opinions or legal analysis. 22 In paragraph 26, Mr. McFaul stated: 23 Based on my review of the Zurich policies provided by Petze and my belief that they were genuine based on Petze’s representation that Skanska itself had 24 25 26 4 Upon careful review of the McFaul declaration, the Court finds that most paragraphs 27 clearly refer to Mr. McFaul’s unprivileged communications with the plaintiff’s counsel in the Chavarin action, other external communications, or facts rather than opinions. See ECF 28 1 produced them in the Chavarin lawsuit, NIIC and I understood that Zurich afforded Skanska up to $25,000,000 in limits for its liability in the Chavarin 2 lawsuit. 3 ECF No. 15-3 at ¶ 26. Plaintiff contends that this paragraph “describe[s] his legal analysis 4 and his conclusions concerning Skanska’s insurance under the Zurich policies.” ECF No. 5 44 at 7. Defendant responds that this paragraph simply summarizes the dollar amount of 6 the policy limits, explaining that it was more than what the plaintiffs were seeking in the 7 Chavarin action. Id. at 17. The Court finds that, though the paragraph does slightly 8 implicate Mr. McFaul’s thinking, it does not broadly waive privilege. 9 In paragraph 34, Mr. McFaul stated: 10 Based on the evidence and arguments regarding liability and damages that had 11 presented by Petze, as well as Reeve Trucking’s declaration that it had no 12 applicable insurance other than the NIIC policies, it was clear that NIIC’s rejection of the $6,000,0000 policy limits demand would have exposed Reeve 13 Trucking and Collins to a significant risk of a judgment in excess of those 14 limits and, as a result, potentially ruinous personal liability. By contrast, the copies of the Zurich policies I had recently reviewed indicated that Skanska 15 was fully protected from any exposure to its personal assets by the 16 $25,000,000 in limits available to it under those policies.
17 ECF No. 15-3 at ¶ 34. Plaintiff contends that Mr. McFaul “state[d] his reasoning and legal 18 conclusions about the anticipated effects of NIIC’s conduct on Skanska as compared to 19 Reeve and Collins.” ECF No. 44 at 7. Defendant responds that this paragraph simply 20 summarizes the dollar amount of the policy limits, explaining that it was more than what 21 the plaintiffs were seeking in the Chavarin action. Id. at 17. The Court finds that this 22 paragraph is a summary of factual events, and not a summary of any legal opinions or legal 23 analysis. 24 In paragraph 38, Mr. McFaul stated: 25 At this point, it was clear that NIIC had only two choices: (1) accept the 26 $6,000,000 policy limits demand on the Chavarins’ terms and take Reeve Trucking and Collins out of harm’s way or (2) reject the demand and expose 27 Reeve Trucking and Collins to a potential excess judgment and financial ruin. 28 There was no third option. 1 ECF No. 15-3 at ¶ 38. Plaintiff contends that Mr. McFaul “g[a]ve his legal opinion about 2 what choices an insurer has when faced with a demand for settlement of claims against 3 fewer than all insureds.” ECF No. 44 at 6. Defendants respond that “is another non-legal 4 summary of the factual circumstances discussed in detail in the declaration. Specifically, 5 McFaul is recapping that, despite his extensive communications with Petze regarding the 6 potential inclusion of Skanska in the policy limits settlement, the Chavarins ultimately 7 demanded that NIIC either accept or reject their demand ‘as is’ and would not agree to 8 modify the demand to include any release of their claims against Skanska.” Id. at 17. The 9 Court agrees with Defendant, and finds that no broad waiver has occurred here. 10 B. Implied Waiver - Whether the Information is At Issue 11 The parties disagree about whether the information is at issue. In doing so, the parties 12 repeatedly refer to the following cases, which the Court will briefly address in turn: SoCal 13 Gas v. Public Utilities Comm’n, 784 P.2d 1373 (Cal. 1990), Mitchell v. Superior Court, 14 691 P.2d 642 (1984), and Merritt v. Superior Court, 88 Cal. Rptr. 337 (Cal. Ct. App. 1970). 15 In SoCal Gas, a regulatory action considering whether the buyout of a supplier 16 contract was reasonable, the court found that implied waiver of attorney-client privilege 17 did not apply because the privileged communications were not placed at issue—“[SoCal 18 Gas does not] intend[] to rely on its attorneys’ advice or state of mind to demonstrate that 19 it acted reasonably when it bought out the [] contract.” 784 P.2d at 1379. Further, the court 20 did not find the privileged documents vital to a fair adjudication of the proceeding. Id. at 21 1380. In finding that the actual legal analysis provided by SoCal Gas’s attorneys was not 22 essential to the case, the court explained that the reasonableness issue was “an objective 23 one which [did] not depend on a particular attorney’s analysis, but upon the terms of the 24 contract itself and surrounding factual circumstances.” Id. There, the court also highlighted 25 an analogous case regarding allegations of a bad faith denial of insurance coverage, Aetna 26 Casualty & Sur. Co. v. Superior Court, 200 Cal. Rptr. 471 (Cal. Ct. App. 1984), where 27 “[t]he court held that Aetna had not impliedly waived its attorney-client privilege since it 28 1 was not relying on advice of counsel to show that it acted reasonably, but instead sought to 2 show that its conduct was reasonable based on the underlying facts. Moreover, the court 3 held that the fact that Aetna’s state of mind was at issue in the insured’s bad faith action 4 did not place in issue its attorneys’ state of mind or their advice.” SoCal Gas, 784 P.2d at 5 1378. 6 In Mitchell, though the factual scenario is distinguishable,5 the court nevertheless 7 found “no ‘waiver of the attorney-client privilege where the substance of the protected 8 communication is not itself tendered in issue, but instead simply represents one of several 9 forms of indirect evidence in the matter.’” SoCal Gas, 784 P.2d at 1378 (quoting Mitchell, 10 691 P.2d at 650); see also Schlumberger, Ltd. v. Superior Court, 171 Cal. Rptr. 413, 417 11 (Cal. Ct. App. 1981) (“[p]rivileged communications do not become discoverable because 12 they are related to issues raised in the litigation”). 13 In Merritt, where plaintiff asserted a bad faith claim against an insurer, the court 14 “held that plaintiff had impliedly waived his privilege since he had specifically put the state 15 of mind of his attorney at issue by alleging that the defendant’s attorney had confused his 16 attorney and impeded his attorney’s ability to settle his claim.” SoCal Gas, 784 P.2d at 17 1378 (citing Merritt, 88 Cal. Rptr. at 342). However, its decision was “limited in its 18 application to the one situation in which a client has placed in issue the decisions, 19 conclusions, and mental state of the attorney who will be called as a witness to prove such 20 matters.” SoCal Gas, 784 P.2d at 1379–80. 21 After consideration of these examples, finding SoCal Gas and Aetna persuasive, the 22 Court finds that the information is not at issue. 23 / / 24
25 5 Several plaintiffs filed suit seeking damages for emotional distress against various entities 26 involved with chemicals that plaintiffs alleged contaminated air and ground water around 27 their homes. One defendant sought discovery of information or documents a plaintiff received from her attorneys about one of the chemicals. SoCal Gas, 784 P.2d at 1378 (citing 28 1 C. Whether the Evidence is Essential to a Fair Adjudication of this Case 2 Here, the evidence is not essential to a fair adjudication of this case. “Although these 3 || privileged communications might help [Plaintiff] litigate this case, [Plaintiff] may still 4 defend against [Defendant]’s claims without introducing the substance of these privileged 5 communications into evidence.” Luna Gaming San Diego LLC v. Dorsey & Whitney, LLP, 6 || No. 06cv2804-BTM-WMc, 2010 WL 148713, at *2 (S.D. Cal. Jan. 11, 2010). 7 Plaintiff contends that it needs the information to refute and contest the remainder 8 Mr. McFaul’s testimony. ECF No. 44 at 7. However, the Court is persuaded by 9 || Defendant’s representation that its original motion for summary judgment, and the McFaul 10 || declaration at issue, are both mooted by Plaintiff's amendment of the complaint to remove 11 |/ all assignment claims. ECF No. 44 at 11 (“Had Skanska filed its amended complaint as the 12 || original complaint, there would have been no need for NIIC to have filed its motion for 13 |}summary judgment or the supporting McFaul declaration”). Plaintiff did not meet its 14 burden to show, given the amendment, that the privileged communication “goes to the 15 || heart of the claim in controversy.” Mitchell, 691 P.2d at 649; SoCal Gas, 784 P.2d at 1380 16 || (finding that counsel’s actual legal analysis was not essential to the case, explaining that 17 ||the reasonableness issue was “an objective one which [did] not depend on a particular 18 ||attorney’s analysis, but upon the terms of the contract itself and surrounding factual 19 || circumstances”); see generally Aetna, 200 Cal. Rptr. at 475. 20 || VII. CONCLUSION 21 For the reasons set forth above, Plaintiff's motion to compel is DENIED. 22 23 IT IS SO ORDERED. 24 Dated: March 5, 2021 05 _ Siow. Xion Honorable Allison H. Goddard 26 United States Magistrate Judge 27 28