Stout v. Illinois Farmers Insurance

150 F.R.D. 594, 1993 U.S. Dist. LEXIS 12304, 1993 WL 335394
CourtDistrict Court, S.D. Indiana
DecidedAugust 31, 1993
DocketNo. NA 92-16-C
StatusPublished
Cited by23 cases

This text of 150 F.R.D. 594 (Stout v. Illinois Farmers Insurance) is published on Counsel Stack Legal Research, covering District Court, S.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stout v. Illinois Farmers Insurance, 150 F.R.D. 594, 1993 U.S. Dist. LEXIS 12304, 1993 WL 335394 (S.D. Ind. 1993).

Opinion

ENTRY ON PLAINTIFF’S MOTION TO COMPEL and DEFENDANT’S MOTION FOR PROTECTIVE ORDER.

FOSTER, United States Magistrate Judge.

In this breach of contract action, the plaintiff (“Mr. Stout”) alleges that the defendant (“Farmers”), his insurer, wrongfully and in bad faith refused to pay his fire loss claim under the terms of his homeowners insurance policy. Mr. Stout purchased an insurance policy from Farmers providing a year’s coverage for his house in French Lick, Indiana starting on March 12,1991. On May 19, 1991, a fire occurred at the house which damaged real and personal property. Mr. Stout reported the fire to Farmers the next day and Farmers began an investigation into the cause and origin of the fire and Mr. Stout’s claims history and financial condition. On November 14, 1991, Farmers formally notified Mr. Stout that it was denying his claim. Mr. Stout filed this suit in February 1992.1

Now before the Court are Mr. Stout’s motion for an order pursuant to Rule 37(a), Federal Rules of Civil Procedure, to compel Farmers to comply with his Rule 34 request to produce “all documents within its investigatory file that were produced or obtained between March 19, 1991 and November 14, 1991”, (Plaintiffs Motion to Compel Production of Documents, p. I),2 and Farmers’ motion for a protective order pursuant to Rule 26(c). Farmers produced some documents from this time period but withheld others. Its grounds for protection are that the documents are either immune from discovery under Rule 26(b)(3) as trial preparation materials (“work product”) or privileged as attorney-client communications under Indiana law, Rule 26(b)(1), and Rule 501, Federal Rules of Evidence. Mr. Stout moved to compel production on the ground that the documents withheld by Farmers do not qualify as work product. He did not make a showing of substantial need for the documents or undue hardship in obtaining their substantial equivalent and he offered no argument on Farmers’ attorney-client privilege contentions.3 Farmers did not raise any relevancy objections to production of the documents.4 Thus, the questions presented for our review are solely whether the withheld documents qualify as work product or are privileged as attorney-client communications.

Farmers filed and served the required index of documents, see Harper v. Auto-Owners Insurance Company, 138 F.R.D. 655, 664 (S.D.Ind.1991), although its explanation of the legal and factual grounds for protection was not as complete or individualized to each [597]*597separate document as required. Farmers also submitted the documents for in camera inspection.

Work Product Standard.

Application of the work product rule to insurer investigative documents is one of the most difficult and often-litigated discovery issues because it is the very nature of an insurer’s business to investigate events which, either directly, or as a consequence of the insurers’ claims decisions, often result in litigation.5 Because of this confluence of business and litigation elements, it is difficult to determine with precision whether a particular investigative document was created to meet the insurer’s litigation or non-litigation needs, and, thus, whether it is qualifiedly immune from discovery under the work product rule. We recently addressed the scope and application of Rule 26(b)(3) in the insurance environment in Harper v. Auto-Owners Insurance Company, 138 F.R.D. 655 (S.D.Ind.1991), and so refer to that opinion for a full treatment of the governing standard. We will concentrate in this ease on the specific issues raised by the parties.

In Harper, we explained that Rule 26(b)(3)’s standard for determining whether a document was “prepared in anticipation of litigation or for trial” has two components, both of which must be satisfied before protection will be extended: first, the document must have been created for the purpose of preparing for litigation, the so-called “causation” or “purpose” prong, and, second, the insurer must have had a justifiable anticipation of litigation when the document was prepared, the “anticipation” prong. Harper, 138 F.R.D. at 661; see Allendate Mutual Insurance Co. v. Bull Data Systems, Inc., 145 F.R.D. 84, 87 (N.D.Ill.1992); International Surplus Lines Insurance Co. v. Willis Corroon Corp., No. 91-C-6057, Memorandum Order, 1992 WL 345051, 1992 U.S.Dist. LEXIS 17332 (N.D.Ill., November 10, 1992). We criticized the tendency of the “shifting focus” approach to work product to confuse the two prongs, usually resulting in the subsumption of the causation-purpose inquiry into the reasonable anticipation inquiry. We held that the Rule required independent inquiries into causation and anticipation: after litigation is reasonably anticipated or even underway, any document produced to evaluate an insured’s claim (or for any other non-litigation purpose) is not work product. Rather than being seen as a linear inquiry, therefore, work product analysis should be approached through independent, parallel lines of inquiry. See Harper, 138 F.R.D. at 662-63; APL, 91 F.R.D. at 21.

A, Causation-Purpose.

In making its argument on causation, Farmers apparently misconstrues a couple of related concepts. One of its reasons for contending that the withheld documents are work product is that they were not produced in the routine or ordinary course of its business because the procedures it followed in evaluating Mr. Stout’s claim varied significantly from its normal claims evaluation procedures for ordinary fire loss claims. (Farmers’ Brief, p. 17). It further contends that work product protection is warranted because these additional procedures would not have been undertaken but for its anticipation of litigation looming over its pending claims decision. (M).6 Farmers misinterprets the [598]*598meaning of the causation component of the standard. The Rule requires causation in the sense of the purpose or motivation for the creation of documents—ie., the intended use to which the documents were to be put— not causation in the sense of a “but for” sequence of events or influences. For documents to qualify as work product, they must have been created for the purpose of preparing for litigation.7 Many documents are produced “because of’ anticipated litigation, in the sense that they would not have been created but for the prospect of litigation, but they were not created to prepare for that litigation. Obvious examples are requests and bills for litigation services. Another example is an investigation which is undertaken for non-litigation purposes when the incentive to pursue that investigation is enhanced by the prospect of litigation, e.g., businesses which conduct periodic safety and maintenance inspections in part to control their liability risk. If an insurer anticipates litigation over a pending claims decision and undertakes extra-ordinary investigations for the purpose of ensuring a correct decision, the resulting documentation is not work product because the insurer generated the reports to use in evaluating the claim in fulfillment of its contractual obligations.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Gaston v. Hazeltine
N.D. Indiana, 2023
Oasis International Waters, Inc. v. United States
110 Fed. Cl. 87 (Federal Claims, 2013)
Parker v. Mobile Gas Service Corp.
123 So. 3d 499 (Supreme Court of Alabama, 2013)
Medical Assurance Co. v. Weinberger
295 F.R.D. 176 (N.D. Indiana, 2013)
McGrath v. EVEREST NATIONAL INSURANCE COMPANY
625 F. Supp. 2d 660 (N.D. Indiana, 2008)
Ex Parte Meadowbrook Ins. Group, Inc.
987 So. 2d 540 (Supreme Court of Alabama, 2007)
Klee v. Whirlpool Corp.
251 F.R.D. 507 (S.D. California, 2006)
Pacific Gas & Electric Co. v. United States
69 Fed. Cl. 784 (Federal Claims, 2006)
State Ex Rel. Medical Assurance of West Virginia, Inc. v. Recht
583 S.E.2d 80 (West Virginia Supreme Court, 2003)
Nicklasch v. JLG Industries, Inc.
193 F.R.D. 570 (S.D. Indiana, 1999)
State Ex Rel. United Hospital Center, Inc. v. Bedell
484 S.E.2d 199 (West Virginia Supreme Court, 1997)
Hartman v. Texaco Inc.
1997 NMCA 032 (New Mexico Court of Appeals, 1997)
Stout v. Illinois Farmers Insurance
882 F. Supp. 776 (S.D. Indiana, 1994)
Suggs v. Whitaker
152 F.R.D. 501 (M.D. North Carolina, 1993)

Cite This Page — Counsel Stack

Bluebook (online)
150 F.R.D. 594, 1993 U.S. Dist. LEXIS 12304, 1993 WL 335394, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stout-v-illinois-farmers-insurance-insd-1993.