[Cite as Whitacre v. Nationwide Ins., Co., 2012-Ohio-4557.] STATE OF OHIO, BELMONT COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
SCOTT J. WHITACRE ) CASE NO. 11 BE 5 ) PLAINTIFF-APPELLEE ) ) VS. ) OPINION ) NATIONWIDE INS. CO., et al. ) ) DEFENDANTS-APPELLANTS )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common Pleas of Belmont County, Ohio Case No. 09 CV 188
JUDGMENT: Affirmed. Remanded.
APPEARANCES:
For Plaintiff-Appellee: Atty. Richard L. Lancione Lancione, Lloyd & Hoffman 3800 Jefferson Street P.O. Box 560 Bellaire, Ohio 43906
For Defendant-Appellant: Atty. Ralph F. Dublikar Atty. Eric J. Stecz Baker, Dublikar, Beck, Wiley & Mathews 400 South Main Street North Canton, Ohio 44720
JUDGES:
Hon. Cheryl L. Waite Hon. Gene Donofrio Hon. Joseph J. Vukovich Dated: September 28, 2012 [Cite as Whitacre v. Nationwide Ins., Co., 2012-Ohio-4557.] WAITE, P.J.
Summary
{¶1} Appellee, Scott J. Whitacre, was involved in a motorcycle accident
caused by an insured’s dog. Appellant, Nationwide Insurance Company, the dog
owner’s insurance company, is alleged by Appellee to have entered into a verbal
contract to pay all of his medical expenses. Appellee contends that the contract was
partially performed when Appellant paid some of his medical bills. When Appellant
stopped paying medical bills and Appellee was denied treatment, he filed suit against
both the dog owner and Appellant. Appellee’s claims against the dog owner were
settled and he was dismissed from the lawsuit, however, the settlement and the
agreed dismissal entry did not extend to his contract claims against Appellant.
Appellant now appeals the trial court’s ruling allowing discovery of material in the
claims file generated by Appellant prior to the date of the lawsuit and depositions of
the two claims adjusters who communicated directly with Appellee. The trial court’s
decision to allow discovery did not amount to an abuse of discretion because
Appellant failed to show privilege with regard to the material it seeks to protect.
However, in compliance with the Ohio Supreme Court’s decision in Peyko v.
Frederick, 25 Ohio St.3d 164, 167, 495 N.E.2d 918 (1986), prior to allowing material
to be released to Appellee, the trial court must conduct an in camera inspection to
determine whether any genuinely privileged material is contained in the file.
Factual and Procedural History
{¶2} On or about November 27, 2007, Appellee, Scott J. Whitacre, was
driving his motorcycle on State Route 800 and was injured when a unrestrained dog, -2-
owned by Arthur Reed, darted onto the highway in front of him causing him to lose
control of the motorcycle. After the accident he was visited by a representative of
Appellant, Nationwide Insurance Company. During the visit, which was witnessed by
Appellee’s mother, the claims adjuster allegedly made statements acknowledging Mr.
Reed’s liability for the accident and promising to cover all resulting medical expenses
and loss of wages. Appellee maintains that he provided the claims adjuster with the
medical information necessary to allow payments to begin and that the adjuster left a
pamphlet. This pamphlet, in addition to the adjuster’s verbal statements and
subsequent payment of a portion of his medical bills, form the basis of his contract
claim against Appellant. It is undisputed that Appellant began to pay Appellee’s
medical bills after this visit. It is also undisputed that Appellant did so without any
written agreement. Appellee maintains there was a verbal contract; Appellant claims
the payments were voluntary and gratuitous.
{¶3} A portion of Appellee’s medical needs were paid for by Appellant and a
portion were paid by his own insurance company. Appellee’s doctor declined to
continue treatment, although an additional surgery was needed, because several
thousand dollars in medical bills remained unpaid. Appellee maintains that Appellant
was aware that his medical expenses were unpaid and that the doctor was
withholding additional necessary treatment as a result of Appellant’s nonpayment.
Appellee filed suit against both the insured and Appellant, alleging liability for the
accident against the insured for failure to properly restrain his dog and breach of a
verbal contract and bad faith failure to pay medical bills against the insurance
company. Appellee alleged damages resulting from both the accident and the failure -3-
to pay medical expenses and sought separate money judgments against the insured
and against Appellant.
{¶4} Appellant filed for summary judgment on the verbal contract and bad
faith claims. In support of the motion, Appellant filed an affidavit from the claims
adjuster who met with Appellee and authorized the payment of some of his medical
bills. In her affidavit, the adjuster denied forming a verbal contract. Appellee filed his
opposition to summary judgment, claimed that a contract was formed, and supported
his damages claim with a letter from his doctor and copies of additional bills. The trial
court denied Appellant’s motion for summary judgment on December 21, 2009. On
March 12, 2010, Appellee submitted an agreed entry, signed by the attorneys for all
parties, dismissing all claims against only the insured, and explicitly preserving claims
against Appellant. The entry was adopted by the court on March 16, 2010.
{¶5} After deposing Appellee, Appellant filed a second motion for summary
judgment on September 30, 2010. Appellee filed a motion to compel production of
relevant documents created prior to the suit and to compel depositions of the claims
adjusters who were involved in the claim. He also sought an extension of time to
respond to the summary judgment motion. During Appellee’s deposition, additional
unpaid medical bills were discussed. It appears Appellee was unaware of the
additional bills when he filed suit and when he settled with Mr. Reed because they
had been submitted directly to Appellant, but Appellant did not pay them and did not
forward them to Appellee. Appellant refused to produce any internal documents
pertaining to the claim and alleges generally that the entire claims file is protected by
privilege and by the work-product doctrine. Appellant does not state the nature of the -4-
privilege, or describe the material it claims should be protected. The cross motions
were set for hearing on December 4, 2010. The trial court granted Appellee’s motion
to compel and motion for an extension of time to respond to summary judgment and
denied Appellant’s motion for a protective order on January 4, 2011. Appellant filed a
timely notice of appeal from the court order compelling discovery. On appeal both
parties have filed their briefs and the matter is now ripe for review.
Argument and Law
ASSIGNMENT OF ERROR
THE TRIAL COURT ABUSED ITS DISCRETION WHEN IT DENIED
APPELLANT’S MOTION FOR PROTECTIVE ORDER AND ORDERED
APPELLANT TO PRODUCE INFORMATION CONTAINED IN ITS
CLAIM FILE AND MAKE ITS ADJUSTERS AVAILABLE FOR
DEPOSITION.
{¶6} The trial court has inherent power to control discovery. Civ.R. 26(C);
State ex rel. Pfeiffer v. Common Pleas Court, 13 Ohio St.2d 133, 235 N.E.2d 232
(1968); State ex rel. Grandview Hosp. Ctr. v. Gorman, 51 Ohio St.3d 94, 554 N.E.2d
1297 (1990). A trial court’s decision concerning discovery will not be disturbed on
review absent an abuse of discretion. State ex rel. The V Companies v. Marshall, 81
Ohio St.3d 467, 469, 692 N.E.2d 198, 200-201 (1998). Abuse of discretion connotes
more than an error of judgment; it implies that the court's attitude was unreasonable,
arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450
N.E.2d 1140, (1983). -5-
{¶7} When applying the abuse of discretion standard, “a reviewing court is
not free to merely substitute its judgment for that of the trial court.” In re Jane Doe 1,
57 Ohio St.3d 135, 138, 566 N.E.2d 1181 (1991). “The term discretion itself involves
the idea of choice, of an exercise of the will, of a determination made between
competing considerations. In order to have an ‘abuse’ in reaching such
determination, the result must be so palpably and grossly violative of fact and logic
that it evidences not the exercise of will but perversity of will, not the exercise of
judgment but defiance thereof, not the exercise of reason but rather of passion or
bias.” Huffman v. Hair Surgeon, Inc., 19 Ohio St.3d 83, 87, 482 N.E.2d 1248, 1252
(1985).
{¶8} Civil discovery of all relevant, unprivileged, information is permitted
under Civ.R. 26. With regard to this suit, Civ.R. 26 provides:
(B) Scope of discovery. Unless otherwise ordered by the court in
accordance with these rules, the scope of discovery is as follows:
(1) In General. Parties may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter involved in the
pending action * * *. It is not ground for objection that the information
sought will be inadmissible at the trial if the information sought appears
reasonably calculated to lead to the discovery of admissible evidence.
*** -6-
(3) Trial preparation: materials. * * * 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. * * *
***
(6) Claims of Privilege or Protection of Trial-Preparation Materials.
(a) Information Withheld. When information subject to discovery is
withheld on a claim that it is privileged or subject to protection as trial
preparation materials, the claim shall be made expressly and shall be
supported by a description of the nature of the documents,
communications, or things not produced that is sufficient to enable the
demanding party to contest the claim.
The test for relevancy under Civ.R. 26 “is much broader than the test to be utilized at
trial. It is only irrelevant by the discovery test when the information sought will not
reasonably lead to the discovery of admissible evidence.” State ex rel. Fisher v.
Rose Chevrolet, 82 Ohio App.3d 520, 523, 612 N.E.2d 782, 784 (1992).
{¶9} “[T]he burden of showing that testimony [or documents] sought to be
excluded under the doctrine of privileged attorney-client communications rests upon
the party seeking to exclude [them.]” Peyko v. Frederick, 25 Ohio St.3d 164, 166, -7-
495 N.E.2d 918 (1986). In Ohio, attorney-client privilege is established both by
statute and at common law. The statutory privilege, R.C. 2317.02(A), is a testimonial
privilege and provides generally that an attorney shall not testify “concerning a
communication made to the attorney by a client in that relation or the attorney’s
advice to a client.” See also, State ex rel. Leslie v. Ohio Housing Finance Agency,
105 Ohio St.3d 361, 2005-Ohio-1508, 824 N.E.2d 990, ¶18. The common law
privilege governs those areas not covered by statute. Id. At common law,
communication is protected “(1) [w]here legal advice of any kind is sought (2) from a
professional legal adviser in his capacity as such, (3) the communications relating to
that purpose, (4) made in confidence (5) by the client, (6) are at his instance
permanently protected (7) from disclosure by himself or by the legal adviser, (8)
unless the protection is waived.” Id. at ¶21 quoting Reed v. Baxter, 134 F.3d 351,
355-356 (C.A.6, 1998). Exceptions to attorney-client privilege other than waiver by
the client include, but may not be limited to, the crime-fraud exception, a self-
protection exception, and suits between the attorney and the client. Squire, Sanders
& Dempsey, L.L.P. v. Givaudan Flavors Corp., 127 Ohio St.3d 161, 2010-Ohio-4469,
937 N.E.2d 533, ¶3.
{¶10} In support of its single assignment of error, Appellant contends that
discovery is prohibited in a suit by a party against an insurance company that is not
his or her own. In other words, only a policyholder may be entitled to discovery of a
claims file. In support of this contention Appellant cites Snyder v. Lincoln General
Ins. Co., 3rd Dist. No. 3-97-4, 1997 WL 232246 (May 7, 1997) for the proposition that
all suits against insurance companies by individuals other than the insured are -8-
barred. According to Appellant, because all third party suits are barred, a third party
may never obtain discovery documents from an insurance company. However,
Appellant’s argument that Appellee’s suit is barred was heard by the trial court in
Appellant’s initial motion for summary judgment. When the trial court denied
Appellant’s initial motion for summary judgment, the trial court found that Appellee
had sufficiently pleaded the elements of his case and that there were outstanding
questions of fact that could not be resolved by the affidavit filed by Appellant in
support of its summary judgment motion. Having passed this preliminary hurdle,
Appellee, like any other plaintiff, was entitled to discovery.
{¶11} After the denial of Appellant’s first motion for summary judgment both
parties sought discovery. Appellant never provided any discovery material.
Appellee, however, was deposed by Appellant. Appellant then filed a second motion
for summary judgment, simultaneously sought a protective order, and continued to
avoid responding to Appellee’s discovery requests. Appellant did not include any
information concerning efforts to resolve the discovery issues, nor did it provide a file
log to explain what documents were in the file and/or what specific privileges it was
asserting as to these documents. Appellee filed a motion to compel discovery and
sought an extension of time to respond to Appellant’s second motion for summary
judgment so that the result of discovery could be included in the response.
{¶12} This appeal was filed from the trial court’s decision to grant Appellee’s
motion to compel discovery and to deny Appellant’s motion for protective order.
Because the trial court made an initial determination that there are issues of fact in
the underlying contract action that cannot be resolved without further proceedings, -9-
and that ruling is not before us for review, we do not have before us the issue of
whether there is an absolute bar to third party suits. Appellee’s claims are based on
the premise that he is not a third party, but instead, has formed his own contract with
Appellant to pay his claim. Hence, he claims that he is not an interloping third party
who seeks to interfere with the contract between the insured and the company.
Instead, Appellant looks to buttress his own contractual claim. Appellant’s arguments
ignore this distinction. However, because Appellant’s argument that Appellee is
barred from discovery is inseparable from its argument that there is a complete bar to
third party suits, we will evaluate the cases Appellant cites to determine whether they
alter the trial court’s discretionary power over discovery matters. We note that a
finding by us that there is no bar to discovery, or even no absolute bar to third party
suits, does not change the trial court’s ability, if presented with additional evidence
and based on the particular facts of the case following discovery, to ultimately
determine that the underlying action may, nevertheless, be so barred.
{¶13} Appellant initially cites three cases, Chitlik v. Allstate Ins., 34, Ohio
App.2d 193 (1973); D.H. Overmyer Telecasting Co., Inc. v. American Home Assur.
Co., 29 Ohio App.3d 31 (8th Dist.1986); and Murrell v. Williamsburg Local School
Dist., 92 Ohio App.3d 92, 634 N.E.2d 263 (12th Dist.1993) in support of its contention
that “[i]t is well settled under Ohio law that an injured party cannot directly sue the
insurer of an alleged tortfeasor for bad faith or other damages because the injured
party is not a third-party beneficiary of a liability insurance contract.” (Appellant’s Brf.,
p. 5.) Appellant cites a fourth case, Snyder, supra, for the proposition that a plaintiff
cannot maintain an action directly against a tortfeasor’s liability insurer for causes of -10-
action that are the result of the insurer’s own actions. (Appellant’s Brf., p. 6.) While
they may have some persuasive effect, none of the caselaw cited by Appellant is
binding on us or on the trial court. More importantly, these cases do not stand for the
principles purported by Appellant or apply to the facts of this case as reflected in the
record, here.
{¶14} Both Chitlik and Overmyer are Eighth District Court of Appeals cases.
In Chitlik the Eighth District dismissed a suit filed directly against an insurer for the
torts of the insured. The Chitlik court cited the pre-1999 version of R.C. 3929.06 for
the principle that an injured party must first obtain a money judgment for damages
against the insured party before the injured party can file any action directly against
the insurer for payment of the injury caused by the insured. The appellant in Chitlik
attempted to short-cut the necessary step of establishing the insured’s liability and
the amount of damages before taking action against the insurer for payment and
instead filed suit directly against the insurance company to recover for the insured’s
tort. The appellant in Chitlik claimed that he was entitled to relief directly from the
insurance company because, due to the injury inflicted on him by the insured, he was
a third party beneficiary of the liability insurance contract between Allstate and the
insured and “may maintain an action against Allstate based on that contract.” Chitlik
at 195. The Eighth District applied the well-established principle that injured parties
are not third party beneficiaries of insurance agreements, in addition to the
requirement found in the version of R.C. 3929.06 then in effect, to dismiss the suit.
Applying the earlier version of R.C. 3929.06, the Chitlik court found that an injured
party cannot sue an insurance company directly for the torts of the insured. Chitlik -11-
does not establish a bar against direct suits against an insurance company for
damages allegedly caused by the insurance company itself. Instead, it affirms the
principle that an injured party may not sue an insurance company for the torts of the
company’s insured before the insured’s liability is even established. Nothing in Chitlik
addresses discovery generally, and nothing in Chitlik addresses what discovery, if
any, may ultimately be sought by a party who is not a policyholder but is suing an
insurance company for injuries caused by the company’s insured.
{¶15} In Overmyer the Eighth District revisited the relationship between an
injured third party and the alleged tortfeasor’s insurance company. Appellant in
Overmyer sought a declaratory judgment as to coverage for an alleged tort before
obtaining a judgment against the tortfeasor. The Overmyer court found that although
a party to the contract, generally the insured, may be entitled to a declaratory
judgment on the issue of coverage, a party who claims injury, but has not obtained
judgment against the alleged tortfeasor, does not have “rights in danger of
impairment or loss” sufficient to establish standing to seek a declaratory judgment
from the tortfeasor’s insurance company. Id. at 33. The Overmyer decision held that
a third party who had not even obtained a judgment establishing the liability of the
insured party was not entitled to a declaratory judgment on the issue of coverage by
the tortfeasor’s insurance policy. Again, nothing in this decision addresses discovery
by any party.
{¶16} The Twelfth District, in Murrell, addressed the same point made by the
Eighth District in Chitlik, citing the earlier version of R.C. 3929.06 that an injured party
may “file a supplemental petition against the tortfeasor’s insurer after recovering a -12-
judgment against the tortfeasor which has not been satisfied within thirty days.”
Murrell, supra, at 94. The caselaw cited by the Murrell court in support of this
proposition discusses suits filed directly against the insurance company seeking
damages for torts committed by the insured party. The plaintiff in Murrell filed suit
against a school district and the district’s insurance company for damage alleged to
have been caused by a bus driver. The plaintiff sought recovery directly from the
company for “bad faith” in denying his claim for recovery. The injured plaintiff did not
have, and apparently never sought, a judgment establishing the bus driver’s liability
or the amount of damage. The suit was dismissed as frivolous after the plaintiff did
not comply with the insurance company’s request that he voluntarily dismiss the suit
and his subsequent failure to respond to the company’s motion to dismiss. An
appeal was filed from the dismissal of the suit and order awarding attorney’s fees to
the insurance company. The Murrell court confirmed that direct suits against an
insurance company for the torts of the insured, without establishing liability of the
insured, are not permitted under Ohio law and suggested that an insurance
company’s duty to adjust claims in good faith runs only from the company to the
insured and not to third parties. Discovery was not an issue in these cases. More
importantly, these cases are completely distinct, factually. They prohibit a claimant
from directly suing an insurance company for the torts of the insured without first
getting a judgment as to the insured’s liability. Appellee in this case has received
such a determination, but more importantly, he seeks to sue the company not for
payment of his damages pursuant to the policyholder’s insurance policy, but directly,
under the verbal contract he claims to have with the company. He acknowledges -13-
that he is not a policyholder, but is suing to enforce the terms of his own alleged
contract with Appellant, and not Mr. Reed’s (the insured’s) contract. This is the
crucial distinction that makes Appellant’s caselaw inapplicable and thus, its reliance
on this same caselaw to provide a blanket bar to discovery equally specious.
Nothing in these decisions suggests that the trial court’s decision in the matter at bar
to allow discovery was prohibited by law or an abuse of discretion.
{¶17} Finally, Appellant moves away from cases that involve an injured party
suing an insurance company directly for the torts of the insured and cites Snyder v.
Lincoln General Ins. Co., for the proposition that a third party who alleges common
law causes of action against an insurance company is barred from suits under the
same rationale provided in Chitlik. The Snyder court stated that “[t]he Chitlick [sic]
rule was imposed to prevent the admission of a tortfeasor’s insurance in a tort case
as the disclosure of said insurance coverage is inadmissible at trial because it is
highly prejudicial to the defendant.” Snyder, supra, p. 2. The Snyder court further
clarified that “in actions for damages by reason of alleged negligence, evidence as to
the financial standing of the parties is inadmissible,” and concluded, “[t]herefore, the
trial court properly dismissed appellant’s claim against Hoover and Lincoln General.”
Snyder, supra, p. 2. In addition to finding that the suit was correctly dismissed to
prevent the improper disclosure of financial information, the Snyder court further
identified as a basis for dismissal the trial court’s finding that “appellant suffered no
damages as he did not miss the statute of limitations nor was he harmed by Lincoln
General’s failure to afford appellant the opportunity to settle early * * * [h]aving failed
to assert any legally recognizable damages, appellant failed to state a claim upon -14-
which relief could be granted.” Id. The appeal before the Snyder court, unlike the
appeal before us, was from a Civ.R. 12(B)(6) motion, and tested only the sufficiency
of the allegations in the complaint.
{¶18} Even if Snyder provided some authority, and was not a decision of a
sister district based on a prior version of a statute that does not apply to the facts at
bar, the appellate court’s decision in Snyder does not address the issue before us. In
this instance, Appellee has passed the hurdles the injured party failed to clear in
Snyder. He has alleged damages resulting from the actions of the insurer, not the
insured; he is not first filing against the insurance company for the torts of an insured
without establishing the liability of the insured; and he is not seeking inadmissible
information (or any information) concerning the limits of the insured’s policy. This
case comes to us in a completely different posture from that addressed in Snyder
and all the rest of Appellant’s caselaw, and with completely different facts. Nothing in
Snyder suggests that the trial court in this instance, once it determined that Appellee
had adequately pleaded all of the elements of his cause of action in contract and
raised issues of material fact in order to survive dismissal in summary judgment,
abused its discretion by allowing Appellee to conduct discovery in this matter. The
issue before us is whether the trial court abused its discretion when allowing
discovery relative to the existence of a verbal contract directly between Appellee and
Appellant, not the sufficiency of the allegations in the complaint. The opportunity to
test the complaint has passed and the question of whether Appellee should have
survived summary judgment is not properly before us. Appellant is certainly free to
continue or renew arguments as to the existence of a bar to all or a portion of -15-
Appellee’s underlying suit, under the same or new theories, as facts emerge or
change during discovery. If discovery discloses material facts that do not support
Appellee’s position, his action may well be dismissed. Currently, however, all such
arguments are issues to be determined by the trial court, alone, at some future date.
The only issue properly raised to this Court is whether Appellee should be allowed to
conduct discovery in his contract action against Appellant. The record here clearly
reveals that Appellant has failed to establish an absolute bar to discovery and the
trial court’s ruling allowing discovery was not an abuse of discretion.
{¶19} Appellant urges that even if Appellee is able to maintain an action
against the company alleging the existence of a verbal contract, he is “barred from
obtaining the discovery he seeks directly from Nationwide.” (Appellant’s Brf., p. 6.)
First, Appellant argues that no non-policyholder may ever obtain discovery from an
insurance company. This argument is based on the proposition that no non-
policyholder may even sue an insurance company. As we have already seen,
however, the caselaw Appellant cites for this general proposition does not support it.
None of the cases on which Appellant relies supports such a broad proposition. In
the alternative, according to Appellant, Appellee is barred because the claim file and
its claims adjusters are protected from discovery and from depositions by the
doctrines of privilege or work product. In the trial court, Appellant failed to identify
any privilege, but on appeal Appellant now specifies attorney-client privilege.
However, Appellant has completely failed to properly invoke this privilege. Appellant
has never specifically identified the protected documents, has offered no privilege log
and has provided no indication that any of the documents requested were ever -16-
transferred to an attorney to receive advice or counsel. Nothing in the record
supports Appellant’s claim that any portion of the file is protected by either the work-
product doctrine or the attorney-client privilege.
{¶20} Appellant urges us to generally adopt the rare instances in which courts
have found individual reports or other discrete pieces of information to be protected
and broadly apply these principles to include a complete protection of the claims file
at issue. The fact that courts have occasionally found that documents that have
been transmitted to or otherwise provided to retained counsel representing an
insurance company in a specific litigation are protected is far from a broad automatic
protection for all insurance claims files in all situations. Insurance claims files are, in
fact, discoverable in a variety of suits, including actions under R.C. 1343.03(C) for
prejudgment interest. In such suits the Ohio Supreme Court has found that if an
insurance company “asserts the attorney-client privilege with regard to the contents
of the ‘claims file’ the trial court shall determine by in camera inspection which
portions of the file, if any, are so privileged.” (Emphasis sic.) Peyko v. Frederick, 25
Ohio St.3d 164, 167, 495 N.E.2d 918 (1986).
{¶21} Appellant relies heavily on the Ohio Supreme Court’s decision in In re
Klemann, 132 Ohio St. 187, 5 N.E.2d 492 (1936), which concerned a specific report
that was prepared at the instruction of the insurance company, then delivered to, and
retained by, its attorney for the purpose of preparing for litigation. The Court in
Klemann found that under these circumstances the subject report was privileged so
as to prevent the attorney from giving testimony concerning the report. This specific
privilege attaches to a document created for, transmitted to, and retained by an -17-
attorney in the course of litigation. The privilege allows a client to prevent the
attorney’s disclosure of the document’s contents. However, this limited privilege
does not serve to protect the entire contents of a claims file, which was not generated
for an attorney or transmitted to him. This is also not a rule that protects Appellant
from disclosing its own information kept in the ordinary course of business, which is
what Appellee seeks and what Appellant claims is barred.
{¶22} Although there are a small minority of district court decisions that cite
Klemann in passing, none of them apply it in the broad manner suggested by
Appellant. The Supreme Court, however, has both distinguished and limited
Klemann in every decision that refers to it for any principle other than its statement of
the broad policy purposes behind a privilege. The Court has summarized its various
distinctions and explanations of Klemann succinctly: “A document of the client
existing before it was communicated to the attorney is not within the present privilege
so as to be exempt from production. But a document which has come into existence
as a communication to the attorney, being itself a communication is within the
present privilege.” (Emphasis sic.) State v. Jeffries, 119 Ohio St.3d 265, 2008-Ohio-
3865, 893 N.E.2d 487, ¶10. Thus, documents produced by a company in the course
of business do not become privileged merely because they are given to an attorney,
and they are certainly not subject to privilege where there is no indication that they
were ever transmitted to an attorney or referenced when seeking representation.
When documents requested in discovery were produced by the company itself, “there
are no statutory provisions which provide against the production of such reports or
records or testimony concerning them by the party, his nonattorney employees, or -18-
anyone else.” In re Story, 159 Ohio St. 144, 148, 111 N.E.2d 385 (1953)
(distinguishing the finding in Klemann that the party’s attorney could not reveal the
contents of a report that was produced for him and remained in his possession as it
was protected by privilege). Although the record reveals that Appellant has not
properly invoked any privilege or identified any specific material that would be subject
to some privilege because of their misguided argument that the entire file is
protected, we believe that the best course is that prescribed by the Supreme Court in
Peyko. On remand for further proceedings, the trial court is ordered to examine the
claims file to determine what material, if any, may be protected by attorney-client
privilege, prior to the disclosure to Appellee.
{¶23} In addition to attorney-client privilege, Appellant also invokes the work-
product doctrine on appeal. The work-product doctrine, unlike the attorney-client
privilege, belongs to the attorney, and protects the “attorney’s mental processes in
preparation of litigation, establishing ‘a zone of privacy in which lawyers can analyze
and prepare their client’s case free from scrutiny or interference by an adversary.’”
Squire, Sanders, & Dempsey, L.L.P. v. Givaudan Flavors Corp., 127 Ohio St.3d 161,
2010-Ohio-4469, 937 N.E.2d 533, ¶55. We note that the work-product doctrine does
not afford complete protection. Hickman v. Taylor, 329 U.S. 495, 67 S.Ct.385 (1947).
In Ohio, “attorney work product, including but not limited to mental impressions,
theories, and legal conclusions, may be discovered upon a showing of good cause if
it is directly at issue in the case, the need for the information is compelling, and the
evidence cannot be obtained elsewhere.” Squire, Sanders & Dempsey, ¶60. A
showing of good cause under Civ.R. 26(B)(3) requires a demonstration of the need -19-
for the materials, i.e., a showing that the documents or the information they contain
are relevant and otherwise unavailable. Jackson v. Greger, 110 Ohio St.3d 488,
2006-Ohio-4968, 854 N.E.2d 487, ¶16. Although, at its core, the work-product
doctrine protects attorney’s own thoughts and processes, protection extends to “[a]ny
notes, documents, or memoranda prepared by the attorney or his representatives in
preparation of litigation” in addition to “tangible things prepared in anticipation of
litigation or for trial by or for [a] party.” State v. Hoop, 134 Ohio App.3d 627, 640, 731
N.E.2d 1177 (12th Dist.1999); Civ.R. 26(B)(3). In Dennis v. State Farm Ins. Co., 143
Ohio App.3d 196, 757 N.E.2d 849 (2001), we reversed a trial court’s decision
granting a protective order to an insurance company which shielded a claims file and
prevented depositions of claims handlers. In Dennis, the party seeking discovery
was the insured who had alleged the company had breached a good faith duty in
denying the insured’s claim for recovery. Although Dennis is certainly factually
distinct from the matter now before us, our finding that there is “nothing in Civ.R.
26(B)(3) that can be read as a limitation on a party’s right to initiate the oral
deposition of an opposing party” is applicable to any instance in which a party seeks
to avoid a deposition by invoking the work-product doctrine. Id. at 201. As we held in
Dennis, the work-product doctrine, which explicitly protects only documents and
tangible things, does not prevent Appellant from taking the depositions of the claims
representative who met with Appellee, even if “[she] has no knowledge of any facts
outside of those contained in the claims file.” Id. at 200.
{¶24} With regard to the balance of the material that may be contained in the
claims file, even if portions of the file produced prior to the instigation of the lawsuit -20-
might be considered work-product, and it is not clear in this instance that they would
be, Appellant has failed to provide the necessary statement under Civ.R. 26(C)
detailing the effort made to resolve the matter prior to seeking a protective order.
The same failure was grounds for reversal in Dennis. Even raised for the first time in
this appeal, Appellant has failed to explain why the material in the claims file should
fall within the work product protection. In suits between an insured and the insurer,
such as Dennis, courts have held that material in the claims file is protected only after
a claim is denied, because up to that point the insurance company is merely carrying
out its contractual responsibilities to the insured. Id. at 203, also, Boone v. Vanliner
Ins. Co., 91 Ohio St.3d 209, 744 N.E.2d 154 (2001). Appellee has explicitly limited
the material he seeks from the claims file to that prepared prior to the date his lawsuit
was filed. Although he does not have the clear cut relationship to the insured that the
plaintiff did in Dennis, and is not an actual policyholder, the origin and the nature of
his alleged direct contractual relationship to the insurance company is the subject
matter of the underlying dispute. Appellee is attempting to prove that he has a
contract, although a verbal one, with Appellant, even while acknowledging that he is
not a policyholder. Under these circumstances Appellee’s cause of action, his motion
to compel and his responses to Appellant’s motion for protective order, appear to
establish the elements of a good cause exception to the work product doctrine.
{¶25} The information the trial court ordered Appellant to produce is directly at
issue, and because the existence of an oral contract is the pivotal question in this
lawsuit, the need for discovery on this issue is compelling. Squire, Sanders, &
Dempsey, L.L.P, ¶55, 61-62, and paragraph two of the syllabus. The information -21-
Appellee seeks is under the sole control of Appellant and is not otherwise available to
him. Id.; also Jackson v. Greger, at paragraph two of the syllabus. Appellant has
offered no argument or caselaw in support of its contention that all material in the
claims file is protected by the work-product doctrine other than the general assertion
that the lawsuit itself should be barred. As we have explained, whether or not
Appellant is correct that this suit should eventually be dismissed is not an issue
before this Court. Appellant has offered no statement of efforts to accommodate
Appellee’s discovery requests, and has advanced no evidence or even arguments to
prove the material in the claims file might be considered work product. Appellant has
made no showing and requested no hearing to identify what material might be
privileged. The documents sought by Appellee do not appear to be relevant to a
denial of a claim, as was the case in Breech v. Turner, 127 Ohio App.3d 243 (4th
Dist.1998) (where an insured’s statements to his insurer’s investigator for the
purpose of determining liability were protected). The question of the insured’s liability
is settled, here. The information sought is directly relevant to the question of whether
an enforceable contract existed between Appellant and Appellee and appears
reasonably calculated to lead to admissible evidence that would facilitate the
resolution of this issue and cannot be otherwise obtained. Civ.R. 26(B)(1) and (3).
Under these circumstances, the trial court’s decision to compel discovery was not an
abuse of discretion. However, pursuant to Peyko, and out of an abundance of
caution to ensure that no genuinely privileged material is turned over, the trial court
“shall determine by in camera inspection which portions of the file, if any, are so
privileged.” Id. at paragraph two of the syllabus. -22-
Conclusion
{¶26} Appellant failed to discharge its burden under Civ.R. 26 to show the
material sought was protected by attorney-client privilege or the work-product
doctrine. There is no general bar to discovery of a claims file. The decision to allow
discovery was not an abuse of discretion. The requests were directly relevant to the
subject matter of the action and reasonably calculated to lead to discoverable
evidence. However, because Appellant has belatedly invoked privilege, pursuant to
Peyko v. Frederick an in camera inspection is required to determine if any portion of
the file is privileged. The matter is remanded for an in camera inspection of the
claims file and further proceedings according to law and consistent with this Court’s
Opinion.
Donofrio, J., concurs.
Vukovich, J., concurs.