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Jesus Antonio Garcia and Christina v. Progressive Choice Insurance

July 30, 2012

JESUS ANTONIO GARCIA AND CHRISTINA ELIZABETH PALMER GERACI,
PLAINTIFFS,
v.
PROGRESSIVE CHOICE INSURANCE COMPANY,
DEFENDANT.



The opinion of the court was delivered by: Hon. Nita L. Stormes U.S. Magistrate Judge United States District Court

ORDER DETERMINING THE PARTIES' JOINT MOTION FOR DETERMINATION OF A DISCOVERY DISPUTE AND GRANTING PLAINTIFF'S REQUEST FOR PRODUCTION (Dkt. No. 30.)

Plaintiff Christina Elizabeth Palmer Geraci ("Plaintiff") commenced this breach of contract action against Defendant Progressive Choice Insurance Company ("Defendant" or "Progressive") in the Superior Court of California, County of San Diego; it was removed to federal court by Defendant on the basis of diversity jurisdiction.*fn1 (Dkt. No. 1.) Currently pending before the Court is the parties' joint motion for a determination of a discovery dispute. (Dkt. No. 30.)

I. FACTUAL BACKGROUND

This case arises out of the denial of an insurance claim. Plaintiff alleges that her 2006 Jeep Grand Cherokee, insured by Defendant, was stolen in 2008 and found completely burned hundreds of miles away from its original location. (Dkt. No. 1-1 ¶ 6.) The complaint alleges that Progressive subsequently denied Plaintiff's claim for coverage in violation of the insurance contract. Id. ¶¶ 10-19.

The parties are in general agreement as to the circumstances that led to the instant discovery dispute. Early in the discovery process, Defendant disclosed Teresa Starinieri, an outside attorney hired by Progressive during the investigation of Plaintiff's claim, as a witness. (Dkt. No. 30 at 19 ¶ 4 and 33 ¶ 4*fn2 .) At the time of disclosure, Defendant indicated that Ms. Starinieri would testify about "her legal work and advice in connection with the claim." Id. As part of Defendant's response to Plaintiff's discovery demands, it disclosed the claims file for the underlying insurance claim and the electronic claim activity notes. Id. at 19 ¶ 5 and 33 ¶ 3. This claims file included communications between Ms. Starinieri and Elizabeth McAndrew, a claims adjuster employed by Defendant. Id. at 33 ¶ 3. These items were produced "subject to objection on grounds of attorney-client privilege." Id.

It came to light at Ms. McAndrew's deposition that there may be some e-mail communications between her and Ms. Starinieri that were not in the claims file. Id. at 21 ¶ 11 and 34 ¶ 5. At the request of Plaintiff's counsel, Defendant conducted a search for the e-mails, which were on an e-mail system no longer in use. Id. at 34 ¶ 6. According to Defendant, some e-mails were recovered directly from Ms. Starinieri, and were disclosed to Plaintiff's counsel on February 1, 2012, and on March 20, 2012. Id. at 34-35 ¶ 7.

On May 25, 2012, counsel for Defendant received a set of documents that had been recovered from Progressive's old e-mail system. Id. at 35 ¶ 8. After reviewing the materials, Defendant disclosed some of the documents to Plaintiff on June 6, 2012, but withheld those that contained privileged communications between Progressive employees and Ms. Starinieri. Id. ¶ 9. In doing so, Defendant advised that it was withdrawing its previously asserted advice of counsel defense,*fn3 and was now claiming attorney-client and attorney work product privileges with respect to the withheld communications, identified as Item Nos. 1-109 on the amended privilege log. Id. at 21 ¶ 12, 35 ¶¶ 9-10, 43-58. The amended privilege log submitted by Defendant also lists communications that were previously disclosed. Id. at 59-76. On June 18, 2012, Defendants filed a summary judgment motion in this action, asserting that coverage under the insurance contract is barred because of misrepresentations made by Plaintiff and her husband during the investigation of the claim. (Dkt. No. 26.)

Pursuant to the scheduling order issued in this action, fact discovery closed on January 30, 2012. (Dkt. No. 23 ¶ 1.) However, it is evident that the parties continued to engage in discovery well past this deadline. See, e.g., Dkt. No. 30 at 19-20 ¶ 7. Although this joint motion is untimely, this Court chooses to exercise its discretion to address the merits of the motion.

II. THE POSITIONS OF THE PARTIES

Plaintiff asserts that Defendant has waived attorney-client privilege with respect to the newly discovered e-mails and with respect to the communications already produced. Due to the fact that Defendant maintained the "advice of counsel" defense throughout the discovery process, Plaintiff argues Defendant should be bound to this defense and requests that this Court review the e-mails listed in the amended privilege log to "decide upon the propriety of Progressive's attempt to suddenly and drastically alter the course of this litigation." (Dkt. No. 30 at 5.) She argues that her litigation and trial strategy was based upon Defendant's assertion that it relied on the advice of counsel; she claims she did not ask questions to witnesses because of Ms. Starinieri's planned deposition, she did not know she did not have the entire case file, and she did not hire a claims handling expert. Id. at 11. Plaintiff requests that the e-mail communications be disclosed and that Ms. Starinieri be required to testify at a deposition without claiming privilege.*fn4 Id. at 17. Alternatively, Plaintiff seeks to re-depose witnesses, at Defendant's cost. Id. at 15.

Defendant argues that the newly discovered e-mails are confidential attorney-client communications, and that they have never been disclosed to outside parties. Id. at 6. As a result, Defendant argues that there has been no waiver of privilege with respect to Item Nos. 1-109 on the amended privilege log. Id.

III. GOVERNING LAW

In an action in federal court that is based on diversity of citizenship, state law governs questions of attorney-client privilege. Fed. R. Evid. 501; Star Editorial, Inc. v. United States District Court for the Central District of California (Dangerfield), 7 F.3d 856, 859 (9th Cir. 1993) (California law governs questions of privilege in a diversity action where state law provides the rule of decision). In California, privileges such as the one between attorney and client are created and governed by statute. HLC Properties, Ltd. v. Superior Court, 35 Cal.4th 54, 59 (2005).

The attorney-client privilege under California law is outlined in § 954 of the California Evidence Code. It provides that "a client...has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer..." Cal. Evid. Code § 954. The purpose behind such a privilege is to protect the confidential relationship between attorneys and their clients, in order to "promote full and open discussion of the facts and tactics surrounding individual legal matters." Mitchell v. Superior Court (Shell Oil Co.), 37 Cal.3d 591, 599 (1985). "[T]he public policy fostered by the privilege seeks to insure 'the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, in order that the former may have adequate advice and a proper defense.'" Id.; citing Baird v. Koerner, 279 F.2d 623, 629 (9th Cir. 1960). Courts of this state have confirmed that preservation of the confidentiality of the attorney-client relationship outweighs the possibility of an unjust decision. Mitchell, 37 Cal.3d at 600; Costco Wholesale Corp. v. ...


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