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Donald anderson, et al v. Nationwide Mutual Insurance Co.

April 19, 2013

DONALD ANDERSON, ET AL., PLAINTIFFS,
v.
NATIONWIDE MUTUAL INSURANCE CO., ET AL., DEFENDANTS.



ORDER

This matter came before the court on April 5, 2013, for hearing of plaintiffs' motion to compel discovery. (Doc. No. 33.) Attorney Daniel Kohls appeared on behalf of the plaintiffs and attorney Megan Lieber appeared on behalf of defendant Nationwide Mutual Insurance Company.

BACKGROUND

According to the parties' Joint Statement of Discovery Disagreement ("JS"), filed March 29, 2013, plaintiffs are mobile home owners. (JS (Doc. No. 35) at 3.) On November 28, 2006, plaintiffs initiated a lawsuit against Grant Park Development, Inc., and others, in the Yolo County Superior Court, claiming that Grant Park Development, Inc., had not properly maintained the mobile home park where plaintiffs' mobile homes were located. (Id.)

From 2002 to 2012, Grant Park Development, Inc., was insured by Nationwide Mutual Insurance Company ("Nationwide"). (Id.) On June 4, 2007, Nationwide accepted the defense of Grant Park Development, Inc. (Id.) On March 3, 2010, however, Nationwide withdrew its coverage of Grant Park Development, Inc., with respect to plaintiffs' claims. (Id.)

In September of 2011, plaintiffs entered into a settlement agreement with Grant Park Development, Inc., which formed the basis for a stipulated judgment entered against Grant Park Development, Inc. in the Yolo County Superior Court (Id.) Pursuant to that settlement agreement, Grant Park Development, Inc., also assigned its rights to any claim Grant Park Development, Inc., had against Nationwide to the plaintiffs. (Id.) The Yolo County Superior Court approved and entered the stipulated judgment on September 30, 2011. (Id.)

Plaintiffs initiated this action against Nationwide, and another insurer, on February 27, 2012, for wrongfully refusing to defend and indemnify Grant Park Development, Inc., and seeking to enforce the stipulated judgment.*fn1 (Id. at 3-4.) The matter was removed by defendant Nationwide to this court on April 20, 2012. (Doc. No. 1.)

Plaintiffs' filed the motion to compel currently pending before the court on March 25, 2013. (Doc. No. 33.) Therein, plaintiffs seek production of documents which Nationwide relied on in rejecting coverage under its insurance policy issued to Grant Park Development, Inc., during the period Nationwide was defending Grant Park Development, Inc. (JS (Doc. No. 35) at 3-4.) Defendant Nationwide objects to production, asserting that the requested documents are protected pursuant to the attorney-client privilege. (Id. at 4.)

ANALYSIS

The party opposing discovery has the burden of clarifying, explaining and supporting its objections to discovery requests with competent evidence. DirectTV, Inc. v. Trone, 209 F.R.D. 455, 458 (C.D. Cal. 2002) (citing Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)). In addition, as the party opposing the propounded discovery in this case defendant Nationwide also bears the ultimate burden of showing that the requested discovery should not be allowed. Cable & Computer Tech. Inc. v. Lockheed Sanders, Inc., 175 F.R.D. 646, 750 (C.D. Cal. 1997). Finally, as the party asserting the attorney-client privilege here, Nationwide bears the burden of establishing that the applicability of the privilege to the material sought. San Diego Professional Association v. Superior Court, 58 Cal. 2d 194, 199 (1962); Greyhound Corp. v. Superior Court, 56 Cal. 2d 355, 398 (1961); American Airlines Inc. v. Superior Court, 114 Cal. App. 4th 881, 887 (2003).

Under California law, evidentiary privileges, including the attorney-client privilege, are governed by statute.*fn2 HLC Properties, Ltd. v. Superior Court, 35 Cal.4th 54, 59 (2005). The attorney-client privilege "is a legislative creation," that courts "have no power to expand [] or to recognize implied exceptions," and thus it "should be narrowly construed" because it prevents the "admission of relevant and otherwise admissible evidence." McKesson HBOC, Inc. v. Superior Court, 115 Cal. App.4th 1229, 1236 (2004). See also Fru-Con Const. Corp. v. Sacramento Mun. Utility Dist., Civ. No. S-05-0583 LKK GGH, 2006 WL 2255538, at *1 (E.D. Cal. Aug. 7, 2006) ("privileges under California law are narrowly construed as their invocation tends to impair the search for the truth").

Generally, California law provides that communications between a lawyer and a client which are intended to be confidential are protected from disclosure. CAL. EVID. CODE § 952. However, California Evidence Code § 962 states that:

Where two or more clients have retained or consulted a lawyer upon a matter of common interest, none of them, nor the successor in interest of any of them, may claim a privilege under this article as to a communication made in the course of that relationship when such communication is offered in a civil proceeding between one of such clients (or his successor in interest) and another of such clients (or his successor in interest).

CAL. EVIDENCE CODE § 962 (emphasis added).

In this regard, "when an insurer, is required by its contract of insurance, employs counsel to defend its insured, any communication with the lawyer concerning the handling of the claim against the insured, is necessarily a matter of common interest to both the insured and the insurer." Glacier Gen. Assurance Co. v. Superior Court, 95 Cal. App.3d 836, 842 (1979). Moreover, when an insured assigns its causes of action against an insurer to a third party, "[s]uch an assignment carries with it all the rights of the assignor in ...


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