United States District Court, D. Montana, Butte Division
DANA L. CHRISTENSEN, Chief District Judge.
Before the Court is Plaintiff Barnard Pipeline, Inc.'s motion to compel documents and Defendant Travelers Property Casualty Company of America's motion for a protective order. Barnard seeks to compel documents from Travelers that have been withheld on the basis of attorney-client privilege and work product doctrine. Travelers seeks a protective order precluding the deposition of Ron Clark, Travelers' counsel in this matter. For the reasons explained below, the Court orders that Travelers submit certain withheld documents for an in camera review and denies the balance of Barnard's motion, and reserves ruling on Travelers' motion until after the Court conducts its in camera review of the documents.
Factual and Procedural Background
In 2010, Barnard contracted with Kern River Gas Transmission Company to complete the Apex Pipeline Expansion Wasatch Loop project ("the Project"), which involved the construction and installation of a 28-mile gas pipeline along a right of way traveling through the Wasatch Mountain Range in Utah. In association with the Project, Barnard purchased a "builder's risk" insurance policy from Travelers. This litigation stems from a dispute regarding coverage of Barnard's claimed losses associated with damage to the right of way. In addition to seeking a declaratory judgment regarding coverage, Barnard brings a claim of bad faith insurance claims handling against Travelers under Montana's Unfair Trade Practices Act, Mont. Code Ann §§ 33-18-201 et seq. The Court recently granted partial summary judgment to Barnard on an issue concerning coverage. The current discovery dispute pertains to Barnard's bad faith claim.
Barnard seeks to depose Travelers' counsel, Ron Clark ("Clark"), and to compel production of documents appearing in Travelers' claims file that were either generated by or sent to Clark. Travelers contends it is entitled to a protective order prohibiting the deposition of Clark and that the documents at issue are not discoverable pursuant to the attorney-client privilege and the work product doctrine.
A time line of events is necessary to bring the issues at bar in focus. Because of unprecedented precipitation levels in the Wasatch Range in the fall and winter of 2010, Barnard experienced problems with the Project soon after construction began. In December 2011, Barnard notified Travelers of its claim for coverage, and Dennis Luoma ("Luoma") was assigned to adjust the claim.
Luoma investigated the claim and made periodic entries in his General Adjuster Activity Log reflecting the progress of his investigation. On June 27, 2012, Luoma and Barnard's General Counsel Pat Brown met to discuss Barnard's proof of loss statement. At the meeting, Luoma requested further documentation regarding Barnard's claim. Barnard appears to have submitted the requested documentation on July 19, 2012 and expected a claims decision would be forthcoming within 60 days of the receipt of this additional documentation.
Travelers, however, did not render its decision within 60 days of receiving the additional documentation. On September 5, 2012, Travelers retained attorney Clark. Luoma testified in his deposition that Clark was initially hired in order to conduct an Examination Under Oath ("EUO") of a Barnard representative. According to Luoma's Activity Log, however, by October 24, 2012, Clark was performing "a coverage analysis" for Travelers. (Doc. 60-4 at 7.) Very few substantive entries appear in Luoma's adjuster activity log after this date.
Barnard filed suit against Travelers on January 15, 2013, seeking a declaratory judgment and tort damages for bad faith claims handling. Barnard served Travelers with its amended complaint on February 22, 2013. In March of 2013, Travelers conducted an Examination Under Oath ("EUO") of the Barnard representative. Clark conducted the EUO. Travelers finally denied Barnard's claim for coverage for damage to the right of way on August 23, 2013. Clark drafted the denial letter, though it appears some changes were made to the draft before Travelers' representatives signed and sent the letter to Barnard.
The parties dispute the role that Clark played in the claim handling process. Barnard asserts that Luoma "outsourced to Clark" the claim handling investigation once Travelers retained Clark. (Doc. 60 at 7.) Travelers counters that it hired Clark merely to provide legal advice and that any fact investigation Clark may have performed was strictly in association with his rendition of legal advice.
The record does not reveal the precise contours of Clark's activities during the claim handling process or whether or to what degree Clark was engaged in any factual investigation. Barnard points to the lack of substantive notations in the Adjuster Activity Log after Luoma's meeting with Brown to support its argument that Clark was at the center of the claims investigation once Travelers retained him. Barnard asserts that the absence of any notations is significant because Travelers' internal policies require adjusters to fully document their claim investigation such that the claim file "should speak for itself." (Doc. 60-5 at 8.) Meanwhile, Travelers cites the deposition testimony of Luoma where he stated that because of "an oversight" not all of his investigative activities were logged in the activity log and that he continued to perform many investigative activities after Travelers retained Clark. (Doc. 70-1 at 3.)
A federal court sitting in diversity applies the privilege law of the forum state, Theme Promotions, Inc. v. News America Marketing FSI, 546 F.3d 991, 1007 (9th Cir. 2008), and applies federal law in determining the application of the work product doctrine. Moe v. System Transport, Inc., 270 F.R.D. 613, 622 (D. Mont. 2010). Here, the Court applies Montana privilege law and applies federal law with respect to the work product doctrine.
I. Attorney-Client Privilege
Montana's attorney-client privilege statute provides as follows:
(1) An attorney cannot, without the consent of the client, be examined as to any communication made by the client to the attorney or the advice given to the client ...