Judge: Robert B. Broadbelt, Case: 21STCV28642, Date: 2024-07-11 Tentative Ruling

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Case Number: 21STCV28642    Hearing Date: July 11, 2024    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTY:                 Plaintiff Los Angeles Unified School District          

RESPONDING PARTY:       Defendant Scottsdale Indemnity Company

Motion for Court Determination of Defendant Scottsdale Indemnity Company’s Claim of Privilege

The court considered the moving, opposition, and reply papers filed in connection with this motion.

DISCUSSION

Plaintiff Los Angeles Unified School District (“Plaintiff”) moves the court for an order determining, pursuant to Code of Civil Procedure section 2031.285, that the attorney-client privilege or the attorney work production protection do not apply, or that defendant Scottsdale Indemnity Company (“Defendant”) has waived any claim of such privilege or protection, as to (1) all or part of Defendant’s production of documents identified as Bates Nos. SCD0000732 – SCD0001049, and (2) the portions of the March 25, 2024 deposition of Ana Campos concerning Exhibit 17 to that deposition.

“If electronically stored information produced in discovery is subject to a claim of privilege or of protection as attorney work product, the party making the claim may notify any party that received the information of the claim and the basis for the claim.”  (Code Civ. Proc., § 2031.285, subd. (a).)  “After being notified of a claim of privilege or of protection under subdivision (a), a party that received the information shall immediately sequester the information and either return the specified information and any copies that may exist or present the information to the court conditionally under seal for a determination of the claim.”  (Code Civ. Proc., § 2031.285, subd. (b).)

As a threshold matter, the court notes that the parties have not set forth, in their briefs, the exact documents in the approximate 400-page production that Defendant contends are privileged.  (Andrade Decl., Ex. A [March 26, 2024 letter requesting the destruction of documents bates-numbered SCD0000732-SCD0001049]; Gerson Decl., ¶¶ 4-8.)  However, Defendant’s revised privilege log, dated April 19, 2024, has identified the following page numbers—which consist of emails, draft letters, counsel’s notes, and a form setting forth premium information of a third party—as privileged: (1) numbers 906-910 (attorney-client privilege); (2) numbers 912-917 (attorney-client privilege); (3) numbers 918-920 (work product protection); (4) numbers 924-928 (attorney-client privilege); (5) number 943 (work product protection); (6) numbers 956-958 (attorney-client privilege and work product protection); (7) numbers 959-962 (work product protection); (8) numbers 962-966 (attorney-client privilege); (9) numbers 1046-1049 (attorney-client privilege); and (10) counsel’s notes set forth on pages 733, 827, 831, 836, 839, 842, 845, 852, 854, 856, 858, 860, 861, 871, 972, 973, 975, 977, 1005, 1009, 1011, 1013, 1016, 1018, 1020, 1022, 1025, 1027, 1030, 1034, 1037, 1040, 1042, 1044, and 1045 (work product protection).  (Andrade Decl., Ex. F, Privilege Log, p. 1; Gerson Decl., ¶ 15 [“On April 19, 2024, [Defendant] reproduced the file with appropriate redactions of the privileged documents contained within the file, and produced alongside it a new privilege log, noting the redactions”].) 

Thus, the court has evaluated Plaintiff’s motion and Defendant’s claims of privilege as to the documents identified in Defendant’s April 19, 2024 privilege log.  

First, the court finds that Defendant has met its burden to show that the documents containing email correspondence are protected by the attorney-client privilege.  (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733 [“The party claiming the privilege has the burden of establishing the preliminary facts necessary to support its exercise, i.e., a communication made in the course of an attorney-client relationship”].)

Defendant has submitted evidence establishing that it retained (1) the law firm Selman Breitman, LLP (the “Selman Firm”) as its outside coverage counsel, and (2) the law firm Manning & Kass, Ellrod, Ramirez, Trester LLP (the “Manning Firm”) to defend defendant After School All Stars (“ASAS”) in the underlying action and in this action.  (Gerson Decl., Ex. A, McRoberts Decl., ¶ 7; Hochhausler Decl., ¶¶ 1-2, 4.)  Defendant has also submitted evidence explaining that K&K Insurance Group, Inc. (“K&K”) acted as its claims administrator, and performed various claims administrations functions, including retaining defense counsel for ASAS.  (Gerson Decl., Ex. A, McRoberts Decl., ¶ 8.)

As to the communications between Defendant (including through its claims administrator, K&K) and the Manning Firm regarding the defense of ASAS, the court finds that Defendant has made a prima facie showing that the communications were made in the course of a tripartite attorney-client relationship and therefore are protected by the attorney-client privilege because (1) “[w]hen an insurer retains counsel to defend its insured, a tripartite attorney-client relationship arises among the insurer, insured, and counsel[,]” and (2) Defendant has submitted evidence establishing that it, as the insurer for ASAS, retained the Manning Firm to represent ASAS, its insured.  (Bank of America, N.A. v. Superior Court (2013) 212 Cal.App.4th 1076, 1083; Hochhausler Decl., ¶ 4; Andrade Decl., Ex. F, Privilege Log, p. 1, ¶ 9 [email correspondence between Manning Firm and K&K].)  Thus, the “confidential communications between either the insurer [(here, Defendant)] or the insured [(here, ASAS)] and counsel [(here, the Manning Firm)] are protected by the attorney-client privilege, and both the insurer and insured are holders of the privilege.”  (Bank of America, N.A., supra, 212 Cal.App.4th at p. 1083.)

As to the communications between Defendant (including through its claims administrator, K&K) and the Selman Firm, the court finds that Defendant has made a prima facie claim of privilege by showing that (1) Defendant retained the Selman Firm to act as its coverage counsel, such that (2) the communications described in the privilege log—which describe the subject emails as confidential communications with coverage counsel—were made in the course of an attorney-client relationship.  (Gerson Decl., Ex. A, McRoberts Decl., ¶ 7; Costco Wholesale Corp., supra, 47 Cal.4th at p. 733 [party has initial burden of establishing preliminary facts of a communication made in the course of an attorney-client relationship]; Andrade Decl., Ex. F, Privilege Log, p. 1, ¶¶ 1 [email correspondence between Selman Firm and K&K], 2 [email correspondence forwarding communications from Selman Firm between K&K and Defendant], 4 [email correspondence between K&K, Selman Firm, and Defendant], 6 [email correspondence between K&K, Selman Firm, and Defendant], 8 [email correspondence between Selman Firm, K&K, and Defendant].)

Thus, the court finds that Defendant has met its burden to make a prima facie claim of privilege as to the communications between it, its claims adjuster K&K, the Manning Firm, and the Selman Firm.  (Costco Wholesale Corp., supra, 47 Cal.4th at p. 733.)

Second, the court finds that Plaintiff has not met its burden to show that the communications are not privileged.  (Costco Wholesale Corp., supra, 47 Cal.4th at p. 733 [“Once that party establishes facts necessary to support a prima facie claim of privilege, the communication is presumed to have been made in confidence and the opponent of the claim of privilege has the burden of proof to establish the communication was not confidential or that the privilege does not for other reasons apply”].)

Plaintiff contends that the privilege arising from an attorney-client relationship (whether arising from a tripartite relationship or generally) does not apply here because such privilege does not “protect an insurer’s internal communications concerning coverage issues relevant to the insured’s litigation” and Defendant “retained coverage counsel to perform [Defendant’s] investigation of the claim (i.e., claims handling)[.]”  (Reply, p. 3:1-3, 3:8-9.)  The court disagrees.

The court acknowledges that a court should determine the dominant purpose of the relationship between an insurance company and its in-house attorneys to determine whether the relationship is one of attorney-client or one of claims adjuster-insurance corporation.  (Costco Wholesale Corp., supra, 47 Cal.4th at pp. 739-740.)  If the court determines that the dominant purpose of such a relationship is not that of attorney and client, communications between the insurer and its counsel that is acting as a claims adjuster would not be protected by the attorney-client privilege.  (Id. at p. 740.)  As set forth above, Defendant met its initial burden to show the existence of an attorney-client relationship by submitting evidence establishing that it retained the Selman Firm as its coverage counsel, such that it is presumed that the communications were made in confidence.  (Gerson Decl., Ex. A, McRoberts Decl., ¶ 7; Costco Wholesale Corp., supra, 47 Cal.4th at p. 733.)

Plaintiff contends that Defendant’s relationship with the Selman Firm is more analogous to claims adjuster-insurance company than attorney-client.  In support of this contention, Plaintiff relies on the following two assertions made by Defendant in its motion for summary judgment or, alternatively, summary adjudication: (1) Defendant “retained coverage counsel who promptly sought information necessary for [Defendant’s] coverage investigation[,]” and (2) Defendant “promptly retained coverage counsel and promptly agreed to defend [Plaintiff] under a reservation of rights.”  (Andrade Reply Decl., Ex. H, p. 24:4-5, 24:8-11.)  The court finds that these two statements do not show that the “dominant purpose” of the relationship between Defendant and the Selman Firm was that of claims adjuster-insurance corporation.  These statements do not establish that the Selman Firm was acting solely as a claims adjuster, or even acting mostly as a claims adjuster, on behalf of Defendant.  As set forth above, the inquiry concerns the “dominant purpose” of the relationship between Defendant and the Selman Firm.  (Costco Wholesale Corp., supra, 47 Cal.4th at p. 739 [emphasis added].) 

Thus, the court finds that Plaintiff has not shown that the attorney-client privilege does not apply on the ground that the dominant purpose of Defendant and the Selman Firm’s relationship was that of claims adjuster-insurance corporation.  Moreover, the court finds relevant that, in its opposition papers, Defendant represented that its communications involving, inter alia, the Selman Firm concerned “case strategy and case updates,” further supporting Defendant’s assertion of the existence of an attorney-client relationship between it and the Selman Firm.  (Opp., p. 12:11-13.)

Third, the court finds that Plaintiff has not met its burden to show that Defendant waived its right to assert the attorney-client privilege and work product protection.  (Costco Wholesale Corp., supra, 47 Cal.4th at p. 733.)

The right of any person to claim attorney-client privilege “is waived with respect to a communication protected by the privilege if any holder of the privilege, without coercion, has disclosed a significant part of the communication or has consented to the disclosure made by anyone.  Consent to disclosure is manifested by any statement or other conduct of the holder of the privilege indicating consent to the disclosure, including failure to claim the privilege in any proceeding in which the holder has legal standing and the opportunity to claim the privilege.”  (Evid. Code, § 912, subd. (a).)  “‘[T]he disclosure contemplated in Evidence Code section 912 involves some measure of choice and deliberation on the part of the privilege holder.’”  (McDermott Will & Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1038, 1101; State Compensation Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644, 652 [“Based on the language of Evidence Code section 912, we hold that ‘waiver’ does not include accidental, inadvertent disclosure of privileged information by the attorney”].) 

“When determining whether an inadvertent disclosure waived the attorney-client privilege, a trial court must examine both the subjective intent of the privilege holder and any manifestation of the holder’s intent to disclose the information.  [Citations.]  Other relevant considerations include the precautions the holder took to maintain the privilege and the promptness with which the holder sought return of the inadvertently disclosed document.”  (McDermott Will & Emery LLP, supra, 10 Cal.App.5th at pp. 1101-1102 [internal citations omitted].)

Plaintiff contends that both Defendant and ASAS waived their rights to assert the attorney-client privilege and work product protection because (1) Defendant did not attempt to claw back the documents until two years after the production thereof; (2) Defendant raised a privileged-based objection at the end of deposition, after allowing Plaintiff’s counsel to question Ana Campos about one of those documents; and (3) ASAS did not assert the privilege at the deposition of Ana Campos.  The court disagrees. 

Defendant has submitted evidence establishing that (1) its counsel inadvertently overlooked the subject communications and documents and did not intend to include those documents in Defendant’s production, and (2) it did not discover the production of the privileged documents until the March 25, 2024 deposition of Ana Campos.  (Gerson Decl., ¶¶ 8-13; Roberts Decl., ¶¶ 2-4.)  Moreover, counsel states that they did not have occasion to review the documents after Defendant’s 2022 production.  (Gerson Decl., ¶ 12; Roberts Decl., ¶ 6.) 

The court finds that Defendant did not have the “subjective intent” to disclose privileged materials to Plaintiff in its production, nor did Defendant manifest an intent to disclose or to consent to disclose such information by asserting the privilege two years after its production, in light of the evidence establishing that Defendant first learned of the disclosure at that time and (1) asserted the privilege at the end of the deposition and on the record, and (2) promptly requested, the day after the deposition, that Plaintiff destroy the documents.  (McDermott Will & Emery LLP, supra, 10 Cal.App.5th at p. 1101; Evid. Code, § 912, subd. (a); Andrade Decl., Ex. A [March 26, 2024 letter from Defendant requesting destruction of documents].)

The court acknowledges, as Plaintiff has pointed out, that Defendant’s counsel did not object to the use of one privileged document (labeled as Exhibit 17) until the conclusion of Ana Campos’s deposition.  (Limber Decl., ¶ 5 [stating that, “[a]t the conclusion of the Campos deposition[,]” counsel asserted privilege].)  However, the court finds that this conduct does not evidence a subjective intent to disclose privileged information.  The attorney representing Defendant in this deposition has stated, in her declaration, that while she believed the exhibit “appeared on its face to contain privileged material,” she “wanted to fully review and analyze the document and identify all individuals referenced, before making any statements on the record.”  (Limber Decl., ¶ 3.)  After reviewing the exhibit during a break, counsel asserted the attorney-client privilege on the record.  (Limber Decl., ¶¶ 4-5.)  The court finds that Defendant’s counsel’s conduct, in ensuring the applicability of the claim of privilege before asserting it on the record and doing so at the conclusion of the deposition, does not show a subjective intent to disclose the information, or to consent to its disclosure.  (McDermott Will & Emery LLP, supra, 10 Cal.App.5th at p. 1101; Evid. Code, § 912, subd. (a).)

The court further finds that ASAS did not waive its right to claim the attorney-client privilege and work product protection by electing not to assert the privileges at the deposition of Ana Campos.  Counsel for ASAS has stated, in his declaration, that (1) he did not intend to waive any privilege claims on behalf of ASAS, and (2) he did not make an objection on the deposition record because Defendant had already asserted the privilege, such that counsel “did not see the need to make a redundant objection.”  (Hochhausler Decl., ¶¶ 8, 6.)  The court finds that this evidence shows that ASAS did not have the subjective intent to disclose or to consent to the disclosure of privileged information.  (McDermott Will & Emery LLP, supra, 10 Cal.App.5th at p. 1101; Evid. Code, § 912, subd. (a).)

Thus, for the reasons set forth above, the court finds that Plaintiff did not meet its burden to show that Defendant and/or ASAS waived their rights to assert the attorney-client privilege.

Finally, the court notes that three entries on Defendant’s privilege log identify three categories of documents that it contends are subject to the work product protection.  (Andrade Decl., Ex. F, Privilege Log, p. 1, ¶¶ 3, 5, 10.)  The parties do not expressly address these entries or dispute that they are subject to the work product protection provided by Code of Civil Procedure section 2018.010 et seq.; instead, Plaintiff appears only to argue that Defendant and ASAS waived this protection.  (Mot., p. 10:22-25.)  However, the court has determined, for the reasons set forth above, that Defendant did not waive its right to claim that the documents in the subject production are privileged.  The court finds that Defendant did not waive its right to claim the work product protection for the same reasons set forth above.  

ORDER

            The court denies plaintiff Los Angeles Unified School District’s motion for determination of claim of privilege.

            The court orders defendant Scottsdale Indemnity Company to give notice of this ruling.

IT IS SO ORDERED.

DATED:  July 11, 2024

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court