*1 Before the court is Defendant Randy Lindquist's motion to compel and request for sanctions (Mot. (Dkt. # 95); Reply (Dkt. # 99).) Allstate Indemnity Company (“Allstate”) opposes the motion and request. (Resp. (Dkt. # 97).) The court has considered the parties’ submissions, the relevant portions of the record, and the applicable law. Being fully advised, the court DENIES the motion in part and ORDERS Allstate to provide unredacted copies of the documents identified below to the court for its in camera review within seven (7) days of the filing of this order.[1]

This insurance dispute stems from a fire that burned down a property Mr. Lindquist owns in Edmonds, WA on December 25, 2019. (Compl. (Dkt. # 1) ¶ 3.12.) Allstate filed this lawsuit against Mr. Lindquist and JPMorgan Chase Bank, N.A. on October 13, 2020, and seeks declaratory relief establishing that Mr. Lindquist's homeowner's insurance policy does not cover the harm to his property that resulted from the December 25, 2019 fire. (See id. ¶¶ 6.1-6.3.) In the course of discovery, a dispute arose between the parties regarding which portions of the claims file could be redacted or withheld by Allstate. Among the disputed issues was Allstate's contention that documents created after June 18, 2020—the date on which Mr. Lindquist informed Allstate that he had obtained counsel—were covered by privilege or work product protection. (See 8/16/21 Order (Dkt. # 73) at 11.) The court ordered Allstate to provide an unredacted version of the claims file for in camera review (7/15/21 Order (Dkt. # 65) at 6-7), and, after reviewing the documents Allstate provided, further ordered Allstate to produce specified portions of the claims file and to reexamine what the court understood to be approximately 300 pages of documents created after June 18, 2020 for possible production (8/16/21 Order at 6-12).

In response to the court's order, Allstate produced additional material from the claims file to Mr. Lindquist, including some documents created after June 18, 2020, but continued to withhold certain other claims file documents Mr. Lindquist contends are discoverable, including all documents created after October 13, 2020—the date the complaint was filed. (See Mot. at 5.) At the court's invitation, Mr. Lindquist brings the motion now before the court. (See 9/20/21 Minute Entry (Dkt. # 92).)

The court first addresses Mr. Lindquist's argument that Allstate should be compelled to produce the claim file in its entirety (Mot. at 6-10) before turning to his request that sanctions be imposed, and fees awarded for the costs associated with this discovery dispute. (See id. at 10-11.)

A. Redacted and Withheld Claims File Documents

1. Legal Standards

In Cedell v. Farmers Insurance Co., the Washington Supreme Court established a presumption that “there is no attorney-client privilege relevant between the insured and the insurer in the claims adjusting process, and that the attorney-client and work product privileges are generally not relevant.” 295 P.3d 239, 246 (Wash. 2013). The insurer may overcome this presumption with a showing that its attorneys were “not engaged in the quasi-fiduciary tasks of investigating and evaluating or processing the claim, but instead in providing the insurer with counsel as to its own potential liability.” Id. Importantly, the presumption created by Cedell applies regardless of whether litigation has commenced, or not. (See 7/15/21 Order at 4-5 (distinguishing Richardson v. Gov't Emps. Ins. Co., 403 P.3d 115 (Wash. Ct. App. 2017)).) In evaluating whether the insurer has overcome the presumption of discoverability, the court has the option to conduct an in camera review of the disputed documents but it is “not bound to do so.” See MKB Constructors v. Am. Zurich Ins. Co., No. C13-0611JLR, 2014 WL 2526901, at *7 (W.D. Wash. May 27, 2014). It may also rely on “a privilege log, affidavits, [and] declarations” instead of or in addition to an in camera review. Id.

*2 Thus, it is clear that documents involving or created by attorneys engaged in quasi-fiduciary tasks are subject to discovery. See Linder v. Great N. Ins. Co., No. C15-5002RBL, 2016 WL 740261, at *3 (W.D. Wash. Feb. 25, 2016) (ordering production of legal invoices involving attorneys’ performance of quasi-fiduciary tasks). And it is further clear the court may consider disputed documents in camera to decide whether they are discoverable, though it is not obligated to do so. MKB Constructors, 2014 WL 2526901, at *7.

If the party seeking to shield a document can overcome Cedell’s presumption that attorney-client privilege and work product protection are not relevant, then the court will further consider whether a disputed document qualifies for either protection.

“Federal common law recognizes a privilege for communications between client and attorney for the purpose of obtaining legal advice, provided such communications were intended to be confidential.” Gomez v. Vernon, 255 F.3d 1118, 1131 (9th Cir. 2001). This privilege, which “has been recognized as ‘the oldest of the privileges for confidential communications known to the common law,’ ” is established to “encourage ‘full and frank communication between attorneys and their clients.’ ” Id. (quoting Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)).

The work product protection, by contrast, “is a qualified protection limiting discovery of ‘documents and tangible things’ prepared by a party or his or her representative in anticipation of litigation or trial.” MKB Constructors, 2014 WL 2526901, at *3 (quoting Admiral Ins. Co. v. U.S. Dist. Court for Dist. of Ariz., 881 F.2d 1486, 1494 (9th Cir.1989)). However, if a document serves a dual purpose, and was not prepared exclusively for litigation, “courts must consider the totality of the circumstances and determine whether the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of litigation.” Gamble v. State Farm Mutual Auto. Ins. Co., No. C19-5956RJB, 2020 WL 4193217, at *3 (W.D. Wash. July 20, 2020) (citing United States v. Richey, 632 F.3d 559, 567-68 (9th Cir. 2011).

2. The Current Dispute

Mr. Lindquist asks the court to order Allstate to “produce its entire, unredacted claim file,” principally because “Allstate continued to adjust the insurance claim file even after this litigation started.” (Id. at 6.) As evidence that Allstate did not cease its claims adjustment-related activities upon the commencement of this litigation, Mr. Lindquist points to two things: (1) First, Allstate's acknowledgement that it has “not made a coverage decision” and did not intend to do so until this case is decided. (See id. at 10 (citing Knudsen Decl. (Dkt. # 96) ¶ 2, Ex. A (August 3, 2021 deposition of Allstate's Rule 30(b)(6) designee, Ryan Jensen)).) Second, “the simple fact that [Allstate] continued to create claim documents and claim notes after filing suit.” (Reply at 4.)

Allstate does not dispute that it has not yet issued a coverage decision but flatly denies that means it continued to adjust the claim after the commencement of this litigation. (See Resp. at 5-7.) Rather, Allstate suggests that it had already decided, well before the case was filed, what coverage Mr. Lindquist is entitled to for the three coverage claims he submitted. (Id.) It follows, according to Allstate, that once it had filed its complaint there would be no reason for it to have continued adjusting the claim and no reason its attorneys would have been engaged in quasi-fiduciary tasks. (Id.) Therefore, any work product added to the claims file after it filed its complaint must necessarily have been created in anticipation of litigation. (See id.) Allstate thus asks the court to find that October 13, 2020, the date the complaint was filed, marks a “privilege date” and that any documents created after that date are absolutely immune from discovery. (Id. at 9.) Underlying this argument is Allstate's contention that Cedell does not apply to documents created after the commencement of litigation and so the only proper inquiry is whether these documents are protected by attorney-client privilege or work product protection. (Id. at 2, 9-11.)

*3 As an initial matter, the parties do not agree on the scope of the current dispute. Mr. Lindquist asks the court to “order production of the entire, unredacted claim file through present,” although he focuses especially on (1) documents Allstate has withheld because they were created after October 13, 2020, and (2) the “seven claim note entries from September 2020” that contain the statement of Third-Party Defendant Melody Grondahl. (Id. at 5, 10 (emphasis in original)). Allstate agrees that whether it must produce post-October 13, 2020 documents is in dispute (Resp. at 2) but argues that challenges to other documents, especially those implicating Ms. Grondahl's statement, were previously resolved by the court without objection from Mr. Lindquist and are, at this point, untimely (see id. at 3 n.2, 4 n.3).

The court agrees with Allstate about the scope of the current dispute. The court's August 16, 2021 order instructed Allstate not to produce documents related to Ms. Grondahl's statement and further instructed it to apply the analysis of that ruling to its reexamination of the post-June 18, 2020 documents. (See 8/16/21 Order at 11:8-9, 12.) The court declines to revisit that decision and Mr. Lindquist does not provide any reason for the court to find that Allstate's subsequent treatment of documents relating to Ms. Grondahl's statement ran afoul of its order.[2] The court thus confines its review to those documents withheld by Allstate, in whole or in part, on the basis that they were created after October 13, 2020.

The court now turns to consider Allstate's arguments as to why it has properly withheld documents created after October 13, 2020, beginning with Allstate's insistence that Cedell’s presumption “does not apply to post-litigation discovery.” (Id. at 2-3 (citing Richardson, 403 P.3d 115, 123 (Wash. Ct. App. 2017)).) The court has already rejected this argument because it found Allstate's prior attempt to distinguish Cedell with Richardson “unavailing.” (7/15/21 Order at 4-5 (noting that Richardson involved a claim brought by an under-insured motorist (“UIM”), which Cedell explicitly excepted from its “presumption of discovery”).) Now, as then, Allstate has failed to provide a “compelling argument why this matter, also stemming from a home destroyed by a fire, is more similar to a UIM dispute.” Id. The court thus concludes, once again, that Cedell’s presumption applies to documents created after the commencement of litigation.

Allstate's arguments, together with the evidence it cites, do not overcome Cedell’s presumption. Allstate primarily asks the court to infer from the fact of its filings in this case that it must have ceased adjustment activity by the time the case was initiated on October 13, 2020, and, thus, any documents added to the claims file after that point would necessarily be documents created only because of the litigation. (Resp. at 5-7.) That is, Allstate seems to argue that no further adjustment activity could be taking place once it had enough information to turn the question of coverage liability over to the court. (See id.) But such an inference cannot be supported by the filing of the complaint alone. If it could, then, by the same logic, even earlier dates could have similarly established an “absolute privilege” for claims file documents, such as (1) August 13, 2021, the date of Mr. Lindquist's EOU, which Allstate relies on to reject his additional living expenses claim (see id. at 6 (citing Argianis Decl. (Dkt. # 72) ¶ 4, Ex. B at 10 (Mr. Lindquist's EUO testimony))); (2) January 3, 2020, the date Allstate determined the reserve amount at which Mr. Lindquist's structure claim would be capped (O'Neill Decl. (Dkt. # 98) ¶ 8, Ex. F (Allstate 000017)); or even (3) March 4, 2013, the date when Mr. Lindquist provided a bankruptcy court with the estimated value of his personal property on which Allstate now bases its coverage decision for Mr. Lindquist's contents claim (Resp. at 6; see Leid Decl. (Dkt. # 9) ¶ 3, Ex. A). Of course, the claims adjustment process post-dated each of these events and so Allstate has, likewise, produced responsive documents that post-date these events. (See Knudsen Decl. ¶ 4, Ex. C at 4-6 (showing documents created in September and October 2020 were produced with redaction in response to the court's 8/16/21 Order).) Accordingly, the fact that Allstate filed a complaint does not, without more, support the conclusion that it had stopped adjusting Mr. Lindquist's claim by October 13, 2020.

*4 All that Allstate offers beyond this inferential reasoning is the repeated assertion that the “chronological claims diary notes” created after October 13, 2020 “contain mental impressions, thoughts, and conclusions of attorneys or employees evaluating the merits and risks of a legal claim.” (See Resp. passim.) Allstate also contends that “the document production” establishes that its “counsel was in no way involved with the claims adjusting of Lindquist's claims” and that the court has made no such finding. (Id. at 10.) However, the court previously found that, with respect to “the redacted and withheld portions of the claim file created before June 18, 2020, the vast majority involve counsel assisting with tasks that are quasi-fiduciary in nature.” (8/16/21 Order at 4 (emphasis added) (providing specific examples of illustrative documents).) And in ordering Allstate to reexamine all of the post-June 18, 2020 documents it had identified, the court specifically concluded, “[b]ased on Allstate's other redactions and withheld documents” that it was “very likely portions of these withheld materials are not subject to attorney client privilege or the work product doctrine.” (Id. at 11.) Especially in light of the court's earlier findings and conclusions, Allstate's unsupported, boilerplate assertions are not enough to overcome Cedell’s presumption.

It may be true that the balance of claims file entries shifted away from adjustment activity and toward protected litigation activity once the case was filed but, given Allstate's track record in this matter and on the record and arguments before the court, the court cannot now say with any certainty that Allstate's attorneys were engaged solely in providing Allstate “with counsel as to its own potential liability” after October 13, 2020. See Gamble, 2020 WL 4193217, at *4 (ordering an insurer to provide documents for in camera review where it was “not obvious to the Court whether” disputed materials were subject to privilege). Thus, the court finds that Allstate has not overcome Cedell’s presumption in favor of discoverability. Cedell, 295 P.3d at 246. At the same time, the court is unwilling to risk compelling production of validly protected work product or privileged communications by issuing a blanket order to produce the disputed documents, as Mr. Lindquist requests. (Mot. at 10.)

Accordingly, the court finds it appropriate to conduct further in camera review and ORDERS Allstate to provide unredacted copies of the following documents to the court within seven (7) days of the filing of this order:

B. Mr. Lindquist's Request for Sanctions

In addition to production of the entire claims file, Mr. Lindquist requests that the court sanction Allstate by awarding Mr. Lindquist's counsel fees for all discovery-related work from July 15, 2021 to present and ordering Allstate to pay sanctions in the amount of $50,000. (Id. at 11.) Mr. Lindquist argues that severe sanctions against Allstate are warranted because it has “willfully disregard[ed] the Court's rulings by refusing to provide to the Court the complete claim file for in camera review when the Court ordered it to do so,” and has also “misrepresented the scope of the ‘post 6/18/2020’ material it was withholding.” (Id. at 10.) Allstate denies these charges and contends that it has been transparent in its objection to producing post-October 13, 2020 claims material and is in compliance with the court's orders. (Resp. at 2, 12.)[4]

*5 Mr. Lindquist is correct that Allstate was ordered to submit for in camera review the complete, unredacted claims file but did not submit any documents created after October 13, 2020 to the court. (See 7/15/21 Order at 6-7; Knudsen Decl. ¶ 5, Ex. D at 2). Had Allstate provided the court with the complete claims file in July 2021, the court could have rendered specific decisions on the entire universe of disputed documents in its August 16, 2021 order, thereby avoiding the fight now before it. Nonetheless, the court does not find that Allstate misrepresented the scope of the documents it was withholding. Allstate made clear both through a cover letter and the July 22, 2021 Privilege Log that it had withheld documents created after October 13, 2020 from the in camera production under a claim of attorney-client privilege and work product protection. (See id.; 7/22/21 Privilege Log at 13; see also 8/16/21 Order at 11 (noting that Allstate had withheld Allstate 000332-634).) Thus, Allstate's in camera production was incomplete but not misleading.

Allstate's evident failure to comply with the court's August 16, 2021 order is of greater concern. The court ordered Allstate “to review” documents created after June 18, 2020 (Allstate 000332-634) in accordance with the analysis in that order. (8/16/21 Order at 11-12.) But while Allstate appears to have complied with the order with respect to documents created between June 18, 2020 and October 13, 2020 (see O'Neill Decl. ¶ 7, Ex. E at 4-8 (providing additional detail on Allstate 000332-590)), it seemingly took no similar steps for documents created after October 13, 2020 (Allstate 000591-634) but instead continued to insist that those documents are “absolutely privileged” on the basis of the date on which they were created. (See id. at 3; see also Knudsen Decl. ¶ 6, Ex. E at 1; id ¶ 3, Ex. B at 12.) Indeed, the Allstate privilege log that purports to respond directly to the August 16, 2021 order contains no mention of post-October 13, 2020 documents. (See Knudsen Decl. Ex. C at 4-8).

Allstate now contends that it has not run afoul of the court's earlier order because the court “has not ruled on any discovery issues post the commencement of this action.” (Resp. at 3.) That is both wrong and irrelevant. The court specifically ordered Allstate to re-examine Allstate 000332-634, which includes post-October 13, 2020 documents. (8/16/21 Order at 11-12). And even if it had not, Allstate's discovery obligations do not arise only where the court specifically compels it to do something. See Local Rules W.D. Wash. LCR 26(f) (setting forth the court's expectations for parties in discovery). Ultimately, Allstate's treatment of the post-October 13, 2020 documents cannot be squared with the court's order directing Allstate to re-examine all of the disputed documents created after June 18, 2020, particularly when the court warned Allstate that “when the documents were created is not necessarily the operative question to determine whether they are protected.” (See 8/16/21 Order at 11-12.)

However, notwithstanding the court's frustration at Allstate's disregard of its August 16, 2021 order and the additional motions practice that has resulted, the court declines to impose sanctions against Allstate or award fees to Mr. Lindquist's counsel at this time. Any decision on those issues will turn, to some degree, on the results of the court's in camera review and so the court reserves judgment on the propriety and amount of sanctions and fees until after it has had an opportunity to review the documents identified above.

Based on the foregoing, the court DENIES Mr. Lindquist's motion in part (Dkt. # 95) and ORDERS Allstate to provide unredacted copies of the following documents to the court within seven (7) days of the filing of this order:

Dated this 1st day of November, 2021.

Neither party has requested oral argument (see Mot. at 1; Resp. at 1), and the court has determined that oral argument would not be helpful to its disposition of the motions, see Local Rules W.D. Wash. LCR 7(b)(4).

Mr. Lindquist indicates that he “intends to bring a further motion” to compel the production of Ms. Grondahl's statement. (Reply at 7.) The court need not address that hypothetical but will address Mr. Lindquist's motion if he files it.

This document was provided to the court by Allstate as part of its July 22, 2021 in camera production but a substantial portion of the document the court presumes contains post-10/13/2020 material was redacted in the court's copy. Allstate shall re-produce this document without redaction for the court's in camera review.

Allstate is correct that it has, since its March 8, 2021 privilege log, raised a general objection to the production of documents created on or after October 13, 2020 (see O'Neill Decl. ¶ 3, Ex. A (“3/8/21 Privilege Log”) ¶ 4), though it did not identify the documents to which that general objection had been specifically applied until July 22, 2021 (see O'Neill Decl. ¶ 4, Ex. B (“7/22/21 Privilege Log”) at 12:13-18, 14:18-22 (disclosing that it had redacted Allstate 001263 and Allstate 001304, and withheld Allstate 00591-634, Allstate 001264-66, and Allstate 001305-6 as “Post 10/13/2020” documents).) Previously, Allstate 000591-634 were identified as withheld in full as “Post 6/18/2020” documents. (See 3/8/21 Privilege Log at 12:14-15).)