Arch Specialty Ins. Co. v. Univ. of S. Cal.
Arch Specialty Ins. Co. v. Univ. of S. Cal.
2022 WL 20746527 (C.D. Cal. 2022)
September 8, 2022
Sagar, Alka, United States Magistrate Judge
Summary
Arch Specialty Insurance Company filed a Motion to Compel supplemental production of May-June 2018 communications between Defendant University of Southern California and Non-Party Chivaroli and Associates. The Court denied the motion, finding that Arch had not met its burden to establish that USC and Chivaroli were adverse and that USC had not placed the content of its communications at issue.
Additional Decisions
Arch Specialty Insurance Company
v.
University of Southern California
v.
University of Southern California
No. CV 19-06964-DDP (ASx)
United States District Court, C.D. California
Filed September 08, 2022
Counsel
Alma Felix, Deputy Clerk, Attorneys Present for Plaintiff: Ronald Schiller, Sharon McKeeCS 09/06/22, Court Reporter / Recorder, Attorneys Present for Defendant, University of Southern California: Jerome Friedberg, Stacey Zill, Diana Rodgers[1]
Sagar, Alka, United States Magistrate Judge
Proceedings (In Chambers): Order DENYING Plaintiff's Motion to Compel Supplemental Production of May-June 2018 Communications Between the University of California and Chivaroli & Associates, Inc. (Dkt. No. 164)
*1 On August 4, 2022, the parties filed a joint stipulation (“Joint Stip.”) regarding Plaintiff Arch Specialty Insurance Company (“Arch(‘s)”) Motion to Compel supplemental production of May-June 2018 communications between Defendant University of Southern California (“USC”) and Non-Party Chivaroli and Associates (“Chivaroli”), accompanied by declarations of counsel and exhibits. (Dkt. No. 164).[2] The Court granted the parties' joint application to file portions of the joint stipulation, declarations, and certain exhibits under seal. (Dkt. Nos. 163, 165, 167). The sealed documents are filed at Dkt. No. 168.
On August 16, 2022, USC filed its supplemental memorandum in support of its opposition to the motion. (Dkt. No. 171). On August 17, 2022, the Court granted Arch's application to file portions of its supplemental memorandum under seal. (Dkt. Nos. 169-70, 172). The sealed document is filed at Dkt. No. 173. On August 26, 2022, Arch filed its additional supplemental submission in support of the motion. (Dkt. No. 174).
On September 6, 2022, the Court held a telephonic hearing on the motion and heard argument from counsel. For the reasons stated below, the Motion to Compel is DENIED.
Arch seeks an order compelling USC to produce all of the documents that USC and Chivaroli exchanged in May and June 2018 that may be relevant to Phase I of the litigation, including the 60 documents listed on the USC and Chivaroli privilege logs. (Joint Stip. at 1). Arch also seeks an order compelling USC to amend its privilege log to: (1) identify the few documents that “mention Arch,” and (2) add the 14 documents that are listed on Chivaroli's privilege log, but not USC's. (Joint Stip. at 2-3).
As an initial matter, the Court agrees with USC that Arch's motion fails to comply with Local Rule 37-2.2, which requires that the moving party incorporate the opposing party's material in the joint stipulation and provide the stipulation to opposing counsel for signature. Here, Arch revised its portion of the joint stipulation and sent it to USC two weeks later, which required USC to revise its portion. (Joint Stip. at 4, 20). Arch is correct Local Rule 37 requires the parties to meet and confer in good faith “[b]efore filing any motion relating to discovery ... to eliminate the necessity for hearing the motion or to eliminate as many disputes as possible.” However, such meet and confer efforts should have taken place before the parties drafted their portions of the joint stipulation. In addition, the Local Rules do not provide any right to amend. If Arch had responses to USC's portion of the joint stipulation, it should have included those responses in its supplemental memorandum, which is permitted under Local Rule 37-2.3. The Court is not denying the motion on this basis, but again warns the parties that absent leave of Court, any further motions to compel must comply with the Local Rules.
Communications Between USC and Chivaroli
*2 Arch seeks production, from USC, of all documents relating to communications between USC and Chivaroli that were exchanged in May and June 2018 under Request for Production (“RFP”) Nos. 5, 9, and 22 that it contends are relevant to Phase I. (Joint Stip. at 8-17, 45-53, 81-89).[3] Arch agrees that these documents are subject to the attorney-client privilege under California Evidence Code Section 952 and federal work product protection. (Joint Stip. at 3-4).[4] However, Arch contends that USC has waived these privileges because (1) USC and Chivaroli had adverse interests at the time of the communications; and (2) USC has placed the communications at issue. (Joint Stip. at 4).
Arch bears the burden of proof to demonstrate that USC waived the attorney-client privilege and work product protection. See Wellpoint Health Networks, Inc. v. Superior Court, 59 Cal. App. 4th 110, 124 (1997) (citation omitted) (“The party opposing the privilege must bear the burden of showing that ... there has been an expressed or implied waiver.”).
Arch first argues that USC waived its privileges because USC and Chivaroli had adverse interests with respect to the Arch Policies or were likely to become adverse as of May 8, 2018. (Joint Stip. at 10, 46, 83). At this time, Arch contends that USC was on notice that the Arch Policies excluded sex abuse claims, and USC knew it was facing these claims from patients who had seen Dr. George Tyndall. (Joint Stip. at 1, 10, 47, 83). According to Arch, USC held Chivaroli responsible for the fact that the Arch Policies have the Abuse and Molestation Exclusions, and the parties had a clear conflict of interest. (Id.). Although USC claims that it was not aware of the Abuse or Molestation Exclusions during that period, Arch contends that USC must have known the terms of the Arch Policy because it had copies of the insurance binders and policies in its Risk Management office. (Joint Stip. at 14-15, 51, 87). Arch also argues that even if USC was not aware of the Exclusion, Chivaroli's knowledge of the Exclusion was imputed to USC because Chivaroli was USC's agent. (Id.).
*3 USC maintains that it was not adverse with Chivaroli in May or June 2018 because Arch had not denied coverage of USC's claims, so the issue of whether Chivaroli had a role in causing Arch's denial of coverage had not yet arisen. (Joint Stip. at 6, 28-29, 64-65, 101-02). USC points out that Arch has no evidence that USC and Chivaroli were adverse during May or June 2018, or that USC knew that the claims would not be covered by the Arch Policies and blamed Chivaroli. (Id.). USC claims that it did not know that the Arch Policies contained the Abuse or Molestation Exclusions, and it was not aware that Chivaroli was reaching out to Arch to have them remove the Exclusion. (Joint Stip. at 29, 65, 102). USC asserts that the fact that it entered into the August 1, 2018 Confidentiality Agreement with Arch regarding the defense of the Tyndall claims supports its position that it was unaware in May or June 2018 that Arch was likely to deny coverage of its claims. (Joint Stip. at 29, 66, 102).
The Court finds that Arch has not met its burden to establish that USC and Chivaroli were adverse in May or June 2018. There is no evidence that USC contended that Chivaroli breached a duty to USC during that time period when it negotiated the Arch Policies. Arch has also failed to make a showing that USC knew that the Arch Policies had the Exclusion at the time that they disclosed the Tyndall claims to Chivaroli. Indeed, USC contends that it was not aware that Arch may deny coverage until August 16, 2018 at the earliest, when Arch issued its reservation of rights letter. (Joint Stip. at 30, 66-67, 103).
The Court is not persuaded by Arch's citations to In re Pac. Pictures Corp., 679 F.3d 1121 (9th Cir. 2012) or Lennar Mare Island, LLC v. Steadfast Ins. Co., 2014 WL 1366252 (E.D. Cal. Apr. 7, 2014) in support of its position that even though USC and Chivaroli share a desire to see USC to prevail against Arch, they were still adverse in May and June 2018. Both of those cases concerned the common interest doctrine, which USC is not relying on in this instance. Lennar is also distinguishable from the instant dispute because in that case, the court found that the disclosing party made no showing that the attorney-client communications at issue were revealed to the third party in an effort to further the party's purpose for seeking legal advice, 2014 WL 1366252, at * 7; this contrasts with USC, which has made a sufficient showing that its disclosure to Chivaroli furthered its legal interests. See supra.
Arch also asserts that USC waived its privileges by putting the substance of its communications at issue in this litigation. (Joint Stip. at 13, 49, 85). Arch maintains that because USC claims that Chivaroli acted without its knowledge and USC did not know about the Abuse or Molestation Exclusion at the time, USC has placed the content of its communications with Chivaroli at issue, and fairness requires their disclosure. (Joint Stip. at 14, 50, 87). USC makes this claim in support of its position that it is not subject to Arch's equitable defenses against reformation that Arch raises in response to USC's counterclaims. (Id.). Arch argues that USC cannot claim that it is not responsible for Chivaroli's actions (i.e., its efforts to delete the Abuse and Molestation Exclusion while withholding information from Arch about the Tyndall claims) because Chivaroli did not tell USC about its communications and withhold the communications that may refute USC's position. (Joint Stip. at 15, 51-52, 87-88).
USC responds that Arch's position fails because privilege is implicitly waived only if the holder of the privilege has placed the conduct of an attorney or the privileged communication itself at issue. (Joint Stip. at 34-35, 71, 107-08). USC points out that Arch does not argue that USC put the conduct of one of its attorneys at issue, and it has not done so. (Joint Stip. at 6, 36, 73, 109). USC also argues that it has not placed the privileged communications at issue because (1) its case is not based on the advice of counsel, (2) it is not relying on the content of the communications in this action, and (3) the communications do not relate to any contention made by USC in the action. (Joint Stip. at 7, 36, 73, 109-10). In addition, USC contends that Arch is incorrect as a matter of law that the privilege must be waived so that Arch can test USC's assertions that it did not know the Arch Policies contained an Abuse or Molestation Exclusion, or that Chivaroli contacted Arch without informing USC. (Joint Stip. at 7, 37, 73, 110).
*4 The Court finds that USC did not implicitly waive its privileges because it neither relies on any conduct or communications of its attorneys nor any of the privileged communications themselves in support of its claims and defenses. See S. Cal. Gas Co. v. Pub. Utilities Com., 50 Cal. 3d 31, 42 (1990) (holding the gas company did not put its privileged communications at issue because it did not plan to rely on its attorney's advice or state of mind to demonstrate that its actions were reasonable); id. at 41 (quoting Mitchell v. Superior Ct., 37 Cal. 3d 591, 606 (1984)) (“We concluded there is no ‘waiver of the attorney-client privilege where the substance of the protected communication is not itself tendered in issue, but instead simply represents one of several forms of indirect evidence in the matter.’ ”); Transamerica Title Ins. v. Superior Ct., 188 Cal. App. 3d 1047, 1052-53 (1987). Moreover, Arch is not entitled to access these privileged communications to determine the veracity of USC's position that it was not aware of Chivaroli's actions in May and June 2018. See id. at 1053 (“[T]he [attorney-client] privilege is not to be set aside when one party seeks verification of the authenticity of its adversary's position.”).
Accordingly, Arch's motion to compel production of May-June 2018 communications between USC and Chivaroli is DENIED.
Privilege Log
Arch seeks an order compelling USC to amend its privilege log to identify which documents “mention Arch.” (Joint Stip. at 17-18, 53-54, 89-90). Arch asserts that adding this information to USC's privilege log will not disclose privileged communications and may help narrow the parties' dispute. (Joint Stip. at 17, 53-54, 90). Arch maintains that the Court should not accept USC's representation that “only a few” documents “mention Arch” unless USC is prepared to identify those specific documents. (Joint Stip. at 18, 54, 90).
USC objects to the disclosure of which documents “mention Arch” because it contends that this information is not required under Federal Rule of Civil Procedure 26 and would not assist in determining whether or not the communications are privileged. (Joint Stip. at 38, 75, 111). USC argues that granting this request would require USC to divulge the contents of its privileged communications. (Joint Stip. at 39, 76, 112). USC also contends that stating that documents “mention Arch” is of no probative value, and the documents themselves are not necessarily relevant to Phase I or this action. (Joint Stip. at 39-40, 76, 113).
The Court agrees with USC and DENIES Arch's motion to compel USC to amend its privilege log to identify the documents that “mention Arch.” Rule 26(b)(5)(A)(ii) requires a party who withholds documents based on privilege to provide a privilege log that “describe[s] the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.” USC has already complied with this requirement and provided a privilege log that allows Arch to assess whether it has properly claimed the privilege.
At the hearing, the parties informed the Court that they have resolved the dispute concerning Arch's request that USC add 14 documents that are listed on Chivaroli's privilege log to USC's privilege log. (Joint Stip. at 18-19, 54-56, 90-92). Accordingly, that request is DENIED as moot.
The parties may avail themselves of the Court's informal discovery dispute resolution process to resolve any remaining discovery issues. (See Judge Sagar's Procedures).
IT IS SO ORDERED.
cc: Dean D. Pregerson United States District Judge
Footnotes
Ms. Rodgers is in house counsel for Defendant USC.
USC objects to several paragraphs in the declaration submitted by Sharon McKee, counsel for Arch, in support of the motion on various grounds, including that the representations are argumentative, set forth an improper legal opinion, are inadmissible by the Best Evidence rule under Fed. R. Evid. 1002, and are not relevant to Phase I issues. (Dkt. No. 164-44, 164-46). The Court has reviewed the objections and Arch's response and, for the reasons stated in Arch's response, USC's objections are overruled.
Arch objects to several paragraphs in the declaration submitted by Stacey Zill, counsel for USC, in opposition to the motion on various grounds, including that the representations are argumentative, lack foundation, lack personal knowledge, constitute hearsay, and set forth an improper legal opinion. (Dkt. No. 164-47). USC does not appear to have responded to Arch's objections. The Court has reviewed the objections, sustains Arch's Objection No. 1, for lack of personal knowledge. Arch's Objection Nos. 2-4 are overruled.
Although USC agrees that these documents are “potentially” responsive to RFP Nos. 5 and 9, it disputes that these documents are responsive to RFP No. 22. (Joint Stip. at 43-44, 80, 92-93, 116-117).
Although Arch concedes that the attorney-client privilege applies to the documents at issue, it contends that a heightened standard applies to USC when it comes to asserting the privilege, and that USC must prove for each communication at issue that the broker's involvement was “nearly indispensable” or “serve[d] some specialized purpose in facilitating attorney-client communications.” Behunin v. Superior Ct., 9 Cal. App. 5th 833 (2017). (Joint Stip. at 9-10, 45-46, 81-82). The Court disagrees and finds that USC need only establish that “disclosure [to Chivaroli] [wa]s reasonably necessary for the accomplishment of the purpose for which the lawyer...was consulted.” Id. at 844 (quoting Cal. Evid. Code § 912(d)). USC has met that standard and shown that Chivaroli was reasonably necessary to these communications. See Joint Stip. at 23-28, 59-64, 96-101; see also Atmel Corp. v. St. Paul Fire & Marine Ins. Co., 409 F.Supp.2d 1180 (N.D. Cal. 2005) (no waiver of attorney-client privilege as a result of insured's disclosure of information to its insurance broker); Cnty. of San Bernardino v. Pac. Indem. Co., 2014 WL 12588292 (C.D. Cal. July 30, 2014) (same); Cottage Health System v. Admiral Insurance Co., 2015 WL 12806480 (C.D. Cal. December 22, 2015) (no waiver of work product doctrine as a result of insured's disclosure of information to its insurance broker).