United States District Court, D. Arizona
ORDER
Honorable Steven P. Logan, United States District Judge.
Plaintiff
Prosight-- Syndicate 1110 At Lloyd's (the
“Plaintiff”) filed suit against American Builders
and Developers LLC (“ABD”) seeking a declaratory
judgment that it is not liable to indemnify ABD for any
damages awarded pursuant to Maria Virginia Huizache and
Florenciano Axinicuilteco's (the “Claimants”)
lawsuit.[1] The Claimants filed this Motion to Compel
Production of Attorney-Client Communications (the
“Motion”), arguing that the Plaintiff's
deposition testimony has opened the door to discovery of the
Plaintiff's attorney-client communications. (Doc. 193)
The Motion was fully briefed on August 15, 2019, and oral
argument was requested. (Docs. 194, 196) Because it would not
assist in resolution of the instant issues, the Court finds
the pending motion is suitable for decision without oral
argument. See LRCiv. 7.2(f); Fed.R.Civ.P. 78(b);
Partridge v. Reich, 141 F.3d 920, 926 (9th Cir.
1998). The Court's ruling is as follows.
In the
Motion, the Claimants seek an order from the Court compelling
the Plaintiff to produce discovery materials that qualify as
attorney-client communications between the Plaintiff and
Plaintiff's counsel. The Claimants argue that a
representative of the Plaintiff stated in a deposition that
the Plaintiff relied on the advice of counsel when denying
ABD's claim for coverage. (Doc. 193 at 5) The Claimants
primarily rely on the holding of State Farm v. Lee
to argue that this admission waived the Plaintiff's
attorney-client privilege for communications related to the
advice of counsel on the topic of the Plaintiff's denial
of ABD's claim. (Doc. 193 at 5-8) State Farm Mut.
Auto. Ins. Co. v. Lee, 199 Ariz. 52 (2000).
In
Lee, the Supreme Court of Arizona crafted the legal
standard for deciding when a party waives its attorney-client
privilege for communications between client and counsel. The
Lee plaintiff was an insurance company who stated
that it relied on the advice of counsel and evaluated the law
in defending its good faith decision to deny the defending
parties' claims. Lee, 199 Ariz. at 57-58. The
Supreme Court of Arizona held that attorney-client privilege
is waived when a party “has asserted some claim or
defense, such as the reasonableness of its evaluation of the
law, which necessarily includes the information received from
counsel.” Id. at 62. Privilege is waived
because “the party claiming the privilege has
interjected the issue of advice of counsel into the
litigation to the extent that recognition of the privilege
would deny the opposing party access to proof without which
it would be impossible for the factfinder to fairly determine
the very issue raised by that party.” Id. The
Supreme Court of Arizona stated that a party waives its
attorney-client privilege in this instance when “the
party asserting the privilege claims its conduct was proper
and permitted by law and based in whole or in part on its
evaluation of the state of the law.” Id.
However, simply conferring with counsel or “trading
information for advice” is not enough to waive
attorney-client privilege. Id. at 66.
The
Court finds that the Plaintiff's statements regarding
reliance on the advice of counsel do not rise to the level of
waiving its attorney-client privilege. The statements
highlighted by the Claimants in the Deposition of Paul Kush
reflect that the Plaintiff “reviewed the facts that had
been provided to [it] thus far, . . . reviewed the complaint,
and [it] sought the advice of counsel as well, ” and
“[it relied] on all of the facts that had been provided
to [it], and further, on advice of [its] counsel.”
(Doc. 193 at 4) The Court finds that the Plaintiffs
statements clearly demonstrate the type of conferral between
client and counsel that is explicitly excluded from
Lee's holding. The Plaintiff is not arguing that
it denied ABD's claim because counsel advised it to, nor
does the Plaintiff advance any arguments regarding its
interpretation of the law as a defense. Furthermore, the
Lee court stated that simply asserting a good faith
defense is not enough to waive attorney-client privilege.
Id. at 57 (stating “a mere denial of a cause
of action is not the kind of act that waives the
privilege” and “[a]n insurer's denial of an
insured's allegations of bad faith, and its assertion
that it acted in good faith . . ., without more, do not . . .
give rise to an implied waiver.”). Thus, the Court
finds that the Claimants have failed to demonstrate that the
Plaintiff has waived its attorney-client privilege.
Accordingly, IT IS ORDERED that
Claimants' Motion to Compel Production of Attorney-Client
Communications (Doc. 193) is denied.
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Notes:
[1] In January 2016, an employee of a
subcontractor was killed while working at the location of
ABD's construction project. The Claimants, as the
decedent's parents, brought a wrongful death action
against ABD, among others, in Arizona state court. The
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