United States District Court, W.D. Washington
ALEXANDER M. and AMY N. SOUSIE, Plaintiffs,
ALLSTATE INDEMNITY COMPANY, Defendant.
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS' MOTION TO COMPEL AND RENOTING PLAINTIFFS'
MOTION TO STRIKE
BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE
matter comes before the Court on Plaintiffs Alexander and Amy
Sousie's (“Sousies”) motion to compel (Dkt.
46) and motion to strike testimony (Dkt. 48). The Court has
considered the pleadings filed in support of and in
opposition to the motions and the remainder of the file and
hereby rules as follows:
January 4, 2017, the Sousies served the Washington Insurance
Commissioner with a complaint against Defendant and foreign
insurer Allstate Indemnity Company (“Allstate”).
Dkt. 1-1. The Sousies assert a cause of action for breach of
their insurance agreement and a violation of Washington's
Insurance Fair Conduct Act (“IFCA”). Id.
January 4, 2018, the Sousies filed a motion to compel
requesting that the Court order Allstate to produce 35
redacted entries from its claims history document and 10
other documents and grant leave to conduct a second
deposition of Allstate's investigator, Peter Poulos. Dkt.
46. On January 16, 2018, Allstate responded. Dkt. 50. On
January 19, 2018, the Sousies replied. Dkt. 52. On January
23, 2018, Allstate filed a surreply requesting that the Court
strike the Sousies' overlength brief. Dkt.
January 5, 2018, the Sousies filed a motion to strike
Allstate's rebuttal expert. Dkt. 48. On January 22, 2018,
Allstate responded. Dkt. 54. On January 22, 2018, the Sousies
replied. Dkt. 56.
Motion to Compel
notice to other parties and all affected persons, a party may
move for an order compelling disclosure or discovery.”
Fed.R.Civ.P. 37(a)(1). “Parties may obtain discovery
regarding any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of
the case . . . .” Fed.R.Civ.P. 26(b)(1).
case, the Sousies move to compel documents and a second
deposition of Allstate's investigator. Regarding the
documents, Allstate separates the requested documents into
three categories as follows: (1) documents regarding counsel
and communications with counsel, (2) documents regarding
counsel's invoices and expenses, and (3) material created
after Allstate denied the Sousies' claim. Allstate based
its withholding of these documents on the assertion of
attorney-client and work-product privileges. Before
addressing the application of the privileges to the
documents, the Court will first address a dispute regarding
scope of the applicable law.
Washington, there is 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.” Cedell v. Farmers Ins. Co. of
Washington, 176 Wn.2d 686, 698 (2013) (internal
citations omitted). An “insurer may overcome the
presumption of discoverability by showing its attorney was
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;
for example, whether or not coverage exists under the
argues that Cedell is not relevant to the
Sousies' IFCA claims because it applies only to first
party bad faith claims by insureds against their
insurers. Dkt. 50 at 4-5. The Court disagrees because an IFCA
claim is a specific type of bad faith claim. “IFCA
explicitly creates a cause of action for first party insureds
who were ‘unreasonably denied a claim for coverage or
payment of benefits.'” Perez-Crisantos v. State
Farm Fire & Cas. Co., 187 Wn.2d 669, 680 (2017)
(citing RCW 48.30.015(1)). Similarly, an insurer establishes
the tort of bad faith when an “insurer's breach of
the insurance contract was unreasonable, frivolous, or
unfounded.” Smith v. Safeco Ins. Co., 150
Wn.2d 478, 484, 78 P.3d 1274, 1277 (2003). Thus, an
unreasonable denial of coverage is simply an unreasonable
breach of the contractual obligation to provide coverage.
Although the parties fail to provide and the Court is unaware
of any authority on this specific issue, it is a logical
proposition that if Cedell governs the more general
bad faith claim, it would also govern the more specific IFCA
claim. Therefore, the Court concludes that Cedell
governs the Sousies' IFCA claim.
light of this conclusion, the Court finds that Allstate has
failed to properly assert the privileges in this matter. The
Court starts with the presumption against the privileges.
Cedell, 176 Wn.2d at 698. The burden then shifts to
Allstate to establish that its attorney, Rick Wathen, was
providing legal advice regarding coverage issues instead of
engaging in quasi-fiduciary tasks. Id. Regarding the
documents identified and dated up to the date of denial,
Allstate fails to provide any evidence to rebut the
presumption that the attorney-client privilege does not apply
to these documents. Similarly, Allstate has failed to
establish that the work-product doctrine applies to material
created before the denial of the Sousies' claim.
Therefore, the Court grants the Sousies' motion as to
the two “post-denial” documents created after the
denial of the claim but before denying the Sousies'
reconsideration, this seems to be a gray area wherein Mr.
Wathen could have been providing counsel or could have been
purely handling the request for reconsideration. As such,
Allstate may either produce these two documents or submit
them for in camera ...