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Torres v. ADM Milling Co.

United States District Court, W.D. North Carolina, Charlotte Division

July 17, 2015

JESUS RAYA TORRES, Plaintiff,
v.
ADM MILLING COMPANY, Defendant/Third-Party Plaintiff,
v.
CICA, INC. AND BUILDERS MUTUAL INSURANCE COMPANY, Defendant.

ORDER

Graham C. Mullen United States District Judge

THIS MATTER is before the Court on Third-Party Plaintiff ADM’s Motion to Compel Third-Party Defendant Builders Mutual Insurance Company to produce documents, (Doc. No. 42), Third-Party Defendant Builders Mutual’s Motion to Compel ADM Milling Co. to Produce Documents, (Doc. No. 44), and Builders Mutual’s Amended Motion to Enforce Subpoena Duces Tecum to Allen C. Smith. (Doc. No. 50). For the reasons set forth below, ADM’s Motion is GRANTED in part and DENIED in part, and Builders Mutual’s Motions are both DENIED.

I. BACKGROUND

Plaintiff Jesus Torres brought this case against ADM Milling Co. alleging various negligence claims associated with an injury sustained while working at an ADM facility in Charlotte, North Carolina. ADM subsequently filed a third-party complaint against CICA, Inc., Torres’ employer, alleging that CICA breached a contract with ADM that required CICA to indemnify ADM for Torres’ claims and to procure commercial liability insurance for ADM’s benefit. (Doc. No. 5). CICA is insured against liability by Builders Mutual Insurance Company (“Builders Mutual”). (Doc. No. 43 at 2). On March 3, 2014, ADM filed an amended third-party complaint that asserted claims against Builders Mutual for breach of contract and declaratory judgment. (Doc. No. 18). That complaint alleged that Builders Mutual breached its insurance contract with CICA by failing to indemnify ADM in this suit, and that ADM is or should be an additional named insured on CICA’s liability policy. Builders Mutual answered the complaint on June 17, 2014. (Doc. No. 26). On April 22, 2014, the parties conducted a mediated settlement conference and settled Torres’ claims. (See Stipulation of Dismissal, Doc. No. 25). Thus, the only remaining claims are those asserted by ADM against CICA and Builders Mutual.

ADM filed a Motion for Leave to File Second Amended Third-Party Complaint, (Doc. No. 29), and this Court granted the motion. (Doc. No. 34). ADM filed the Second Amended Third-Party Complaint on March 3, 2014, adding claims against Builders Mutual for common law bad faith and unfair and deceptive trade practices. (See Doc. No. 29-1). Builders Mutual filed an answer to the new claims on February 6, 2015. (Doc. No. 37). Discovery commenced, and the parties served the requests at issue in these Motions.

II. LEGAL STANDARD

Work-product protection is determined by federal law.[1] See Ring v. Commercial Union Ins. Co., 159 F.R.D. 653, 656 (M.D. N.C. 1995). “Work product protection only shields the documents produced in anticipation of litigation, not the facts.” Id. at 657. The party seeking protection has the burden of establishing that the documents sought were “prepared in anticipation of litigation or for trial by and for the party or the party's representative.” Id. at 656. However, even if litigation was anticipated, “documents prepared in the regular course of business will not merit protection.” Id. Insurance claim files may be prepared in the regular course business and in anticipation of litigation. Id. When considering whether insurance claim files are protected, courts have held that “a reasonable possibility of litigation only arises after an insurance company has made a decision with respect to the claim of its insured.” Id. “When an insurer seeks to argue that the threat of litigation appeared at an earlier time, it must bear the burden of persuasion by presenting specific proof demonstrating a resolve to litigate.” Id.

Work-product privilege is not absolute. A party may discover documents protected by the work-product doctrine if it is able to demonstrate “it has substantial need for the materials to prepare its case and cannot without undue hardship, obtain their substantial equivalent by other means.” Fed.R.Civ.P. 26(b)(3)(A). Courts have found that when an insurance company is sued for indemnification following a settlement, an exception to Rule 26(b)(3) may apply, but only when the protected materials relate to whether a party met the obligations of the insurance policy at issue. See, e.g., Truck Ins. Exch. v. St. Paul Fire & Marine Ins. Co., 66 F.R.D. 129, 131 (E.D. Pa. 1975).

As to attorney-client privilege, under North Carolina law, attorney-client privilege exists

if “(1) the relation of attorney and client existed at the time the communication was made, (2) the communication was made in confidence, (3) the communication relates to a matter about which the attorney is being professionally consulted, (4) the communication was made in the course of giving or seeking legal advice for a proper purpose, although litigation need not be contemplated, and (5) the client has not waived the privilege.”

State v. McIntosh, 336 N.C. 517, 523–24, (1994) (quoting State v. Murvin, 304 N.C. 523, 531 (1981)); see also Evans v. United Servs. Auto. Ass'n, 142 N.C.App. 18, 32, (2001). However, communications from counsel are only privileged under the attorney-client privilege doctrine if they consist of legal advice. See McIntosh, 336 N.C. at 523–24. “Although an attorney may assert the privilege when necessary to protect the interests of the client, the privilege belongs solely to the client.” In re Miller, 357 N.C. 316, 337 (2003); see also Hulse v. Arrow Trucking Co., 161 N.C.App. 306, 310 (2003).

III. DISCUSSION

A. ADM’s Motion to Compel

ADM files the instant Motion to Compel against Builders Mutual seeking production of ...


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