United States District Court, D. Nevada
FOLEY, JR. United States Magistrate Judge
matter is before the Court on Plaintiffs Motion to Compel
(ECF No. 15), filed on May 10, 2017. Defendant filed its
Response (ECF No. 25) on May 24, 2017. Plaintiff filed a
Supplement to the Motion to Compel (ECF No. 24) on May 24,
2017, and filed her Reply (ECF No. 34) on May 31, 2017. Also
before the Court is Defendant's Motion for Protective
Order (ECF No. 28), filed on May 25, 2017. Plaintiff filed
her Response (ECF No. 33) on May 31, 2017. The Court
conducted a hearing on these motions on June 5, 2017.
Kirsten Spargo alleges that she suffered bodily injuries in a
May 26, 2009 accident when another motorist ran a stop sign
and collided with her vehicle. She made a claim against the
other driver's liability insurance policy and
subsequently settled for the $15, 000 limits of that policy.
On May 13, 2011, Ms. Spargo made a claim to State Farm for
underinsured motorist benefits. On February 27, 2012, she
filed a lawsuit against State Farm for breach of the
underinsured motorist coverage contract. On April 4, 2012,
State Farm sent a letter to Plaintiffs attorney stating that
the medical records showed that Ms. Spargo had seen a doctor
for four (4) to five (5) years for neck symptoms and
headaches. State Farm stated that to move forward it would
need all medical records from Dr. Mayor and Dr. Simoncelli.
5, 2012, Plaintiff provided State Farm with signed
authorizations for (1) medical records, (2) employment
records, (3) insurance claims records, (4) worker's
compensation records, and (5) tax returns. On July 9, 2013,
State Farm requested that Ms. Spargo undergo a medical
examination with Dr. Schiffini, a doctor hired by State Farm.
On October 30, 2014, Plaintiff s attorneys advised State Farm
that she was still treating with Dr. Hogan and Dr. Burkhead.
Plaintiff alleges that during the lawsuit State Farm
unreasonably undervalued her claim and forced her to engage
in prolonged litigation to recover the policy limits. State
Farm paid the policy limit of $250, 000.00 on August 26,
2015. Plaintiff alleges that "State Farm's attorney
in the breach of contract action recommended to State Farm
that it pay the policy limits two years earlier in the
litigation and State Farm chose instead to delay the
litigation and force Kirsten into prolonged litigation."
Amended Complaint (ECF No. 1), ¶¶ 11-19.
counsel Sean Claggett submitted a declaration in which he
states that Defendant's counsel in the breach of contract
action, Gina Winspear, "told Samuel Harding-an attorney
at my firm-and me that she had advised State Farm to pay the
policy limits years earlier than when State Farm finally paid
the policy limits." Motion to Compel (ECF No.
15), pg. 3, ¶ 12. In response, State Farm filed a
declaration by Ms. Winspear in which she states that
"[d]uring my handling of the defense of the state court
case, I never told Plaintiffs counsel, Sean A. Claggett, Esq.
or Samuel A. Harding, Esq., that I recommended that Defendant
pay Plaintiffs $250, 000 UIM policy limits because her UIM
claim had a value of $250, 000." Response (ECF
No. 25), Exhibit B, ¶ 8. In reply, Mr. Claggett
submitted another declaration stating that "I distinctly
remember Mr. Harding and I talking to Ms. Winspear about the
breach of contract action at the Clark County Regional
Justice Center following a hearing. During that conversation,
Ms. Winspear seemed frustrated at the case and told us that
she had been telling State Farm to settle the case for policy
limits for years. I recall this conversation because I
believed at that time that it likely meant that State Farm
acted in bad faith." Reply (ECF No. 34),
Exhibit 7, ¶¶ 4-5.
Farm has produced portions of its claims file relating to
Plaintiffs UIM claim. It has, however, withheld
letter/reports provided to it by Ms. Winspear in the
underlying breach of contract action. State Farm also withheld
claim log entries regarding communications with its counsel
in the underlying action. State Farm asserts that these
letter/reports and claim log entries are protected from
disclosure pursuant to the attorney-client privilege and the
work product doctrine. Plaintiff argues that she is entitled
to obtain these letter/reports and related claim log entries
because they are directly relevant to her claim that State
Farm unreasonably undervalued and delayed the payment of her
claim. Plaintiff argues that neither the attorney-client
privilege or the work product doctrine protects the
letter/reports or log entries from disclosure in this action.
insurer fails to act in good faith when it refuses without
proper cause to compensate the insured for a loss covered by
the policy. Such conduct gives rise to a breach of the
covenant of good faith and fair dealing and constitutes
"bad faith." Pemberton v. Farmers Ins.
Exch., 109 Nev. 789, 858 P.2d 380, 382 (Nev. 1993). An
insurance company may be found liable in tort for the
"bad faith" refusal or failure to pay uninsured or
underinsured motorist coverage benefits. Id. at 383.
See also Allstate Prop. & Cas. Co. v. Mirkia,
2013 WL 944778, at *7 (D.Nev. March 7, 2013); Chacon v.
State Farm Mut. Auto. Ins. Co., 2017 WL 1179945, at *2
(D.Nev. March 29, 2017). "Bad faith is established where
the insurer acts unreasonably and with knowledge that there
is no reasonable basis for its conduct." Guaranty
National Ins. Co. v. Potter, 112 Nev. 199, 912 P.2d 267,
272 (Nev. 1996). An insurer maybe liable for punitive damages
if it is shown by clear and convincing evidence that the
insurer has been guilty of oppression, fraud or malice.
Id. at 273. See also Hackler v. State Farm Mut.
Auto. Ins. Co., 210 F.Supp.3d 1250, 1258 (D.Nev. 2016).
duty of good faith continues during any litigation that is
brought to recover policy benefits. Knotts v. Zurich Ins.
Co., 197 S.W.3d 512, 517-18 (Ky. 2006) (citing White
v. Western Title Ins. Co., 710 P.2d 309, 316-17 (Cal.
1985), Haddick v. Valor Ins., 735 N.E.2d 132, 133 (
Ill. App. 2000), Harris v. Fontenot, 606 So.2d 72,
74 (La.Ct.App. 1992), Palmer v. Farmers Ins.
Exchange, 861 P.2d 895, 913 (Mont. 1993),
O'Donnell ex rel. Mitro v. Allstate Ins. Co.,
734 A.2d 901, 906 (Pa.Super.Ct. 1999) and Barefield v.
DPIC Companies, 600 S.E.2d 256, 267 (W.Va. 2004)).
See also Sinclair v. Zurich American Ins. Co., 129
F.Supp.3d 1252, 1257 (D.N.M. 2015). Here, Plaintiff alleges
that State Farm acted in bad faith during the course of the
underlying breach of contract action.
Work Product Doctrine
work production doctrine protects from discovery by the
opposing party materials prepared in anticipation of
litigation. Fed.R.Civ.Pro. 26(b)(3). Application of the
doctrine is governed by federal law. Kandel v. Brother
Intern. Corp., 683 F.Supp.2d 1076, 1083 (C.D.Cal. 2009);
Moe v. System Transport, Inc., 270 F.R.D. 613, 622
(D.Mont. 2010); and Abueg v. State Farm Mu. Auto. Ins.
Co., 2014 WL 550311, at *3 (D.Nev. Oct. 30, 2014). The
party claiming work product immunity has the burden of
proving the applicability of the doctrine. Kandel,
683 F.Supp.2d at 1083-84 (citing A Farber & Partners,
Inc. v. Garber, 234 F.R.D. 186, 192 (CD. Cal. 2006)).
Rule 26(b)(3) distinguishes between ordinary work product and
opinion work product. Ordinary work product is discoverable
if the requesting party shows a "substantial need for
the materials to prepare its case and cannot, without undue
hardship, obtain their substantial equivalent by other
means." Moe, 270 F.R.D. at 626-27 (quoting Rule
26(b)(3)(A)(ii)). "In contrast, the Court is obligated
to 'protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of a party's
attorney or other representatives concerning the litigation.
Thus, opinion work product is afforded greatest protection,
and a party seeking such materials must show that the
'mental impressions are directly at issue in a case and
the need for the materials is compelling.'"
Id. at 627 (quoting Dion v. Nationwide Mut. Ins.
Co., 185 F.R.D. 288, 282 (D.Mont. 1998)). See also
Phillips v. CR. Bard, Inc., 290 F.R.D. 615, 634 (D.Nev.
Holmgren v. State Farm Mut. Auto. Ins. Co., 976 F.2d
573 (9th Cir. 1992), the court stated that in a bad faith
insurance claim settlement case, the "strategy, mental
impressions, and opinions of [the insurer's] agents
concerning the handling of the claim are directly at
issue." Id. at 577 (citing Reavis v.
Metropolitan Property & Liability Ins. Co., Ill.
F.R.D. 160, 164 (S.D.Cal. 1987)). "Unless the
information is available elsewhere, a plaintiff may be able
to establish a compelling need for evidence in the
insurer's claim file regarding the insurer's opinion
of the viability and value of the claim. We review the
question on a case-by-case basis." The court further
noted that "in bad faith settlement cases, insurers may
call their adjusters to testify to their opinions as to the
lack of viability of the underlying claim. When an insurer
chooses to remain moot on the subject, the plaintiff is not
foreclosed from developing the same evidence."
Id. at 578.
insured's right to discover the opinions and mental
impressions of the insurer's claims adjusters does not
mean, however, that she is entitled to obtain the
confidential opinions, mental impressions or legal theories
of the insurer's attorney. In Siddall v. Allstate
Ins. Co., 15 Fed.Appx. 522 (9th Cir. Aug. 1, 2001)
(unpublished memorandum), the plaintiff argued that he had
"a substantial need" for the mental impressions,
conclusions, and opinions of the insurer's attorney. The
court stated that "[i]n analyzing this contention, it is
important to discern the difference between the
attorney-client privilege and the work product doctrine. Even
if we agreed that Siddall had a substantial need for the
requested documents, a substantial need does not, as a matter
of law, provide a legal basis for piercing the
attorney-client privilege. It can, however, provide a basis
for obtaining material withheld under the work product
doctrine." Id. at 522. Likewise, in Dion v.
Nationwide Mut. Ins. Co., 185 F.R.D. 288, 294 (D.Mont.
1998), the court stated that a compelling need to obtain the
insurance adjuster's mental impressions and opinions does
not, in and of itself, support production of the mental
impressions and opinions of the insurer's attorney. In
Yurick ex rel. Yurick v. Liberty Mut. Ins. Co., 201
F.R.D. 465, 473 n. 13 (D.Ariz. 2001), the court relied on
Holmgren and Brown v. Superior Court, 137
Ariz. 327, 670 P.2d 725, 735 (Ariz. 1983) in stating the
mental impressions and opinions of the insurer's claims
personnel were discoverable in a bad faith action, "but
not the attorney-client communications" between
the insurer and its counsel which were protected by the
attorney-client privilege. Therefore, although the work
product doctrine may not protect the attorney's mental
impressions and opinions from being discovered in a bad faith
action, they may still be protected under the attorney-client