JANUARY 2012 BAD FAITH CASES: MOTION TO COMPEL DISCOVERY OF RESERVE INFORMATION GRANTED, BUT REQUEST FOR DOCUMENTS RELATING TO COUNSEL DENIED (Western District)

In Craker v. State Farm Mutual Automobile Insurance Company, the court heard a motion to compel discovery related to an insured’s claim for underinsured motorist benefits (“UIM”). Specifically, the insured moves to compel the carrier to release documents related to reserve information and information regarding the attorney actions as an insurance adjuster.
The court previously granted a similar motion on the reserve information, wherein the carrier had argued that such discovery, as well as discovery of mental impressions and evaluations, was premature because the UIM claim should be decided first; an argument the court rejected. In this second round, the carrier argued that the reserved information was irrelevant under any circumstances. The court rejected that second effort as well, and required production of reserve information, as well as the mental impressions and evaluations of the UIM claim, just as it did the first time.
However, the insureds were not successful on the second part of their motion, wherein they took the position that the carrier’s communications with counsel were not privileged because counsel was acting as an adjuster, not an attorney. This was based on the theory that the attorney “was not acting as an attorney before the complaint was filed, and was only discussing underlying facts at the time.”
The court ruled that the motion was both untimely and unsound. First, in connection with raising this motion at the end of the discovery period, the plaintiff had the carrier’s privilege log for some time and there were no new facts that justified any basis to raise this argument late in the day, rather than promptly upon receiving the privilege log. The court reasoned that “no further explanations from [the carrier] on subsequent Privilege Logs could change the fact that the communications occurred before the complaint was filed.” As such, the court disagreed with the insured because it had no reason to wait more than two months before filing a motion to compel on this basis.
The court also held that this portion of the insured’s motion was “substantively baseless.” Although the insured did not file a complaint in state court until 2011, they had been represented by counsel in this dispute since at least 2007. The insured’s attorney has communicated with the carrier and its counsel since that time. Therefore, this factual backdrop indicates that both parties were represented by counsel and preparing for litigation as early as 2007. There is no dispute that all of the controverted communications that the insured now seek occurred months after they sent their formal demand to the carrier in February of 2008.
Therefore, the court granted the insured’s motion to compel on the reserve information, but denied the insured’s request for additional documents relating to communications with the carrier’s attorney.
Date of Decision: December 9, 2011
Craker v. State Farm Mutual Automobile Insurance Company, No. 11-0225, United States District Court for the Western District of Pennsylvania, 2011 U.S. Dist. LEXIS 141811 (W.D. Pa. Dec. 9, 2011) (Lancaster, J.)