Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_16-cv-00407/USCOURTS-cand-5_16-cv-00407-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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E-Filed 8/24/16

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

HARTFORD CASUALTY INSURANCE 

COMPANY,

Plaintiff,

v.

FIRST SPECIALTY INSURANCE 

CORPORATION,

Defendant.

Case No. 5:16-cv-00407 (HRL)

ORDER ON DISCOVERY DISPUTE 

JOINT REPORTS 1 AND 2

Re: Dkt. No. 24, 28

A construction company filed a cross-complaint against subcontractor Collier Warehouse 

(“Collier”) as part of a construction-defect dispute. Collier had general-liability insurance through 

Hartford Casualty Insurance Company (“Hartford”), First Specialty Insurance Corporation (“First 

Specialty”), and Nationwide Insurance (“Nationwide”). Dkt. No. 24 at 2. Hartford, First 

Specialty, and Nationwide each agreed to defend Collier in the construction-defect suit. Id. 

Collier ultimately requested that Hartford and Nationwide settle the litigation with no contribution 

from First Specialty, id. at 2-3, and Hartford and Nationwide did so, id. at 3. Hartford now sues

First Specialty for equitable contribution. 

First Specialty has largely refused to produce documents requested by Hartford, see Dkt. 

No. 24 at 3, and the parties filed Discovery Dispute Joint Report (“DDJR”) 1 to resolve whether 

Hartford is entitled to the withheld documents, Dkt. No. 24 at 1. The parties filed DDJR 2 to 

resolve whether Hartford is entitled to depose claims adjuster Kevin Curry (“Curry”). Dkt. No. 

28. First Specialty argues in each DDJR: (1) the requested discovery is not relevant because there 

are no material facts in dispute; and (2) various privileges and privacy rights support the

withholding of the requested discovery. First Specialty also argues in DDJR 2 that it would be 

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unduly burdensome to produce Curry for a deposition.1

Discussion

Both of the pending DDJRs involve the same overarching relevance dispute: if Collier’s 

settlement-contribution request is relevant to Hartford’s claim, then is it also relevant to review

specific litigation risks that might have motivated the request? First Specialty asserts that Collier 

asked it to “refrain from reimbursing Hartford and Nationwide ‘in order to preserve the First 

Specialty funds for potential use in the future.’” Dkt. No. 17 at 3. Hartford seeks information

related to the specifics of Collier’s request and “the assertion that Collier required First Specialty’s 

policy limits for future claims.” Dkt. No. 24 at 4. In particular, Hartford seeks “the Laurels, 

Redwoods, and Sycamores claim files,” which relate to litigation against Collier, and “documents 

which reflect the remaining completed operations limits for each policy First Specialty issued to 

Collier.” Id. at 10-11. First Specialty counters that Collier’s decision might be relevant to 

Hartford’s claim but that, nevertheless, “[i]nformation about other construction-defect claims is

not relevant to deciding whether Hartford is entitled to equitable contribution.” Dkt. No. 24 at 8.

The court, as to each DDJR, rejects First Specialty’s relevance argument. Federal Rule of 

Civil Procedure (“FRCP”) 26(b)(1) permits discovery of “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. 

Courts decide equitable contribution claims between insurers by “weigh[ing] the equities” of the 

individual case, Axis Surplus Ins. Co. v. Glencoe Ins. Ltd., 204 Cal. App. 4th 1214, 1231 (2012), 

and a trial court has broad discretion to resolve an equitable-contribution claim by determining 

which results would be “the most equitable . . . based on the facts and circumstances of the 

particular case,” Centennial Ins. Co. v. United States Fire Ins. Co., 88 Cal. App. 4th 105, 112 

(2001) (collecting cases and describing six distinct methods that have been used to resolve 

 

1 DDJR 1 includes an argument by Hartford for why First Specialty would not be unduly burdened 

by the proposed document production, but First Specialty makes no real undue-burden argument

in DDJR 1. First Specialty instead concludes, without citing any authority or making any separate 

argument, that it is unduly burdensome to produce irrelevant documents. Dkt. No. 24 at 10. This 

conclusion fails under its own terms if the underlying relevance argument fails. First Specialty 

has therefore duly raised in DDJR 1 only two theories to support the withholding of documents: 

relevance, Dkt. No. 24 at 7, and privileges-and-privacy-rights, id. at 9.

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equitable-contribution claims). First Specialty bases its defense on the fact that Collier directed 

the company to preserve its policy limits for use in other litigation. The court is persuaded that 

information about any such litigation is relevant to the fact-intensive process of seeking the most 

equitable result in this case. Hartford therefore seeks information that satisfies FRCP 26’s “low 

threshold for relevance.” See, e.g., Wit v. United Behavioral Health, No. 14-cv-02346-JCS, 2016 

WL 258604, at *11 (N.D. Cal. Jan. 21, 2016).

The court also rejects the undue-burden argument First Specialty raises against Hartford’s 

request to depose Curry. First Specialty argues that Curry knows only a small amount of 

discoverable information which could easily be obtained through a stipulation, like for example 

whether certain documents are authentic, and so under FRCP 26(b)(2)(C)(i) the court must limit 

discovery of that small set of information to a more convenient and less burdensome source—a 

stipulation. Dkt. No. 28 at 5-6. As previously discussed, the court rejects First Specialty’s narrow 

interpretation of what information is relevant to this case, and so Hartford is entitled to more 

broadly seek details about other litigation faced by Collier. A simple document-authentication 

stipulation would therefore be no substitute for the deposition of Curry, a claims adjuster who has 

personal knowledge of relevant facts. Furthermore, FRCP 26(b)(2)(C)(i) ordinarily applies when 

several different sources are able to provide identical copies of an existing document, and First 

Specialty cannot provide an identical copy of deposition testimony Curry has not yet given. See

MicroTechnologies, LLC v. Autonomy, Inc., No. 15-cv-02220-RMW-HRL, 2016 WL 1273266, at 

*3 (N.D. Cal. Mar. 14, 2016). First Specialty has therefore failed to show it would suffer an

undue burden from providing Curry for a deposition.

The court turns to the privileges-and-privacy-rights arguments raised by First Specialty. 

The court outright rejects all such arguments with respect to the question of whether Curry should 

be deposed. Hartford correctly points out that FRCP 30(c)(2) describes “privilege” as a possible 

basis for refusing to answer a specific question, but not as a basis for refusing to “proceed[]” with 

a deposition, and First Specialty gives no authority for the proposition that a privilege or privacy 

right may justify wholly refusing to provide a witness for a deposition. Dkt. No. 28 at 6-7. And 

although First Specialty generally discusses the attorney-client privilege, that privilege applies to 

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specific communications, and not to information contained within privileged communications—it 

is “[o]bvious[] [that] a client may be examined on deposition . . . as to the facts of the case, 

whether or not he has communicated them to his attorney.” Costco Wholesale Corp. v. Superior 

Court, 47 Cal. 4th 725, 735 (2009) (quoting Greyhound Corp. v. Superior Court, 56 Cal.2d 355, 

397 (1961)). First Specialty has therefore failed to establish any valid basis for refusing to provide 

Curry for a noticed deposition.

The court also rejects the vague argument that the “privacy rights” of First Specialty, or 

Collier, or a third-party individual “may be implicated here” if the court orders the production of 

“information [that] bears no relevance[.]” Dkt. No. 28 at 6-7; see also Dkt. No. 24 at 10. First, 

this argument fails under its own terms because, as discussed, Hartford seeks relevant information. 

Second, this argument cites only a single case, Hecht, Solberg, Robinson, Goldberg & Bagley LLP 

v. Superior Court, 137 Cal. App. 4th 579, 595 (2006), which the undersigned does not read as

helpful to First Specialty here. In Hecht the Supreme Court of California considered whether 

corporations have any cognizable privacy rights that might permit them to object to the production

of relevant financial information. Id. at 593-94. The court held that, even if corporations are 

assumed to have cognizable privacy rights, the trial court had nevertheless properly protected any 

such rights when it overruled the third-party corporation’s objections and ordered production 

pursuant to “a standard protective order” which safeguards against the public disclosure of 

sensitive information. See id. at 596-600. Furthermore, any such corporate privacy rights “do not 

preclude discovery that is relevant to the essential issues in [a] case.” Id. at 595. The undersigned 

therefore reads Hecht to mean in the context of this case, at most, that Collier and First Specialty 

might have privacy rights and that any such rights could be adequately protected, upon request, by 

a standard protective order. The undersigned also sees no basis to conclude First Specialty has 

standing to raise and litigate third-party privacy rights. First Specialty has therefore failed to 

establish that any privacy right justifies the withholding of relevant documents and deposition 

testimony in this case.

Finally, First Specialty asserts that the documents Hartford seeks “are clearly protected 

from disclosure by the attorney-client privilege,” Dkt. No. 24 at 10, and that “files generated 

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during the investigation of third party claims are made in anticipation of litigation and are not 

discoverable,” id. (quoting Underwriter Ins. Co. v. Atlanta Gas Light Co., 248 F.R.D. 663, 668 

(N.D. Ga. 2008) (citations and quotations omitted)). Hartford responds that First Specialty has 

improperly asserted attorney-client privilege, mediation privilege, and the work-product doctrine 

as to a large set of withheld documents, but without describing each withheld document in a 

privilege log as required by FRCP 26(b)(5)(A). Dkt. No. 24 at 5.

The undersigned is persuaded that First Specialty has failed to duly describe each withheld 

document in its privilege log. Instead, the privilege log submitted to the court describes only a 

small number of documents which are not at issue in DDJR 1. Dkt. No. 24-3. First Specialty may 

not maintain privilege or work-product claims without logging each withheld document in the 

manner required by FRCP 26(b)(5)(A). Hartford correctly notes that “locating responsive 

documents, reviewing those documents, and pulling privileged information [is] a routine part of 

responding to discovery.” Dkt. No. 24 at 5. And as First Specialty’s own cited authority 

concludes, the work-product doctrine does not categorically apply to insurance claim files: an 

insurance company has a “routine duty” to investigate and document potential claims, and so a 

claim file may contain both discoverable documents routinely prepared “in the ordinary course of 

business” as well as protected work product prepared “in anticipation of litigation,” Tayler v. 

Travelers Ins. Co., 183 F.R.D. 67, 71 (N.D. N.Y. 1998) (collecting cases). First Specialty must 

therefore supplement its document production to Hartford and must specifically log each withheld 

document; First Specialty cannot rest on the assertion that a variety of privileges justify its 

decision to categorically withhold a wide range of responsive documents.

Finally, the undersigned notes for the benefit of the parties’ future discovery efforts: (1)

particular documents may be protected under attorney-client privilege if they are communications 

sent between an insurer or an insured and their shared attorney, Bank of Am., N.A. v. Superior 

Court of Orange Cty., 212 Cal. App. 4th 1076, 1090 (2013), but First Specialty may not use that 

privilege to justify withholding documents which are not attorney-client communications or to 

justify withholding discoverable facts which happen to be stated in privileged communications, 

see Costco Wholesale Corp., 47 Cal. 4th at 735; and (2) given the relevance of the litigation risks 

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faced by Collier, it is possible that some work product and opinion work product related to those 

risks will be discoverable here, see Holmgren v. State Farm Mut. Auto. Ins. Co., 876 F.2d 573, 

576-77 (9th Cir. 1992).

Conclusion

The documents Hartford seeks are relevant to its claim for equitable contribution;

discovery of those documents is not categorically barred by privileges, privacy rights, or the workproduct doctrine, and First Specialty has failed to provide a privilege log that complies with FRCP 

26(b)(5)(A). First Specialty shall therefore produce: (1) as to request for production 3, the 

Laurels, Redwoods, and Sycamores claim files, less any additional-insured tender documents; (2) 

as to requests for production 4, 5, and 7, documents which reflect the remaining completed 

operations limits for each policy First Specialty issued to Collier; and (3) documents responsive to 

the other requests for production at issue in DDJR 1. First Specialty may, however, continue to 

withhold any given document to the extent that such a decision is duly supported by an updated 

privilege log which complies with FRCP 26(b)(5)(A).

Curry has personal knowledge of relevant, discoverable facts and First Specialty has failed 

to justify its refusal to cooperate in the deposition of Curry. First Specialty shall therefore 

cooperate in arranging for the deposition of Curry.

The parties shall promptly meet and confer to develop a mutually agreeable plan for how, 

and by when, First Specialty will comply with the terms of this order. The parties will also 

discuss whether the case-management schedule in this case should be changed to accommodate 

compliance with this order. The parties will be prepared to discuss these issues at the casemanagement conference that is currently set for August 30, 2016.

IT IS SO ORDERED.

Dated: 8/24/16

HOWARD R. LLOYD

United States Magistrate Judge

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