Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00537/USCOURTS-caed-1_07-cv-00537-23/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 28:1442 Petition for Removal- Breach of Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

DAIRY AMERICA, INC., CASE NO. CV F 07-0537 LJO SKO

Plaintiff, ORDER TO EXCLUDE ATTORNEY BILLING

RECORDS AND TESTIMONY

vs.

HARTFORD CASUALTY

INSURANCE COMPANY, 

Defendant.

 /

Prior to the July 15, 2010 pretrial conference, defendant Hartford Casualty Insurance Company

(“Hartford”) raised the issue of plaintiff Dairy America, Inc.’s (“Dairy America’s”) failure to produce

attorney billing materials to support economic damages arising from Hartford’s denial of Dairy

America’s claim. After discussion with counsel at the pretrial conference, this Court permitted Dairy

America to file papers to address its failure to produce attorney billing materials. On July 22, 2010,

Dairy America filed its 27-page brief and 10-page declaration of its counsel Charles Manock (“Mr.

Manock”) with 187 pages of exhibits. 

In Cassim v. Allstate Ins. Co., 33 Cal.4th 780, 806, 16 Cal.Rptr.3d 374 (2004), the California

Supreme Court explained recovery of attorney fees as economic damages in an insurance bad faith case:

. . . if an insurer fails to act fairly and in good faith when discharging its

responsibilities concerning an insurance contract, such breach may result in tort liability

for proximately caused damages. Those damages can include the insured's cost to hire

an attorney to vindicate the insured's legal rights under the insurance policy. “When an

insurer's tortious conduct reasonably compels the insured to retain an attorney to obtain

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the benefits due under a policy, it follows that the insurer should be liable in a tort action

for that expense. The attorney's fees are an economic loss-damages-proximately caused

by the tort. [Citation.] These fees must be distinguished from recovery of attorney's fees

qua attorney's fees, such as those attributable to the bringing of the bad faith action itself.

What we consider here is attorney's fees that are recoverable as damages resulting from

a tort in the same way that medical fees would be part of the damages in a personal injury

action.” ( Brandt, supra, 37 Cal.3d at p. 817, 210 Cal.Rptr. 211, 693 P.2d 796.)

With its November 17, 2009 document requests, Hartford sought “all attorney fee bills and costs

incurred by Dairy America for the purpose of obtaining policy benefits” under Hartford’s policy issued

to Dairy America. With its January 15, 2010 responses, Dairy America objected to the request for

attorney fee bills and costs as seeking “information protected by the attorney-client and/or work product

privilege.” DairyAmerica furtherresponded that “[n]on-privileged documents responsive to this request

will be produced.”

After the July 15, 2010 pretrial conference, Dairy America first produced 115 pages of billing

materials to Hartford.

In Xebec Development Partners, Ltd. v. National Union Fire Ins. Co. of Pittsburgh, 12

Cal.App.4th 501, 569, 15 Cal.Rptr.2d 726 (1993), the California Court of Appeal addressed assertion

of privilege as to billing materials:

A party who asserts a privilege as to evidence essential to some element of his

or her case will usually be obliged as a practical matter to forsake that element; his or her

decision to do so will have been a necessary part of the decision to assert the privilege.

But at least in circumstances such as those before the court here, the party cannot have

it both ways: He or she cannot assert the privilege in discovery and then (having as a

practical matter denied the adversary's legitimate discovery rights) waive the privilege

and offer the proof at trial without taking or suffering steps appropriate to cure the

prejudice to the adversary. 

Dairy America goes to great lengths and verbosity to obscure the key issue at hand. The record

reveals that for six months leading up to the July 15, 2010 pretrial conference, Dairy America invoked

the attorney-client privilege and attorney work product doctrine as to the requested billing materials. 

This is an inescapable conclusion in that Dairy America did not disclose the billing materials until

Hartford raised the issue just prior to the pretrial conference. Nothing suggests that Dairy America

raised the issue of the billing statements in its F.R.Civ.P. 26(a)(1) or 26(a)(3) disclosures. Of key

/ / /

/ / /

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importance, Dairy America did not list the billing materials as proposed exhibits in the joint pretrial

statement. Hartford justifiably concluded that Dairy America continued to invoke the attorney-client 1

privilege and attorney work product doctrine as to the billing statements. Dairy America’s laborious

points regarding discovery extensions (some without this Court’s adherence), changes in attorney

personnel, and purported lack of diligence and expected good will of Hartford’s counsel serve only to

camouflage Dairy America’s inaction to produce billing materials to which it now disavows the cloak

of attorney-client privilege and attorney work product.

DairyAmerica’s points as to lack of prejudice to Hartford are not credible. Permitting admission

of the billing materials would compel Hartford to defend a claim of thousands of dollars with next to

no meaningful preparation and potential continuation of trial, which this Court will not tolerate. Dairy

America’s proposals to permit belated expert designation and related discovery would serve only to

impede and distract Hartford’s trial preparation. 

Equally incredible are Dairy America’s notions that it had no duty to produce billing records. 

Such claim is game playing and ignores the parties’ mutually beneficial agreements regarding belated

discovery. In addition, belated disclosure of the billing materials on July 15, 2010 fails to comply with

F.R.Civ.P. 26(a)(3)(B).

Dairy America’s claim that it need not introduce billing materials is unavailing. Dairy America

unjustifiably seeks to add Mr. Manock as a witness although he was not listed as a witness in the joint

pretrial statement. Without the billing materials, Dairy America proposes to address attorney fees by 2

testimony of Dairy America officers who are listed as witnesses in the pretrial order and Mr. Manock. 

Mr. Manock’s proposed testimonyon reasonableness and need for fees would encompass expert opinion

to require reopening expert discovery and compound prejudice to Hartford.

Moreover, Dairy America is not entitled to F.R.Civ.P. 60(b) relief in that its predicament

Local Rule 281(b)(11) requires in the joint pretrial statement a “list of documents or other exhibits that the

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party expects to offer at trial. Only exhibits so listed will be permitted to be offered at trial except as may be otherwise

provided in the pretrial order.”

Local Rule 281(b)(10) requires in the joint pretrial statement a list “of all prospective witnesses, whether

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offered in person or by deposition or interrogatory, designating those who are expert witnesses. Only witnesses so listed will

be permitted to testify at the trial, except as may be otherwise provided in the pretrial order.”

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regarding the billing materials is of its own making, despite the passage of six months to address the

matter. The relief which Dairy America seeks would cause manifest injustice – to Hartford. 

CONCLUSION AND ORDER

Forthe reasons discussed above, this Court EXCLUDES the billing materials and Mr. Manock’s

testimony. As such, the Dairy America’s economic attorney fees claim is barred in the absence of

sufficient supporting evidence.

IT IS SO ORDERED.

Dated: July 23, 2010 /s/ Lawrence J. O'Neill 

66h44d UNITED STATES DISTRICT JUDGE

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