Court Opinion

ID: 2822042
Source: CourtListenerOpinion
Date Created: 2015-07-30 19:01:01.472775+00
Date Added: 2024-06-11T11:31:04.801357
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 15-1002

LEVERT SMITH; NELSON D. RADFORD, Co-Administrators of the
Estate of Joseph Jeremaine Porter,

                Plaintiffs - Appellants,

          v.

SCOTTSDALE INSURANCE COMPANY,

                Defendant - Appellee,

          and

SCOTTSDALE INDEMNITY COMPANY; NATIONWIDE INSURANCE COMPANY,

                Defendants.

Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling.     Frederick P. Stamp,
Jr., Senior District Judge. (5:12-cv-00086-FPS-JES)

Submitted:   June 30, 2015                  Decided:   July 30, 2015

Before GREGORY, DUNCAN, and KEENAN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Timothy F. Cogan, Patrick S. Cassidy, CASSIDY, COGAN, SHAPELL &
VOEGELIN, LC, Wheeling, West Virginia, for Appellants.   Thomas
E. Scarr, Sarah A. Walling, JENKINS FENSTERMAKER, PLLC,
Huntington, West Virginia; Denise D. Pentino, William E
Robinson, Jacob A. Manning, DINSMORE & SHOHL, LLP, Wheeling,
West Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

      Levert Smith and Nelson Radford, as administrators of the

Estate   of    Joseph    Jermaine    Porter     (the    “Estate”),   appeal   the

district court’s orders affirming the magistrate judge’s denial

in part of the Estate’s motion to compel discovery and granting

summary judgment to Scottsdale Insurance Company (“Scottsdale”)

on the Estate’s claim under the West Virginia Human Rights Act,

W. Va. Code §§ 5-11-1 to 5-11-20 (2013) (“WVHRA”).                    The claim

arises from a civil rights lawsuit filed by the Estate against

Scottsdale’s insured, the City of Huntington, West Virginia (the

“City”).      See Smith v. Lusk, 533 F. App’x 280 (4th Cir. July 18,

2013) (No. 12-2063).        We affirm.

                                        I.

      The     Estate    first    challenges    the     district   court’s   order

denying in part its motion to compel discovery of portions of

Scottsdale’s claim file.           District courts and magistrate judges

are   afforded     substantial       discretion      in   managing   discovery.

United States ex rel. Becker v. Westinghouse Savannah River Co.,

305 F.3d 284, 290 (4th Cir. 2002).              We review discovery rulings

for an abuse of discretion.           Kolon Indus. Inc. v. E.I. DuPont de

Nemours & Co., 748 F.3d 160, 172 (4th Cir.), cert. denied, 135
S. Ct. 437 (2014).              An abuse of discretion occurs when the

district      court’s     decision    is      “guided     by   erroneous    legal

                                         3
principles” or “rests upon a clearly erroneous factual finding.”

Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir.

1999).     We review de novo the district court’s legal conclusion

that     the    attorney-client           and       work    product        privileges     are

applicable.          Hawkins v. Stables, 148 F.3d 379, 382 (4th Cir.

1998).

       Because this is a diversity action, the elements of the

attorney-client            privilege   are      governed       by   West    Virginia      law.

Fed. R. Evid. 501; Ashcraft v. Conoco, Inc., 218 F.3d 282, 285

n.5 (4th Cir. 2000) (“[I]n a diversity action the availability

of an evidentiary privilege is governed by the law of the forum

state.”).           Under West Virginia law, there are three elements

necessary to establish this privilege: “(1) both parties must

contemplate that the attorney-client relationship does or will

exist; (2) the advice must be sought by the client from the

attorney       in    his    capacity     as   a     legal   advisor;       [and]    (3)   the

communication between the attorney and client must be intended

to be confidential.”             State ex rel. Med. Assurance of W. Va.,

Inc. v. Recht, 583 S.E.2d 80, 84 (W. Va. 2003).                             This privilege

also applies to communications between an attorney and a client

that are shared with the client’s insurance company.                           Id. at 89.

       The Estate argues that when the attorney’s activities in a

discrimination         case     become    an        intimate    part   of     the   claimed

discrimination, the privileged communications are discoverable,

                                                4
citing State ex rel. Westbrook Health Servs., Inc. v. Hill, 550
S.E.2d 646    (W.     Va.     2001).           However,   “privileged       matters,

although relevant, are not discoverable.                           As a result of this

rule,     many       documents       that       could    very    substantially        aid    a

litigant in a lawsuit are neither discoverable nor admissible as

evidence.”          Recht, 583 S.E.2d at 84.                    Moreover, the Supreme

Court of Appeals of West Virginia in Hill did not conclude that

documents related to an attorney’s actions in a discrimination

case    are     per     se    outside       the       protection    of    the    privilege;

instead, the court found that the employer failed to meet the

three-part test for application of the privilege. 550 S.E.2d at

650-51.

       The      Estate       further        argues,       however,       that    Scottsdale

impliedly           waived         attorney-client         privilege        because         the

attorneys’ communications are “at issue” in this                                 case.      “A

party    may        waive    the     attorney-client         privilege      by    asserting

claims or defenses that put his or her attorney’s advice in

issue.”        State ex rel. Brison v. Kaufman, 584 S.E.2d 480, 482

(W.     Va.     2003)       (internal       quotation      marks     omitted).           “[A]n

attorney’s legal advice only becomes an issue where a client

takes affirmative action to assert a defense and attempts to

prove that defense by disclosing or describing an attorney’s

communication.”             State ex rel. Marshall Cnty. Comm’n v. Carter,

689 S.E.2d 796,    805     (W.   Va.    2010)    (internal      quotation       marks

                                                  5
omitted).        We conclude that Scottsdale did not affirmatively

place     any     attorney-client             privileged         matters        at    issue.

“[A]dvice is not in issue merely because it is relevant, and

does not come in issue merely because it may have some affect on

a client’s state of mind.”               State ex rel. U.S. Fid. & Guar. Co.

v. Canady, 460 S.E.2d 677, 688 n.16 (W. Va. 1995).                                   Further,

Scottsdale       did     not    assert       any   claim       or    defense     based     on

counsel’s advice in the underlying case; instead, it maintained

that its actions were based on its own evaluation of the case

and the City’s refusal to consent to a settlement.

       The     Estate    also     sought      documents        the     magistrate      judge

concluded were protected under the work product doctrine.                                 The

work    product        doctrine        “confers     a        qualified     privilege      on

documents       prepared        by      an    attorney          in     anticipation        of

litigation.”       Solis v. Food Employers Labor Relations Ass’n, 644
F.3d 221,    231     (4th    Cir.    2011).      Work       product     is    “generally

protected and can be discovered only in limited circumstances.”

In re Grand Jury Proceedings, 33 F.3d 342, 348 (4th Cir. 1994).

“Fact work product is discoverable only upon a showing of both a

substantial      need     and    an    inability        to    secure     the    substantial

equivalent of the materials by alternate means without undue

hardship.”       Chaudhry v. Gallerizzo, 174 F.3d 394, 403 (4th Cir.

1999)    (internal       quotation       marks     omitted).            “[O]pinion       work

product enjoys a nearly absolute immunity and can be discovered

                                              6
only         in    very     rare     and   extraordinary     circumstances.”         Id.

(internal quotation marks omitted).

         The       Estate    argues    that    the   attorney’s    opinions    are   “at

issue” here because of the intimacy of the involvement of the

attorneys and adjusters in determining the course of the civil

rights lawsuit.                  Here, however, Scottsdale has never contended

that it relied upon counsel’s opinions in refusing to settle.

It has consistently asserted that it made the decision based on

its own conclusions and the City’s decision, which was not made

on   the          advice    of    counsel.     Thus,    because   Scottsdale    is   not

“attempt[ing] to use a pure mental impression or legal theory as

a sword and as a shield in the trial of a case,” In re Martin

Marietta Corp., 856 F.2d 619, 626 (4th Cir. 1988), we conclude

that          the      Estate        has      not    demonstrated      “extraordinary

circumstances”              to     overcome    the     “nearly    absolute    immunity”

afforded to opinion work product.                       See Chaudhry, 174 F.3d at

403. *

                                               II.

         *
       To the extent that the Estate summarily contends that
documents   containing  Scottsdale’s  valuation  of   the  case
constituted fact work product rather than opinion work product,
we conclude that the Estate has waived that argument by failing
to submit adequate briefing.

                                                7
      The Estate also argues that the district court erred in

granting summary judgment to Scottsdale on its WVHRA claim.                        We

review     de    novo   whether    a   district       court    erred   in    granting

summary judgment, viewing the facts and drawing all reasonable

inferences in the light most favorable to the nonmoving party.

Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir. 2013).                       Summary

judgment is properly granted “if the movant shows that there is

no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.”                        Fed. R. Civ. P.

56(a).       A district court should grant summary judgment unless a

reasonable jury could return a verdict for the nonmoving party

on the evidence presented.             Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986).

      The       WVHRA   creates    “three      distinct       causes   of    action.”

Michael     v.    Appalachian     Heating,     701 S.E.2d 116,   117   (W.   Va.

2010).      Under the WVHRA:

      it is an unlawful discriminatory practice for any
      person . . . to: (1) engage in any form of threats or
      reprisal, or; (2) engage in, or hire, or conspire with
      others to commit acts or activities of any nature, the
      purpose of which is to harass, degrade, embarrass or
      cause physical harm or economic loss, or (3) aid,
      abet, incite, compel, or coerce any person to engage
      in any of the unlawful discriminatory practices
      defined in W. Va. Code § 5-11-9 [(2013)].

W.   Va.    Code    § 5-11-9(7)(A).           The    WVHRA    “prohibits     unlawful

discrimination by a tortfeasor’s insurer in the settlement” of a

claim.       Id. at 118.

                                          8
       The Estate argues that the district court erred when it

determined    that       the   Estate       failed    to    show      that   Scottsdale’s

proffered reasons for its actions in the underlying case were

pretextual.    West Virginia courts employ a three-pronged test to

determine    whether       a   plaintiff       has    established        a     prima    facie

case, analyzing whether (1) the plaintiff is within a protected

class; (2) the plaintiff suffered an adverse decision; and (3)

there is evidence permitting an inference that “[b]ut for the

plaintiff’s   protected          status,      the    adverse       decision      would    not

have been made.”          Dawson v. Allstate Ins. Co., 433 S.E.2d 268,

274 (W. Va. 1993).         To complete its prima facie case, the Estate

must   establish     a    link    between         Scottsdale’s        decision     and   its

status as a member of the protected class sufficient “to give

rise to an inference that the . . . decision was based on an

illegal discriminatory criterion.”                    Conaway v. E. Assoc. Coal

Corp., 358 S.E.2d 423, 429 (W. Va. 1986).

       If the Estate establishes the prima facie case, then the

burden   shifts      to    Scottsdale         to     provide      a   nondiscriminatory

reason for the adverse action; if Scottsdale provides such a

reason, then the burden shifts back to the Estate to demonstrate

that the proffered reason is merely pretextual.                         Id. at 430.       To

demonstrate    pretext,          the    plaintiff          must       “prove     that    the

[defendant]    did       not   act     as    it     did    because      of   its   offered

                                              9
explanation.”       Skaggs v. Elk Run Coal Co., Inc., 479 S.E.2d 561,

584 (W. Va. 1996).

       Even assuming that the Estate has established a prima facie

case, we conclude that the Estate has failed to demonstrate that

Scottsdale’s proffered reasons for its decision not to settle

the    civil     rights       lawsuit    were      pretextual.         Scottsdale   has

consistently maintained that it refused to settle the lawsuit

based on two facially race-neutral reasons: its own assessment,

ultimately proven correct, that the City was likely to not be

found     liable,       and     the    City’s      refusal    to   consent    to    any

settlement.        While the Estate asserts that these reasons are

pretextual, it concedes that Scottsdale could not settle the

lawsuit without the City’s consent.

       The Estate contends, however, that Scottsdale had notice of

the racial elements of the lawsuit                        and thus had a duty to

investigate the City’s reasons for refusing to settle in order

to ensure that the decision was not based on an improper motive,

under Fairmont Specialty Servs. v. W. Va. Human Rights Comm’n,

522 S.E.2d 180     (W.    Va.    1999).        The     Estate    asserts     that

Scottsdale could have tried to persuade the City to settle or

provide a special review for cases with racial components and

that     Scottsdale’s         failure    to     do   so     demonstrates     that   its

proffered reasons were pretextual.

                                              10
       We   conclude       that      Scottsdale       did    not      have       a    duty    to

investigate      claims       that      racial      animus    motivated          the    City’s

decision not to settle the underlying case.                            As the district

court noted, the Supreme Court of Appeals of West Virginia only

has    recognized      a    cause       of    action    against        an     insurer         for

discrimination in settlement practices; it has not imposed upon

an    insurer    a   duty     to     investigate       whether      the      City       had    an

unlawful motive in refusing to consent to a settlement.                                       See

Michael, 701 S.E.2d at 124-26.                   Moreover, the Estate’s reliance

on    Fairmont   Specialty         is    misplaced.          There,    the       high    court

concluded    only      that    “[a]n     employer’s         liability       in       harassment

cases is tied to the nature of its response to a complaint of

discriminatory conduct.” 522 S.E.2d at 189 (emphasis added).

The court has not extended this holding to create a freestanding

duty to investigate any claims of discrimination.                            Therefore, we

conclude that summary judgment was proper.

                                             III.

       Accordingly, we affirm the district court’s orders.                                    We

dispense     with      oral    argument        because       the    facts        and     legal

contentions      are    adequately        presented     in    the     materials          before

this Court and argument will not aid the decisional process.

                                                                                     AFFIRMED

                                              11