G. R. SMITH, Magistrate Judge.
Before the Court is an insurance coverage case arising from storm damage to the roof of a motor home purchased by plaintiffs Douglas and Vicki Cone from Camping Time RV Centers, LLC d/b/a Camping World RV Sales ("Camping World"). The Cones insured it with National General Assurance Company ("NGAC"), against whom they brought this action after it refused to pay their damage claim. They now move to: compel documents from NGAC, doe. 24; add Camping World as a party, doe. 27; and extend discovery. Doe. 34. NGAC does not oppose adding Camping World as a party, doe. 34 at 2 ¶ 3, so that motion is granted. But it raises objections to the compelled discovery and insists that plaintiffs ran out the clock on extending the discovery period. Docs. 28 & 38; see also doc. 13 at 2 (discovery ended October 22, 2015).
The storm caused tree limbs to hit and damage the mobile home's roof. Rain water penetrated it, damaging the interior. NGAC's policy, plaintiffs contend, "covers water damage caused by a sudden event, in this case, the winter of February 12, 2014," doc. 25 at 2 (emphasis added), so NGAC must cover that loss. NGAC insists that water seepage from a defective roof is not a "sudden event." Doc. 24-1 at 14.
The claim took some time to adjust because of the way the loss occurred. At first plaintiffs believed they could repair their motor home's roof simply by replacing a roof vent. But later they "found that the roof lining was falling down from the ceiling." Doc. 25 at 2; see also doc. 24-1 at 23-25, 27-29 (D. Cone's correspondence reciting these details). So, they took it to the vehicle's vendor, Camping World. Camping World inspected it and told them that they had a property damage insurance claim; it forwarded its findings to NGAC on May 13, 2014. Doe. 25 at 2.
On July 15, 2014, NGAC declined the claim because water seepage, not a "sudden event," caused the damage: "[T]he damage to your coach is due to long term water intrusion and not a covered peril listed in your policy." Doe. 25 at 2 (quoting doe. 24-1 at 14 (claim denial letter)). But the Cones persisted, so NGAC retained Auto Damage Appraisers ("ADA") to re-evaluate their claim. Id. ADA's August 11, 2014, repair report: "Tree limbs fell across roof panel, damaging roof vents. Owner replaced vents but it appears water had already seeped into ceiling — damaging ceiling panels. . . ." Doe. 24-1 at 19.
The Cones read ADA's report as documenting the water damage as the result of a sudden event. Doe. 25 at 2. Douglas Cone threatened suit in a November 4, 2014 letter. Doe. 25 at 7; doe. 28 at 10 n. 3. On February 20, 2015, plaintiffs sent NGAC an O.C.G.A. § 33-4-6 demand letter.
Through discovery the Cones requested, but NGAC denied, a copy of NGAC's Claims Manual and All Written Policies and Procedures for 2012-2015, plus its entire claims file on their case.
LITIG. & PREy. INS. BAD FAITH § 12:10 (3d ed. July 2015) (footnotes omitted and added). Hence, "those portions of a first-party insurer's claims investigations manual which deal with the insurer's basis for denying the insured's claim have been held relevant and discoverable in a first-party bad faith case." Id. The Court has been shown no convincing reason why NGAC's practices and policies manual should not be divulged to the Cones, conditioned upon a Protective Order to protect any of NGAC's trade secret and other proprietary interests.
NGAC therefore must turn over to plaintiffs "[a] copy of any claims manual(s) or policies and procedures published or written by [NGAC] for the evaluation of claims for property damage of insured property during the years 2012-2015, including claims for diminished value." Doc. 24 at 2. Given the very liberal "discovery" standard noted supra, they are discoverable because one reasonably could find claims-adjusting guidelines, constraints and restraints relevant to, or otherwise informing NGAC's intent (e.g., written procedures could "guide" adjusters on using "proper word usage" when examining property for coverage-excluding causes like "seepage"; how such procedures may have evolved contemporaneous to the Cones' 2014 claim also inform the bad-faith inquiry here, so the 2012-2015 time frame is reasonable).
Compelling disclosure of an insurer's actual claims file depends on whether its contents were routinely generated or specially created in anticipation of litigation. See Howard, 296 F.R.D. at 695 ("[T]he work product doctrine typically does not protect documents from discovery unless they are prepared in anticipation of litigation, and since not every claim is expected to result in litigation, the privilege is not automatically conferred upon insurer claims files.") (emphasis original); Holbourn v. NCL (Bahamas) Ltd., 305 F.R.D. 685 (S.D. Fla. 2014) (surveillance video that routinely recorded events onboard a cruise ship and showed passenger's fall after being knocked down when a lounge chair struck her leg was created in the ordinary course of business, and was thus not protected from discovery by work product doctrine in passenger's personal injury case).
Plaintiffs insist that they are entitled to the following from NGAC's claims file:
Doe. 25 at 6-7.
NGAC's "Redaction/Withholding Log for Documents" shows that it withheld an email because it contained information NGAC deemed "irrelevant and beyond the scope of discovery under Fed. R. Civ. P. 26(b)(1)."
NGAC cannot, plaintiffs insist, reasonably claim that it anticipated litigation, and thus block disclosure on privilege grounds, until November 4, 2014 at the earliest. Doc. 25 at 7. That's when Douglas Cone sent a certified letter to Camping World (acting as NGAC's agent, plaintiffs claim) in which he documented: (a) his claim that "water had apparently entered his motorhome through the `busted vent' and leaked into his ceiling panels," doe. 25 at 3; and (b) his claim that no one had given him a copy of Camping World's report to NGAC. Id. at 7. That's when he agrees "that the risk of litigation was substantial and imminent." Id.
The Court notes the temporal direction each side pushes for the proper "anticipation of litigation" date. An earlier date benefits NGAC (hence, more of its file will be privileged), while a later date benefits plaintiffs (less of NGAC's file will be privileged). NGAC pegs the "anticipation" date at July 15, 2014, when it first denied the Cones' claim. Doc. 24-1 at 8; see also id. at 14 (the coverage denial letter). The Cones respond that, as of that day, they "were [still] doing all that they could to resolve the claim. [NGAC] had [even] retained an adjusting company [i.e., ADA] to investigate the claim and so was continuing to evaluate the claim. The risk of litigation [at that point therefore] was not `substantial and imminent." Doc. 25 at 8. Hence, they argue, that date should not apply because the parties were still attempting to resolve the coverage dispute. Indeed, the Cones did not even invoke O.C.G.A. § 33-4-6 until February 20, 2015. Id. at 7.
Pause must be taken to consider what in substance both parties urge: An objective standard for establishing the "anticipation of litigation" benchmark for supporting an insurer's privilege claims.
Objectively speaking, August 22, 2014 is the proper cut-off point for sustaining NGAC's anticipation of litigation, work-product objections.
Plaintiffs' motion to compel on this issue is therefore granted in part: NGAC must produce any part of its claims file contents, generated up to August 22, 2014, that it has withheld on privilege grounds, for it is not objectively reasonable to claim anticipation prior to that day.
The Court also grants plaintiffs' motion to extend discovery. Doc. 34. Plaintiffs were awaiting this ruling so they could depose defense witnesses with the benefit of the withheld documents now ordered disclosed. Doe. 34 at 1; doc. 27 at 1-2. They also have now succeeded in adding Camping World as a party, and they cite to discovery needed from it. Doe. 34 at 2. Expert witness needs (plaintiffs may raise a negligence claim against Camping World) are also in play. Id.
Plaintiffs' motion to compel (doe. 24) is
Linthicum, 2015 WL 4567106 at * 5. When is it reasonable to suspect a case will be litigated? Courts analyze the facts of each case while using phrases like whether litigation was the "primary motivating factor" in generating a document, or whether the document was created "because of" actual or expected litigation. See e.g., Maher, 143 S.W.3d at 912 ("For the privilege to apply, preparation for litigation must be the primary motivating purpose underlying the creation of the document."); Wells Dairy, Inc. v. Am. Indus. Refrigeration, Inc., 690 N.W.2d 38, 47-48 (Iowa 2004) (if documents would have been created in essentially similar form irrespective of litigation, it cannot fairly be said that they were created because of actual or impending litigation, and documents would not be entitled to work-product privilege). Those semantic conceptualizations all involve an attempt to discern when an insured likely will resort to litigation. But given the sheer complexity of human perception and behaviors, line-drawing here at best will be imprecise. See e.g., Meighan v. TransGuard Ins. Co. of Am., Inc., 298 F.R.D. 436, 448 (N.D. Iowa 2014).
Nationwide Mut. Fire Ins. Co. v. Kelt, Inc., 2015 WL 1470971 at * 8 (M.D. Fla. Mar. 31, 2015). The Court has not located any Georgia state or federal cases that have applied this presumption, and NGAC evidently has not either — it cites none. Even were it applied here, there is no dispute that the Cones did not resort to litigation, in fact persisted in trying to resolve their claim up to if not beyond August 22, 2014, and NGAC stayed in that game. Indeed, it even hired an appraiser — what an insurer would do to reassess a claim, if not compute a possible pay-out on the policy. That's enough to rebut the presumption and support the conclusion that NGAC did not anticipate litigation after its July 15, 2014 claim denial. If anything, it (by hiring ADA) signaled to the Cones that it was still in claim adjustment mode — hence, that it might yet pay out on their claim. That, in turn, would signal plenty of insureds that it's not yet time to "call the lawyer."
