The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
HOME REPAIR, LLC as assignee of
Living Hope Bible Church,
CIVIL ACTION NO. 3:21-cv-00419
Plaintiff,
(SAPORITO, M.J.)
v.
CHURCH MUTUAL INSURANCE
COMPANY,
Defendant.
MEMORANDUM
This matter is before the court on the plaintiff’s motion to compel
the production of documents. (Doc. 20).
I. Statement of Facts
This matter was initiated by the plaintiff in the Court of
Common Pleas of Luzerne County, Pennsylvania, by the filing of a
complaint on February 9, 2021. Thereafter, on March 8, 2021, the
defendant timely removed this matter to this court.
Living Hope Bible Church, a religious institution and owner of
real property in Plains, Luzerne County, Pennsylvania, sustained a loss
due to a hailstorm on April 15, 2019. At the time of the loss, the Living
Hope Bible Church’s insurance policy with the defendant, Church Mutual
Insurance Company was in full force and effect. Living Hope Bible
Church made a claim to Church Mutual under the policy for losses and
damages because of this storm. On January 14, 2020, Living Hope Bible
Church assigned any and all of its rights, benefits, proceeds, and causes
of action for the subject claim to the plaintiff, Home Repair, LLC.
After a demand for appraisal was made, Church Mutual agreed
to the appraisal process only regarding damage to the roof of the premises
from the subject hailstorm. An appraisal award was subsequently
entered with regard to the damage to the roof of the premises. The
plaintiff contends that the siding of the premises was also damaged as a
result of the storm, which was not included in the appraisal because
Church Mutual denied coverage for the siding of the premises. The
plaintiff maintains that the failure and/or refusal to pay all insurance
proceeds under the policy because of the hailstorm constitutes a breach
of the subject insurance policy.
The plaintiff served a request for production of documents upon
Church Mutual. In response, Church Mutual produced its claim file
which contained redactions of information within the status reports
forwarded to it by Syndicate Claim Services, Inc., the independent
adjuster that it had retained to evaluate and adjust the subject claim.
Included among those documents was a Status Report for File No. 200173
dated March 10, 2020, from Jay Kittrick of Syndicate (the “Status
Report”) addressed to Church Mutual. Therein, Mr. Kittrick discussed
his inspection findings regarding the hail damage to the siding of the
premises and suggested a reserve.
In Mr. Kittrick’s Status Report, Church Mutual redacted a portion
of Mr. Kittrick’s findings and the specific amount of his suggested
reserve. On July 8, 2022, the court ordered Church Mutual to provide it
with an unredacted version of the Status Report for an in-camera review.
The defendant timely submitted the unredacted copy of the report. While
Church Mutual contends that the report was prepared in anticipation of
litigation, it does not specifically address this crucial element in its
submissions. (See Doc. 22). Likewise, the plaintiff does not address this
element either. (See Doc. 20). Nevertheless, the motion is ripe for
disposition.1
1 The plaintiff has not filed a brief in support of its motion to compel.
See Local Rule 7.5, requiring briefs in support of a motion to be filed
within fourteen (14) days after filing the motion, otherwise the motion
II. Legal Standards
“Unlike the attorney-client privilege, the work product privilege is
governed, even in diversity cases, by a uniform federal standard
embodied in the federal rules.” U.S. Fid. & Guar. Co. v. Barron Indus.,
Inc., 809 F. Supp. 355, 364 n.10 (M.D. Pa. 1992) (citing United Coal Cos.,
839 F.2d at 966). “The work product doctrine is governed by a uniform
federal standard set forth in Fed. R. Civ. P. 26(b)(3) and ‘shelters the
mental processes of the attorney, providing a privileged area within
which he can analyze and prepare his client’s case.’” In re Cendant Corp.
Sec. Litig., 343 F.3d 658, 661–62 (3d Cir. 2003).
The purpose of the work-product doctrine differs from
that of the attorney-client privilege. . . . [T]he attorney-
client privilege promotes the attorney-client relationship,
and, indirectly, the functioning of our legal system, by
protecting the confidentiality of communications between
clients and their attorneys. In contrast, the work-product
doctrine promotes the adversary system directly by
protecting the confidentiality of papers prepared by or on
behalf of attorneys in anticipation of litigation. Protecting
attorneys’ work product promotes the adversary system
by enabling attorneys to prepare cases without fear that
their work product will be used against their clients.
shall be deemed withdrawn. In the exercise of our discretion, and as the
motion contains a recitation of the facts and law, we will consider the
brief filed contemporaneously with the motion.
Westinghouse, 951 F.2d at 1427–28. Moreover,
the doctrine is an intensely practical one, grounded in the
realities of litigation in our adversary system. One of
those realities is that attorneys often must rely on the
assistance of investigators and other agents in the
compilation of materials in preparation for trial. It is
therefore necessary that the doctrine protect material
prepared by agents for the attorney as well as those
prepared by the attorney himself.
United States v. Nobles, 422 U.S. 225, 238–39 (1975) (footnote omitted).
Thus, under Rule 26(b)(3), the work-product doctrine shields from
discovery “documents and tangible things that are prepared in
anticipation of litigation or for trial by or for another party or its
representative (including the other party’s attorney, consultant, surety,
indemnitor, insurer, or agent).” Fed. R. Civ. P. 26(b)(3)(A). “In
distinguishing between proceedings which qualify as litigation and those
that do not, the adversarial nature of the proceeding is characteristic of
litigation.” In re Rail Freight Fuel Surcharge Antitrust Litig., 268 F.R.D.
114, 117 (D.D.C. 2010). Although a common hallmark of litigation is
whether “the parties have the right to cross-examine witnesses or to
subject an opposing party’s presentation of proof to equivalent
disputation,” see United States v. Am. Tel. & Tel. Co., 86 F.R.D. 603, 627
(D.D.C. 1980),
[t]he proper focus should be whether the proceeding
required the lawyer to function as lawyers usually do at a
trial so that the proceeding can be classified as “litigation.”
This properly segregates the transactional work of lawyers
who draft contracts or provide legal advice from lawyers
who have to represent clients before tribunals that have
the power to adjudicate their clients’ rights, whatever the
nature of the proceeding. If the tribunal has the power to
adjudicate those rights and demands that the party before
it either make a certain showing or disprove a particular
allegation, the process is adversarial by its very nature
and surely qualifies as litigation.
Rail Freight Fuel Surcharge, 268 F.R.D. at 118; see also Restatement (3d)
Lawyers § 87 cmt. H (“In general, a proceeding is adversarial when
evidence or legal argument is presented by parties contending against
each other with respect to legally significant factual issues.”).
Rule 26(b)(3) establishes two categories of protection: fact work
product and opinion work product. “Fact work product is discoverable
only upon a showing [of] ‘substantial need’ and by demonstrating that
one cannot otherwise obtain the ‘substantial equivalent’ of such
materials without ‘undue hardship.’” In re Linerboard Antitrust Litig.,
237 F.R.D. 373, 381 (E.D. Pa. 2006) (quoting Fed. R. Civ. P. 26(b)(3)).
Opinion work product, “which consists of ‘mental impressions,
conclusions, opinions, or legal theories of an attorney,’ is afforded almost
absolute protection” and it “is discoverable ‘only upon a showing of rare
and exceptional circumstances.’” Linerboard, 237 F.R.D. at 381 (quoting
Cendant, 343 F.3d at 663).
Waiver of the work-product doctrine also works differently than
waiver of the attorney-client privilege. Unlike the attorney-client
privilege, where disclosure to a third party waives the privilege unless
the disclosure is necessary to further the legal representation, “the work-
product doctrine serves instead to protect an attorney’s work product
from falling into the hands of an adversary,” and thus “disclosure must
enable an adversary to gain access to the information” for it to constitute
waiver of work-product protection. Westinghouse, 951 F.2d at 1428; see
also Miller, 104 F.R.D. at 445–46.
Finally, we note that,
[o]rdinarily, the work-product doctrine should only be
applied after it is decided that attorney-client privilege
does not apply. This is because the work-product doctrine
applies only to “documents and tangible things otherwise
discoverable.” If the attorney-client privilege applies to a
particular item, it is absolutely undiscoverable, and the
work-product rule does not apply.
Robinson v. Texas Automobile Dealers Ass’n, 214 F.R.D. 432, 442 (E.D.
Tex. 2003) (citations omitted) (quoting Fed. R. Civ. P. 26(b)(3)), vacated
in part on other grounds by 2013 WL 21911333 (5th Cir. July 25, 2003)
(mem.).
III. Discussion
Here, we note that the complaint was originally filed in the Court
of Common Pleas of Luzerne County, Pennsylvania, on February 9, 2021,
before being removed to this court on March 8, 2021. In the complaint,
the plaintiff alleged that the subject hailstorm occurred on April 15, 2019.
(Doc. 1-2 ¶9). The assignor, Living Hope Bible Church, made a timely
claim to Church Mutual under the insurance policy. (Id. ¶10). Church
Mutual assigned a claim number and sent an adjuster to evaluate the
loss. (Id. ¶11). According to Mr. Kittrick’s Status Report, on March 6,
2020, he was scheduled to meet with Hancock Claims Consultants which
was providing a ladder assist to the roof, and the plaintiff’s
representative, Chris Ford. Because the ladder was not long enough to
reach the roof, another inspection was scheduled for March 19, 2020.
While Mr. Kittrick was on the premises on March 6, 2020, he performed
a limited inspection of the exterior of the aluminum siding and recorded
his observations. Those observations are among the redactions made by
Church Mutual. A demand for an appraisal was not made until
September 23, 2020, six months after the start of the inspection. It seems
a bit of a stretch for the court to find that on March 6, 2020—the start of
the inspection—litigation was anticipated.
a. Mental impressions.
Church Mutual redacted portions of the Status Report which
include Mr. Kittrick’s observations of the exterior of the siding on March
6, 2020. Mental impressions and opinions of a party and its agents are
not generally protected by the work product doctrine unless they are
prepared in anticipation of litigation. See Safeguard Lighting Sys., Inc.
v. N. Am. Specialty Ins. Co., Civ. No. 03-cv-4145, 2004 WL 3037947, *2
(E.D.Pa. Dec. 30, 2004) (citing United States v. Nobles, 422 U.S. 225, 238
(1975)). To that end, “work product prepared in the ordinary course of
business is not immune from discovery.” Id. (citing Holmes v. Pension
Plan of Bethlehem Steel Corp., 213 F.3d 124, 138 (3d Cir. 2000)). Thus,
as stated by this court in Keefer v. Erie Insurance Exchange, Civ. No. 13-
cv-1938, 2014 WL 901123 at *4 (M.D. Pa. Mar. 7, 2014), the gravamen of
a claim of work product protection necessarily requires an assessment of
when litigation was anticipated, which is a determination not subject to
a bright-line rule. Our court has long adopted a case-by-case approach.
Basinger v. Glacier Carriers, Inc., 107 F.R.D. 771, 774 (M.D. Pa. 1985).
As recognized by the Third Circuit, “[p]rudent parties anticipate
litigation and begin preparation prior to the time suit is formally
commenced.” Martin v. Bally’s Park Place Hotel & Casino, 983 F.2d 1252,
1260 (3d Cir. 1993) (citing In re Grand Jury Proceedings, 604 F.2d 798,
803 (3d Cir. 1979)). Thus, whether litigation was reasonably anticipated
is a fact-dependent inquiry.
Although the court lacks the necessary evidence to determine
precisely when the defendant’s claims representatives reasonably
anticipated litigation, the court has reviewed the entire unredacted
version of the Status Report with this standard in mind and concludes
that certain portions of the claims record were prepared in anticipation
of litigation and should be protected. Nonetheless, the court finds that
Mr. Kittrick’s observations of the exterior of the aluminum siding and
subsequent reporting thereon were not prepared in anticipation of
litigation. Thus, the portion of the Status Report on page 2 relating to
Mr. Kittrick’s observations of the exterior of the aluminum siding were
inappropriately redacted. We will order that Church Mutual produce an
unredacted portion of that paragraph, except as set forth below. Our
inquiry, however, does not end there.
b. Insurance reserve information.
Church Mutual contends that the insurance reserve information
made by Mr. Kittrick is protected from disclosure because it represents
protected reserve information.
An insurance reserve is money set aside “to satisfy obligations that
may arise under a claim.” Peco Energy Co. v. Ins. Co. of N. America, 852
A.2d 1230, 1232 n.3 (Pa. Super. Ct. 2004), and Pennsylvania requires
insurance companies to set reserves aside when they are placed on notice
of possible losses arising under their policies. Keefer 2014 WL 901123 at
3. This Court has observed that courts in this circuit are split on the
question of whether reserves are discoverable in bad faith cases. See
Barnard v. Liberty Mut. Ins. Corp., No. 3:18-CV-01218, 2019 WL 461510,
at *5 (M.D. Pa. Feb. 6, 2019) (citing Consugar v. Nationwide Ins. Co., No.
3:10-CV-2084, 2011 WL 2360208, at *5 (M.D. Pa. June 9, 2011). Barnard
points out that the “[p]revailing view indicates that reserves may be
discoverable in a bad faith action when the claim relates to an insurer’s
failure to settle or where there is a discrepancy regarding the value of the
claim.” Id. But, “[w]hen the bad faith claim is based on a denial of
coverage and ‘does not involve the value of the claim or [the plaintiff’s]
estimation of liability … the reserve information requested is neither
relevant nor reasonably calculated to lead to the discovery of admissible
evidence.’” Id. at *6.
Here, there is no bad faith claim. The plaintiff has only alleged a
breach of contract. In its answer, Church Mutual has denied that it
breached the contract. (Doc. 3 ¶26). Also, Church Mutual asserts that it
issued payment for all covered damage pursuant to the appraisal award
and denied the portion of the loss that is not covered under the policy.
(Id. ¶¶ 26-27). The issue in this case is Church Mutual’s denial of
coverage under the policy rather than the value of the plaintiff’s claim.
Under this circumstance, discovery of the insurer’s reserve information
is irrelevant. Accordingly, Church Mutual will not be required to produce
an unredacted version of the Status Report that relates to insurance
reserve information.
An appropriate order follows.
s/Joseph F. Saporito, Jr.
JOSEPH F. SAPORITO, JR.
United States Magistrate Judge
Dated: July 19, 2022