R.A. STUCHBERY & Others Syndicate 1096, Plaintiff and Appellant,

v.

REDLAND INSURANCE COMPANY, Defendant and Respondent.

No. A114986.

 

Aug. 28, 2007.

 

Superior Court of the City and County of San Francisco, No. CGC-05-440529,James L. Warren, Judge.

 

SIMONS, Acting P.J.

In this insurance coverage dispute, R.A. Stuchbery & Others Syndicate 1096, as Underwriters at Lloyds, London subscribing to Policy No. BA 98 01045LO145 (Stuchbery), insured M & M Luxury Shuttle, Inc. (M & M), a shuttle service operator, and Mostafa Tehrani (Tehrani), an officer and director of M & M, under a general liability policy. Stuchbery defended and ultimately indemnified these insureds in a lawsuit filed by a passenger (the victim) who alleged she had been sexually assaulted by M & M’s driver. Redland Insurance Company (Redland) also insured M & M and Tehrani under a business automobile policy and, following the conclusion of the passenger’s lawsuit (the Underlying Action), Stuchbery filed an action against Redland, seeking reimbursement or equitable contribution for its defense costs and indemnification payment.

 

Stuchbery appeals a summary judgment entered in favor of Redland after the trial court determined that Redland had no duty to defend or indemnify M & M or Tehrani in the Underlying Action, and therefore Stuchbery was not entitled to reimbursement or equitable contribution from Redland. We conclude that, as a matter of law, the victim’s injuries did not result from the “ use”  of the M & M shuttle and affirm the trial court’s judgment.

 

 

Stuchbery concedes that the material facts in this case are undisputed. The Underlying Action was filed against M & M, Tehrani and one of M & M’s drivers, Collie George Downer (Downer). The plaintiff in that case (the victim), who was 16 years old at the time of the incident, alleged that at or about 1:00 a.m. on January 12, 2000, while at the Civic Center in San Francisco, she asked Downer to transport her to a teen shelter. He agreed, but instead of taking her there, Downer drove her to his apartment and raped her. The complaint alleged causes of action for: (1) common carrier liability; (2) childhood sexual abuse; (3) assault; (4) battery; (5) sexual battery; (6) intentional infliction of emotional distress; (7) negligent hiring and/or retention of an unfit employee; (8) negligent training and supervision; (9) false imprisonment; and (10) violation of Civil Code section 51.7.

 

The victim testified in a concurrent criminal action, and her testimony was submitted in the motion for summary judgment in this insurance dispute. She had run away from home because she “ needed a break”  from her parents and did not want to go to school. After arriving at the Civic Center in San Francisco, she “ kept walking”  as she looked for a “ shelter for run-away people, homeless people,”  until she saw Downer in front of a diner with his shuttle. Downer asked the victim what she was doing out and how old she was, and suggested she call her mother. The victim became concerned that Downer would “ call the cops”  and she would be sent home. She asked him to take her to a shelter, and he agreed. She testified she approached Downer in his capacity as a driver of a shuttle, and would not have entered the shuttle if she believed it was a private vehicle.

 

The victim testified that the shuttle stopped in front of Downer’s apartment. Downer told her the shelters were closed until 6:00 a.m., and that she could sleep in his apartment while he returned to work. The victim responded, “ Fine,”  because she “ figured”  she would sleep at Downer’s apartment for a few hours and have him take her to the shelter in the morning. The two went through the entryway, went up at least one flight of stairs and walked inside. According to the complaint, Downer “ caused [the victim] by threat of intimidation and physical violence to remain in his apartment for a period of approximately [five] hours. During this time … Downer sexually assaulted and battered [the victim]….”

 

In June 2002, M & M and Tehrani tendered their defense and indemnity in the Underlying Action to Stuchbery, which agreed to defend subject to a reservation of rights. In January 2004, M & M and Tehrani tendered their defense and indemnity to Redland, which initially accepted the tender under a reservation of rights, but after conducting a coverage investigation declined to defend or indemnify. Stuchbery incurred $274,549.40 in attorney fees and costs in defending M & M and Tehrani in the Underlying Action, $195,723.11 of which was incurred after M & M and Tehrani tendered to Redland. Stuchbery also incurred $250,000 in settling the victim’s claims against M & M and Tehrani.

 

In April 2005, Stuchbery filed this action against Redland, asserting it was entitled to reimbursement from Redland because Redland alone was responsible for defending and indemnifying M & M and Tehrani. In the alternative, Stuchbery claimed that both Stuchbery and Redland had a duty to defend and indemnify and Stuchbery was entitled to equitable contribution from Redland.

 

Redland filed the instant motion for summary judgment, asserting there was no potential for coverage under its policy. The trial court agreed and concluded that because Redland had no duty to defend or indemnify M & M and Tehrani, Redland owed no reimbursement or equitable contribution to Stuchbery.Stuchbery filed a timely notice of appeal.

 

 

“ [A] liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. [Citation.]”  (Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081, 17 Cal.Rptr.2d 210, 846 P.2d 792; accord, Ortega Rock Quarry v. Golden Eagle Ins. Corp. (2006) 141 Cal.App.4th 969, 977, 46 Cal.Rptr.3d 517.) “ The insurer is entitled to summary adjudication that no potential for indemnity exists and thus no duty to defend exists if the evidence establishes as a matter of law that there is no coverage. [Citation.] We apply a de novo standard of review to an order granting summary judgment when, on undisputed facts, the order is based on the interpretation or application of the terms of an insurance policy. [Citation.]”  (Smith Kandal Real Estate v. Continental Casualty Co. (1998) 67 Cal.App.4th 406, 414, 79 Cal.Rptr.2d 52.)

 

“ The rules governing policy interpretation require us to look first to the language of the contract in order to ascertain its plain meaning or the meaning a layperson would ordinarily attach to it. [Citations.]”  (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18, 44 Cal.Rptr.2d 370, 900 P.2d 619.) “ If contractual language is clear and explicit, it governs. [Citation.]”  (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545.) “ A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable.” (Waller, at p. 18, 44 Cal.Rptr.2d 370, 900 P.2d 619.) “ But if ‘ a term in an insurance policy has been judicially construed, it is not ambiguous and the judicial construction of the term should be read into the policy unless the parties express a contrary intent.’ [Citation.]”  (CDM Investors v. Travelers Casualty & Surety Co. (2006) 139 Cal.App.4th 1251, 1257, 43 Cal.Rptr.3d 669.) However, we apply this rule only after determining that “ the context in which the construed term appears is analogous to the context of the term before us.” (Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, 197, 35 Cal.Rptr.3d 799.) “ The scope of coverage … is to be construed with regard to the intent and reasonable expectations of the insured. [Citations.]”  (Interinsurance Exchange v. Macias (1981) 116 Cal.App.3d 935, 938, 172 Cal.Rptr. 385.) It is the burden of the insured “ to bring the claim within the basic scope of coverage.” (Waller, at p. 16, 44 Cal.Rptr.2d 370, 900 P.2d 619.)

 

Redland’s policy provides in pertinent part: “ We will pay all sums an ‘ insured’  legally must pay as damages because of ‘ bodily injury’  or ‘ property damage’  to which this insurance applies, caused by an ‘ accident’  and resulting from the ownership, maintenance or use of a covered ‘ auto.’  “  Attached to the policy is a motorcarrier endorsement which contains similar language, as follows: “ [T]he insurer … agrees to pay … any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles….”  Resolution of this matter requires us to interpret that portion of Redland’s policy providing coverage for a “  ‘ bodily injury’  … resulting from the … use of a covered auto.”

 

The California Supreme Court addressed the meaning of the phrase “ use … of a motor vehicle”  in State Farm Mut. Auto. Ins. Co. v. Partridge (1973) 10 Cal.3d 94, 109 Cal.Rptr. 811, 514 P.2d 123(Partridge ), and acknowledged two cases that had defined it in distinctly different ways.Universal Underwriters Ins. Co. v. Aetna Ins. Co. (1967) 249 Cal.App.2d 144, 150-151, 57 Cal.Rptr. 240, held that “  ‘ [t]he term “ us[e],”  when employed in a policy without restrictive terms, must be understood in its most comprehensive sense. It does not require that the injury be the direct and proximate result in any strict legal sense of the active movement of the motor vehicle covered by the policy.’ [Citations.]”  In contrast, Truck Ins. Exch. v. Webb (1967) 256 Cal.App.2d 140, 148, 63 Cal.Rptr. 791 requires that the use of the vehicle be a “  ‘ predominating cause’  or a ‘ substantial factor’  in causing the injury.” (See generally American Nat. Property & Casualty Co. v. Julie R. (1999) 76 Cal.App.4th 134, 139-140, 90 Cal.Rptr.2d 119(Julie R.).) Partridge found it unnecessary to resolve whether Universal Underwriters v. Aetna Ins. Co., supra, or Truck Ins. Exch. v. Webb, supra, correctly interpreted the phrase “ use of the vehicle”  because in Partridge, the insurance policy “ clearly”  covered the accident. (Partridge, at p. 100, fn. 7, 109 Cal.Rptr. 811, 514 P.2d 123.) Subsequent to Partridge, however, the majority of California decisions considering the issue have applied the “ predominating cause/substantial factor test.”  (State Farm Mutual Automobile Ins. Co. v. Grisham (2004) 122 Cal.App.4th 563, 566-567, 18 Cal.Rptr.3d 809(Grisham );Julie R., at p. 140, 90 Cal.Rptr.2d 119.) Under this test, a mere “ but for”  connection between the use of the vehicle and the alleged injuries is insufficient to bring the claim within the scope of coverage. “ To hold otherwise would convert auto liability policies into general liability policies. [Citation.]”  (Grisham, at p. 567, 18 Cal.Rptr.3d 809.)

 

In Julie R., the automobile policy at issue provided coverage for “  ‘ bodily injury … result[ing] from the ownership, maintenance or use of the vehicle.’  “  (Julie R., supra, 76 Cal.App.4th at p. 137, 90 Cal.Rptr.2d 119.) There, the plaintiff was driven by the assailant in his car to a secluded location and raped. The assailant had parked the car next to a fence in such a way as to keep the door closed, and reclined the plaintiff’s seat to prevent her from escaping. (Ibid.) The court held that causation could not be proved simply by showing that a vehicle was a “ cause in fact”  of the injury. (Id. at p. 140, 90 Cal.Rptr.2d 119.) Instead, Julie R. concluded use of the vehicle had to be a “ predominating cause or substantial factor”  in the injury, and the mere use of the vehicle as transportation to the scene of the injury did “ not establish a sufficient causal connection between the ‘ use’  and the injury.”  (Ibid.) Julie R. relied on Truck Ins. Exch. where a truck was used to transport cardboard boxes to a location where the boxes were ignited and caused buildings to burn. Though the truck’s “ use”  played a part in the chain of events “  ‘ it [could not] be reasonably said that the destruction of the buildings arose out of the “ use”  of the vehicle.’  “  (Julie R., at p. 141, 90 Cal.Rptr.2d 119, quoting Truck Ins. Exch. v. Webb, supra, 256 Cal.App.2d at p. 148, 63 Cal.Rptr. 791.)

 

Julie R. next noted that “ where the role of the vehicle in the injury is merely as a situs for the act causing injury, courts have found that the injury does not arise from the use of the vehicle and that the injury is not covered.” (Julie R., supra, 76 Cal.App.4th at p. 139, 90 Cal.Rptr.2d 119.) “ For example, coverage was denied for an injury caused when a gun inside a car at rest discharged because the bolt of the gun was pulled back.” (Ibid., citing Aetna Casualty & Surety Co. v. Safeco Ins. Co. (1980) 103 Cal.App.3d 694, 163 Cal.Rptr. 219 .) In Aetna, an occupant of the car pulled back the bolt of a rifle to chamber a round of ammunition and accidentally discharged the gun, causing injury. The court held the injury did not arise out of the “ use”  of the car, but arose out of the “ conduct”  of the person who pulled back the bolt of the rifle. (Aetna, at p. 698.)

 

Julie R. acknowledged that the assailant’s “ placement of his vehicle against the fence increased the danger that he would be successful in carrying out his intent to rape Julie R.,”  but held that the rape “  ‘ originated from, grew out of [and] flowed from’  [the assailant’s] intent to rape Julie R. and his actions with his body to achieve that end,”  not from the use of the car. (Julie R ., supra, 76 Cal.App.4th at p. 141, 90 Cal.Rptr.2d 119.) Thus, the car’s “ use was a circumstance accompanying the rape, not a predominant cause or substantial factor in Julie R.’s injury.”  (Id. at p. 142, 90 Cal.Rptr.2d 119.) In reaching this conclusion, Julie R. relied on Farmers Ins. Exchange v. Hansel (1970) 12 Cal.App.3d 570, 90 Cal.Rptr. 654 where “ the court held that an automobile insurance policy did not provide coverage even though physical aspects of the car were used in perpetrating an attack.” (Julie R., at p. 142, 90 Cal.Rptr.2d 119.)

 

Julie R. supports the trial court’s determination in the present case. As in Julie R., the M & M shuttle was merely used to transport the victim to the locale of the rape. Her injury resulted from Downer’s conduct and his intent to rape the plaintiff in his apartment, not from the “ use”  of the shuttle. The connection between the shuttle and the victim’s injuries was even more attenuated than in Julie R., as the victim’s rape did not take place inside the shuttle and there was also no allegation that Downer used the shuttle to trap his victim.The use of the shuttle merely to drive the victim to Downer’s apartment “ d[id] not establish a sufficient causal connection between the ‘ use’  and the injury.” (Julie R., supra, 76 Cal.App.4th at p. 140, 90 Cal.Rptr.2d 119.)

 

Stuchbery does not dispute Julie R.’s analysis or its conclusion that coverage exists only when the use of the covered automobile is a substantial factor or predominate cause of the injury. Stuchbery contends, however, we should distinguish Julie R., and the cases on which it relies, because they involved private vehicles, not common carriers.Stuchbery argues, in effect, that with a common carrier, the use of the vehicle is always a substantial factor in a case where a passenger is injured by the driver’s physical assault. Stuchbery contends the relationship between a common carrier driver and passenger is defined by the common carrier vehicle; there would be no relationship, and hence no opportunity to assault and injure the victim, but for the vehicle. This, Stuchbery contends, distinguishes our case from the typical private vehicle case, like Julie R., where the parties have a private relationship outside and apart from the vehicle, and the assault could have occurred elsewhere and under circumstances not involving a vehicle.

 

Stuchbery principally relies on Connell v. Clark (1948) 88 Cal.App.2d 941, 200 P.2d 26(Connell ). In Connell, directly following a dispute regarding the cab fare, the taxi driver dragged his passenger from the vehicle and assaulted and battered him. (Id. at p. 946, 200 P.2d 26.) The passenger sued the taxicab operators and the insurance company that provided liability insurance to the operator. A municipal ordinance required taxicab operators to be adequately insured and provided that “ the taxicab operator shall pay all damages to person or property, for the payment of which he may become liable arising out of the conduct of the business of taxicab operator.”  (Connell, at p. 945, 200 P.2d 26, italics added.) Connell did not quote the insurance policy language, but read the provisions of the ordinance into the policy.(Id. at p. 950, 200 P.2d 26 .) The court concluded it was “ too patent to be susceptible to argument”  that the damages resulted from the operation of a taxicab. (Ibid.)

 

Connell is inapposite. First, the assault was apparently triggered by a dispute directly related to the business operation of the cab. Second, Connell never states that its definition of the term “ operation”  hinged on the common carrier status of the vehicle or that for common carriers the use of the vehicle is always a substantial factor for injuries to a passenger resulting from a driver assault. In fact, Connell is a pre-Partridge case, and the court may have been applying the lesser “ cause in fact”  standard more widely used at that time, even for passengers of private vehicles. (See Julie R., supra, 76 Cal.App.4th at p. 140, 90 Cal.Rptr.2d 119.) As discussed, ante, the “ predominating cause/substantial factor test”  has prevailed since Partridge.

 

The factual distinction between Connell and this case highlights the flaw in Stuchbery’s position. Even if the interpretation of the phrase in the subject insurance policy “ injury … resulting from the … use of a covered auto”  should take into account whether the vehicle at issue is a common carrier, the assault in this case is simply too attenuated from the use of the shuttle. As noted, the passenger in Connell was attacked while sitting inside the taxicab. The attack appears to have been triggered by a fare dispute, and the passenger was “ dragged out of the cab by the driver”  at the beginning of the attack. (Connell, supra, 88 Cal.App.2d at p. 950, 200 P.2d 26.) In contrast, the victim in the Underlying Action was not injured while a passenger inside the shuttle. Her testimony reveals that she exited the shuttle on her own and, without being subject to either physical or verbal coercion from Downer, went into his apartment, “ figur[ing]”  she would sleep there for a few hours until the shelters reopened in the morning. Thus, even if Connell is correctly decided and Julie R. would have been decided differently had the rapist’s vehicle been a common carrier, here, the relationship between the “ use”  of the M & M shuttle and the rape inside the apartment was too attenuated to trigger Redland’s duty to defend or indemnify.

 

Stuchbery’s reliance on several out-of-state cases, principally Mironov v. New York Mutual Underwriters (1989) 147 A.D.2d 761, 762, 537 N.Y.S.2d 345(Mironov ), is similarly misplaced.In Mironov, the policy language was quite similar to the language in this case, and the court found the insurance company had a duty to defend or indemnify a passenger injured in an assault by a driver of a common carrier. “ While cases generally hold that there would be no coverage under an automobile policy where one occupant of a vehicle intentionally inflicts violence on another occupant … [citations], where the policy of insurance is issued to cover a common carrier, coverage has been found [citations].” (Id. at p. 762, 537 N.Y.S.2d 345.) But Mironov and the other out-of-state cases on which Stuchbery relies are factually distinguishable; as in Connell, the alleged assaults in those cases occurred inside the vehicles. Thus, even if we were to find that the subject phrase in Redland’s policy should be interpreted more broadly when the insured is a common carrier, we would still conclude there was no potential for coverage in this case.

 

 

The judgment is affirmed. Respondent shall recover its costs on appeal.

 

We concur. GEMELLO and NEEDHAM, JJ.

 

The victim obtained a default judgment against Downer, who did not appear in the civil action.

 

Stuchbery had filed a concurrent motion for summary adjudication of the issue of Redland’s duty to defend or indemnify, which the trial court denied on the same day it granted Redland’s motion for summary judgment.

 

Stuchbery asserts, without persuasive analysis or reference to relevant authority, that “ Redland’s indemnity obligation was also triggered by M & M’s ownership of the automobile.” (Italics added.) Redland also states in a summary fashion that there was no potential for coverage under its policy because the plaintiff’s injuries were not caused by an accident.We will not address these contentions, for “ [w]hen an issue is unsupported by pertinent or cognizable legal argument it may be deemed abandoned and discussion by the reviewing court is unnecessary. [Citations.]”  (Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, 699-700, 46 Cal.Rptr.2d 119.)

 

As noted, the plaintiff’s complaint included a cause of action for false imprisonment, but the complaint alleged the plaintiff was falsely imprisoned in Downer’s apartment, not in the shuttle.

 

Stuchbery also relies on Nassau Ins. Co. v. Jo-Jo Cab (1980) 102 Misc.2d 455 [425 N.Y.S.2d 813];Roe v. Lawn (1994) 418 Mass. 66 [634 N.E.2d 117]; and Huntington Cab Co. v. American Fidelity & Casualty Co. (4th Cir.1946) 155 F.2d 117.

 

It appears Mironov no longer contains a correct statement of New York law. (Adams v. New York City Transit Authority (1996) 88 N.Y.2d 116 [666 N.E.2d 216].)

 

Having reached our conclusion that there was no potential for coverage under Redland’s policy, we need not address Stuchbery’s assertion that its automobile and molestation exclusions apply to exclude coverage, and Redland was therefore solely responsible for defending and indemnifying M & M and Tehrani. Further, we need not address Redland’s claim that even if there was a potential for coverage under its policy, it should be required to reimburse Stuchbery only for its portion of the costs incurred after M & M and Tehrani notified Redland of the Underlying Action and tendered its defense and indemnity to Redland. We also need not address Stuchbery’s arguments that M & M was liable for the victim’s injuries because of the doctrine of respondeat superior and because, as a common carrier, its duty to the victim did not end until it safely transported the victim to the teen shelter, as these contentions relate to M & M’s potential for liability and are immaterial to whether there was a potential for coverage under Redland’s business automobile insurance policy.

KANSAS CITY SOUTHERN RAILWAY COMPANY

v.

NICHOLS CONSTRUCTION COMPANY, L.L.C., et al.

 

Aug. 27, 2007.

 

 

HELEN G. BERRIGAN, United States District Judge.

This matter comes before the Court on a Motion to Appeal the June 20, 2007 findings and recommendations of the Magistrate Judge pursuant to 28 U.S.C. § 636, filed by Turner Industries Group, L.L.C. (“ Turner” ) (Rec.Doc.215). The plaintiff, Kansas City Southern Railway Company (“ KCS” ) opposes the motion. Having considered the record, the memoranda of counsel and the applicable law, the Court has determined that the appeal should be PARTIALLY GRANTED AND PARTIALLY DENIED.

 

 

On November 30, 2004, a train owned and operated by KCS and a semi-truck and trailer owned by Turner and operated by Kenneth Bourg (“ Bourg” ) collided. Rec. Doc. 4, p. 3. Turner alleges that the accident led to significant damage to the trailer and destroyed a crane that was on it. Rec. Doc. 7, Exh. B, ¶ 8. KCS alleges that the impact derailed the train and caused property damage “ well in excess of … $75,000”  to KCS. Rec. Doc. 1, p. 3.

 

On the day of the accident, counsel for KCS was present at the scene. Rec. Doc. 151, p. 2. Turner contacted Gallagher Basset Services, Inc. (“ GB” ) to report the accident and advise GB of an expected property damage claim or suit by KCS. Rec. Doc. 158, B, p. 3 . By the end of the day, Turner had contacted and discussed the accident with the attorney Thomas E. Balhoff (“ Balhoff” ). Rec. Doc. 169, p. 2 ¶ 3. On the following day, Turner and Balhoff further discussed the accident and Balhoff’s law firm was retained as counsel for Turner. Id.

 

GB is a full service insurance claims service company that has provided claims management services to Turner since March, 2003. (Rec.Doc.158, B, p. 3).

 

KCS filed suit in Federal Court on March 19, 2005. On February 14, 2007 KCS filed a Motion to Compel Interrogatories and Response to Request for Production of Documents. Rec. Doc. 150. Because Turner had not yet done so, the Magistrate ordered Turner to generate a privilege log regarding several documents it had withheld on the basis of privilege. Rec. Doc. 170, p. 3. Then on April 13, 2007, the Magistrate ruled on most of the privilege log, but continued the remainder of KCS’s Motion to Compel so that the Court could review certain documents found in the privilege log in camera to determine whether they were protected.Id. At the same time, the Magistrate ordered Turner to provide another supplemental memorandum regarding the identity of the individual who took Bourg’s statement and the circumstances surrounding the preparation of the investigative report listed as Item Number 5 on the privilege log. Id. After reviewing the documents and Turner’s supplemental memorandum, the Magistrate ordered the production of the documents. Rec. Doc. 200.

 

This Court overturned the Magistrates April 13, 2007 ruling after Turner filed a Motion to Appeal. Rec. Doc. 238.

 

This appeal concerns six items of discovery, five of which are listed on the privilege log. Item Number 5 is an investigative report prepared by the Barnette Group (“ Barnett” ), an investigative company, for GB on January 4, 2005. Rec. Doc. 200. Item Number10 includes handwritten notes of GB’s representatives, some of which were taken during conversations with Turner’s counsel or about conversations with Turner’s counsel. Id. Items Number 7, 8, and 9 are invoices from Tuner’s attorney. Id. The other document sought is a statement of Bourg taken by St. Paul/Traveler’s Insurance Company (“ St.Paul” ).Id.

 

The Magistrate Judge held that these documents were not protected by the work-product doctrine and/or attorney-client privilege. Id . Thus, the Magistrate Judge granted KCS’s Motion to Compel Interrogatories and Response to Request for Production of Documents regarding Items Number 5, 7, 8, 9 and 10 and Bourg’s statement to St. Paul. Id.

 

Turner argues that Items Number 5, 7, 8, 9 and 10 are protected by the attorney-client privilege or the work product doctrine because the primary motivating purpose behind the creation of these documents was to aid in future litigation. Rec. Doc. 215. Also, Turner asserts that it does not have possession of or access to Bourg’s statement to St. Paul. Id. KCS argues that the documents were prepared in the ordinary course of business or are not subject to attorney client privilege. Rec. Doc. 262. KCS also contends that Turner should be able to obtain Bourg’s statement to St. Paul because he represents both of them in the parallel state court litigation and because Bourg has a right to obtain a copy of his statement. Id. KCS further asserts that the Magistrate’s ruling was correct because the documents “ were prepared by representatives of Turner or its routine outside investigative service, not counsel.” Id.

 

 

The Magistrate Judge’s ruling is before this Court on appeal. Pursuant to 28 U.S.C § 636(b)(1)(A), this Court “ may reconsider any pretrial matter … where it has been shown that the magistrate judge’s order is clearly erroneous or contrary to law.”  (emphasis added).

 

Items Number 5, 7, 8, 9 and 10

 

The work-product doctrine is governed by FED. R. CIV. P. 26(b)(3) (West 2007), which provides in relevant part:

[A] party may obtain discovery of documents and tangible things otherwise discoverable … and prepared in anticipation of litigation or for trial by or for another party or by or for that other party’s representative (including the other party’s attorney, consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party’s case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of such materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of the party concerning the litigation.

 

(emphasis added). This Court’s reads this rule to protect a document or tangible thing from discovery when it was prepared by or for that party or that party’s representative and was prepared in anticipation of litigation.If these tests are satisfied, the party seeking discovery must prove that it has a substantial need of the material and that it is unable to obtain equivalent materials without undue hardship. The jurisprudence supports this reading.

 

A. Prepared By or For the Party or the Party’s Representative

 

Before its codification in FED. R. CIV. P. 26(b)(3), the work product doctrine was recognized by the Supreme Court in Hickman v. Taylor, 329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451 (1947). The Court in Hickman found that in order to “ promote justice and protect their clients’ interests”  a lawyer must be able to assemble and sift through information and plan her strategy “ free from unnecessary intrusion by opposing parties and their counsel.” Id. at 510-511.As the modernrule suggests, however, the work product doctrine is no longer limited to documents prepared by an attorney. The 1970 amendment to the rule “ expressly extends protection to documents prepared by or for a representative of a party, including his agent.”  8 Charles Wright, Arthur Miller & Richard Marcus, Federal Practice & Procedure § 2024 (2d Ed.1994).“ Thus, the rule made it clear that a report from the insured to the insurer is within the immunity as are statements obtained by investigators for the insurer.” Id. In general, investigative reports prepared by agents of the party or the party’s attorney are protected by the work product doctrine. 6 James Wm. Moore, Moore’s Federal Practice § 26.70(3rd Ed.2007). Thus, the first prong of the work-product protection is satisfied if the document or tangible thing was prepared by or for the party or by or for the party’s representative.

 

The Magistrate Judge concluded that Items Number 7, 8, 9 and 10 were not the protected by attorney client or work product privileges and must be produced, with little explanation. Rec. Doc. 200. She also concluded that Item Number 5 was not protected by the work product privilege because there was no evidence that it was produced at the direction of Turner’s counsel. Id.

 

Items Number 5 and 10 were prepared by the investigators, GB or Barnett, not Turner’s attorneys. However, this fact is not determinative. Id. Although the work product doctrine originated with the theory that an attorney’s thoughts must be protected, the doctrine now protects documents created by or for Turner or by or for Turner’s representative. Item No. 5 was prepared by Barnett for GB. Rec. Doc. 200. GB is a consultant or agent of Turner. Rec. Doc. 238. Item Number 10 was prepared by GB and concerns conversations with Turner’s attorney. Rec. Doc. 170. Thus, it was prepared by Turner’s representative. Also, Items Number 7, 8, and 9 are all invoices from Turner’s attorney to GB, so these documents were prepared by Turner’s attorney for its representative. Rec. Doc. 200. All five documents were prepared by or for Turner or by or for representatives of Turner.

 

B. Prepared in Anticipation of Litigation

 

The second prong of the work-product doctrine requires that the document was prepared in anticipation of litigation. FED. R. CIV. P. 26(b)(3). In the Fifth Circuit, litigation need not be imminent, but the primary motivating purpose behind the creation of the document should be to aid in possible future litigation. In re Kaiser Lauminum & Chem. Co., 214 F.3d 586, 593 (5th Cir.2000). Documents prepared in the ordinary course of business, however, are not protected from discovery by the workproduct doctrine. U.S. v. El Paso Co., 682 F.2d 530, 542 (5th Cir.1982) (holding that tax pool analysis was prepared with an eye on business needs, not litigation needs, and thus not protected from discovery).

 

In the realm of insurance claims and litigation, the analysis of whether documents were prepared in anticipation of litigation becomes more complicated. This is primarily because insurance companies are in the business of conducting, investigating and evaluating claims against its policies.Piatkowski v. Abdon Callais Offshore, L.L.C., 2000 WL 1145825, at(E.D.La.2000). When it comes to insurance claims adjuster’s files,” [t]he overwhelming majority of federal courts that have addressed the issue … have maintained the fact specific approach,”  which requires an inquiry into “ whether a given item of discovery was produced in anticipation of litigation.” S.D. Warren Co. v. Eastern Elec. Co., 201 F.R.D. 280,283 (D.Me.2001). To show that a document was prepared in anticipation of litigation, courts have required that the insurer point to a “ critical factor that made it anticipate litigation … and offer specific facts demonstrating that the critical factor did indeed make the insurer deal with the insured in a different way.” Stout v. Illinois Farmers Ins., Co., 852 F.Supp. 704, 706 (S.D.Ind.1994).See also Dunn v. State Farm Fire & Cas. Co., 122 F.R.D. 507 (N.D.Miss.1988) (holding that although the insurer regularly retained attorneys to evaluate whether to deny a claim, the work product doctrine applied to documents prepared by or for attorneys because in the Dunn case the insurer retained its attorneys after learning that the Dunns had signed a confession admitting to having intentionally started the fire that caused the loss).

 

Since the documents in this case involve Turner’s insurance claims service provider, KCS cites two cases for the proposition that an insurer’s investigative files are created in the ordinary course of business, and thus not protected by the work product doctrine. KCS first discusses St. James Stevedoring Co., Inc. v. Femco Machine Co., 173 F.R.D. 431, (E.D.La.1997), which involved a seller of a crane damaged in an accident demanding production of documents by the purchaser and an insurer of the crane. Id. The court found that the insurer could not have reasonably anticipated litigation until it received a report about the cause of the accident. Id. at 434.Using this date as a guide, the court held any documents produced before the date were not privileged and any documents produced after it discoverable. Id. at 435.Although KCS focuses on the timing of document production in its analysis of the case, the court in St. James did not consider timing in relation to the accident, but rather in relation to when litigation could reasonably anticipated. Id. Indeed, the court in Piatrowski v. Abdon Callais Offshore, L.L.C. observed that rather than timing of production, the primary motivating purpose behind the creation of the document is pivotal in determining whether the work product protection applies. Piatrowksi, 2000 WL 1145825, at(E.D.La.2000).

 

KCS also cites Nissho Iwai Co. v. M/V Sea, 1999 WL 350090 (E.D.La.1999) in support of its position that the documents in question were prepared in the ordinary course of business. The court in Nissho considered whether the work-product doctrine applied to survey reports compiled by surveyors summoned to a vessel after a claim for damages was reported to the insurer. Nissho, 1999 WL 350090, at * 1. The court stated that “ so long as the surveyors are acting at the request of liability insurers, in a case where attorneys for the assured have not yet been appointed, and the surveyors do not report directly to counsel, the surveys are not regarded as ‘ prepared in anticipation of litigation,’  even though an eventual suit by the cargo owner or its insurer is well within the bounds of reasonable possibility.” Id. quoting Insurance Co. of North America v. M/V Savannah, 1995 WL 608295, (S.D.N.Y.1995) (emphasis added). Noting that surveyors are regularly present at the discharge of cargo even where there are no allegations of damage, the court held that the survey reports were not protected by the work product doctrine.Id. Unlike the current case, apparently attorneys were not yet involved when the surveys were prepared. Id. The court considered a similar case in Piatrowski, where the court did not protect from discovery witness statements obtained by the insurer’s claims adjuster because such investigations were routinely conducted. Id. at *3. In coming to its decision, the court noted that insurer had not provided the date when counsel was formally retained.Id. Without evidence to indicate that the investigation was conducted in anticipation of litigation and not as a normal claim evaluation, the court held that the work product doctrine did not apply. Id.

 

A survey of cases reveals that the severity of an accident may make anticipation of litigation reasonable. Documents created by the insurer or its representative tend not to be protected by the work product doctrine if they were prepared as a “ more or less routine investigation of a possibly resistible claim.” Tejada Fashions Corp. v. Yasuda Fire and Marine Ins. Co. (U.K.), Ltd., 1984 WL 500, at * 3 (S.D.N.Y.1984). Investigative files will be protected, however, when prepared in response to an accident so serious that a lawsuit will inevitably be filed. See Holton v. S & W Marine, Inc., 2000 WL 1693667, at(E.D.La.2000) (holding that a statement taken from a witness by insurance claims adjuster was routine and not protected by work product doctrine because the claim involved a non-life-threatening injury on a barge, “ a fact of life for vessel owners and their crew members,”  and differentiating from Hamilton v. Canal Barge Co., Inc., 395 F.Supp. 975 (E.D.La.1974) (where a serious accident caused the plaintiff fatal injuries)).

 

Turner argues that Items Number 5, 7, 8, 9 and 10 were prepared in anticipation of litigation. The record shows that counsel for KCS was involved on the day of the accident and that Turner had contacted counsel on that same day. Rec. Doc. 151, p. 2; Rec. Doc. 158, Exh. B, p. 3. In both Piatrowski and Nissho, the courts refused to protect investigative files, and in doing so considered that the insurers had not shown that they had already retained counsel at the time the documents were produced. Piatrowski, 2000 WL 1145825 at *3;Nissho, 1999 WL 350090 at *1. Unlike these cases, Turner and KCS both had attorneys involved on the day of the accident, suggesting that both sides anticipated litigation.

 

Although Turner had regularly used GB for claims adjustment, Turner argues that because of the severity of the accident, communications with GB were made in anticipation of litigation from the day of the accident. In Holton, the court did not extend the work product doctrine to investigative files produced after what it considered to be a normal accident as opposed to a severe accident. Holton, 2000 WL 1693667 at *3. The record shows that both parties suffered significant damages. Rec. Doc. 7, Exh. B, ¶ 8; Rec. Doc. 1, p. 3. This Court finds that it was reasonable for Turner to anticipate litigation from November 30, 2004, the day of the accident.

 

Item Number 5 is a report prepared by Barnett for GB on January 4, 2005. Item Number 10, consists of notes in GB’s claims file concerning this incident and are dated from December 3, 2004 to November 17, 2005. Since litigation was reasonably anticipated as of the day of the accident, both of these documents were prepared in anticipation of litigation and were protected by the work product doctrine. Items Number 7, 8 and 9 are invoices with transmittal letter from Turner’s attorney to GB. Since GB is a representative of Turner, and the communications were made regarding the accident after litigation was anticipated, the document is protected by the work product doctrine. These invoice for services provided in anticipation of litigation by a representative of Turner are protected by the work-product doctrine.

 

All five documents, Items Number 5, 7, 8, 9 and 10, were prepared by or for Turner or its representatives and were prepared in anticipation of litigation. The work product doctrine protects these documents from discovery. Therefore, this Court finds that the Magistrate Judge’s ruling that the work product protection did not apply because the documents were not prepared by an attorney is clearly erroneous and contrary to law.

 

C. Necessity and Undue Hardship

 

If a party shows the documents were prepared in anticipation of litigation, the party seeking discovery must show that it has “ substantial need of the materials … and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means.” FED.R.CIV.P. 26(b)(3). KCS makes no showing that it has substantial need for Items Number 5, 7, 8, 9 and 10 or that the information is unobtainable by other means.

 

Bourg’s Statement to St. Paul

 

The Magistrate Judge found that this statement was not subject to the work product or attorney client privilege. She also found that although neither Turner, nor its attorneys have the statement, they do have “ the practical ability to obtain the documents,”  and are thus “ deemed to have ‘ control’  “  over them. Rec. Doc. 200; citing In re Flag Telecom Holdings, Lt. Securities Lit., 236 F.R.D. 177, 180 (S.D.N.Y.2006). This finding was based on the fact that Turner’s counsel represents both Turner and St. Paul in the parallel state litigation and that Turner was insured by St. Paul at the time of the accident.

 

Turner argues that this ruling was incorrect because it should not have to obtain documents from one of its clients to produce documents that have been requested from another. However, Turner overlooks the fact that its attorneys also represent Bourg, the party to this litigation that made the statement. Bourg has an absolute right to obtain a copy of his statement in the state court proceedings, which can then be produced to KCS. SeeLA.CODE CIV. PRO. art. 1424(B). As a result, the Court cannot say that the Magistrate Judge’s ruling is “ clearly erroneous or contrary to law.” See28 U.S.C. § 636(b)(1)(A).

 

 

For the reasons stated above,

 

IT IS ORDERED that the Motion to Appeal the June 20, 2007 findings and recommendations of the Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1)(A), filed by Turner Industries Group, L.L.C. is PARTIALLY GRANTED AND PARTIALLY DENIED.The Magistrate Judge’s ruling as to Items Number 5, 7, 8, 9, and 10 is REVERSED. However, the Magistrate Judge’s ruling as to Bourg’s statement to St. Paul stands.