SM 10000 Property, LLC v. Allianz Global Risks US Insurance Company
- Phyllis Hamilton
- 4:19-cv-03054
- U.S. District Court · Northern District of California
- 3
In SM 10000 Property v. Allianz, Magistrate Judge Beeler upheld privilege for disputed communications and required Allianz to assess its privilege log.
The order affected the plaintiffs and Allianz Global Risks US Insurance Company by determining the treatment of certain withheld communications and requiring Allianz to evaluate and potentially revise its privilege log.
What happened
SM 10000 Property, LLC and other plaintiffs sought discovery from Allianz Global Risks US Insurance Company in a dispute about insurance coverage for delays after an accident at a construction project. The disputes concerned documents Allianz withheld based on attorney-client privilege, including communications with outside lawyers and internal communications without lawyers.
The court held that communications reflecting legal advice about Allianz’s insurance obligations were privileged, and that internal communications conveying that advice could also be privileged. The court could not determine from the limited record whether Allianz had adequately supported its separate claims that dozens of documents contained confidential or proprietary information. It directed Allianz to evaluate and, if necessary, revise its privilege log; further disputes were to be presented using representative entries or a log limited to those claims.
Magistrate Judge Laurel Beeler issued the discovery order on October 13, 2020, stating that it disposed of ECF No. 55.
The detailed version
- SM 10000 Property, LLC v. Allianz Global Risks US Insurance Company · No. 4:19-cv-03054
- Phyllis Hamilton
- Oct. 13, 2020
Background
The case concerns Allianz’s responsibility under an insurance contract for delays resulting from an accident at the plaintiffs’ construction project. The discovery dispute involved three issues: whether attorney-client privilege protected documents reflecting advice from outside counsel about Allianz’s obligations under the policy; whether the privilege extended to internal communications that did not include a lawyer; and whether Allianz’s privilege log adequately supported withholding documents as confidential and proprietary.
Because the case was in federal court based on diversity jurisdiction, the court applied California law to the attorney-client privilege issues. Under that law, the party claiming privilege must establish the preliminary facts supporting the privilege. After a prima facie showing, the communication is presumed confidential, and the opposing party must show that it was not confidential or that the privilege otherwise does not apply.
Rulings
The court determined that Allianz met its burden for communications in which its lawyers provided legal advice about Allianz’s insurance obligations. The court rejected the plaintiffs’ contention that outside counsel acted as insurance adjusters rather than lawyers, explaining that nothing in the record supported that position.
The court also determined that internal communications conveying attorney advice could be privileged. The relevant inquiry was whether the communication was within the employee’s corporate duties and whether the employee understood that the communication was made to help the corporation’s attorneys provide legal advice and was to be treated as confidential.
The court did not resolve Allianz’s claims that dozens of documents were confidential or proprietary. It had only the first page of the privilege log and one redaction concerning subrogation, which was insufficient for evaluating those claims on the existing record. The court directed Allianz to assess whether the log provided enough detail and to revise it if necessary. If the parties continued to dispute the log’s sufficiency or the withholding of information, they were directed to submit representative entries or, at minimum, a log containing only the claims of confidentiality and proprietary information.
The order states: “This disposes of ECF No. 55.” It was issued by Magistrate Judge Laurel Beeler.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.