Kumar v. Nationwide Mutual Insurance Company

Background

The Kumars had a house fire on July 4, 2020, and submitted an insurance claim to Nationwide. Nationwide referred the claim to its Special Investigations Unit for investigation into potential insurance fraud. In October 2020, Nationwide retained Julian Pardini of Lewis, Brosbois, Bisgaard & Smith, LLP, as outside counsel regarding the claim. Pardini told the Kumars that he had been retained to assist with investigating and evaluating the claim and to provide legal advice. He also conducted or sought to conduct examinations under oath.

The Kumars later sued Nationwide, asserting claims including insurance bad faith, breach of a contractual duty to pay a covered claim, negligent failure to obtain insurance coverage, and negligent misrepresentation. In this discovery dispute, they challenged Nationwide’s privilege logs and its withholding or redaction of records based on attorney-client privilege and attorney work-product protection.

Attorney-Client Privilege

Under California law, attorney-client privilege protects confidential communications made during an attorney-client relationship when the dominant purpose of the relationship is providing legal advice. The court found that Nationwide met its initial burden of showing that Pardini’s relationship primarily involved providing legal advice about Nationwide’s coverage obligations. The court relied on evidence that Pardini was outside counsel, that Nationwide kept the communications confidential, that he investigated the claim and conducted examinations under oath to provide legal advice, and that Nationwide’s claims-handling employees continued processing the claim while Pardini worked on the legal issues.

The court rejected the Kumars’ arguments that Pardini acted mainly as a claims adjuster because he was their primary contact, requested documents, sent claim-denial letters, and responded to claim-related requests. The court stated that mixing legal and claims-handling functions does not eliminate the need to determine the relationship’s dominant purpose. It concluded that the Kumars had not shown that the communications were nonconfidential or that attorney-client privilege otherwise failed to apply.

The court therefore denied the Kumars’ request to compel production of Pardini’s communications.

Work-Product Protection

The Kumars also argued that they had a compelling need for documents protected by the attorney work-product doctrine. Nationwide responded that Pardini’s strategy, mental impressions, and opinions were contained in confidential communications that were also protected by attorney-client privilege. Because the court had found the attorney-client privilege applicable and a work-product ruling would not result in production of additional documents, it did not rule on the work-product issue. The court stated that the Kumars could raise future disputes about that issue.

Privilege Logs

The court found that some of Nationwide’s privilege-log entries were insufficient. In particular, some entries for documents created before Pardini was retained referred generally to a “communication with counsel” without identifying the attorney involved. The court held that Nationwide had to provide enough information for the Kumars to evaluate whether each withheld document was privileged.

The court ordered Nationwide to revise its logs, provide declarations, or use a combination of those methods to identify the attorneys involved in legal advice documented in claim diaries and other entries where no attorney had been identified. The additional information had to include more than just attorney names and had to allow evaluation of the privilege claims. The court also expressed skepticism about withholding records created before Pardini’s retention, when the record did not show that the attorneys involved served a purpose other than investigating or adjusting the claim.

The court did not find a sufficient record to conclude that Nationwide had forfeited its privileges by refusing to correct the log deficiencies.

Post-Complaint Claim-Related Documents

The court stated that Nationwide did not need to list communications with counsel concerning the present litigation because those communications and related work product were presumptively privileged. But the record showed that claim-handling activity continued after the complaint was filed, including Pardini’s September 1, 2022 final denial letter. The court therefore ordered Nationwide, to the extent it had not already done so, to create privilege-log entries for privileged communications and documents created after the complaint was filed that related to handling the insurance claim rather than the litigation itself.

Disposition

The court denied the request to compel production of Pardini’s communications. It ordered Nationwide to revise its privilege logs or provide additional information within two weeks by identifying attorneys involved in specified legal advice and adding entries for qualifying post-complaint communications concerning the insurance claim. The judge’s name is not legible in the provided opinion text.