United States District Court, D. Colorado
CHURCH MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Plaintiff,
PHILLIP MARSHALL COUTU, an individual, POWER ADJUSTERS, INC., a Colorado corporation, JUDAH LEON BENSUSAN, an individual, and ATLANTIS CLAIMS SERVICES, LLC, a Florida limited liability company, Defendants.
AMENDED ORDER ON MOTION TO COMPEL
Y. WANG UNITED STATES MAGISTRATE JUDGE
Judge Nina Y. Wang This matter is before the court on
Defendants' Motion to Compel Discovery Filed Pursuant to
Minute Order Dated April 9, 2018 (“Motion to
Compel” or “Motion”). [#189]. The
undersigned considers the Motion to Compel pursuant to 28
U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil
Procedure, and the Memorandum dated April 18, 2018 [#190].
Upon review of the Parties' briefing [#157; #159; #171],
the applicable case law, the entire docket, the documents
submitted for in camera review, and the Parties'
comments offered at the January 30, 2018 Discovery
Conference, this court GRANTS IN PART and DENIES IN
PART the Motion to Compel.
court has discussed the background of this case in its prior
Recommendation and Orders, see e.g., [#103; #120],
and does so here only as it pertains to the discovery issue
before the court. This case arises from an appraisal award
issued to Plaintiff Church Mutual Insurance Company's
(“Plaintiff” or “Church Mutual”)
policyholder Montview Boulevard Presbyterian Church
(“Montview”), which Church Mutual contends was
artificially inflated for Defendants Phillip Marshall Coutu,
Power Adjusters, Inc. (“Power Adjusters”), Judah
Leon Bensusan, and Atlantis Claims Services, LLC's
(“Atlantis Claims”) (collectively,
“Defendants”) own economic gains. In its original
Complaint Plaintiff alleged two claims against Defendants:
(1) civil conspiracy and (2) fraudulent concealment.
[Id.]. Plaintiff filed its First Amended Complaint
(“FAC”) on April 25, 2017. In issuing a
Recommendation on Defendants' Joint Motion to Dismiss the
FAC [#65], the undersigned recommended dismissing only
Plaintiff's claims under the federal Racketeering
Influenced and Corrupt Organizations Act (“RICO”)
and Colorado Organized Crime Control Act
(“COCCA”). [#120]. The undersigned also limited
discovery to the “Montview matter and the relationships
between the four Defendants.” See [#103 at 7].
then filed its Motion for Leave to File Second Amended
Complaint (“Motion to Amend”) on October 6, 2017.
[#128]. This court recommended granting Plaintiff leave to
file a Second Amended Complaint (“SAC”), which
the presiding judge, the Honorable Raymond P. Moore, adopted
in part. See [#166; #183]. The SAC is now
the operative complaint in this matter and asserts claims
against all Defendants for: (1) civil conspiracy
(“Claim I”); (2) fraudulent concealment
(“Claim II”); (3) federal civil RICO violations
(“Claim III”); (4) federal civil RICO conspiracy
(“Claim IV”); and (5) state civil COCCA
violations (“Claim V”). The SAC also includes a
prayer for exemplary damages under Colo. Rev. Stat. §
January 11, 2018, the Parties submitted a “Joint
Statement of the Parties to Magistrate Nina Wang Framing
Discovery Dispute - Scope of Deposition of Nicholas
Cassidy” (the “Joint Statement”). [#143].
The main issue identified by the Joint Statement was
“the applicability of the attorney-client privilege and
work product privilege during the deposition of former Senter
Goldfarb attorney Mr. Nicholas Cassidy.” [Id.
at 1]. Church Mutual invoked the attorney-client privilege to
preclude discovery or disclosure of documents prepared by the
law firm of Senter Goldfarb & Rice, LLC (“Senter
Goldfarb”) relating to the appraisal of the Montview
insurance claim. As the Joint Statement made clear, Mr.
Cassidy was a former Senter Goldfarb attorney at the time of
the Montview appraisal process, who had several
communications with Church Mutual's designated appraiser
Mr. William McConnell. [Id.]. Defendants sought to
depose Mr. Cassidy about his communications with Mr.
McConnell and Church Mutual during the Montview appraisal
process. [Id.]. Church Mutual argues that these
communications are protected from discovery or disclosure
under both the attorney-client privilege and the work product
doctrine, because the appraisal process is an adversarial
process and Senter Goldfarb was retained in anticipation of
litigation. See [#143-1; #143-2; #157]. Defendants
counter that neither privilege protects Mr. Cassidy's
communications with Mr. McConnell or Church Mutual because,
although Mr. Cassidy is an attorney, he acted in the capacity
of a “file handler” or claims investigator
regarding the Montview appraisal. See [#143-1;
#143-2; #159; #171].
Parties appeared before the undersigned for a Discovery
Conference on January 30, 2018, to discuss the
attorney-client privilege and work product doctrine issues,
among other discovery disputes. See [#152]. Ahead of
the Discovery Conference Church Mutual submitted several
documents for in camera review to support its
invocation of both privileges. [#156 (subject to Level 3
Restriction)]. At the conclusion of the Discovery Conference
this court ordered the Parties to submit supplemental
briefing on the privileges issue, and directed Church Mutual
to provide to the court for in camera review a copy
of the engagement letter between Church Mutual and Senter
Goldfarb. [#152]. No such engagement letter exists, but
Church Mutual provided the court with two additional
documents it believes supports its position. The Parties have
since submitted their supplemental briefing on the issue,
including Defendants' response brief addressing Church
Mutual's exhibits attached to its supplement brief and
the instant Motion to Compel. See [#157; #159; #171;
#189]. The Motion is ripe for resolution.
26(b)(1) of the Federal Rules of Civil Procedure defines the
scope of permissible discovery in this action. Fed.R.Civ.P.
26(b)(1). The Rule permits discovery regarding any
nonprivileged matter that is relevant to any party's
claim or defense and proportional to the needs of the case.
Id. This scope for discovery does not include all
information “reasonably calculated to lead to
admissible evidence.” The amendments to Rule 26
effective December 1, 2015, purposefully removed that phrase.
See Advisory Committee Notes to 2015 Amendments to
Rule 26(b)(1) (“The former provision for discovery of
relevant but inadmissible information that appears
“reasonably calculated to lead to the discovery of
admissible evidence” is also deleted. The phrase has
been used by some, incorrectly, to define the scope of
discovery”; In re Bard Filters Products Liability
Litig., 317 F.R.D. 562, 563 (D. Ariz. 2016). As
explained by the Bard court, the Advisory Committee
on the Federal Rules of Civil Procedure was concerned that
the phrase had been used incorrectly by parties and courts to
define the scope of discovery, which “might swallow any
other limitation on the scope of discovery.”
Id. (citing Fed.R.Civ.P. 26 advisory committee's
notes to 2015 amendment).
applicable test is whether the evidence sought is relevant to
any party's claim or defense, and proportional to the
needs of the case. Id. Rule 401 of the Federal Rules
of Evidence defines relevant evidence as “evidence
having any tendency to make the existence of any fact that is
of consequence to the determination of the action more or
less probable than it would be without the evidence.”
Fed.R.Evid. 401. In defining the scope of appropriate
discovery, the Parties and the court are directed to consider
the importance of the issues at stake in the action, the
amount in controversy, the parties' relative access to
relevant information, the parties' resources, the
importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit. Fed.R.Civ.P. 26(b)(1).
to Rule 37(a)(1), a party may move for a court order
compelling disclosure or discovery, and must certify that she
“has in good faith conferred or attempted to confer
with the person or party failing to make disclosure or
discovery in an effort to obtain it without court
action.” Fed.R.Civ.P. 37(a)(1). A motion to compel may
include a party's failure to produce documents requested
pursuant to Rule 34. See Fed. R. Civ. P
37(a)(3)(B)(iv). “The party moving to compel discovery
must prove that the opposing party's answers are
incomplete[, ]” and the “party objecting to
discovery must establish that the requested discovery does
not fall under the scope of relevance as defined in Rule
26(b)(1).” Tara Woods Ltd. P'ship v. Fannie
Mae, 265 F.R.D 561, 566 (D. Colo. 2010). Ultimately,
“[t]he administration of the rule lies necessarily
within the province of the trial court with power to fashion
such orders [as] may be deemed proper to vouchsafe full
discovery for the just, speedy and inexpensive determination
of the lawsuit.” Robison v. Transamerica Ins.
Co., 368 F.2d 37, 39 (10th Cir. 1966).
Attorney-Client Privilege & Work Product
not specifically addressed by the Parties, the issue of the
attorney-client privilege appears to relate to elements of
Plaintiff's state law claims, e.g., what Church
Mutual and its representatives knew, and what they relied
upon in making their payment determinations. Thus, Colorado
substantive law governs the scope and application of the
attorney-client privilege. See White v. Am. Airlines,
Inc., 915 F.2d 1414, 1424 (10th Cir. 1990) (“In a
civil action based upon a state cause of action, state law
controls the determination of privileges.”). By
contrast, “the work product privilege is governed by a
uniform federal standard embodied in Fed.R.Civ.P.
26(b)(3).” Frontier Refining, Inc. v. Gorman-Rupp
Co., Inc., 136 F.3d 695, 702 n.10 (10th Cir. 1998)
(citation and quotation omitted).
Colorado has codified the attorney-client privilege in
pertinent part as follows:
“An attorney shall not be examined without the consent
of his client as to any communication made by the client to
him or his advice given thereon in the course of professional
Colo.Rev.Stat. § 13-90-107(b). The law is clear that the
attorney-client privilege inures to the benefit and
protection of the client to allow a client to gain counsel,
advice, or direction with respect to the client's rights
and obligations confidentially. See Mountain States Tel.
& Tel. ...