Askew v. Hardman

Page 1258

884 P.2d 1258

Julia Lee ASKEW, Plaintiff and Appellant, v. Paul HARDMAN, Defendant and Appellee.

No. 930537-CA.

Court of Appeals of Utah.

Oct. 11, 1994.

Rehearing Denied Dec. 2, 1994.

Gary A. Dodge, Mark F. James (argued), Kimball, Parr, Waddoups, Brown & Gee, Salt Lake City, for appellant.

Stephen G. Morgan, Mitchel T. Rice (argued), Morgan & Hansen, Salt Lake City, for appellee.

Before BENCH, BILLINGS and ORME, JJ.

BENCH, Judge:

Plaintiff Julia Lee Askew appeals the trial court's denial of her motion to compel defendant's insurance company to produce documents in its claim file. We reverse and remand for a new trial.

FACTS

Late at night on November 20, 1989, plaintiff was seriously injured when the vehicle in which she was a passenger struck a horse. The horse, which belonged to defendant, had escaped from defendant's fenced pasture and wandered onto a public highway. Defendant contacted his insurance company, Utah Farm Bureau, which sent adjuster Robert Harmon to investigate the accident. Adjuster Harmon took some pictures and recorded a conversation he had with defendant. Deputy Jerry Monson, of the Utah County Sheriff's Office, also investigated the accident. Both adjuster Harmon and deputy Monson observed that a portion of the pasture fence was down.

Plaintiff brought an action against defendant alleging that he was negligent in the construction and/or maintenance of the pasture fence. Defendant maintained that the accident was caused by deer hunters who had knocked down his fence in order to pass over his property.

Prior to trial, plaintiff attempted to discover the contents of the file prepared for Utah Farm Bureau by adjuster Harmon. Utah Farm Bureau refused plaintiff's request claiming that the contents of adjuster Harmon's investigative file were prepared in anticipation of litigation and therefore protected from discovery by the work-product doctrine. Thereafter, the trial court denied plaintiff's motion to compel production of the information in adjuster Harmon's file. The jury returned a no-cause-of-action verdict in favor of defendant and this appeal followed.

ANALYSIS

Work-Product Doctrine

Plaintiff argues that the trial court erred by holding that the contents of adjuster Harmon's investigative file were prepared in anticipation of litigation and therefore protected by the work-product doctrine. We agree.

Rule 26(b)(3) of the Utah Rules of Civil Procedure provides, in relevant part:

[A] party may obtain discovery of documents and tangible things prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including his 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 his case and that he 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 a party concerning litigation.

Id. For written materials to fall under the protection of the work-product doctrine, three criteria must therefore be met: "(1) the material must be documents and tangible things otherwise discoverable, (2) prepared in anticipation of litigation or for trial, (3) by or for another party or by or for that party's representative." Gold Standard, Inc. v. American Barrick Resources Corp., 805 P.2d 164, 168 (Utah 1990).

In Gold Standard, the Utah Supreme Court addressed the issue of whether a memorandum written as part of an accident investigation was entitled to work-product protection. The court stated that "[i]f in connection with an accident or an event, a business entity in the ordinary course of business conducts an investigation for its own purposes, the resulting investigative report is produceable in civil pre-trial discovery." Id. at 171 (quoting Janicker v. George Washington Univ., 94 F.R.D. 648, 650 (D.D.C.1982)).

Under Gold Standard, an accident report prepared in the ordinary course of business is clearly discoverable. Defendant argues, however, that adjuster Harmon's report is entitled to work-product protection because it was prepared at the request of Utah Farm Bureau's attorney and because all such reports are prepared in anticipation of litigation. Utah has never addressed whether an insurance adjuster's report is, by its very nature, entitled to work-product protection. Because Utah's Rule 26(b)(3) is nearly identical to its federal counterpart, "federal interpretations of the rule are persuasive." State v. Smith, 817 P.2d 828, 829 (Utah App.1991); accord Olson v. Salt Lake City Sch. Dist., 724 P.2d 960, 965 n. 5 (Utah 1986); Salt Lake City v. Holtman, 806 P.2d 235, 237 n. 2 (Utah App.1991).

In Thomas Organ Co. v. Jadranska Slobodna Plovidba, 54 F.R.D. 367 (N.D.Ill.1972), the court addressed the question of whether documents prepared by an expert hired by Fireman's Fund American Insurance Companies to investigate a marine cargo loss were discoverable. Fireman's Fund argued that after an insurance claim has arisen, "litigation may be deemed a contingency and any document prepared after such a claim has arisen is prepared in anticipation of litigation ... irrespective of whether an attorney in the role of counsellor has been consulted...." Id. at 373. The court rejected Fireman's Fund's argument and stated, in pertinent part:

An insurance company by the nature of its business is not called into action until one of its insured has suffered some form of injury and has a potential claim against some other party and/or the insurer itself. At this point, the insurer must conduct a review of the factual data underlying the claim, presumably through the talents of agents or employees who summarize the data for middle- or upper-management, the latter deciding whether to resist the claim, to reimburse the insured and seek subrogation of the insured's claim against a third party, or to reimburse the insured and forget about the claim thereafter. The logical absurdity of the plaintiff's position is that, under its theory, the amendments to the discovery rules which were believed to be a liberalization of the scope of discovery would be a foreclosure of discovery of almost all internal documents of insurance companies relating to the claims of insureds. We do not believe that Rule 26(b)(3) was designed to so insulate insurance companies merely because they always deal with potential claims.

Id. The court went on to hold that "[o]nce we have determined that no document authored prior to the consultation of an attorney may be deemed to have been prepared in anticipation of litigation, it follows that the documents requested ... were not prepared in anticipation of litigation...." Id. The court further stated:

The mere fact that Fireman's Fund may have anticipated the possibility of pursuing a subrogation claim against the defendants herein is a far cry from anticipating litigation.... It is a fact of common knowledge that an overwhelming majority of claims asserted by parties generally are amicably resolved and that only a very small portion of them rise to the level of disputes, let alone to the level of lawsuits. If every time a party prepared a document in the ordinary course of business to guide claim handling, this document was deemed to be prepared in anticipation of litigation, it is difficult to see what would be discoverable.

Id. at 373-74; accord Binks Mfg. Co. v. National Presto Indus. Inc., 709 F.2d 1109, 1118-19 (7th Cir.1983); Janicker, 94 F.R.D. at 650.

Similarly, in McDougall v. Dunn, 468 F.2d 468 (4th Cir.1972), the court discussed the issue of whether statements made to an insurance adjuster during the course of an accident investigation were discoverable. Although the court ultimately decided the issue on other grounds, it rejected the insurance company's contention that the statements were prepared in anticipation of litigation and held that the statements were "secured by the claim adjuster in the regular course of his duties as an employee of the insurance company and presumably were incorporated in the files of the company." Id. at 473.

Thomas Organ and its progeny have been criticized by some courts for creating a hard and fast rule that insurance adjusters' reports are never entitled to work-product protection unless an attorney has participated in their preparation in anticipation of litigation. Courts disagreeing with Thomas Organ have generally adopted one of two other positions. The first group of courts have adopted a rule contrary to Thomas Organ, holding that any "routine investigation of an accident by a liability insurer is conducted in anticipation of litigation." Ashmead v. Harris, 336 N.W.2d 197, 201 (Iowa 1983); see, e.g., Fontaine v. Sunflower Beef Carrier, Inc., 87 F.R.D. 89, 92-93 (E.D.Mo.1980); Almaguer v. Chicago, Rock Island & Pac. R.R. Co., 55 F.R.D. 147, 149 (D.Neb.1972); Harriman v. Maddocks, 518 A.2d 1027, 1033-34 (Me.1986); Fireman's Fund Ins. Co. v. McAlpine, 120 R.I. 744, 391 A.2d 84, 89-90 (1978). The second group of courts, recognizing the concerns of the Thomas Organ court about insulating insurance adjuster reports from discovery, but finding the Thomas Organ view too restrictive, have adopted a case-by-case analysis. See, e.g., Suggs v. Whitaker, 152 F.R.D. 501, 506 (M.D.N.C.1993); Auto Owners Ins. Co. v. Totaltape, Inc., 135 F.R.D. 199, 202 (M.D.Fla.1990); Airheart v. Chicago & N.W. Transp. Co., 128 F.R.D. 669, 671 (D.S.D.1989); Taroli v. General Elec. Co., 114 F.R.D. 97, 98-99 (N.D.Ind.1987); Mission Nat'l Ins. Co. v. Lilly, 112 F.R.D. 160, 164 (D.Minn.1986); Basinger v. Glacier Carriers, Inc., 107 F.R.D. 771, 773-74 (M.D.Pa.1985); State Farm Fire & Casualty Co. v....