Duett v. State Farm Mut. Auto. Ins. Co.

MARY DUETT, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

No. 2:19-cv-01917-LK-BAT

United States District Court, W.D. Washington, Seattle

May 4, 2022

ORDER GRANTING IN PART MOTION FOR FEES AND SANCTIONS

BRIAN A. TSUCHIDA, United States Magistrate Judge.

Before the Court is Plaintiff Mary Duett's Motion for Fees and Sanctions Pursuant to Order of March 8, 2022. Dkt. 38 (citing Dkt. 34). Plaintiff advises that not all discovery issues have been resolved. Plaintiff also seeks sanctions pursuant to Fed.R.Civ.P. 26(g)(3). Id. Defendant State Farm Mutual Automobile Insurance Company (“State Farm”) opposes the motion. Dkt. 42.

DISCUSSION

A. Remaining Discovery Issues

On November 4, 2021, Plaintiff moved to compel discovery from State Farm. Dkt. 24. On February 11, 2022, the Court granted the motion in part and ordered State Farm to produce those portions of the claim file that it had redacted under the work product doctrine, and to produce for an in camera review, documents redacted under the attorney client privilege. Dkt. 34. The Court reserved ruling on Plaintiff's motions for sanctions. Id., p. 10. State Farm produced the documents as directed on February 18 2022 and provided supplemental responses to interrogatories. Issues remaining for resolution are the Court's ruling following its in camera review Plaintiff's contention that State Farm's supplemental response to Interrogatory No. 5 is incomplete, and Plaintiff's motion for sanctions.

1. SFCLAIM 258-266 - Attorney Client Privilege

On March 8, 2022, the Court informed the parties that it believed all issues relating to Plaintiff's motion to compel had been resolved. However, Plaintiff states and State Farm confirms, that documents SF258-266 (correspondence between counsel and State Farm's claims representative) have not been produced pending a final decision by the Court following its in camera review.

To place these documents in context, following State Farm's denial of Plaintiff's UIMin response to receipt of the May 10, 2018 letter, State Farm consulted with counsel, see Albers Dep., p. 85, then State Farm's counsel responded to plaintiff's counsel, asserting that State Farm's internal evaluation was protected and not subject to disclosure pursuant to Hanson v. State Farm, supra.

To place these documents in context, following State Farm's denial of Plaintiff's UIM claim on April 18, 2018 (“Our evaluation would indicate Ms. Duett was made whole by [the at fault carrier's insurance provider], therefore, State Farm is unable to consider further payment under the underinsured motorist coverage.”). Dkt. 1-1, ¶ 3.7; Dkt. 14, Richardson Decl., Ex. 5. On May 10, 2018, Plaintiff asked State Farm to identify and list the medical and other records reviewed by State Farm; a list of the injuries State Farm accepted as causally related to the accident; a list of the injuries State Farm did not accept as causally related; medical recording supporting State Farm's position; total general and special damages accepted on the claim; an accounting of how State Farm determined that her damages came to exactly $100, 000; and a list of any other recoveries State Farm felt were applicable to the calculation of Plaintiff's UIM claim. Dkt. 14, Richardson Decl., Ex. 6 (the “May 10, 2018 Letter”).

State Farm sent the May 10, 2018 Letter to counsel for advice in responding. Dkt. 42, p. 6 (citing Supplemental Answer to Interrogatory No. 5). It is these communications that are contained in SF258-266.

The Court concludes, from its in camera review of SF258-266, that counsel was not engaged in the quasi-fiduciary tasks of investigation and evaluating or processing the claim, but instead was being asked to provide legal advice as to whether State Farm was legally obligated to provide the information requested in Plaintiff's May 10, 2018 letter - a question that could impact State Farm's liability. See Cedell v. Farms Ins. Co. of Wash., 176 Wn.2d 686, 699 (2013). Accordingly, Plaintiff's motion to compel these documents is denied.

State Farm's counsel responded to the May 10, 2018 directly, stating that, based on Hanson v. State Farm Mut. Auto. Ins. Co., 261 F.Supp.3d 1110, 1118 (W.D. Wash. 2017), State Farm was not obligated to provide the information requested. This Court ultimately disagreed with counsel's reliance on Hanson to the extent State Farm argued that its work product - prior to the IFCA claim notice was not discoverable. Dkt. 34. Consistent with that Order, State Farm has now provided supplemental answers to Plaintiff's interrogatories addressing the items set forth in the May 10, 2018 Letter.

2. Supplemental Answer to Interrogatory No. 5

The Court also granted Plaintiff's motion to compel State Farm to answer Interrogatories 1, 2, 3, 4, and 5. Dkt. 34, p. 10. On March 4, 2022, State Farm supplemented its answers to those interrogatories. The supplemental answers are acceptable to Plaintiff, except for Interrogatory No. 5, which asked what steps State Farm took in its “investigation of correspondence dated May 10, 2018, sent by Plaintiff's counsel to State Farm's Claims Specialist Kandi Albers.” Dkt. 30, Declaration of Randall Johnson, Exhibit 1.

State Farm's March 5, 2022 Supplemental Answer to Interrogatory No. 5 stated, in pertinent part:

First, to the extent the interrogatory seeks information about what State Farm did in response to receipt of the May 10, 2018 letter, State Farm consulted with counsel, see Albers Dep., p. 85, then State Farm's counsel responded to plaintiff's counsel, asserting that State Farm's internal evaluation was protected and not subject to disclosure pursuant to Hanson v. State Farm, supra.

Second, to the extent that the interrogatory seeks disclosure of certain items of information listed on page 2 of the May 10, 2018 letter, please see State Farm's answers to interrogatories 2 through 4, above (note: the subparts of Interrogatory No. 2 are exactly the same as the inquiries 1 through 7 in the May 10, 2018 letter). These determinations were made prior to the May 10, 2018 letter being sent to State Farm.

Dkt. 39-1, pp. 12-13. Plaintiff argues that State Farm is still standing by its erroneous objection based on Hanson, which the Court has already overruled. The Court does not agree that this is the position taken by State Farm in its supplemental answer. State Farm stated that it “stands by its objection” that the interrogatory begs the question “because it asks for a disclosure of the ‘investigation of correspondence' when the correspondence itself did not ask for any investigation. Id. p. 13. State Farm did not reassert its previous objection based on Hanson, but merely referred to counsel's response, in which counsel referred to Hanson.

State Farm is correct that the interrogatory simply asks what steps State Farm took after receiving the May 10, 2018 Letter and State Farm has adequately answered that query, i.e., it referred the letter to its counsel to determine whether State Farm was obligated to respond.

Accordingly, Plaintiff's motion for further supplementation to this interrogatory answer is denied.

B. Motion for Sanctions

Monetary sanctions are authorized by Fed.R.Civ.P. 37(a).^[1] See also, Grimes v. City and County of San Francisco, 951 F.2d 236, 240 (9th Cir. 1995) (“The authority of magistrates to impose discovery sanctions is established by 28 U.S.C. Sec. 636 and recognized by our decisions.”).

If the Court grants a motion to compel, as it did here, it must, “after giving an opportunity to be heard, ” require the party, his attorney, or both “to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees.” Fed.R.Civ.P. 37(a)(5)(A). The award is mandatory unless the Court finds that the opposing party's position was “substantially justified” or that “other circumstances make an award of expenses unjust.” Id. The burden of establishing this substantial justification or special circumstances rests on the party being sanctioned. See Hyde & Drath v. Baker, 24 F.3d 1162, 1171 (9th Cir. 1994). The rule's purpose is “to protect courts and opposing parties from delaying or harassing tactics during the discovery process.” Cunningham v. Hamilton County, 527 U.S. 198, 208, 119 S.Ct. 1915, 144 L.Ed.2d 184 (1999).

Plaintiff argues that sanctions are warranted because State Farm's objections are inconsistent with the rules and existing law, are not a logical extension of the law, and caused unnecessary delay and increased costs. Dkt. 38, pp. 5-6. Plaintiff has submitted a summary of counsel's time with incurred and anticipated future attorney fees, in the amount of $18, 907.50. Id., pp. 7-8. State Farm argues that it was substantially justified in resisting production of its internal evaluation content, so sanctions are not appropriate. Dkt. 42, pp. 8-10. State Farm does not object to the Court using the hours and rates requested by Plaintiff but does question the need for “anticipated future expenses” related to a follow-up deposition of Kandi Albers. Ms. Albers did not perform the initial UIM evaluation but agreed with and adopted the UIM evaluation by former State Farm employee, Danielle Tortorice. State Farm's counsel advises that he has been unable to contact Ms. Tortorice but has given her contact information to Plaintiff. Id., p. 10.

State Farm argues that it was justified in “drawing the line at internal evaluation materials reflecting its claim professionals' opinions on the monetary value of plaintiff's claim” because this approach has been endorsed by Washington state courts. Dkt. 42, p. 3 (citing Leahy v. State Farm Mut. Auto. Insur. Co., 3 Wash.App.2d 613, 418 P.3d 175, 181-182 (2018)). State Farm also contends that its objections are well founded...