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Materials prepared in anticipation of litigation are generally privileged from discovery. Colo. R. Civ. P. 26(b)(3). The Colorado Supreme Court has set forth the standard to be applied in determining whether materials prepared during an insurance company's investigation of a claim fall within the scope of this privilege. The question is whether, in light of the nature of the document and the factual situation in the particular case, the party resisting discovery demonstrates that the document was prepared or obtained in contemplation of specific litigation. Indeed, there is a presumption that witness' statements compiled by or on behalf of the insurer in the course of such investigations are ordinary business records, as distinguished from trial preparation materials.
Plaintiff Stephen Compton was injured by a fall at one of defendant's retail stores. The injury required medical treatment and surgery. An accident report was prepared and submitted to the defendant, which was self-insured and maintained its own risk management and loss control department. The defendant conducted the investigation of plaintiff's claim and ultimately denied the claim. Plaintiff then brought a personal injury lawsuit against defendant. Plaintiff moved to compel the production of witness statements made to defendant's claims adjuster during the course of defendant's investigation. The trial court denied plaintiff's motion. Plaintiff appealed.
Did the trial court err in denying motion to compel discovery of the witness statements?
The court noted that witness statements compiled by or on behalf of the insurer in the course of investigations were ordinary business records, as distinguished from trial preparation materials. To overcome the presumption, the party opposing discovery must show that the witness statements were obtained after a specific claim had arisen, for the purpose of defending that claim, and at a time when "there was a substantial probability of imminent litigation over the claim or a lawsuit had already been filed." In this case, the court held that the defendant did not overcome the presumption of discoverability, as it has not presented any evidence to rebut the presumption that the statements were recorded in the ordinary course of business of its risk management and loss control department. Moreover, the statements were not recorded at a time when there existed a substantial probability of imminent litigation over plaintiff’s claim. The court also held that the defendant cannot establish that litigation was imminent at the time the statements were recorded. Because the witness statements were made to the owner's own risk management and loss control department during the ordinary course of its claim investigation, the court concluded that the witness statements were not protected by the work-product privilege. Moreover, they did not fall within the scope of the attorney-client privilege because the owner's attorneys were not involved in the investigation that produced the statements. Accordingly, the trial court was ordered to vacate its ruling denying the motion to compel discovery of the recorded statements at issue.