New York Appellate Court Rejects Privilege Claim on Insurer Outside Counsel Materials

New York Appellate Court Rejects Privilege Claim on Insurer Outside Counsel Materials

By Charles A. Jones, and David F. Cutter

The First Department of the New York Supreme Court, Appellate Division, has affirmed [enhanced version available to subscribers] a trial court ruling [enhanced version available to subscribers] that materials generated by outside counsel for insurers before a denial of coverage were not protected by the attorney-client privilege or the work product doctrine.

The documents at issue involved materials generated by outside counsel for several insurers investigating the insured’s claim for coverage. The trial court held that the materials were subject to discovery, and the First Department affirmed. In so doing, the court stated: “The record shows that the insurance companies retained counsel to provide a coverage opinion, i.e. an opinion as to whether the insurance companies should pay or deny the claims. Documents prepared in the ordinary course of an insurer's investigation of whether to pay or deny a claim are not privileged, and do not become so merely because [the] investigation was conducted by an attorney.”

In addition, the court rejected the insurers’ arguments that the sharing of such materials between counsel for various insurers did not waive any applicable privileges, finding that the common interest doctrine did not apply because “there was no pending or reasonably anticipated litigation in which the insurance companies had a common legal interest.”

A copy of the trial court’s ruling can be accessed here, and a copy of the First Department’s ruling can be accessed here.

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