Freedom Trust v. Chubb Group of Ins. Companies

AMENDED ORDER DENYING PLAINTIFFS’ MOTION TO COMPEL PRODUCTION

This matter comes before the Court on a discovery motion by the plaintiffs. The motion presents a question of first impression in California: whether a law firm’s participation in an insurer’s bad faith denial of a claim falls within the crime-fraud exception to the lawyer-client privilege. The Court holds that it does not.

I. Background

Among other claims, the plaintiffs sued Chubb for bad faith denial of insurance coverage. Chubb moved for summary judgment on this issue but the Court de nied the motion. The plaintiffs now assert that they have made a prima facie showing of bad faith and that this is sufficient to trigger the crime-fraud exception to the lawyer-client privilege. Therefore, the plaintiffs move to compel disclosure of Chubb’s communications with its lawyers concerning the plaintiffs’ insurance claim.

II. Discussion

A. Crime-Fraud Exception to Lawyer-Client Privilege

Because this is a civil action in which California law provides the rule of decision, Chubb’s claim of privilege is governed by California law. Fed.R.Evid. 501; Weinstein’s Federal Evidence § 501.02[2][b][ii]. California Evidence Code §…