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Mixed Purpose Insurance Reports Held Not Protected by Attorney-Client Privilege

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  • Posted on: Dec 23 2019

Whether to permit discovery of insurance coverage decisions is often hotly contested. The issue typically arises in cases in which the carrier performs an investigation into the facts and circumstances of a potential or actual claim. The fruits of such an investigation can be very illuminating. For this reason, plaintiffs request the disclosure of all documents concerning such investigations.

Defendants and insurers often resist producing these materials on privilege and work product grounds. To obtain such protection, these parties must demonstrate that the investigative materials were prepared solely in anticipation of litigation. Sounds easy. But, as is often the case, it is not.

Attorney-Client Privilege and Mixed Purpose Reports

The starting point for the analysis begins with Section 3101 of the Civil Practice Law and Rules (“CPLR”). Under CPLR § 3101, “all matter material and necessary to the prosecution or defense of an action” is to be disclosed. Reid v. Soults, 138 A.D.3d 1091, 1092 (2d Dept. 2016) (citing Allen v. Crowell-Collier Pub. Co., 21 N.Y.2d 403, 406-07 (1968)). Courts are to determine whether documents and information are “material and necessary” liberally so that there will be disclosure of “any facts bearing on the controversy [that] will assist preparation for trial” and “sharpen[ ] the issues and reduc[e] delay and prolixity.” Yoshida v. Hsueh-Chih Chin, 111 A.D.3d 704, 705 (2d Dept. 2013). Stated differently, the documents and information must be relevant. Id. at 705-06.

CPLR § 3101 also “establishes three categories” of materials that are protected from production: “privileged matter, absolutely immune from discovery (CPLR 3101 [b]); attorney’s work product, also absolutely immune (CPLR 3101 [c]); and trial preparation materials [CPLR 3101 (d) (2)], which are subject to disclosure only on a showing of substantial need and undue hardship.” Forman v. Henkin, 30 N.Y.3d 656, 661-662 (2018). Because withholding documents based on one of the foregoing privileges obstructs the truth-finding process (Spectrum Sys. Int’l Corp. v. Chemical Bank, 78 N.Y.2d 371, 377 (1991)), “[t]he burden of establishing a right to protection under these provisions is with the party asserting it – the protection claimed must be narrowly construed; and its application must be consistent with the purposes underlying the immunity.” Id. at 662; see Rickard v. New York Cent. Mut. Fire Ins. Co., 164 A.D.3d 1590, 1591-1592 (4th Dept 2018). “[A] court is not required to accept a party’s characterization of material as privileged or confidential.” Rickard, 164 A.D.3d at 1592 (internal quotation marks omitted). “Ultimately, resolution of the issue whether a particular document is . . . protected is necessarily a fact-specific determination . . . , most often requiring in camera review.” Id. (internal quotation marks omitted). See also Spectrum, 78 N.Y.2d at 378 (citation omitted).

To fall within the conditional privilege of CPLR 3101(d)(2), the material sought must be prepared solely in anticipation of litigation. Hawley v. Travelers Ind. Co., 90 AD2d 684, 684 (4th Dept. 1982); New England Seafoods of Amherst v. Travelers Cos., 84 AD2d 676, 677 (4th Dept. 1981). Whether material is prepared solely in anticipation of litigation is determined by looking at the facts objectively, rather than subjectively, “because litigation can be anticipated at the time almost any incident occurs.” For this reason, there must be “a substantial and significant threat of litigation” before a party’s anticipation of litigation is considered ‘reasonable.’” See, e.g., Royal Indem. Co. v. Salomon Smith Barney, Index. No. 125889/99 (Sup. Ct., N.Y. County July 8, 2004) (here) (quoting Harper v. Auto-Owners Ins. Co., 138 F.R.D. 655, 659 (S.D. Ind. 1991)).

In the context of insurance coverage disputes, “[d]ocuments prepared in the ordinary course of an insurance company’s investigation to determine whether to accept or reject coverage and to evaluate the extent of a claimant’s loss are not privileged and are, therefore, discoverable.” Brooklyn Union Gas Co. v. American Home Assur. Co., 23 A.D.3d 190, 191 (1st Dept. 2005). Importantly, such documents do not become privileged “merely because an investigation was conducted by an attorney.” Id. (quoting Spectrum Sys., 78 N.Y.2d at 379).

Attorney-Client Privilege and Third Parties

Under CPLR § 3101(b), attorney-client communications are immune from discovery. “The attorney-client privilege shields from disclosure any confidential communications between an attorney and his or her client made for the purpose of obtaining or facilitating legal advice in the course of a professional relationship.” Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 N.Y.3d 616, 623 (2016). The reason for such immunity: the privilege “fosters the open dialogue between lawyer and client that is deemed essential to effective representation.” Spectrum, 78 N.Y.2d at 377. As the Court of Appeals observed: “It exists to ensure that one seeking legal advice will be able to confide fully and freely in his attorney, secure in the knowledge that his confidences will not later be exposed to public view to his embarrassment or legal detriment.” Matter of Priest v. Hennessy, 51 N.Y.2d 62, 67-68 (1980).

Although the privilege serves an important function – the open and candid dialogue between attorney and client – there exists an “[o]bvious tension” between the privilege and the policy of New York State that favors liberal discovery. Ambac, 27 N.Y.3d at 624 (citing Spectrum, 78 N.Y.2d at 376-377). Because the privilege shields from disclosure “material and necessary” information “and therefore ‘constitutes an “obstacle” to the truth-finding process,’” courts narrowly construe its application. Ambac, 27 N.Y.3d at 624 (quoting Matter of Jacqueline F., 47 N.Y.2d 215, 219 (1979)); Spectrum, 78 N.Y.2d at 377. For this reason, “[t]he party asserting the privilege bears the burden of establishing its entitlement to protection by showing that the communication at issue was between an attorney and a client ‘for the purpose of facilitating the rendition of legal advice or services, in the course of a professional relationship,’ that the communication is predominantly of a legal character, that the communication was confidential and that the privilege was not waived.” Ambac, 27 N.Y.3d at 624 (quoting Rossi v. Blue Cross and Blue Shield of Greater New York, 73 N.Y.2d 558, 593-594 (1989)).

Communications made in the presence of third parties ordinarily are not subject to the attorney-client privilege. Ambac, 27 N.Y.3d at 624. Where, however, the third party is an agent of the attorney or the client, and his or her presence is deemed necessary to enable the attorney-client communications and the client has a reasonable expectation of confidentiality, the attorney-client privilege is not waived. Id. See also Sevenson Envtl. Servs., Inc. v Sirius Am. Ins. Co., 64 A.D.3d 1234, 1236 (4th Dept. 2009), lv. dismissed, 13 N.Y.3d 893 (2009). Likewise, the attorney work product privilege “extends to experts retained as consultants to assist in analyzing or preparing the case.” Beach v. Touradji Capital Mgt., LP, 99 A.D.3d 167, 170 (1st Dept. 2012).

In John Mezzalingua Assoc., LLC v. Travelers Indem. Co., 2019 N.Y. Slip Op. 09157 (Dec. 20, 2019) (here), the Appellate Division, Fourth Department addressed the foregoing principles, reversing much of the motion court’s decision shielding documents and information on work product and privilege grounds.

John Mezzalingua Associates, LLC v. Travelers Indemnity Co.


Plaintiff, John Mezzalingua Associates, LLC (“JMA”), the owner of an engineering and manufacturing facility, commenced the action after rainfall entered and caused damage to the facility in October 2016. JMA asserted a negligence cause of action against defendant, Campany Roofing Company, Inc. (“Company”), stemming from certain roofing work that Campany performed at the facility and asserted a breach of contract cause of action against defendants, the Travelers Indemnity Company and the Phoenix Insurance Company (collectively, “Travelers Defendants”), based upon the Travelers Defendants’ disclaimer of coverage for the loss. JMA had filed a claim with the Travelers Defendants for the loss and, on October 24, 2016, the Travelers Defendants sent Plaintiff a letter reserving their rights under the insurance contract and noting an exclusion in the policy for rain damage. Consequently, JMA hired litigation counsel and other consultants. On January 5, 2017, the Travelers Defendants disclaimed coverage.

During discovery, a dispute arose over allegedly privileged documents that JMA withheld or redacted. In its privilege logs, JMA asserted that many of the documents were protected from disclosure on three grounds, i.e., that they were material prepared in anticipation of litigation (see CPLR §3101(d)(2)), attorney work product (see CPLR § 3101(c)), or protected by the attorney-client privilege (see CPLR § 4503(1)). JMA asserted that a few documents were not discoverable on the sole basis that they were materials prepared in anticipation of litigation.

Campany and the Travelers Defendants separately moved to, inter alia, compel JMA’s disclosure of various documents or, in the alternative, for an in camera review of the documents. JMA moved for, among other things, a protective order, contending that all communications involving attorneys or litigation experts on and after October 24, 2016, were presumptively privileged because the Travelers Defendants and JMA contemplated litigation at that time. The motion court denied the Travelers Defendants’ motion, denied in part Campany’s motion, and granted JMA’s motion by, as relevant to the appeal, ordering that all documents that JMA created on and after October 24, 2016, were not discoverable because they were material prepared in anticipation of litigation. Campany and the Travelers Defendants appealed.

The Fourth Department’s Decision

The Court modified the motion court’s order by denying that part of JMA’s motion seeking a protective order with respect to documents created on or after October 24, 2016, which JMA alleged to be immune from discovery under CPLR § 3101(d)(2). Slip Op. at *3. The Court found that these communications (e.g., communications involving attorneys or litigation experts) were not privileged because the Travelers Defendants and JMA did not solely contemplate litigation at the time. The Court explained the materials were “mixed purpose reports” and, therefore, were not “prepared solely in anticipation of litigation.” Id. at *2 (citations omitted). “Because plaintiff ‘did not establish that the requested material was protected by the qualified immunity privilege set forth in CPLR 3101 (d) for material prepared exclusively in anticipation of litigation,’” concluded the Court, “‘the burden did not shift to [Campany and the Travelers defendants] to establish that they had substantial need’ for the material and could not obtain it without undue hardship.” Id. (quoting Peralta v. New York City Hous. Auth., 169 A.D.3d 1071, 1074-1075 (2d Dept. 2019)).

“With respect to [the] documents that [JMA] contend[ed] were attorney work product or protected by the attorney-client privilege,” said the Court, “many of the documents were shared with or prepared by third parties.” Slip Op. at *3. However, because it was unclear whether the third parties were agents of the attorney or the client, and whether their presence was necessary to enable the attorney-client communications for which the client had a reasonable expectation of confidentiality, the Court remanded to the motion court for an in camera review “to determine if the privileges were actually applicable.” Id. (citations omitted).


It is well settled that the trial court is given broad discretion to supervise disclosure. See Those Certain Underwriters at Lloyds, London v. Occidental Gems, Inc., 41 AD3d 362, 364 [2007], aff’d, 11 N.Y.3d 843 (2008). Under CPLR § 3101, such disclosure is “generous, broad, and is to be construed liberally.” Mann v. Cooper Tire Co., 33 AD3d 24, 29 (1st Dept. 2006); Allen, 21 N.Y.2d at 406. Consequently, a party is entitled to “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof.” CPLR § 3101.  

The party claiming immunity from disclosure has the initial burden of showing that the materials being sought were prepared solely and exclusively for litigation purposes. 148 Magnolia, LLC v. Merrimack Mut. Fire Ins. Co., 62 A.D.3d 486, 487 (1st Dept. 2009). “[T]his burden cannot be satisfied with wholly conclusory allegations.” Claverack Cooperative Ins. Co. v. Nielsen, 296 AD 2d 789, 789 (3d Dept. 2002). The reason: every request for disclosure must be considered in the context of each case in which it is sought and in light of the evidence presented to the court. Andon v. 302-304 Mott St. Assoc., 94 N.Y.2d 740, 747 (2000). Consequently, as shown in John Mezzalingua Assocs., the “resolution of the issue whether a particular document is . . . protected …, most often require[es] in camera review.” Rickard, 164 A.D.3d at 1592 (internal quotation marks omitted).

John Mezzalingua Assocs. also highlights the difficulties litigants have satisfying their burden of demonstrating that an investigative report was prepared “solely” in anticipation of litigation. Too often, the claim of privilege is supported by attorney affidavits rather than affidavits from persons with first-hand knowledge. E.g., Claverack Coop. Ins. Co. v Nielsen, 296 AD2d 789, 789 (3d Dept. 2001). Even reference to emails and letters can come up short if they do not conclusively show that the disputed materials were related solely to future litigation and “not also used to evaluate [the insureds’] claim or that retention of an independent investigator was other than [the] ordinary course of [a] business practice.…” Carden v. Allstate Ins. Co., 105 A.D.2d 1048, 1049 (3d Dept. 1984). Thus, John Mezzalingua Assocs. serves as a reminder to litigants that because immunity from disclosure is a fact-intensive analysis, litigants should come to court with facts and evidence, not conclusory statements, demonstrating that investigative reports were prepared solely in anticipation of litigation.  

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