Levert Smith v. Scottsdale Insurance Company , 621 F. App'x 743 ( 2015 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1002
LEVERT SMITH; NELSON D. RADFORD, Co-Administrators of the
Estate of Joseph Jeremaine Porter,
Plaintiffs - Appellants,
v.
SCOTTSDALE INSURANCE COMPANY,
Defendant - Appellee,
and
SCOTTSDALE INDEMNITY COMPANY; NATIONWIDE INSURANCE COMPANY,
Defendants.
Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling. Frederick P. Stamp,
Jr., Senior District Judge. (5:12-cv-00086-FPS-JES)
Submitted: June 30, 2015 Decided: July 30, 2015
Before GREGORY, DUNCAN, and KEENAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Timothy F. Cogan, Patrick S. Cassidy, CASSIDY, COGAN, SHAPELL &
VOEGELIN, LC, Wheeling, West Virginia, for Appellants. Thomas
E. Scarr, Sarah A. Walling, JENKINS FENSTERMAKER, PLLC,
Huntington, West Virginia; Denise D. Pentino, William E
Robinson, Jacob A. Manning, DINSMORE & SHOHL, LLP, Wheeling,
West Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Levert Smith and Nelson Radford, as administrators of the
Estate of Joseph Jermaine Porter (the “Estate”), appeal the
district court’s orders affirming the magistrate judge’s denial
in part of the Estate’s motion to compel discovery and granting
summary judgment to Scottsdale Insurance Company (“Scottsdale”)
on the Estate’s claim under the West Virginia Human Rights Act,
W. Va. Code §§ 5-11-1 to 5-11-20 (2013) (“WVHRA”). The claim
arises from a civil rights lawsuit filed by the Estate against
Scottsdale’s insured, the City of Huntington, West Virginia (the
“City”). See Smith v. Lusk, 533 F. App’x 280 (4th Cir. July 18,
2013) (No. 12-2063). We affirm.
I.
The Estate first challenges the district court’s order
denying in part its motion to compel discovery of portions of
Scottsdale’s claim file. District courts and magistrate judges
are afforded substantial discretion in managing discovery.
United States ex rel. Becker v. Westinghouse Savannah River Co.,
305 F.3d 284, 290 (4th Cir. 2002). We review discovery rulings
for an abuse of discretion. Kolon Indus. Inc. v. E.I. DuPont de
Nemours & Co., 748 F.3d 160, 172 (4th Cir.), cert. denied, 135
S. Ct. 437 (2014). An abuse of discretion occurs when the
district court’s decision is “guided by erroneous legal
3
principles” or “rests upon a clearly erroneous factual finding.”
Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir.
1999). We review de novo the district court’s legal conclusion
that the attorney-client and work product privileges are
applicable. Hawkins v. Stables, 148 F.3d 379, 382 (4th Cir.
1998).
Because this is a diversity action, the elements of the
attorney-client privilege are governed by West Virginia law.
Fed. R. Evid. 501; Ashcraft v. Conoco, Inc., 218 F.3d 282, 285
n.5 (4th Cir. 2000) (“[I]n a diversity action the availability
of an evidentiary privilege is governed by the law of the forum
state.”). Under West Virginia law, there are three elements
necessary to establish this privilege: “(1) both parties must
contemplate that the attorney-client relationship does or will
exist; (2) the advice must be sought by the client from the
attorney in his capacity as a legal advisor; [and] (3) the
communication between the attorney and client must be intended
to be confidential.” State ex rel. Med. Assurance of W. Va.,
Inc. v. Recht, 583 S.E.2d 80, 84 (W. Va. 2003). This privilege
also applies to communications between an attorney and a client
that are shared with the client’s insurance company. Id. at 89.
The Estate argues that when the attorney’s activities in a
discrimination case become an intimate part of the claimed
discrimination, the privileged communications are discoverable,
4
citing State ex rel. Westbrook Health Servs., Inc. v. Hill, 550
S.E.2d 646 (W. Va. 2001). However, “privileged matters,
although relevant, are not discoverable. As a result of this
rule, many documents that could very substantially aid a
litigant in a lawsuit are neither discoverable nor admissible as
evidence.” Recht, 583 S.E.2d at 84. Moreover, the Supreme
Court of Appeals of West Virginia in Hill did not conclude that
documents related to an attorney’s actions in a discrimination
case are per se outside the protection of the privilege;
instead, the court found that the employer failed to meet the
three-part test for application of the privilege. 550 S.E.2d at
650-51.
The Estate further argues, however, that Scottsdale
impliedly waived attorney-client privilege because the
attorneys’ communications are “at issue” in this case. “A
party may waive the attorney-client privilege by asserting
claims or defenses that put his or her attorney’s advice in
issue.” State ex rel. Brison v. Kaufman, 584 S.E.2d 480, 482
(W. Va. 2003) (internal quotation marks omitted). “[A]n
attorney’s legal advice only becomes an issue where a client
takes affirmative action to assert a defense and attempts to
prove that defense by disclosing or describing an attorney’s
communication.” State ex rel. Marshall Cnty. Comm’n v. Carter,
689 S.E.2d 796, 805 (W. Va. 2010) (internal quotation marks
5
omitted). We conclude that Scottsdale did not affirmatively
place any attorney-client privileged matters at issue.
“[A]dvice is not in issue merely because it is relevant, and
does not come in issue merely because it may have some affect on
a client’s state of mind.” State ex rel. U.S. Fid. & Guar. Co.
v. Canady, 460 S.E.2d 677, 688 n.16 (W. Va. 1995). Further,
Scottsdale did not assert any claim or defense based on
counsel’s advice in the underlying case; instead, it maintained
that its actions were based on its own evaluation of the case
and the City’s refusal to consent to a settlement.
The Estate also sought documents the magistrate judge
concluded were protected under the work product doctrine. The
work product doctrine “confers a qualified privilege on
documents prepared by an attorney in anticipation of
litigation.” Solis v. Food Employers Labor Relations Ass’n, 644
F.3d 221, 231 (4th Cir. 2011). Work product is “generally
protected and can be discovered only in limited circumstances.”
In re Grand Jury Proceedings, 33 F.3d 342, 348 (4th Cir. 1994).
“Fact work product is discoverable only upon a showing of both a
substantial need and an inability to secure the substantial
equivalent of the materials by alternate means without undue
hardship.” Chaudhry v. Gallerizzo, 174 F.3d 394, 403 (4th Cir.
1999) (internal quotation marks omitted). “[O]pinion work
product enjoys a nearly absolute immunity and can be discovered
6
only in very rare and extraordinary circumstances.” Id.
(internal quotation marks omitted).
The Estate argues that the attorney’s opinions are “at
issue” here because of the intimacy of the involvement of the
attorneys and adjusters in determining the course of the civil
rights lawsuit. Here, however, Scottsdale has never contended
that it relied upon counsel’s opinions in refusing to settle.
It has consistently asserted that it made the decision based on
its own conclusions and the City’s decision, which was not made
on the advice of counsel. Thus, because Scottsdale is not
“attempt[ing] to use a pure mental impression or legal theory as
a sword and as a shield in the trial of a case,” In re Martin
Marietta Corp., 856 F.2d 619, 626 (4th Cir. 1988), we conclude
that the Estate has not demonstrated “extraordinary
circumstances” to overcome the “nearly absolute immunity”
afforded to opinion work product. See Chaudhry, 174 F.3d at
403. *
II.
*
To the extent that the Estate summarily contends that
documents containing Scottsdale’s valuation of the case
constituted fact work product rather than opinion work product,
we conclude that the Estate has waived that argument by failing
to submit adequate briefing.
7
The Estate also argues that the district court erred in
granting summary judgment to Scottsdale on its WVHRA claim. We
review de novo whether a district court erred in granting
summary judgment, viewing the facts and drawing all reasonable
inferences in the light most favorable to the nonmoving party.
Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir. 2013). Summary
judgment is properly granted “if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A district court should grant summary judgment unless a
reasonable jury could return a verdict for the nonmoving party
on the evidence presented. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986).
The WVHRA creates “three distinct causes of action.”
Michael v. Appalachian Heating, 701 S.E.2d 116, 117 (W. Va.
2010). Under the WVHRA:
it is an unlawful discriminatory practice for any
person . . . to: (1) engage in any form of threats or
reprisal, or; (2) engage in, or hire, or conspire with
others to commit acts or activities of any nature, the
purpose of which is to harass, degrade, embarrass or
cause physical harm or economic loss, or (3) aid,
abet, incite, compel, or coerce any person to engage
in any of the unlawful discriminatory practices
defined in W. Va. Code § 5-11-9 [(2013)].
W. Va. Code § 5-11-9(7)(A). The WVHRA “prohibits unlawful
discrimination by a tortfeasor’s insurer in the settlement” of a
claim. Id. at 118.
8
The Estate argues that the district court erred when it
determined that the Estate failed to show that Scottsdale’s
proffered reasons for its actions in the underlying case were
pretextual. West Virginia courts employ a three-pronged test to
determine whether a plaintiff has established a prima facie
case, analyzing whether (1) the plaintiff is within a protected
class; (2) the plaintiff suffered an adverse decision; and (3)
there is evidence permitting an inference that “[b]ut for the
plaintiff’s protected status, the adverse decision would not
have been made.” Dawson v. Allstate Ins. Co., 433 S.E.2d 268,
274 (W. Va. 1993). To complete its prima facie case, the Estate
must establish a link between Scottsdale’s decision and its
status as a member of the protected class sufficient “to give
rise to an inference that the . . . decision was based on an
illegal discriminatory criterion.” Conaway v. E. Assoc. Coal
Corp., 358 S.E.2d 423, 429 (W. Va. 1986).
If the Estate establishes the prima facie case, then the
burden shifts to Scottsdale to provide a nondiscriminatory
reason for the adverse action; if Scottsdale provides such a
reason, then the burden shifts back to the Estate to demonstrate
that the proffered reason is merely pretextual. Id. at 430. To
demonstrate pretext, the plaintiff must “prove that the
[defendant] did not act as it did because of its offered
9
explanation.” Skaggs v. Elk Run Coal Co., Inc., 479 S.E.2d 561,
584 (W. Va. 1996).
Even assuming that the Estate has established a prima facie
case, we conclude that the Estate has failed to demonstrate that
Scottsdale’s proffered reasons for its decision not to settle
the civil rights lawsuit were pretextual. Scottsdale has
consistently maintained that it refused to settle the lawsuit
based on two facially race-neutral reasons: its own assessment,
ultimately proven correct, that the City was likely to not be
found liable, and the City’s refusal to consent to any
settlement. While the Estate asserts that these reasons are
pretextual, it concedes that Scottsdale could not settle the
lawsuit without the City’s consent.
The Estate contends, however, that Scottsdale had notice of
the racial elements of the lawsuit and thus had a duty to
investigate the City’s reasons for refusing to settle in order
to ensure that the decision was not based on an improper motive,
under Fairmont Specialty Servs. v. W. Va. Human Rights Comm’n,
522 S.E.2d 180 (W. Va. 1999). The Estate asserts that
Scottsdale could have tried to persuade the City to settle or
provide a special review for cases with racial components and
that Scottsdale’s failure to do so demonstrates that its
proffered reasons were pretextual.
10
We conclude that Scottsdale did not have a duty to
investigate claims that racial animus motivated the City’s
decision not to settle the underlying case. As the district
court noted, the Supreme Court of Appeals of West Virginia only
has recognized a cause of action against an insurer for
discrimination in settlement practices; it has not imposed upon
an insurer a duty to investigate whether the City had an
unlawful motive in refusing to consent to a settlement. See
Michael, 701 S.E.2d at 124-26. Moreover, the Estate’s reliance
on Fairmont Specialty is misplaced. There, the high court
concluded only that “[a]n employer’s liability in harassment
cases is tied to the nature of its response to a complaint of
discriminatory conduct.” 522 S.E.2d at 189 (emphasis added).
The court has not extended this holding to create a freestanding
duty to investigate any claims of discrimination. Therefore, we
conclude that summary judgment was proper.
III.
Accordingly, we affirm the district court’s orders. We
dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before
this Court and argument will not aid the decisional process.
AFFIRMED
11