Heidebrink v. Moriwaki

Pearson, J.

The issue presented by this case is whether the statement of an insured to his or her insurance company is protected by the attorney-client privilege or the work product immunity rule. The trial court ruled the statement was not discoverable. The Court of Appeals reversed and ordered production of the statement. We now reverse the decision of the Court of Appeals on the basis that the statement is protected by the work product immunity rule codified in CR 26(b)(3).

I

This lawsuit arose from a multiple car collision on a state highway near Moses Lake, Washington, on March 15, 1982. Respondents allege that Mrs. Heidebrink was traveling west on this highway when suddenly her car was surrounded by a dense cloud of smoke, causing her to collide with the car ahead of her. Several cars were involved in a chain collision and other motorists, in addition to Mrs. Heidebrink, were injured. Respondents claim that the cloud of smoke and the ensuing collisions were caused by Mr. Moriwaki's negligence in burning grain stubble in an adjacent field.

At the time of the incident Mr. Moriwaki carried a liability insurance policy issued by Continental Insurance Company. Under the terms of this policy, Continental was contractually obligated to defend Mr. Moriwaki against all insured claims. This contractual duty allowed Continental to select and retain an attorney to represent the insured and required the insured to cooperate in his defense.

On March 17, 1982, two days after the accident, Tim Dahmen, an investigator and adjuster for Continental, contacted Mr. Moriwaki and tape-recorded his statement relating to the accident. The tape was subsequently transcribed. Several months later the Heidebrinks filed a personal injury action against the Moriwakis. Thereafter Mr. Moriwaki's deposition was taken at which time he testified about the existence of the statement.

Counsel for respondents requested a copy of the transcript of Mr. Moriwaki's statement. Defense counsel objected on grounds of work product and attorney-client privilege. Respondents subsequently moved for an order compelling production. The trial court denied the order. The Court of Appeals reversed. Heidebrink v. Moriwaki, 38 Wn. App. 388, 685 P.2d 1109 (1984).

II

Pursuant to Fed. R. Civ. P. 26(b)(1) and CR 26(b)(1), in their current form, a party may obtain discovery of any matter which is relevant to the subject matter involved in the pending action and not privileged. The scope of such discovery, however, is limited by Fed. R. Civ. P. 26(b)(3) and CR 26(b)(3) which provide in relevant part:

Subject to the provisions of subsection [subdivision in Fed. R. Civ. P.] (b)(4) of this rule, a party may obtain discovery of documents and tangible things otherwise discoverable under subsection (b)(1) of this rule and prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including his attorney, consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of his case and that he is unable without undue hardship to obtain the substantial equivalent of the materials by other means.

Fed. R. Civ. P. 26(b)(3) and CR 26(b)(3) embody the policies set forth by the United States Supreme Court over three decades ago in the now famous decision of Hickman v. Taylor, 329 U.S. 495, 91 L. Ed. 451, 67 S. Ct. 385 (1947). In fact, more recently the Supreme Court explicitly stated that rule 26(b)(3) codifies the principles of the "work product doctrine" first established in Hickman. Upjohn Co. v. United States, 449 U.S. 383, 401, 66 L. Ed. 2d 584, 101 S. Ct. 677 (1981).

In Hickman the plaintiff had attempted to discover the statements of witnesses and any other relevant information the attorney for the defendants had prepared with an "eye" toward litigation. Hickman, at 498-99. While examining the scope of discovery question, the Supreme Court explained that the discovery rules were to be accorded broad and liberal treatment. Trials were no longer to be carried on in the dark; instead, the goal of discovery was to ensure mutual knowledge of all relevant facts. Hickman, at 501, 507. However, the Court stressed that it was necessary to maintain certain restraints on bad faith, irrelevant, and privileged inquiries in order to ensure the just and fair resolution of disputes. Hence, the Court held that an attorney's "work product", although relevant and not privileged, is discoverable only upon a showing of good cause. Hickman, at 512.

In its original form, Fed. R. Civ. P. 26(b)(3) protected only those writings prepared by an attorney in preparation for trial. However, Fed. R. Civ. P. 34 contained a "good cause" requirement which prevented discovery of other materials if the party seeking discovery did not show good cause for such discovery. The rule in this state as originally adopted was different than the federal rule. It provided in part:

The court need not order the production or inspection of any writing obtained or prepared by the adverse party, his attorney, surety, indemnitor or agent in anticipation of litigation or in preparation for trial.

CR 26(b), 71 Wn.2d lxvii (1967). Although never interpreted by this court, this rule apparently placed the matter of discovery within the discretion of the court and required a showing of good cause before allowing such discovery.

As history shows us, problems arose over the proper scope of Fed. R. Civ. P. 26(b)(3). The rule did not specifically address the extent to which a party could discover materials prepared for trial by nonattorneys nor did it indicate exactly what was meant by "good cause". See Note, Work Product Discovery: A Multifactor Approach to the Anticipation of Litigation Requirement in Federal Rule of Civil Procedure 26(b)(3), 66 Iowa L. Rev. 1277 (1981). To remedy these deficiencies the federal rules were amended in 1970. The requirement of good cause was deleted from Fed. R. Civ. P. 34 and Fed. R. Civ. P. 26(b)(3) was changed to read as previously provided herein. Whether this State would have confronted similar problems with CR 26(b)(3) as originally adopted is of little consequence since in 1972 it was amended to conform with the federal rule. CR 26(b)(3), 80 Wn.2d 1189 (1972). Thus, under both the federal and Washington rules, there is no distinction between attorney and nonattorney work product. The test for determining whether such work product is discoverable is whether the documents were prepared in anticipation of litigation and, if so, whether the party seeking discovery can show substantial need.

Many federal courts and other state courts have struggled over the proper interpretation of CR 26(b)(3). The Court of Appeals found the analysis in Hawkins v. District Court, 638 P.2d 1372 (Colo. 1982) and Thomas Organ Co. v. Jadranska Slobodna Plovidba, 54 F.R.D. 367 (N.D. Ill. 1972) very persuasive.

Hawkins involved an action by an insured against his insurance carrier for bad faith. Plaintiff sought discovery of notes and reports of defendant's adjuster regarding his interviews with several witnesses. In ruling that the documents were discoverable, the court concluded:

Because a substantial part of an insurance company's business is to investigate claims made by an insured against the company or by some other party against an insured, it must be presumed that such investigations are part of the normal business activity of the company and that reports and 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.

Hawkins, at 1378.

Thomas Organ Co. involved a defendant's request for production of two documents written by a marine surveyor hired by plaintiff's insured. In deciding that the documents were discoverable, the court asserted that unless the documents are requested by or prepared for an attorney, or otherwise reflect the employment of an attorney's legal expertise, they are conclusively presumed to have been made in the ordinary course of business. Thomas Organ Co., at 372.

In addition to the two cases already mentioned, respondents set forth several more for the proposition that an insured's statement to his insurer is discoverable. Several of these cases can be set aside immediately as not on point since they were decided prior to CR 26(b)(3) being amended. See Jackson v. Kroblin Refrigerated Xpress, Inc., 49 F.R.D. 134 (N.D. W. Va. 1970); Southern Ry. v. Campbell, 309 F.2d 569 (5th Cir. 1962); Rucker v. Wabash R.R., 418 F.2d 146 (7th Cir. 1969); Gottlieb v. Bresler, 24 F.R.D. 371 (D.C. 1959); Alseike v. Miller, 196 Kan. 547, 412 P.2d 1007 (1966).

Several other cases cited by respondents are likewise not directly on point since, as in the Hawkins and Thomas Organ Co. cases, they concern reports and statements of nonparty witnesses rather than statements of an insured. See Martin v. N.V. Nederlandsche Amerikaansche Stoomvaart Maatchappij, 8 F.R.D. 363 (S.D.N.Y. 1948) (report made by consulting engineers for insurance carrier); Khoudary v. Home Ins. Co., 77 Misc. 2d 864, 355 N.Y.S.2d 291 (1974) (first report of an adjusting firm furnished to defendant insurance company concerning a fire loss covered by defendant's policy); Hopkins v. Chesapeake Utils. Corp., 300 A.2d 12 (Del. 1972) (reports of marine surveyors and investigators to insurance company); Garfinkle v. Arcata Nat'l Corp., 64 F.R.D. 688 (S.D.N.Y. 1974) (notes and memoranda prepared by attorneys for an opinion letter to client).

Respondents do, however, cite one case which is very similar to the one at hand. In Henry Enters., Inc. v. Smith, 225 Kan. 615, 592 P.2d 915 (1979) plaintiff sought discovery of a statement made by the defendant corporation's principal officer to the corporation's insurance carrier. The issue, as framed by the court, was whether statements of witnesses taken routinely by adjusters or investigators for insurance carriers upon receipt of claims or knowledge of claims under the policy are discoverable. Henry Enters., at 615. In concluding they were discoverable, the court stated:

It is apparent to us, and we hold, that the initial investigation of a potential claim, made by an insurance company prior to the commencement of litigation, and not requested by or made under the guidance of counsel, is made in the ordinary course of business of the insurance company, and not "in anticipation of litigation or for trial" . . .

Henry Enters., at 623.

On the other side of the struggle are cases cited by petitioners. Several of petitioners' cases are also not directly on point since they are broader than the instant case in that they involved statements from nonparty witnesses. See Garfinkle v. Arcata Nat'l Corp., supra; Burlington Indus. v. Exxon Corp., 65 F.R.D. 26 (D. Md. 1974); American Optical Corp. v. Medtronic, Inc., 56 F.R.D. 426 (D. Mass. 1972); Arney v. Geo. A. Hormel & Co., 53 F.R.D. 179 (D. Minn. 1971); Almaguer v. Chicago, R.I. & Pac. R.R., 55 F.R.D. 147 (D. Neb. 1972); Ashmead v. Harris, 336 N.W.2d 197 (Iowa 1983).

One case is, however, very similar to this one. Fireman's Fund Ins. Co. v. McAlpine, 120 R.I. 744, 391 A.2d 84 (1978) involved four cases, one of which concerned a 5-car chain collision. Shortly after the collision an investigator for two of the defendants took written statements from the insureds. In concluding that such statements were prepared in anticipation of litigation, the court stated:

In our litigious society, when an insured reports to his insurer that he has been involved in an incident involving another person, the insurer can reasonably anticipate that some action will be taken by the other party. The seeds of prospective litigation have been sown, and the prudent party, anticipating this fact, will begin to prepare his case. Although a claim may be settled short of the instigation of legal action, there is an ever-present possibility of a claim's ending in litigation. The recognition of this possibility provides, in any given case, the impetus for the insurer to garner information regarding the circumstances of a claim.

(Citation omitted.) Fireman's Fund, at 753-54.

Despite the fact that petitioners and respondents present cases on point from other jurisdictions addressing the issue at hand, we believe it inappropriate to subscribe entirely to the rationale of either set of cases. The specific issue at hand is whether an insured's statement to his insurance carrier is protected from discovery by CR 26(b)(3). It is difficult in this context to determine whether a document was prepared in anticipation of litigation since an insurance company's ordinary course of business entails litigation. The requirement of having an attorney involved in the case before documents prepared by an insurance carrier are protected is a rather conclusory determination of the issue and is contrary to the plain language of the rule. On the other hand, broad protection for all investigations conducted by an insurer as suggested by several cases cited by respondents is likewise an unsatisfactory answer to the problem. Should such a rule of thumb approach become the general rule, it is not hard to imagine insurers mechanically forming their practices so as to make all documents appear to be prepared in "anticipation of litigation". We believe the better approach to the problem is to look to the specific parties involved and the expectations of those parties. With these parties in mind, the scope of CR 26(b)(3) should provide protection when such protection comports with the underlying rationale of the rule to allow broad discovery, while maintaining certain restraints on bad faith, irrelevant and privileged inquiries in order to ensure just and fair resolutions of disputes.

This case involves statements by a defendant. There are important distinctions between nonparty witness statements and defendant statements. To begin with, nonparty witnesses have no contractual agreement with the party interviewing them. An insured is contractually obligated to cooperate with the insurance company. Such an obligation clearly creates a reasonable expectation that the contents of statements made by the insured will not be revealed to the opposing party. The insurer on the other hand has a contractual obligation to act as the insured's agent and secure an attorney. The insured cannot choose the attorney but can expect the agent to transmit the statement to the attorney so selected. Without an expectation of confidentiality, an insured may be hesitant to disclose everything known. Such nondisclosure could hinder representation by the selected attorney. In essence, the insurance company has been retained to provide an attorney and the expectation is that statements made by the insured will be held in confidence. Without such protection, the insured would bear many of the burdens of the insurance contract without reaping the benefits. Under these circumstances, we believe the statements are protected by CR 26(b)(3). If the statement were made directly to the selected attorney, it would obviously have been made in anticipation of litigation. The contractual obligation between insured and insurer mandates extension of this protection to statements made by an insured to his insurance company. Such an extension comports with the policy of maintaining certain restraints on bad faith, irrelevant and privileged inquiries and helps to ensure the just and fair resolution of disputes. Therefore, we hold that a statement made by an insured to an insurer following an automobile accident is protected from discovery under CR 26(b)(3). The question then remains whether respondents have shown substantial need.

Most courts agree that the determination of this issue is vested in the sound discretion of the trial judge, who should look at the facts and circumstances of each case in arriving at an ultimate conclusion. Fireman's Fund, at 90; Southern Ry. v. Lanham, 403 F.2d 119 (5th Cir. 1968); Tiedman v. American Pigment Corp., 253 F.2d 803 (4th Cir. 1958); Thomas v. Harrison, 634 P.2d 328 (Wyo. 1981). We likewise agree that the determination of this issue is vested within the sound discretion of the trial judge. However, because this is a case of first impression, it is imperative that we look to other cases for standards to guide the trial judge in making this determination.

Cases interpreting Fed. R. Civ. P. 26(b)(3) have generally held that to justify disclosure, a party must show the importance of the information to the preparation of his case and the difficulty the party will face in obtaining substantially equivalent information from other sources if production is denied. In re Int'l Sys. & Controls Corp. Sec. Litigation, 693 F.2d 1235 (5th Cir. 1982); 4 J. Moore, Federal Practice ¶ 26.64 (1984). The clearest case for ordering production is when crucial information is in the exclusive control of the opposing party. See Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577 (7th Cir. 1981). On the other hand, cases interpreting the federal rule indicate that the substantial need standard is not met if the discovering party merely wants to be sure nothing has been overlooked or hopes to unearth damaging admissions. Republic Gear Co. v. Borg-Warner Corp., 381 F.2d 551, 557 (2d Cir. 1967); Alltmont v. United States, 177 F.2d 971 (3d Cir. 1949), cert. denied, 339 U.S. 967 (1950). In addition, although several courts have held that statements contemporaneous with the occurrence may in some instances be unique and cannot be duplicated by later interviews or depositions, McDougall v. Dunn, 468 F.2d 468 (4th Cir. 1972), in general there is no justification for discovery of the statement of a person contained in work product materials when the person is available for deposition. Gay v. P.K. Lindsay Co., 666 F.2d 710 (1st Cir. 1981); see also 8 C. Wright & A. Miller, Federal Practice § 2025, 215 n.72 (1970). Whether a statement is contemporaneous and unique is a question of fact.

In light of all these considerations, we are unable to see any error in the trial court's determination that respondents did not have "substantial need" of petitioner's statement. Although the statement was taken 2 days after the accident, the passage of time alone is insufficient to allow discovery. Respondents have failed to show any other extenuating circumstances justifying disclosure. Hence, the passage of time in the instant case fails to carry the day. Rather, the more important fact is that the statement in question is that of the defendant. He is not unavailable; in fact, it was in his deposition that the conflict arose. There is no claim that he has no present recollection of the events in question. The primary reason for acquiring the statement, as we see it, is impeachment. If the possibility of impeachment alone were sufficient to show substantial need, the work product immunity rule, CR 26(b)(3), would be meaningless as "[a]ny effort at discovery would be said to have a possible impeachment purpose." Thomas v. Harrison, 634 P.2d at 333. Hence, we hold that in the instant case respondents have failed to show a substantial need for the statement. Hence, we reverse the Court of Appeals and reinstate the ruling of the trial court.

Dolliver, C.J., and Utter, Andersen, Callow, and Durham, JJ., concur.