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ContraVest Inc. v. Mt Hawley Insurance Co.

United States District Court, D. South Carolina, Beaufort Division

October 24, 2018

CONTRAVEST INC., CONTRAVEST CONSTRUCTION COMPANY, and PLANTATION POINT HORIZONTAL PROPERTY REGIME OWNERS ASSOCIATION, INC., as assignee, Plaintiffs,
v.
MT. HAWLEY INSURANCE COMPANY, Defendant.

          ORDER

          DAVID C. NORTON, UNITED STATES DISTRICT JUDGE.

         The following matter is before the court on defendant Mt. Hawley Insurance Company's (“Mt. Hawley”) motion to stay, ECF No. 163. For the reasons set forth below, the court denies the motion without prejudice and orders that Mt. Hawley produce all documents except those claiming attorney-client privilege.

         I. BACKGROUND

         The facts of this insurance coverage dispute are stated in the court's March 31, 2017 order, ECF No. 143; therefore, the court dispenses with a recitation of the facts for purposes of this order. The following facts are relevant here. On April 6, 2018, Mt. Hawley filed the instant motion to stay the case pending resolution of the court's in camera review, Mt. Hawley's mandamus petition, and Mt. Hawley's certification motion. ECF No. 163. Mt. Hawley also submitted to the court a privilege log and various documents for in camera review. ECF No. 163-1.

         On April 11, 2018, Mt. Hawley requested that the Fourth Circuit issue a writ of mandamus directing this court to vacate its March 31, 2017 order finding the waiver of attorney-client privilege in bad faith insurance claims. Petition for Writ of Mandamus at 2, In re Mt. Hawley Insurance Company, No. 18-401 (4th Cir. April 11, 2018), ECF No. 3. Mt. Hawley also filed a motion to certify the question of attorney-client privilege wavier in bad faith insurance claims to the Supreme Court of South Carolina. Motion for Certification to the Supreme Court of South Carolina, In re Mt. Hawley Insurance Company, No. 18-401 (4th Cir. April 11, 2018), ECF No. 6. On May 29, 2018, the Fourth Circuit stayed any district court discovery implicating the attorney-client privilege issue. Order, In re: Mt. Hawley Insurance Company, No. 18-401 (4th Cir. May 29, 2018), ECF No. 23. Then on June 19, 2018, the Fourth Circuit certified the attorney-client privilege waiver question to the Supreme Court of South Carolina. Order, In re: Mt. Hawley Insurance Company, No. 18-401 (4th Cir. May 29, 2018), ECF No. 27. The Supreme Court of South Carolina has not yet issued a ruling on the question.

         ContraVest, Inc., ContraVest Construction Company, and Plantation Point Horizontal Property Regime Owners Association, Inc. (collectively, “plaintiffs”) responded to Mt. Hawley's motion to stay on April 19, 2018. ECF No. 165. The court held a status conference on July 11, 2018, at which the court directed the parties to submit a letter identifying which, if any, documents unrelated to the certified attorney-client privilege question needed to be reviewed in camera by the court. ECF No. 170. On July 26, 2018, the parties submitted a letter (“Letter”) referencing and attaching the privilege log previously submitted to the court with the documents for in camera review. The Letter and privilege log discuss four main categories of documents at issue: (1) attorney-client privilege documents, tabs 1-41; (2) work-product documents, tabs 42-51; (3) reinsurance documents, tabs 52-100; and (4) reserves documents, tabs 101-110.

         In the Letter, the parties agree that the in camera review of attorney-client documents, tabs 1-41 of the privilege log, is held in abeyance until the Fourth Circuit's mandamus decision. The parties also note that Mt. Hawley is investigating a privilege claim over documents in tabs 31 and 32 of the privilege log. However, the parties disagree on three issues. The first issue is whether work-product documents, tabs 42-51, need to be reviewed in camera. The second issue is whether the court has ruled on Mt. Hawley's request, raised in its motion to reconsider, for in camera review of the reinsurance and reserves documents, tabs 52-110. The third issue is whether Mt. Hawley may object to producing documents in tabs 44 and 47-49 on the basis that they reference mediation.

         II. DISCUSSION

         A. In Camera Review

         In its motion to stay, Mt. Hawley first requests that the production of all documents subject to the court's orders be suspended until the court's in camera review is complete. ECF No. 163 at 2. The Letter indicates disagreement over which categories of documents are currently subject to an in camera review. The court addresses each category in turn.

         1. Work-Product Documents

         The first category of documents over which the parties disagree is the set of work-product documents, which the Letter identifies as tabs 42-51 on the privilege log. Plaintiffs take the position that the court has already denied in camera review of these documents. Letter at 2. Mt. Hawley argues that the work-product documents need to be reviewed in camera and points to footnote 13 in the court's order adopting the magistrate judge's report and recommendation (“R&R”) as support for its position. Id. (citing ECF No. 142 at 22 n.13). The footnote states:

Because the at-issue waiver is so related to the relevance of communications at issue, it seems appropriate to take the rather unusual step of conducting an in camera review for relevance, despite having already determined that the privilege has been waived. In ordering such a review, the court is mindful of the need to protect the privilege against undue incursion under the City of Myrtle Beach approach. It is also notable that some of the documents in ...

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