United States: Court Rules Claims Notes Prepared After Anticipation Are Discoverable For Bad Faith Claims But Only After Bifurcation Of Claims For Breach Of Contract And Bad Faith

Last Updated: July 24 2019
Article by Karen K. Karabinos

For decades attorneys for insurance companies and insureds have debated the discoverability of documents contained in the insurer's claims file. Frequently, the debate concerns when an insurer will be required to produce documents prepared in anticipation of litigation. An increasing number of courts are addressing whether claims notes prepared in anticipation in cases must be produced in cases involving bad faith claims. Judge Tilman Self with the Middle District of Georgia ruled in 2018 that such claims notes are discoverable for a bad faith claim, but not for a breach of contract claim, resulting in the bifurcation of the two claims.

Judge Self issued the ruling in Omni Health Solutions, LLC v. Zurich American Insurance Co, 2018 WL 4701791 (DC Ga. October 1, 2018), a case in which Zurich and the insured disputed the extent of the covered hail damage to the insured's roof. During discovery, the insured requested Zurich "'identify all documents created by each of Zurich's agents in adjusting or inspecting the property'" and produce "'[c]opies of all adjuster logs, internal communications, taped or recorded statements, engineering reports and other documents and records relating to the Property.'" Zurich responded advising that it possessed claims notes, but refused to produce them, claiming in its motion for a protective order that the claims notes were protected by the work-product doctrine. Zurich argued that claims notes created after it believed there was a strong possibility of litigation were notes created in "anticipation of litigation." The insured demanded production on the grounds that the claims notes were created in the ordinary course of business, and thus were not prepared in anticipation of litigation. The insured further argued that only those created "because of the litigation" were prepared in anticipation of litigation.

In light of the parties' positions, Judge Self held that the Court must determine "whether (and which of) [Zurich's] claims note were prepared in anticipation of litigation. If any of the claims notes were prepared in anticipation of litigation, the Court must then determine whether [the insured] has a substantial need for the claim notes and cannot, without undue hardship, obtain the information within those documents from some other source. If so, the Court must finally determine which claims notes – if any – contain mental impressions, conclusions, opinions, or legal theories, all of which are undiscoverable."

As Judge Self noted, whether a document is prepared in anticipation of litigation is a complicated issue in the insurance disputes.  In Underwriters Ins. Co. v. Atlanta Gas Light Co., 248 F.R.D. 663 (N.D. Ga. 2008), the District Court found that insurance claim files:

generally do not constitute work product in the early states of investigation, when the insurance company is primarily concerned with deciding whether to resist the claim, to reimburse the insured and seek subrogation ... or to reimburse the insured and forget about the claim thereafter. Once the litigation is imminent, however, the claims investigation file is maintained in anticipation of litigation and its contents are protected by the work product doctrine.

Id. at 667.  According to Judge Self, "the true, objective determination is at what point litigation [becomes] "imminent" as opposed to merely possible or part of the abstract atmosphere.

With regard to Zurich's claims notes, Judge Self held that the "objective date" that Zurich had a reasonable anticipation of litigation was the date on which the insured invoked the approval provision of the policy. It was that date in which the insured "formally acknowledged that he wished to dispute the claim ... and [the parties'] joint efforts to resolve the claim were indeed at an impasse." The Court held that when the insured invoked appraisal, Zurich was "primarily" concerned with either resisting the claim, reimbursing the insured and seeking subrogation or reimbursing the insured and forgetting about the claim. According, Judge Self ordered Zurich to produce all claims notes prepared prior to the date the insured invoked appraisal.

The Court then considered whether the insured had a substantial need for the post-appraisal invocation claims notes because to prepare its case, the insured could not without, "undue hardship, obtain their substantial equivalent by other means" citing Rule 26(b)(3)(A)(ii) of the Federal Rules of Civil Procedure. Zurich contended the insured could obtain the substantial equivalent by the voluminous documents produced as well as in certain testimony provided by company representatives. The insured disagreed, noting that one of the company representatives repeatedly testified that he could not recall "most of the information" regarding the insured's claim.

Judge Self held that there was a substantial need for the claims notes, but only to the insured's claim for bad faith, not to the claim for breach of contract. The judge followed the rationale applied by the court in Underwriters that bad faith claims can only be proved by discovering how an insurer handled the claim, and therefore, the information in claims files is "not only substantial, but overwhelming." Underwriters Ins. Co, supra at 668. As a result, Judge Self ordered bifurcation of the breach of contract claim and the bad faith claim. Once the breach of contract claim is resolved, "and not before that time" Judge Self ordered that the claims notes created after appraisal, which were created in anticipation of litigation, but would not be produced until the parties proceed with the bad faith claim.

Judge Self's decision does not put the nail in the coffin on an insurer's objections to producing documents prepared in anticipation of litigation.  The decision merely provides an opening for insureds to overcome some insurer's objections based on the work doctrine privilege. Despite that opening, an insurer can delay production by seeking bifurcation of the bad faith claim and withholding discovery of documents prepared in anticipation of litigation until if, and when, the bad faith claim proceeds following the resolution of the breach of contract claim.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions