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Nationwide Mutual Fire Insurance Co. v. Jones

Court of Appeals of Ohio, Fourth District, Scioto

May 31, 2017

NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Plaintiff-Appellant,
v.
MARK JONES, et al., Defendants-Appellees.

         CIVIL CASE FROM COMMON PLEAS COURT

          David G. Jennings and J. Stephen Teetor, Columbus, Ohio, and Brian L. Wildermuth, Dayton, Ohio, for appellant.

          Robert P. Rutter and Robert A. Rutter, Cleveland, Ohio, and Robert R. Miller and Rebecca D.L. Waigand, Wellston, Ohio, for appellees.

          DECISION & JUDGMENT ENTRY

          PETER B. ABELE, JUDGE.

         {¶ 1} This is an appeal from a Scioto County Common Pleas Court decision that denied a motion to stay discovery filed by Nationwide Mutual Fire Insurance Company, plaintiff below and appellant herein. Appellant raises the following assignments of error for review:

FIRST ASSIGNMENT OF ERROR:
"THE TRIAL COURT ERRED IN ITS ORDER AND DECISION OF AUGUST 26, 2015 BY FAILING TO STAY DISCOVERY ON DEFENDANT'S SEPARATE BAD FAITH TORT COUNTERCLAIMS WHICH WILL PREJUDICE NATIONWIDE BY ALLOWING DISCOVERY OF PRIVILEGED INFORMATION, ATTORNEY CLIENT COMMUNICATION AND WORK PRODUCT IN THE UNDERLYING CASE"
SECOND ASSIGNMENT OF ERROR:
"THE TRIAL COURT ERRED BY NOT PROPERLY AND EFFECTIVELY BIFURCATING THE UNDERLYING CONTRACT CASE AND BAD FAITH CASE BY ORDERING THAT THE SECOND BAD FAITH TRIAL COMMENCE WITH THE SAME JURY IMMEDIATELY AFTER THE UNDERLYING TRIAL, AND ALLOWING DISCOVERY TO PROCEED ON BOTH CLAIMS."

         {¶ 2} In March 2014, a fire destroyed a home that appellant insured and in which Mark and Erica Jones, defendants below and appellees herein, resided. Appellant subsequently filed a declaratory judgment and breach of contract action against appellees and requested the court to declare that appellees are not entitled to insurance coverage under the homeowner's insurance policy.[1] Appellant alleged that appellees intentionally set fire to the home, made false statements, and committed fraud. Appellant asserted that its policy precludes coverage for damages resulting from intentional acts, or when an insured (1) intentionally conceals or misrepresents any material fact or circumstance, or (2) commits fraud or makes false statements relating to the loss. Appellant thus claimed that its policy precludes coverage for appellees' loss.

         {¶ 3} Appellees answered and filed a counterclaim for breach of contract and bad faith. Appellees requested compensatory and punitive damages.

         {¶ 4} Appellant filed a combined motion to bifurcate and to stay discovery regarding appellees' bad faith claim until the contractual dispute was resolved. Appellees opposed appellant's motion. The trial court found that the parties had yet to engage in any discovery and denied appellant's motion as premature.

         {¶ 5} After appellees submitted discovery requests to appellant, appellant renewed its motion to bifurcate and to stay discovery. Appellant alternatively requested the court to issue a protective order. Appellant asserted that appellees requested privileged information. Appellant claimed that appellees sought to depose its trial counsel, who also took part in investigating appellees' loss. Appellant argued that deposing its trial counsel would breach its attorney-client privilege and disclose attorney work-product. To support its motion, appellant attached its trial counsel's affidavit. In it, he stated:

If the bad faith and punitive claims are not bifurcated and stayed, the defense of the underlying case will be prejudiced as disclosures of my privileged communications and work product would be divulged, and prejudice the preparation and prosecution of the declaratory judgment action. I would be effectively disqualified as counsel, as I would be a material witness on the bad faith defense.

         He continued that appellees "have directly requested my communications with Nationwide, which are protected from discovery by the attorney-client privilege. [Appellees] also seek to discover documents and information comprising my thoughts, impressions, analyses, and advice-all of which are protected by the attorney work product doctrine and Civil Rule 26." Appellant additionally attached its responses to appellees' discovery requests. Appellant objected to certain interrogatories and requests for production of documents and asserted: "[T]he interrogatory infringes upon the attorney-client privilege, the work product doctrine, and/or Civil Rule 26(B)(3). * * * * Privileged and work product protected documents are not even arguably discoverable during the first phase of a bifurcated case."

         {¶ 6} On August 26, 2015, the trial court granted, in part, appellant's motion to bifurcate, and denied appellant's motion to stay discovery. In partially granting appellant's motion to bifurcate, the court stated that it will try the declaratory judgment and breach of contract actions separately from the bad faith claim, and that the "phases will be tried back-to-back, one right after the other, and [the] jury shall remain the same." The court recognized appellant's claim that "allowing discovery to go forward on all claims will result in prejudice to Nationwide-including the requested deposition of its trial counsel * * * and the discovery of privileged information and work product, " and appellee's assertion "that they are entitled to the discovery now prior to the first phase." The court agreed with appellees and thus "denie[d appellant's] Motion to Stay discovery of privileged communications and work product." The court determined that the bifurcation "statute mandates bifurcation of the trial, not of discovery." The trial court did not specifically address appellant's alternative request for a protective order. This appeal followed.

         {¶ 7} Before we consider the merits of appellant's appeal, we first reconsider our jurisdiction to do so. This court previously determined that the court's decision concerning appellant's motion to bifurcate is not a final, appealable order, and that we thus lack jurisdiction to consider this part of the trial court's decision. Nationwide Mut. Fire Ins. Co. v. Jones, 2016-Ohio-513, 60 N.E.3d 448 (4th Dist). We do not find any need to reconsider this conclusion. We do, however, believe that the Ohio Supreme Court's intervening decision in Burnham v. Cleveland Clinic, __Ohio St.3d __, 2016-Ohio-8000, __N.E.3d __, requires that we reconsider our prior determination that the trial court's decision to deny appellant's motion to stay discovery is a final, appealable order.

         {¶ 8} In Burnham, the court considered whether "an order compelling the production of documents allegedly protected by the attorney-client privilege is a final, appealable order under R.C. 2505.02(B)(4)." Id. at ¶1. In Burnham, the trial court ordered the Cleveland Clinic to produce an incident report that the Clinic claimed was protected by the attorney-client ...


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