Insurance Coverage: Celani v. Allstate Indem. Co. (N.Y. App. Div., 4th Dept.)
December 31, 2017
In Celani, the plaintiff sought coverage under her father’s homeowners policy for her bodily injuries sustained in connection with an accidental shooting involving a gun owned by the named insured father. Allstate disclaimed coverage on the basis that bodily injury to an “insured person” was not covered and the daughter qualified as an “insured person” because she was a relative of her father and a “resident” of the father’s household. Plaintiff filed suit and moved to compel the disclosure of Allstate’s entire claim file, including a pre-disclaimer coverage opinion authored by outside counsel, pre-disclaimer claim notes related to that coverage opinion, Allstate’s claim manual, and information concerning Allstate’s reserves for the accident. The Supreme Court, Erie County, granted the motion to compel and denied Allstate’s cross-motion for a protective order.
The Fourth Department reversed and modified the Supreme Court’s order, holding that the coverage evaluation and the related claim notes were “absolutely privileged” and that the Supreme Court abused its discretion in ordering their production. Specifically, the Fourth Department held the coverage evaluation was privileged because it was a document of primarily legal character prepared by an attorney made to furnish legal services, and confirmed that the privilege existed regardless of the fact that there was no litigation pending at the time counsel’s opinion was rendered. The Fourth Department further held that Allstate’s reserve information was not discoverable because it was not “material and necessary” to the coverage action. Finally, the Fourth Department held the Supreme Court abused its discretion in ordering the production of Allstate’s claim manual, as an Allstate employee had testified that the manual did not define the term “resident” and therefore the Court should have reviewed the claim manual in camera to determine whether it was relevant to the issues in the coverage action.