[Cite as DeMarco v. Allstate Ins. Co., 2014-Ohio-933.]


                  Court of Appeals of Ohio
                                EIGHTH APPELLATE DISTRICT
                                   COUNTY OF CUYAHOGA

                               JOURNAL ENTRY AND OPINION
                                       No. 100192


                                ELIZABETH DeMARCO

                                                               PLAINTIFF-APPELLEE

                                                         vs.

                    ALLSTATE INSURANCE CO., ET AL.

                                                               DEFENDANTS-APPELLANTS

                                            JUDGMENT:
                                             AFFIRMED


                                      Civil Appeal from the
                             Cuyahoga County Court of Common Pleas
                                    Case No. CV-12-789067

        BEFORE: Jones, P.J., E.A. Gallagher, J., and Kilbane, J.

        RELEASED AND JOURNALIZED: March 13, 2014
ATTORNEYS FOR APPELLANT

For Allstate Insurance

Adam E. Carr
The Carr Law Office, L.L.C.
5824 Akron-Cleveland Road
Suite A
Hudson, Ohio 44236

For Jerome Chavez, Jr.

Jerome Chavez, Jr., pro se
Inmate #A634-088
c/o Warden Terry Tibbals
P.O. Box 788
Mansfield, Ohio 44901

For Tracy Schmidt

Tracy Schmidt, pro se
7803 Pelham Drive
Parma, Ohio 44129


ATTORNEYS FOR APPELLEE

Michael D. Goldstein
Goldstein & Goldstein Co., L.P.A.
55 Public Square
Suite 2075
Cleveland, Ohio 44113

Steven M. Weiss
Law Offices of Steven M. Weiss
55 Public Square
Suite 1055
Cleveland, Ohio 44113
LARRY A. JONES, SR., P.J.:

       {¶1} Defendant-appellant Allstate Insurance Company appeals from the trial court’s

July 9, 2013 judgment finding that five discovery requests made by plaintiff-appellee

Elizabeth DeMarco were not privileged.       We affirm.

                              I. Procedural History and Facts

       {¶2} In December 2010, DeMarco was involved in an automobile accident with

defendant-appellant Jerome Chavez, Jr.          Chavez was driving a vehicle owned by

defendant-appellant Tracy Schmidt.       At the time of the accident, neither Chavez nor

Schmidt had automobile insurance;1 DeMarco was insured by Allstate.

       {¶3} In August 2012, DeMarco initiated this action against Allstate, Chavez, and

Schmidt. At issue in this appeal is her action against Allstate. In her claims against the

company, DeMarco sought a declaration that she is legally entitled to recover damages

under her policy for uninsured/underinsured motorist coverage.         DeMarco also sought a

declaration regarding the rights and responsibilities of the parties vis-à-vis Allstate’s rights

of subrogation and/or reimbursement.

       {¶4} Further, DeMarco alleged that Allstate has “refused to fully compensate” her

and that said refusal “constitutes a breach of the terms and conditions of [her policy with

Allstate] and a breach of it[s] implied covenant to perform its obligations under the

contract in good faith.” Complaint, ¶ 33 and 34.



       This fact was established through the trial court’s judgment on DeMarco’s partial summary
       1

judgment motion.
       {¶5} Allstate filed a motion to bifurcate and stay discovery.      In its motion, the

company contended that DeMarco had not alleged a bad faith claim, but nonetheless

sought to bifurcate DeMarco’s “claims for bad faith and punitive damages from the

underlying claim for uninsured/underinsured motorist coverage.”

       {¶6} Allstate also filed a motion for a protective order, “prohibiting [DeMarco]

from enforcing a notice of deposition that seeks only information related to Allstate’s

investigation and defense of this claim and not any of the underlying facts.” Allstate

maintained in its motion that such information was protected by work-product and

attorney-client privileges.

       {¶7} DeMarco opposed both motions. Relative to the motion for a protective

order, DeMarco contended that her Civ.R. 30(B)(5) deposition notice sought (1)

non-privileged information to support her claims and (2) non-privileged information

“concerning the basis of Allstate’s numerous and frivolous denials.”        As examples of

such denials, DeMarco referred to Allstate’s answer, wherein it denied that DeMarco was

an insured under the policy and that her vehicle was an insured vehicle under the policy.

Allstate also denied in its answer that Chavez and Schmidt were uninsured.

       {¶8} Relative to Allstate’s motion to bifurcate and stay discovery, DeMarco

contended that it was illogical for Allstate to argue that she had not alleged a bad faith

claim, but then seek to bifurcate the claim.

       {¶9} In its reply, Allstate maintained that DeMarco had not “actually asserted any

claims for bad faith * * * [and] [t]hus, she is not entitled to discovery in the first place.
The issue of bifurcation and discovery ought to be moot.”

       {¶10} The trial court denied Allstate’s request to bifurcate the bad faith claim,

stating that because Allstate had maintained that there was no bad faith claim, there was

nothing in that regard to bifurcate.     The trial court denied in part, and granted in part,

Allstate’s request for a protection order.    Specifically, the court denied the motion as it

pertained to the following:

       (1) Allstate’s investigation as to whether the subject Allstate policy provides
       coverage for DeMarco’s uninsured motorist claim;

       (2) The manner in which Allstate evaluated DeMarco’s claim and how it
       arrived at the amount of the final settlement offer made to settle the claim;

       (3) The identity (names, work addresses, and present place of employment)
       of all persons who assisted in any way in calculation of the amount of the
       final settlement offer Allstate made to settle the claim, including the identity
       of every person that is a physician or nurse who participated in the
       evaluation of the claim;

       (4) Everything Allstate did to determine if Chavez was insured under an
       automobile liability insurance policy or SR-22 bond on the date of the
       accident;

       (5) Everything Allstate did to determine if the vehicle Chavez was operating
       at the time of the collision was insured under an automobile liability
       insurance policy or SR-22 bond.

       {¶11} Allstate’s sole assignment of error reads: “The trial court erred in denying

Allstate’s motion for a protective order for privileged matters related to Allstate’s

investigation and defense of the claim.”

                                   II.   Law and Analysis

Standard of Review
       {¶12} We first address the standard of review; Allstate contends we review de

novo, while DeMarco contends we review for an abuse of discretion.

       {¶13} Ordinarily, a discovery dispute is reviewed under an abuse-of-discretion

standard. Tracy v. Merrell Dow Pharmaceuticals, Inc., 58 Ohio St.3d 147, 151-152, 569

N.E.2d 875 (1991). However, if the discovery issue involves an alleged privilege, as in

this case, it is a question of law that must be reviewed de novo.      Med. Mut. of Ohio v.

Schlotterer, 122 Ohio St.3d 181, 2009-Ohio-2496, 909 N.E.2d 1237, ¶ 13; see also Carter

v. Gestalt Inst. of Cleveland, Inc., 8th Dist. Cuyahoga No. 99738, 2013-Ohio-5748, ¶ 18.

Protective Orders

       {¶14} The burden of showing that testimony or documents are privileged rests with

the party seeking to exclude it. Covington v. The MetroHealth Sys., 150 Ohio App.3d

558, 2002-Ohio-6629, 782 N.E.2d 624, ¶ 24 (10th Dist.).              Civ.R. 26(C) governs

protective orders and provides in pertinent part as follows:

       Upon motion by any party or by the person from whom discovery is sought,
       and for good cause shown, the court in which the action is pending may
       make any order that justice requires to protect a party or person from
       annoyance, embarrassment, oppression, or undue burden or expense,
       including one or more of the following: * * * (4) that certain matters not be
       inquired into or that the scope of the discovery be limited to certain matters *
       * *.

Discovery from Insurer in Support of Bad Faith Claim and Attorney- Client
Privilege

       {¶15} “In an action alleging bad faith denial of insurance coverage, the insured is

entitled to discover the insurance company’s claims file materials containing

attorney-client communications related to the issue of coverage that were created prior to
the denial of coverage.”    Boone v. Vanliner Ins. Co., 91 Ohio St.3d 209, 744 N.E.2d 154

(2001), syllabus. Allstate contends that DeMarco did not allege a bad faith claim in her

complaint.   We disagree.

       {¶16} DeMarco alleged that Allstate has “refused to fully compensate” her, and that

said refusal “constitutes a breach of the terms and conditions of [her policy with Allstate]

and a breach of it[s] implied covenant to perform its obligations under the contract in good

faith.” Complaint, ¶ 33 and 34.

       {¶17} “An insurer’s lack of good faith in the processing of a claim is frequently

referred to as ‘bad faith.’”   Boone at 210, fn. 1 citing Hoskins v. Aetna Life Ins. Co., 6

Ohio St.3d 272, 452 N.E.2d 1315 (1983), paragraph one of the syllabus; see also Slater v.

Motorists Mut. Ins. Co., 174 Ohio St. 148, 644 N.E.2d 397 (1962) (“A lack of good faith is

the equivalent of bad faith * * *.”), overruled on other grounds, Zoppo v. Homestead Ins.

Co., 71 Ohio St.3d 552, 644 N.E.2d 397 (1994).

       {¶18} DeMarco alleged a lack of good faith.      In light of the above, she, therefore,

alleged that Allstate acted in bad faith.   We are not persuaded by Allstate’s contention

that the trial court’s judgment denying its request to bifurcate, wherein the court stated that

there was no bad faith claim to bifurcate, established that DeMarco did not allege bad

faith. The trial court’s judgment merely pointed out the illogical nature of Allstate’s

request; that is, its request to bifurcate which it contends does not exist, despite Allstate

itself acknowledging DeMarco had a bad faith claim.

       {¶19} Accordingly, the attorney-client privilege did not bar DeMarco from
discovery in this case.

Work-Product Privilege

       {¶20} Allstate also contends that the subject discovery is protected under the

work-product privilege. The Ohio Supreme Court has defined work product as follows:

       Work product consists of “documents and tangible things prepared in
       anticipation of litigation or for trial by or for another party or by or for that
       other party’s representative” and may be discovered only upon a showing of
       good cause. Civ.R. 26(B)(3). * * * The purpose of the work-product
       doctrine is “to prevent an attorney from taking undue advantage of his
       adversary’s industry or efforts.”

Boone at id., fn. 2, quoting Civ.R. 26.

       {¶21} According to Allstate, its claims file was “by definition ‘prepared in

anticipation of litigation’ [and] * * * DeMarco cannot obtain this information without

showing ‘good cause.’” DeMarco on the other hand contends that the subject discovery

was relative to Allstate’s pre-suit evaluation of the case.

       {¶22}    We disagree with Allstate’s position that, by definition, its claims file was

prepared in anticipation of litigation.      Allstate’s business is providing insurance to

insureds for a premium.     Whenever an insured makes a claim, Allstate, in the ordinary

course of business, opens a file for the claim. “[A]n insurance company has a routine

duty to investigate accidents and, thus, such materials generated are not prepared in

anticipation of litigation but prepared in the ordinary course of business.”      Roggelin v.

Auto-Owners Ins., 6th Dist. Lucas No. L-02-1038, 2002-Ohio-7310, ¶ 15.

       {¶23} That is not to say that an insurance company’s claims file can never be

protected under the work-product doctrine.
       In determining whether the material are prepared in the ordinary course of
       business or are work product prepared in anticipation of litigation, the facts
       of each case must be carefully reviewed because “at a certain point an
       insurance company’s activity shifts from the ordinary course of business to
       anticipation of litigation.” (Citations omitted.)

Id., quoting Tayler v. Travelers Ins. Co., 183 F.R.D. 67, 71 (N.D.N.Y.1998).

       {¶24} But on the record before us, the discovery request related to Allstate’s

pre-suit evaluation of the case and, thus, was not protected under the work-product

privilege.

       {¶25} In light of the above, the trial court did not err in denying Allstate’s motion

for a protective order relative to the subject discovery request.     Its sole assignment of

error is, therefore, overruled.

       {¶26} Judgment affirmed.

       It is ordered that appellee recover of appellant costs herein taxed.

       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate issue out of this court directing the Cuyahoga

County Court of Common Pleas to carry this judgment into execution.

       A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the

Rules of Appellate Procedure.




LARRY A. JONES, SR., PRESIDING JUDGE

EILEEN A. GALLAGHER, J., and
MARY EILEEN KILBANE, J., CONCUR
