[Cite as Loukinas v. State Farm Mut. Auto. Ins. Co., 2019-Ohio-3300.]



                          IN THE COURT OF APPEALS
                 FIRST APPELLATE DISTRICT OF OHIO
                           HAMILTON COUNTY, OHIO




STEPHEN LOUKINAS, Individually :                            APPEAL NO. C-180462
and as Parent and Next Friend of his                        TRIAL NO. A-1504183
minor children, Stephen, Jr., Bradyn, :
Hailey, and Austin Loukinas,
                                        :                        O P I N I O N.
JOYCE LOUKINAS, Individually and
as Parent and Next Friend of her minor :
children, Stephen, Jr., Bradyn, Hailey,
and Austin Loukinas,                    :

BRADYN LOUKINAS,                                 :

HAILEY LOUKINAS,                                 :

AUSTIN LOUKINAS,                                 :

    and                                          :

STEPHEN LOUKINAS, JR.,                           :

        Plaintiffs-Appellees,                    :

  vs.                                            :

STATE    FARM                  MUTUAL            :
AUTOMOBILE                  INSURANCE
COMPANY,                                         :

     Defendant-Appellant.                        :




Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed in Part and Reversed in Part

Date of Judgment Entry on Appeal: August 16, 2019
                OHIO FIRST DISTRICT COURT OF APPEALS




Loeb, Vollman & Friedmann and Mark C. Vollman, for Plaintiffs-Appellees,

Gallagher, Gams, Pryor, Tallan & Littrell L.L.P., Mark H. Gams and James R.
Gallagher, for Defendant-Appellant.




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MYERS, Presiding Judge.

       {¶1}   State Farm Mutual Automobile Insurance Company (“State Farm”)

appeals the trial court’s order granting in part the motion to compel discovery by the

plaintiffs-appellees in their action for a declaratory judgment, breach of contract, and

bad-faith handling of their uninsured-motorist claim.

                                      Background


       {¶2}   Plaintiff-appellee Stephen Loukinas was injured in an automobile

accident with an uninsured motorist on January 12, 2010. On January 4, 2013,

Loukinas and his wife Joyce Loukinas, individually and on behalf of their four

children, initiated a declaratory judgment action against State Farm, Stephen’s

automobile liability insurance carrier, upon its refusal to pay his claim for uninsured-

motorist coverage. The plaintiffs dismissed the action without prejudice in October

2014, and refiled it in August 2015. In the refiled action, in addition to seeking a

declaration of their rights under the insurance policy, the plaintiffs sought

compensatory and punitive damages for breach of contract and for breach of the duty

to act in good faith in handling their claim.

       {¶3}   State Farm filed a motion to bifurcate the bad-faith cause of action and

claim for punitive damages (what it termed the “non-contractual claims”) from the

declaratory-judgment and breach-of-contract causes of action (what it termed the

“contractual insurance coverage portion of the case”), and to stay all discovery

regarding the bad-faith and punitive-damages claims until after the trial of the

contractual-insurance-coverage claims. After the trial court denied the motion, State

Farm appealed.      We dismissed the appeal for lack of jurisdiction upon our

determination that the trial court’s order denying State Farm’s motion to bifurcate

and to stay discovery was not a final, appealable order. See Loukinas v. State Farm

Mut. Auto. Ins. Co., 1st Dist. Hamilton No. C-160311 (Sept. 9, 2016).



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       {¶4}    Then the plaintiffs filed a motion to compel discovery of State Farm’s

entire claims file and to compel the depositions of State Farm’s claims

representatives. State Farm filed a motion for a protective order regarding its claims

file and the testimony of its claims representatives.          Thereafter, the case was

reassigned to another trial judge.

       {¶5}    State Farm asked the new trial judge to reconsider the previous judge’s

rulings on its motion to bifurcate and to stay discovery.       State Farm provided the

plaintiffs a redacted copy of the claims file as well as a privilege log that identified the

redacted items and the reasons that the items were redacted. In addition, State Farm

gave the trial court an unredacted copy of the claims file so that it could conduct an

in camera review.

       {¶6}    The trial court granted State Farm’s motion to bifurcate the bad-faith

claim from the underlying declaratory-judgment and breach-of-contract claims. The

court found that bifurcation was appropriate because the bad-faith cause of action

hinged upon “an initial determination of coverage.” The court determined that

“before a jury can assess whether State Farm has unfairly evaluated Mr. Loukinas’s

claim, purposely delayed processing his claim, or offered unreasonably low

settlements as alleged in the bad faith cause of action,” the issue of coverage must

first be adjudicated.

       {¶7}    After an in camera review, the trial court also granted State Farm’s

motion to stay discovery on the bad-faith claim pending the outcome of the

underlying declaratory-judgment and breach-of-contract claims.                  The court

recognized that State Farm’s ability to defend the underlying claims would be

inhibited by a release of claims file materials containing privileged or work-product

protected materials related to the bad-faith claim.

       {¶8}    The trial court also granted in part and denied in part the plaintiffs’

motion to compel discovery. The court denied the motion to compel with respect to


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some of the documents identified in State Farm’s privilege log as being either

“attorney-client privileged” or “work product.”

       {¶9}    However, despite its stay on discovery related to the bad-faith claim,

the court ordered State Farm to immediately turn over to the plaintiffs all

documents, created prior to January 4, 2013 (the filing date of the plaintiffs’ first

complaint), identified as work product. The court ordered State Farm to turn over

any item identified by State Farm as an “evaluation,” that was “created by claims

representatives at any time.” The court found that the evaluations were “relevant to

the issue of coverage and may cast light on the bad faith cause of action.”

       {¶10} The court also ordered State Farm to turn over several documents only
after the adjudication of the declaratory-judgment and breach-of-contract claims,

because they were “not relevant to the declaratory action,” but “may, however, cast

light on the bad faith cause of action.” These included a document identified in the

privilege log as “[e]valuation, work product, attorney-client privileged,” and five

documents identified in the log as “[c]reated after lawsuit filed, work product,

evaluation.”

       {¶11} With respect to the depositions of State Farm claims representatives,
the court ordered the following:

       Just like the issue of the claims file materials, all discovery relating to

       the claims representatives on matters that occurred up until January

       4, 2013, are not subject to work product doctrine. Further, testimony

       of the claims representatives regarding the method of evaluation may

       be relevant to the declaratory action as no denial of coverage ever

       occurred. The testimony of the claims representatives regarding the

       method for processing claims may be relevant to the declaratory

       action, may cast light on the bad faith cause of action, and is

       discoverable as an exception to any attorney-client privilege that could


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       be asserted. Therefore [c]laims representatives may be compelled to

       testify as to any evaluations made at any point in Mr. Loukinas’s claim

       and any methods of claims processing used up until January 4, 2013 in

       Mr. Loukinas’s claim.

       {¶12} Finally, the court ordered that State Farm submit an amended
privilege log as to items identified as having been “[c]reated after lawsuit filed,”

because the items were insufficiently described for the court to assess the asserted

privilege or work-product protection. The court ordered State Farm to “list each file

note withheld individually, and provide not only the protection or privilege invoked

(i.e., work product, attorney-client privileged, not relevant to the declaratory action,

etc.), but also describe the item and explain the reason for withholding it so that this

[c]ourt can assess State Farm’s claims of privilege or protection.” The amended

privilege log and the court’s order addressing the items in the amended log are not

before us.

       {¶13} State Farm now appeals the trial court’s order granting in part the
plaintiffs’ motion to compel and denying in part its motion to stay discovery on the

plaintiffs’ bad-faith claim.   The plaintiffs did not appeal either the trial court’s

bifurcation order or its discovery order.

                                     Jurisdiction


       {¶14} First, we must determine whether we have jurisdiction over this
appeal. Our jurisdiction is limited to the review of final judgments of lower courts.

Ohio Constitution, Article IV, Section 3(B)(2); R.C. 2505.03(A). Before this court

can exercise jurisdiction over an appeal, the order of the lower court must meet the

finality requirements of R.C. 2505.02. State Farm argues that the order in this case

is final under R.C. 2505.02(B)(4).




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       {¶15} Under R.C. 2505.02(B)(4), an order that grants or denies a provisional
remedy is a final order if (a) “[t]he order in effect determines the action with respect

to the provisional remedy and prevents a judgment in the action in favor of the

appealing party with respect to the provisional remedy,” and (b) “[t]he appealing

party would not be afforded a meaningful or effective remedy by an appeal following

final judgment as to all proceedings, issues, claims, and parties in the action.”

       {¶16} Generally, discovery orders by a trial court are neither final nor
appealable. Summitbridge Natl. Invests., L.L.C. v. Ameritek Custom Homes, Inc.,

1st Dist. Hamilton No. C-120476, 2013-Ohio-760, ¶ 6. But a proceeding for discovery

of privileged matter is a “provisional remedy” within the meaning of R.C.

2505.02(A)(3). Smith v. Chen, 142 Ohio St.3d 411, 2015-Ohio-1480, 31 N.E.3d 633, ¶

5.

       {¶17} The plaintiffs argue that the court’s order does not involve a
provisional remedy because State Farm has failed to establish that any of the

requested documents contain privileged information.          However, a party is not

required to conclusively prove the existence of privileged matter as a precondition to

appellate review under R.C. 2505.02(B)(4). Byrd v. U.S. Xpress, Inc., 2014-Ohio-

5733, 26 N.E.3d 858, ¶ 12 (1st Dist.). “To impose such a requirement would force an

appellate court ‘to decide the merits of an appeal in order to decide whether it has the

power to hear and decide the merits of an appeal.’ ” Id., quoting Bennett v. Martin,

186 Ohio App.3d 412, 2009-Ohio-6195, 928 N.E.2d 763, ¶ 35 (1oth Dist.). Instead, a

party need only make a “colorable claim” that materials subject to discovery are

privileged in order to qualify as a provisional remedy.        Id.   Because there is a

colorable claim that at least some of the information for which State Farm seeks

protection is privileged information, we hold that the order qualifies as a provisional

remedy. See id.




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       {¶18} Next, we must consider whether the order determines the action with
respect to the provisional remedy and prevents a judgment in favor of State Farm,

the appealing party, with respect to the provisional remedy.                See R.C.

2505.02(B)(4)(a).   In its motion for a protective order and in response to the

plaintiffs’ motion to compel, State Farm asserted that it should not be ordered to

disclose work product, evaluations, defense strategies, or any information protected

by attorney-client privilege.   Because the effect of the trial court’s order is that

privileged or protected information will be disclosed, the order has determined the

action with respect to the provisional remedy. “Any order compelling the production

of privileged or protected materials certainly satisfies R.C. 2505.02(B)(4)(a) because

it would be impossible to later obtain a judgment denying the motion to compel

disclosure if the party has already disclosed the materials.” Burnham v. Cleveland

Clinic, 151 Ohio St.3d 356, 2016-Ohio-8000, 89 N.E.3d 536, ¶ 21.

       {¶19} Finally, we must consider whether State Farm would be able to obtain
meaningful relief by an appeal following the entry of final judgment.        See R.C.

2505.02(B)(4)(b).   State Farm seeks to prevent the disclosure of privileged and

protected information. Because the trial court’s order compels the production of

material allegedly protected as work product and by the attorney-client privilege, the

order satisfies R.C. 2505.02(B)(4)(b) because there is no effective remedy other than

an immediate appeal. Burnham at ¶ 25.

       {¶20} Accordingly, State Farm has demonstrated that we have jurisdiction to
entertain the appeal.

                                The Merits of the Appeal


       {¶21} We now turn to the merits of the appeal. In a single assignment of
error, State Farm argues that the trial court erred in denying in part State Farm’s

motion to stay discovery, in granting the plaintiffs’ motion to compel discovery of



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State Farm’s evaluations contained in the claims file, and in compelling State Farm

personnel to testify regarding State Farm’s evaluation of the plaintiffs’ claim. Where,

as here, a trial court’s discovery order involves an alleged privilege, we review the

order de novo. Ward v. Summa Health Sys., 128 Ohio St.3d 212, 2010-Ohio-6275,

943 N.E.2d 514, ¶ 13.

        {¶22} State Farm argues that “[w]hen the insured and insurer disagree over
the value of an uninsured motorist claim, all documentation such as evaluations and

depositions of claims people regarding the evaluations of the uninsured motorist

claim should be stayed until the uninsured motorist claim has been decided by the

trier of facts.”

        {¶23} In Boone v. Vanliner, 91 Ohio St.3d 209, 213-214, 744 N.E.2d 154
(2001), the Supreme Court of Ohio held that:

                   [I]n an action alleging bad faith denial of insurance coverage,

        the insured is entitled to discover claims file materials containing

        attorney-client communications related to the issue of coverage that

        were created prior to the denial of coverage.

        {¶24} Ohio courts have held that Boone’s rationale extends to work-product
materials, such that both attorney-client materials and work-product materials are

subject to disclosure during discovery on bad-faith claims. Garg v. State Auto. Mut.

Ins. Co., 155 Ohio App.3d 258, 2003-Ohio-5960, 800 N.E.2d 757, ¶ 16 (2d Dist.);

DeVito v. Grange Mut. Cas. Co., 2013-Ohio-3435, 996 N.E.2d 547, ¶ 5, 9 (8th Dist.).

        {¶25} In Boone, the Supreme Court recognized that the release of work
product or attorney-client privileged materials related to the issue of coverage might

inhibit an insurer’s ability to defend itself on the underlying claim. Boone at 214.

The court suggested that, in such a situation, the trial court “may issue a stay of the

bad faith claim and related production of discovery pending the outcome of the

underlying claim.” Id.


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       {¶26} State Farm acknowledges that otherwise protected attorney-client
communications and work-product materials are discoverable with respect to the

bad-faith claims.    State Farm contends, however, that it cannot simultaneously

prepare and present a defense to the underlying uninsured-motorist claim if it is

required to turn over its claims file materials containing its evaluations and

strategies for defending the underlying case.

       {¶27} State Farm directs us to post-Boone decisions of the Second and
Eighth Districts that held a trial court acted unreasonably in denying a stay of

discovery with regard to attorney-client communications or work-product

documents relating to a bad-faith claim, pending resolution of the underlying

breach-of-contract claim, because allowing discovery to proceed on the bad-faith

claim would be prejudicial to the insurer. See Garg, 155 Ohio App.3d 258, 2003-

Ohio-5960, 800 N.E.2d 757; DeVito, 2013-Ohio-3435, 996 N.E.2d 547. We are

persuaded by the reasoning in Garg and DeVito regarding the likelihood of prejudice

to an insurer resulting from the disclosure of privileged or protected materials before

the resolution of the underlying claims.

       {¶28} In DeVito, the Eighth District held that allowing discovery to proceed
on the bad-faith claim would inhibit the insurer’s ability to defend the underlying

breach-of-contract claim and would be “highly prejudicial” to the insurer. In Garg,

the Second District held that the plaintiffs were not entitled to discover the insurance

company’s attorney-client communications and work-product materials for purposes

of their underlying breach-of-contract and unfair-claims-practices claims, absent

waiver of those privileges. Garg at ¶ 29. The court reasoned that:

       Although [correspondence containing Grange’s attorney’s analysis of

       the factual investigation of the claim and of the defense of arson] may

       cast light on whether Grange acted in bad faith in handling the Gargs’

       claim and, thus, is discoverable for purposes of the bad-faith claim, it


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       is also highly relevant to Grange’s defense of the breach-of-contract

       and unfair-claims-practices claims. To require Grange to divulge its

       otherwise privileged information prior to a resolution of those other

       claims would unquestionably impact Grange’s ability to defend against

       them.

Id.

       {¶29} Similarly, in Brummitt v. Seeholzer, 6th Dist. Erie No. E-13-035, 2015-
Ohio-71, ¶ 30-32, the Sixth District held that the trial court did not err by denying the

plaintiffs’ motion to compel discovery of an insurance claims file where the insurer

alleged that it would be prejudiced by discovery of the claims file “because it contains

defense theories and strategies including documentations and evaluations.”

       {¶30} We hold, therefore, that the plaintiffs are not entitled to discover the
materials protected by the work-product doctrine or attorney-client privilege in State

Farm’s claims file for purposes of their declaratory-judgment and breach-of-contract

claims. Although these documents may cast light on whether State Farm acted in

bad faith in handling the plaintiffs’ claim and, thus, are discoverable for purposes of

the bad-faith claim, they retain their privileged status for the underlying claims.

       {¶31} Requiring State Farm to divulge its otherwise protected information
prior to a resolution of those other claims would undoubtedly affect State Farm’s

ability to defend against them, and would, as State Farm contends, render the

bifurcation order “toothless.”    Accordingly, we hold that, where the trial court

bifurcated the bad-faith claim from the underlying claims, the court erred by

compelling State Farm to disclose materials protected by the work-product doctrine

or attorney-client privilege contained in its claims file and compelling the

depositions of its representatives about these materials prior to the resolution of the

declaratory-judgment and breach-of-contract claims.




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                                       Conclusion


       {¶32} Consequently, we sustain the sole assignment of error. We reverse the
trial court’s judgment to the extent that it compelled State Farm to disclose, prior to

the resolution of the underlying declaratory-judgment and breach-of-contract

claims, the materials protected by the work-product doctrine or attorney-client

privilege in its claims file and the depositions of its representatives regarding those

materials. In all other respects, the judgment of the trial court is affirmed.

                                                                   Judgment accordingly.


CROUSE and WINKLER, JJ., concur.



Please note:

       The court has recorded its own entry on the date of the release of this opinion.




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