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COREGIS INSURANCE CO. v. LAW OFFICES OF CAROLE KAFRISSEN

February 11, 2002

COREGIS INSURANCE CO., PLAINTIFF,
V.
LAW OFFICES OF CAROLE F. KAFRISSEN, P.C., ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Eduardo C. Robreno, J.

MEMORANDUM

The issue before the court is whether under Pennsylvania law the attorney-client privilege protects communications from the client to the lawyer only, or whether it extends also to communications from the lawyer to the client, even though disclosure of the communications from the lawyer to the client will not reveal the client's communications to the lawyer.

I

The instant case involves an action by an insured against her insurer for bad faith in the prosecution and denial of certain insurance benefits under a professional insurance liabilities policy. The defendant, a lawyer, was sued by a client for malpractice. The underlying case was settled by the insurer with the lawyer's client. It is the circumstances of the settlement, the particulars of which are not relevant for the purposes of the instant matter, which give rise to the lawyer's claim for bad faith presently before the court.

During discovery in the bad faith litigation, the lawyer requested, inter alia, production of the claims file. Coregis, the plaintiff and the insurer herein, produced a number of documents, but objected to the production of one document prepared by a claims representative, as well as five documents referenced in that memorandum, on the basis that the six documents were cloaked with the protection of the doctrine of work product or the attorney-client privilege. It is these six documents that are at issue before the court.

The parties' initial submissions on the issue treated the work product doctrine and the attorney-client privilege interchangeably as either applying or not applying to all six documents. The court, after an in camera review, determined that four of the documents were not protected by the work product doctrine and ordered their production. The court also determined that the remaining two documents, communications between outside counsel and Coregis, were potentially entitled to the protection of the attorney-client privilege. However, the court found that under Pennsylvania law the attorney-client privilege applied only to communications by the client to the lawyer, and communcations from the lawyer to the client were protected only to the extent that disclosure would reveal communications of the client to the attorney. The court thus ordered the two documents to be submitted to the court in camera, together with Coregis' proposed redactions of those portions of the communications from the lawyer to the client which Coregis believed, that if disclosed, would reveal the client's communications. Without producing the four documents ordered produced to the defendant, nor producing the two remaining documents for in camera inspection, Coregis took an appeal to the Third Circuit.*fn1

Defendant has now moved the court to have the court declare the appeal frivolous, order production of the documents forthwith, and proceed to trial, or, in the alternative, to stay the trial until the Third Circuit reaches the issue of the applicability of the work product doctrine and the attorney-client privilege to the requested documents. Coregis opposes the motion and for the first time argues that under the Third Circuit's authority of In re Ford Motor Co., 110 F.3d 954 (3d Cir. 1997), the previous decision of the court ordering in camera production of the two documents as to which Coregis claims attorney-client privilege was incorrect, and that no in camera inspection is needed since all communications contained in the documents are privileged without further inquiry.

II

A.

Under Federal Rule of Evidence 501, a federal court sitting in a diversity must look to state law for the applicable legal rule on issues of privilege. See Fed.R.Evid. 501; United Coal Co. v. Powell Constr. Co., 839 F.2d 958, 965 (3d Cir. 1988). The Pennsylvania rule on attorney-client privilege has been codified for nearly 125 years. See 1976 Pa. Laws 586, No. 142, § 2; 1887 Pa. Laws 158, No. 89, § 5(d). The statute in its current form provides:

In a civil matter counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall the client be compelled to disclose the same, unless in either case this privilege is waived upon the trial by the client.

42 Pa. C.S.A. § 5928.

By its very terms, the statute cloaks with privilege communications from the attorney to the client but does not extend an equal and full protection to those communications flowing from the lawyer to the client. The apparent one-sidedness of the Pennsylvania statute on attorney-client privilege is not a matter of whim or oversight, but rather it is based on sound policy judgments. As the Pennsylvania Supreme Court explained:

The purpose and necessities of the relation between a client and his attorney require, in many cases, on the part of the client, the fullest and freest disclosures to the attorney of the client's objects, motives and acts. This disclosure is made in the strictest confidence, relying upon the attorney's honor and fidelity. To permit the attorney to reveal to others what is disclosed, would be not only a gross violation of a sacred trust upon his part, but would utterly destroy and prevent the usefulness and benefit to be derived from professional assistance. Based upon considerations of public policy, therefore, the law wisely declares that all confidential communications and disclosures, made by a client to his legal advisor for the purpose of obtaining his professional aid or advice, shall be strictly privileged; ...


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