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New Jersey Court Recognizes Common Interest Between Surplus Lines Insurer and its Domestic Agent and Claims Adjuster and Applies Attorney Client Privilege

Blogs, UIM/UM

The Appellate Division of the New Jersey Superior Court recently recognized the common interest between a surplus lines insurer and its domestic agent and claims adjuster and reversed the trial court’s order directing the disclosure of sixteen documents listed on the adjuster’s privilege log. The Court found that, with one limited exception, the documents were shielded from disclosure by the attorney-client privilege and work product doctrine. Friedman Route 10, LLC v. Certain Underwriters at Loyd’s, London et al, 2014 WL 340087 (N.J. Super. A.D. 2014).

Certain Underwriters at Loyd’s, London (“Underwriters”) issued a surplus lines policy to Friedman Route 10, LLC (“Friedman”). Because Underwriters is not licensed to conduct business in New Jersey, the policy was issued through a surplus lines agent, Jimcor, Agency Inc (“Jimcor”). After a portion of its roof collapsed, Friedman filed an insurance claim with Underwriters. Underwriters hired the law firm of Powell & Roman, LLC (“Powell”) to provide a coverage opinion and legal analysis with respect to the claim, as well as an independent claims adjuster, Raphael & Associates (“Raphael”), to investigate and adjust Friedman’s claim. Ultimately, Friedman brought suit against Underwriters with respect to the claim. Raphael and Jimcor were later added as defendants.

During the litigation, but before Friedman named Raphael as a defendant, Friedman subpoenaed Raphael’s claim file. Raphael, through Powell, produced various responsive documents and a privilege log. The documents listed on the privilege log were withheld on the basis that they contained Raphael’s communications with Powell, a well as Powell’s legal advice and analysis. After conducting an in camera review, the trial court ordered Raphael to produce the documents. 

Raphael filed an interlocutory appeal and the Appellate Division reversed. The Court conducted a de novo review of the documents and concluded that even though Raphael was not a party to the litigation when the documents were subpoenaed, Raphael clearly shared a common interest with Underwriters in adjusting and investigating Friedman’s claim, and that, even assuming that Powell was first retained by Underwriters, the attorney-client and work-product privileges, were not waived because Raphael was clearly acting on Underwriter’s behalf.

To read more on Friedman Route 10, LLC v. Certain Underwriters at Loyd’s, London et al click here