First Industrial, L.P. v. General Insurance Co. of America, No. A-1705-10 (App. Div. Aug. 29, 2011), arose from environmental property damage at a complex that was owned by the plaintiff’s predecessor in interest.  The plaintiff informed the New Jersey Department of Environmental Protection about the damage and agreed to investigate and remediate the property.  As the successor to its predecessor’s insurance policies, the plaintiff filed claims with defendants General Insurance Company of America (“General”) and Harleysville Insurance Company (“Harleysville”) in which it demanded defense and indemnification for losses it would incur to remediate the property.  From 2000 through 2007, the parties negotiated but could not reach an agreement about the claims.  Therefore, the plaintiff filed a complaint against Harleysville and General in April 2007.  In November 2008, the parties entered into an agreement whereby the complaint was dismissed without prejudice so that the parties could again try to resolve their dispute.  Negotiations again proved unsuccessful and in February 2009 the plaintiff re-filed its complaint and added Pennsylvania General Insurance Company (“Pennsylvania”) as a defendant.

During discovery, the plaintiff produced over 50,000 pages of documents, including a January 26, 2005, letter from plaintiff’s counsel Debra Rothberg to Jon Raleigh, Director of Business Management at First Industrial Realty Trust, Inc.  The top of the letter contained the following statement, in boldface type:  “PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION AND ATTORNEY-WORK PRODUCT.”  Pursuant to a court order, the plaintiff also submitted a privilege log to the trial court, which was to review the documents in camera and then make a determination as to whether the listed documents were privileged.  The plaintiff listed approximately 100 documents that it claimed were privileged, including eleven communications between Raleigh and Rothberg – but not the January 2005 letter.

During the deposition of the plaintiff’s corporate designee, counsel for Pennsylvania questioned him about the January 2005 letter.  Plaintiff’s counsel instructed the witness to not answer the question, stating that the document was privileged and had been inadvertently produced.  Counsel for Pennsylvania did not continue questioning the witness about the document because the privilege issue had to be resolved by the court.

One month later, the defendants filed a motion to compel the deposition of plaintiff’s counsel, Rothberg.  They claimed that Rothberg was intimately involved with the development of the facts on the underlying claim and that the January 2005 letter was relevant to the defendants’ bad faith claims and various defenses.  The plaintiff cross-moved for a protective order concerning the allegedly privileged information in the January 2005 letter.

The trial court denied both motions and provided a statement of reasons why it denied the defendants’ motion to compel the deposition, but did not do so for the plaintiff’s motion for a protective order.  After the plaintiff filed a motion for leave to appeal, the trial court provided a written statement of its reasons pursuant to Rule 2:5-6 in which it explained that it “‘motion as to privilege until the Court could conduct a full review of all documents as granting that part of the motion at the time would have been premature.’”

The Appellate Division granted the plaintiff’s motion for leave to appeal and reversed.  The Appellate Division noted that, pursuant to well-established caselaw, when a claim of privilege is disputed the trial court ordinarily must review the disputed information in camera to determine if a privilege applies and then make a specific ruling about each document and provide its reasoning for each such ruling.  The Appellate Division concluded that “it is clear that the trial court misapplied its discretion when it failed to conduct an in camera hearing prior to ruling on plaintiff’s cross-motion.”  Accordingly, the Appellate Division reversed and remanded the matter so that the trial court could review the January 2005 letter in camera and determine if it was privileged.