Friedman Route 10, LLC v. Certain Underwriters At Lloyd’s, London, A-0434-13T1, 2014 WL 340087 (N.J. Super. Ct. App. Div. Jan. 22, 2014) (per curiam) (not reported in A.3d).

Superior Court of New Jersey upholds attorney-client privilege for communications between defendant insurer’s outside coun- sel and independent claims adjuster, where outside counsel was performing legal services for defendant insurer and claims adjuster “shared a common interest” with defendant insurer.

Friedman Route 10, LLC filed an insurance claim with Certain Underwriters at Lloyd’s London (Lloyd’s).   Because Lloyd’s could not conduct business in New Jersey (pursuant to state statute), Lloyd’s retained Raphael & Associates (“Raphael”),  an independent claims adjuster, to investigate and adjust plaintiff’s claim.  Lloyd’s also retained the law firm of Powell & Roman, LLC (“Powell”) to provide a coverage opinion and legal analysis of the claim.  During this time, Raphael represented itself to Friedman Route 10 as acting on Lloyd’s behalf (even though Lloyd’s retained the ultimate decision as to denial or acceptance of coverage and payment of claims).  Powell submitted legal bills to Raphael for review and approval, and all initial communications between Friedman Route 10 and Lloyd’s were done through Raphael.

When the parties were unable to adjust the claim, Friedman Route 10 commenced an action against Lloyd’s in the Law Division of the New Jersey Superior Court.  Friedman Route 10 issued a subpoena to Raphael for its file on the matter. Powell produced all but sixteen documents from Raphael’s file; the withheld documents were itemized in a privilege log pur- suant to the argument that they constituted privileged attor- ney-client communications.  Friedman Route 10 objected, arguing that Powell was retained by Lloyd’s, and Raphael was  a separate entity that was never Powell’s client.  Two judges in the Law Division held in succession that the documents should be produced, as there was “insufficient specificity on the papers” for the court to decide whether the items were privi- leged.

Lloyd’s moved for reconsideration again on the basis that the documents were privileged and, for the first time, that they were protected under the attorney work product doctrine and the common interest doctrine; the motion was denied and the defendant was ordered to produce the documents. Lloyd’s then appealed the interlocutory order to the Superior Court of New Jersey Appellate Division.

Applying the New Jersey Supreme Court’s rationale in Payton v. N. J. Tpk Auth., 148 N.J. 524 (1997), the Appellate Division noted that “privilege would not attach if Powell’s role here was simply to render routine claims investigation services,” but that in the instant case, “Powell was tasked with conducting legal research of the various issues surrounding plaintiff’s claim, and to provide a legal opinion.” (emphasis added).  Therefore, attorney-client privilege should attach as to Powell.

The court also rejected Friedman Route 10, LLC’s contention that Powell represented Lloyd’s, not Raphael, when the com- munications were made and therefore Raphael could not claim the privilege because it was not outside counsel’s client. Applying the “common interest doctrine,” the court focused on “the nature and origin of the relationship” between Lloyd’s and Raphael, and found that Raphael “clearly shared a com- mon interest with Lloyd’s in investigating and adjusting Friedman Route 10, LLC’s claim.”  The court noted that Lloyd’s could not conduct business in New Jersey and there- fore had to use agents like Raphael out of necessity.

Additionally, even before Raphael was added as a defendant,  an employee of Raphael was authorized to certify interrogatory answers from Lloyd’s, and an attorney of Raphael attended mediation as a Lloyd’s representative.  Further, the court did note that the privilege might be waived if Lloyd’s were to use “advice of counsel” as a defense to the claim; however, that defense had not been affirmatively raised and so a finding of waiver would be premature.  Therefore, after an individualized review of the documents in question, the court found that privi- lege attached to all but one of the withheld documents contain- ing communications between Raphael and Powell.