ROYAL INDEMNITY v. TERRA FIRMA, No. X04 CV 05 4005063 S (Feb. 1, 2007)

ROBERT E. BEACH, JUDGE.

The plaintiff, Royal Indemnity Company, has brought a declaratory judgment action regarding coverage sought by the defendants Konover Construction Company and Terra Firma, Inc., in defense of actions previously brought against them by the intervening defendants Archembault and Sowell. Konover has, in turn, counterclaimed against Royal, claiming, inter alia, bad faith violation of the duties to defend and to indemnify. This court decided, by way of summary judgment, that Royal and U.S. Fire, the excess insurer over Royal's coverage and a party in a consolidated action, do have the obligation to defend and to indemnify. This court's ruling as to the coverage obligations of Royal and U.S. Fire is currently on appeal to the Appellate Court, pursuant to Practice Book Rule § 61-4. I declined to stay discovery pending appeal as to the remainder of the causes of action at the trial court level, with the understanding that trial would not be held while the action was being appealed. The cases brought by the intervening defendants Archembault and Sowell, who obtained multi-million dollar verdicts against Konover, are also currently on appeal.

The motion at hand involves the application of a proposed confidentiality agreement between Konover and Royal. Konover has reportedly sought production of Royal's "claim file" regarding the underlying cases of Archembault and Sowell against Konover and Soneco. The parties apparently agree in principle to a rather standard confidentiality agreement regarding the production of documents. The question originally forming the basis of the current dispute is whether Konover can provide documents from the "claim file" provided to it by Royal to the Connecticut Insurance Department, with whom Konover has apparently registered a complaint against Royal. A second question is whether Royal may properly provide documents to Konover but not to the other parties in the litigation, including the CT Page 2331 underlying plaintiffs. A third question, not directly presented but nevertheless lurking like the elephant in the room, is whether the question of a stay should be reexamined.

The short answer is that I cannot provide a direct answer to the questions presented, because specific documents with specific facts have not been presented to me. The motion is, then, denied without prejudice to pursue the relief sought with proper documentation. I perhaps can, however, provide some insight into the issues presented for the guidance of the parties.

A claim file typically contains many things. Some of the items may be subject to attorney-client privilege. These, most typically, are communications involving counsel for the insured and concern the defense of the underlying action. These items are subject to the attorney-client privilege, though there are some twists. The privilege belongs to the client, who is the insured. See, e.g., Rienzo v. Santangelo, 160 Conn. 391, 395 (1971); King v. Guiliani, 1993 Conn.Super. LEXIS 1889, *18-23 (Spear, J.) [ 9 Conn. L. Rptr. 527]. There is indeed a common interest among the insured, the attorney and the insurer, and ordinarily the insured's privilege is not waived because of disclosure to the insurer, at least with respect to disclosures made before a coverage dispute arises. See, e.g., Carrier Corp. v. Home Ins. Co., 1992 Conn.Super. LEXIS 1.713 (Schaller, J.) [ 6 Conn. L. Rptr. 478], *27-28; Ryan v. National Union Fire Ins. Co. of Pittsburgh, 2006 U.S.Dist. LEXIS 7366, *16 n. 5 (D.Conn.; Smith, U.S. Magistrate Judge). A similar analysis pertains to work product: the mental impressions of attorneys and, at times, others, are protected, and other material prepared in anticipation of litigation is protected unless there is a sufficient showing of need. It does appear to be true that in some situations material within the insured-attorney-insurer triangle may be required to be disclosed to others within the group, at least if the material was prepared prior to the falling out, and yet still maintain its privileged status as to other parties. See Carrier Corp., supra, *29-30; Ryan, supra, *16-47.

With these principles in mind, it would seem that Royal should disclose its claims file to Konover. Because the attorney-client privilege belongs primarily to Konover, at least where the parties are in conflict and no longer enjoy a "common interest," Konover presumably can do what it wants with the materials. If Konover should disclose documents to a third party, the attorney-client privilege presumably would be waived as to anyone. If Royal believes it has an interest in maintaining the confidentiality of any specific documents provided to Konover, such as its own work product or other privilege, it shall CT Page 2332 create a specific privilege log. Disputes presumably would be resolved by the court, if necessary, in a manner consistent with the sealing rules. If Royal provides documents to Konover and not to other parties, a specific log shall be provided to the other parties, who shall have the opportunity to contest the withholding of the documents.

I do not rule on any matters at this time; this "ruling" provides only suggestions for the future and does so most gingerly.

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