Renter’s insurance and destruction of the home

Ohio Appellate Reports

Unpublished

STEGMAN v. NICKELS, Unpublished Decision (9-22-2006)
2006-Ohio-4918 Thomas Stegman, et al., Appellees, v. Donald
Nickels, et al., Appellants. Court of Appeals No. E-05-069,
Trial Court No. 2001-CV-501. Court of Appeals of Ohio,
Sixth District, Erie County. Decided: September 22, 2006.

[EDITOR’S NOTE: This case is unpublished as indicated by the
issuing court.] K. Ronald Bailey, for appellees.

James L. Glowacki and Christopher M. Corrigan, for
appellants.

DECISION AND JUDGMENT ENTRY

SKOW, J.

{¶ 1} This appeal comes to us from a judgment issued
by the Erie County Court of Common Pleas, granting a motion
to compel discovery. Because we conclude that the trial
court erred in granting the motion to compel without
conducting a hearing or in camera inspection of documents,
we reverse.

{¶ 2} Appellants, Donald and Phyllis Nickels, owned
a residence which they began renting to appellees, Thomas
and Donna Stegman, in 1994. The lease provided that
appellants would pay for insurance as to the house itself,
but appellees could either purchase renter’s insurance or
self-insure to cover loss or damage to their personal
property in the event of damage or destruction of the home.
The Stegmans did not purchase renter’s insurance.

{¶ 3} On March 30, 2001, a fire destroyed the
rental property, including all of the Stegmans’ personal
property. When the fire started, Mike Brewster, who had
been hired by appellants to upgrade certain electrical
components, was working on an electrical panel in the
basement. He saw smoke seeping down through the floor
boards and quickly exited the house, which was then
completely destroyed by the fire.

{¶ 4} Appellants’ insurer, Ohio Mutual Insurance
Group (“OMIG”), assigned an adjuster, Aleta Roberts, to
handle the Nickels’ insurance claim. On April 3, the
Nickels received a $50,050 claim payment, and ultimately
received a total payment of $78,790. The Stegmans were then
notified that they had thirty days to retrieve property or
arrange for inspection of the property. Ohio Mutual also
hired an outside expert to evaluate and create a report as
to his opinion on the fire and its possible causes.

{¶ 5} The Stegmans did not arrange for a separate
inspection of the residence or request that appellants
delay demolition. They did, however, speak with and answer
questions posed by the expert investigator hired by OMIG.
The house was demolished over a period of four days,
beginning on May 11, 2001. The Stegmans later sued
appellants for damages, alleging that appellants had been
negligent in the maintenance of the rental property. During
discovery, the Stegmans sent interrogatories to appellants
requesting “any and all documents which reference or pertain
to inspection or investigative reports performed on the
subject property after the fire.” Appellants responded:
“Objection. Testifying experts have not been identified as
yet on [sic] such request violates Civil Rule 26(B)(4).”

{¶ 6} The Stegmans then filed a motion to compel
the production of all reports regarding any investigation
of the causes of the fire. Appellants opposed the motion,
asserting that certain documents, including a letter to
potential defendants and the report created by the outside
expert, were protected as attorney work product created in
anticipation of litigation, under Civ.R. 26(B)(4). Without
examining any documents or conducting a hearing, the trial
court granted the Stegmans’ motion to compel on the basis
of undue hardship. The court ordered that the documents be
disclosed since the house had been completely demolished,
and the Stegmans had “no possible way * * * to obtain any
facts about the cause of the fire.” Along with a motion for
reconsideration and request for a protective order,
appellants submitted the documents to the trial court,
under seal, and appealed from the court’s judgment, arguing
the following sole assignment of error:

{¶ 7} “The trial court abused its discretion in its
August 26, 2005 Judgment Entry by requiring
Defendants/Appellants to produce to the Plaintiffs any
expert reports and the identity of the person making the
report or inspection as these materials are privileged
pursuant to the work product doctrine codified in Ohio
Civil Rule 26.”

{¶ 8} Civ.R. 26(A) sets forth the general policy
regarding discovery and provides:

{¶ 9} “It is the policy of these rules (1) to
preserve the right of attorneys to prepare cases for trial
with that degree of privacy necessary to encourage them to
prepare their cases thoroughly and to investigate not only
the favorable but the unfavorable aspects of such cases and
(2) to prevent an attorney from taking undue advantage of
his adversary’s industry or efforts.” Civ.R. 26(B)(1)
provides that the scope of discovery liberally includes
“any matter, not privileged, which is relevant to the
subject matter involved in the pending action, whether it
relates to the claim or defense of the party seeking
discovery or to the claim or defense of any other party.”
Trial preparation materials, also called attorney work
product, encompass materials prepared in anticipation of
litigation by a party or a party’s representative and are
discoverable only upon a showing of good cause. Civ.R.
26(B)(3); State v. Kemper, 158 Ohio App.3d 185,
2004-Ohio-4050, at ¶ 20. “Good cause,” under Civ.R.
26(B)(3), requires a showing of substantial need, that the
information is important in the preparation of the party’s
case, and that there is an inability or difficulty in
obtaining the information without undue hardship. Jackson
v. Greger, 160 Ohio App.3d 258, 2005-Ohio-1588, at ¶
34; State v. Hoop (1987), 134 Ohio App.3d 627, 642.

{¶ 10} Civ.R. 26(B)(4), which specifically
addresses information of trial preparation experts,
provides that:

{¶ 11} “(a) Subject to the provisions of
subdivision (B)(4)(b) of this rule and Rule 35(B), a party
may discover facts known or opinions held by an expert
retained or specially employed by another party in
anticipation of litigation or preparation for trial only
upon a showing that the party seeking discovery is unable
without undue hardship to obtain facts and opinions on the
same subject by other means or upon a showing of other
exceptional circumstances indicating that denial of
discovery would cause manifest injustice.

{¶ 12} “(b) As an alternative or in addition to
obtaining discovery under subdivision (B)(4)(a) of this
rule, a party by means of interrogatories may require any
other party (i) to identify each person whom the other
party expects to call as an expert witness at trial, and
(ii) to state the subject matter on which the expert is
expected to testify. Thereafter, any party may discover
from the expert or the other party facts known or opinions
held by the expert which are relevant to the stated subject
matter. Discovery of the expert’s opinions and the grounds
therefore is restricted to those previously given to the
other party or those to be given on direct examination at
trial.”

{¶ 13} In other words, Civ.R. 26(B)(4)(c) gives
courts the power “to control discovery under unfair
circumstances where an expert may be paid by one party and
deposed by the other party, who would garner the benefit of
information without paying.” Vance v. Marion Gen. Hosp.,
165 Ohio App.3d 615, 2006-Ohio-146, at ¶ 13, citing
Siegel v. Birnbaum (Feb. 20, 1997), 8th Dist. Nos. 69105,
69059. The discovery of experts consulted for trial
preparation is permitted only upon a showing of undue
hardship or exceptional circumstances. “Other than in those
situations * * * it would appear that the identity of
experts consulted prior to trial but who will not be called
as witnesses as well as the findings or opinions of those
experts are not subject to discovery by the opposing
party.” Owens v. Bell (1983), 6 Ohio St.3d 46, 54
(concurring opinion). One example of an exceptional
circumstance or undue hardship warranting discovery would be
that the expert utilized by a party “was the only expert in
a particular field.” Civ.R. 26 Staff Notes (1994). Undue
hardship might also be shown where an inequality of
investigative opportunity demonstrates that a party had no
other viable option for obtaining information sought. See
Harpster v. Advanced Elastomer Sys., L.P., 9th Dist. No.
22684, 2005-Ohio-6919.

{¶ 14} Once discovery is requested, the party
claiming that documents or statements are work product, has
the burden of showing that the materials should not be
discoverable. Peyko v. Frederick (1986), 25 Ohio St.3d 164,
166. Although fact work product receives lesser protection
and may be overcome by a showing of good cause, opinion
work product, reflecting the attorney’s mental impressions,
opinions, conclusions, judgments or legal theories,
receives near absolute protection. Helton v. Kincaid, 12th
Dist. No. CA2004-08-099, 2005-Ohio-2794, ¶ 15,
citing to State v. Hoop, supra.

{¶ 15} Unlike the attorney-client privilege, which
belongs to the client, “[t]he work-product doctrine * * *
belongs to the attorney and assures him that his private
files shall remain free from intrusions of opposing counsel
in the absence of special circumstances. The work-product
doctrine generally protects a broader range of materials
than does the attorney-client privilege because the
work-product doctrine protects all materials prepared in
anticipation of trial.” Frank W. Schaefer, Inc. v. C.
Garfield Mitchell Agency, Inc. (1992), 82 Ohio App.3d 322,
329. Material in an insurer’s claims file is generally
protected from discovery by third parties under the
attorney-client privilege or work product doctrine. See
Dennis v. State Farm Ins. Co. (2001), 143 Ohio App.3d 196.
Nevertheless, information in an insurer’s claims file sought
to be protected from discovery as work product must have
actually been “prepared in anticipation of litigation,” and
not merely in the ordinary course of business. Id., at 203.
The ordinary business reports of an insurer during the
initial investigation of a claim made by one of its
insureds are not generally considered to have been
“prepared in anticipation of litigation.” Id.

{¶ 16} Generally, trial courts are given broad
discretion in the management of discovery. State ex rel.
Daggett v. Gessaman (1973), 34 Ohio St.2d 55, 57. Absent an
abuse of that discretion, a trial court’s decision on a
motion to compel will not be reversed. State ex rel. The V
Cos. v. Marshall (1998), 81 Ohio St.3d 467, 469. An abuse
of discretion implies more than mere error of law, but that
the court’s attitude was unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore (1983), 5 Ohio St.3d
217, 219.

{¶ 17} Nonetheless, if requested discovery is
arguably either opinion work product or ordinary fact work
product, the trial court should conduct an evidentiary
hearing and an in camera inspection to determine which
portions of a file are privileged. See Peyko, supra, at
167. See, also, Miller v. Bassett, 8th Dist. No. 86938,
2006-Ohio-3590, at ¶ 16. Absent such hearing or
inspection, any blanket grant of discovery is an abuse of
discretion. Miller, supra. Moreover, a trial court has been
found to have abused its discretion in granting a premature
motion to compel disclosure of all expert reports when
trial experts had not yet been designated. Becker v.
Metzger (2001), 144 Ohio App.3d 52, 56.

{¶ 18} In this case, appellees contend that their
cooperation with the expert hired by OMIG entitles them to
a copy of the report generated by that expert. They also
claim undue hardship because the house has been demolished,
now preventing them from gathering their own information.
What appellees do not acknowledge is that they themselves
created the alleged hardship. Despite being notified that
the house was to be demolished, they did not seek to have
their own inspection of the property. Although the Stegmans
may have assumed that they would be compensated in some
way, nothing in the record indicates that OMIG or
appellants ever told them they would receive a copy of the
expert’s report or that they would be covered by the OMIG
policy. The information about the cause of the fire only
became important to the Stegmans when they later filed
suit.

{¶ 19} The facts of this case illustrate the exact
purpose behind Civ.R. 26(B)(4). Nothing in the record of
this case indicates any extraordinary circumstances which
would require the disclosure of appellants’ expert report
prior to his designation as a trial witness. Although it is
true that the house is no longer available for inspection,
appellees were notified and given the opportunity to
arrange for their own inspection. Unlike the case in which
a party has no notice to conduct his or her own inspection,
or materials are limited for testing, the Stegmans had an
opportunity to protect their own interests and opted to do
nothing. Consequently, we cannot say that the circumstances
in this case warrant the premature disclosure of
appellants’ expert’s report, if prepared in anticipation of
litigation.

{¶ 20} Before any experts were designated as trial
witnesses, appellees requested all expert reports,
regardless of whether they had been generated for claims
purposes or for litigation. Appellees may discover any
unprivileged report generated in the ordinary course of
business for the purpose of investigation and payment of
insurance claims. The trial court failed, however, to
conduct a hearing or in camera inspection to make the
determinations as to whether the documents submitted under
seal are privileged work product in anticipation of
litigation or merely investigative business reports related
to the processing of appellants’ insurance claim.
Therefore, we conclude that the trial court improperly
granted appellees’ motion for disclosure of appellants’
expert’s report.

{¶ 21} Accordingly, appellants’ sole assignment of
error is well-taken.

{¶ 22} The judgment of the Erie County Court of
Common Pleas is reversed and remanded for the court to
conduct an evidentiary hearing and to inspect the documents
submitted under seal to make determinations which are
consistent with this decision. Appellees are ordered to pay
the costs of this appeal pursuant to App.R. 24. Judgment
for the clerk’s expense incurred in preparation of the
record, fees allowed by law, and the fee for filing the
appeal is awarded to Erie County.

JUDGMENT REVERSED.

A certified copy of this entry shall constitute the
mandate pursuant to App.R. 27. See, also, 6th
Dist.Loc.App.R. 4.

Singer, P.J., Skow, J., Parish, J. Concur.