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In re Environmental Insurance Declaratory Judgment Actions. HM Holdings Inc.

Decided: September 18, 1992.

IN RE ENVIRONMENTAL INSURANCE DECLARATORY JUDGMENT ACTIONS. HM HOLDINGS, INC., THE GLIDDEN COMPANY AND SMITH CORONA CORPORATION, PLAINTIFFS-APPELLANTS,
v.
LUMBERMENS MUTUAL CASUALTY COMPANY, AMERICAN MOTORISTS INSURANCE COMPANY, CONTINENTAL CASUALTY INSURANCE COMPANY, ZURICH INSURANCE COMPANY, FALCON INSURANCE COMPANY, FORMERLY TITLED EMPLOYERS SURPLUS LINES INSURANCE COMPANY, CERTAIN LLOYD'S UNDERWRITERS AND COMPANIES, INSURANCE COMPANY OF NORTH AMERICA, EMPLOYERS INSURANCE OF WAUSAU A MUTUAL COMPANY, EMPLOYERS COMMERCIAL UNION INSURANCE COMPANY, HOME INSURANCE COMPANY, HARTFORD ACCIDENT & INDEMNITY COMPANY, GRANITE STATE INSURANCE COMPANY AND INDUSTRIAL INDEMNITY COMPANY, DEFENDANTS-RESPONDENTS



On appeal from Superior Court, Law Division, Union County.

Antell, Baime and Thomas. The opinion of this court was delivered by Thomas, J.s.c., temporarily assigned.

Thomas

Plaintiffs appeal, pursuant to leave granted, a trial court's discovery order compelling them to produce materials which they contend are protected by the attorney-client privilege. On various theories, the trial court held the material was not subject to that privilege.

FACTS

Plaintiffs are the subject of numerous claims for injuries arising from exposure to hazardous waste material located at different sites throughout the country. Plaintiffs brought the present declaratory judgment action seeking to define the obligation of the defendant insurance companies to defend and indemnify plaintiffs in pending and future claims. The order under appeal requires;

[p]laintiffs to produce all documents prepared and used in the underlying actions involving such sites, regardless of the date such documents were obtained or prepared, which documents were previously withheld on the grounds of privilege [and]

These rulings requiring disclosure were based on three reasons:

1) that the insurance company defendants share a common interest with plaintiffs in defending and settling environmental clean-up actions;

2) that the cooperation clause found in plaintiffs' policies vitiated any expectations of confidentiality plaintiffs may have had; and

3) that plaintiffs " put into issue their conduct in the underlying litigation " by bringing the present declaratory judgment action.

The documents plaintiffs assert are privileged include:

-- internal memoranda and notes prepared by outside or in-house counsel in anticipation or during the course of the underlying litigation;

-- internal memoranda and notes prepared by [plaintiffs'] employees at the direction of outside or in-house counsel in anticipation or during the course of the underlying litigation;

-- communications between environmental consultants retained by [plaintiffs] or its counsel and outside counsel or [plaintiffs] in anticipation or during the course of the underlying litigation; and

-- concerning the non-owned sites, communications between [plaintiffs'] outside counsel and counsel for other defendants in the underlying actions which are protected pursuant to the Joint Defense Agreement.

Prior to the court's order, plaintiffs had produced approximately 100,000 documents, including consultant reports submitted to and by various governmental authorities regarding the sites; voluminous test data relating to the sites which were collected prior to the underlying litigation; invoices and correspondence with waste haulers who transported wastes from plaintiffs' facilities; internal memoranda concerning plaintiffs' disposal of its wastes written at the time disposal was occurring; and all correspondence with governmental agencies concerning the sites and settlement of claims arising from the sites. In addition, plaintiffs have identified numerous witnesses in their answers to interrogatories whom defendants may interview and/or depose to acquire information. Pursuant to this discovery, defendants have contacted over forty witnesses and deposed at least fourteen, most of whom are former or current employees of plaintiffs. Defendants are presently following a continuing schedule of taking the deposition of these witnesses. Defendants also have access to all test results and reports generated by local, state, and national authorities relating to the sites. In addition, they have access to all documents generated by plaintiffs ...


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