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First Industrial, L.P. (As Successor In Interest To Cherry Hill Industrial Sites, Inc v. General Insurance Company of America (A Safeco Company

August 29, 2011

FIRST INDUSTRIAL, L.P. (AS SUCCESSOR IN INTEREST TO CHERRY HILL INDUSTRIAL SITES, INC.), PLAINTIFF-APPELLANT,
v.
GENERAL INSURANCE COMPANY OF AMERICA (A SAFECO COMPANY), HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY, PENNSYLVANIA GENERAL INSURANCE COMPANY (AS SUCCESSOR TO CERTAIN LIABILITIES OF AMERICAN EMPLOYERS' INSURANCE COMPANY), DEFENDANTS-RESPONDENTS.



On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-4651-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued June 7, 2011

Before Judges Graves, Messano and Waugh.

Plaintiff First Industrial, L.P. appeals from an order dated October 1, 2010, denying its request for an order preventing "the showing, producing, admitting, disseminating, disclosing and copying" of an allegedly privileged letter inadvertently produced during discovery. Leave to appeal was granted by this court on November 19, 2010. We now reverse and remand for further proceedings.

This case arises out of "environmental property damage" at an industrial complex owned by plaintiff's predecessor in interest, Cherry Hill Industrial Sites, Inc. (CHIS). Plaintiff informed the New Jersey Department of Environmental Protection of the property's condition and agreed to "investigate and remediate" the damage. Plaintiff, as successor to CHIS's insurance policies, filed claims with defendants General Insurance Company of America (General Insurance) and Harleysville Insurance Company (Harleysville), demanding "defense and indemnification" for losses sustained in connection with the remediation. Thereafter, from 2000 to 2007, the parties negotiated plaintiff's claims, but a satisfactory resolution was not reached. As a result, plaintiff filed a complaint against General Insurance and Harleysville in April 2007.

On November 24, 2008, the parties entered into a "Cooperation Agreement" (the Agreement) and plaintiff's complaint was dismissed without prejudice. Pursuant to the Agreement, the parties attempted to negotiate "an amicable resolution of the claims." However, negotiations were again unsuccessful, and plaintiff refiled its complaint on February 6, 2009. Pennsylvania General Insurance Company (Pennsylvania General) was added as a defendant.

During discovery, plaintiff produced at least 50,000 pages of documents. Included was a letter dated January 26, 2005, from one of plaintiff's attorneys, Debra L. Rothberg, to Jon Raleigh, Director of Business Management at First Industrial Realty Trust, Inc. (the January 2005 letter). In bold typeface across the top of the letter was the following statement:

"PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION AND ATTORNEY-WORK PRODUCT."

Due to the extensive amount of discovery, the court entered an order on February 24, 2010, instructing the parties to submit "a privilege log and copies of all documents withheld from production." The order indicated that the court would "make an independent determination of all claims of privilege" after an in camera review. Plaintiff submitted a privilege log on March 15, 2010, listing approximately 100 documents that were privileged under the attorney client privilege or the work product doctrine. Although the privilege log included eleven communications between Rothberg and Raleigh, the January 2005 letter was not one of them.

On August 5, 2010, during a deposition of Michael Reese, plaintiff's "corporate designee," counsel for Pennsylvania General questioned Reese about the January 2005 letter. Plaintiff's counsel instructed Reese not to answer the question:

It's clear to me that's a privileged document, it was a document that was written by Counsel for First Industrial to a member of the litigation control group. It contains legal advice, it seems clear to me, for whatever reason, inadvertently, that document was produced when it should have been withheld. . . . It's going to be my position that we should be able to pull this document back as having been inadvertently produced. . . . If and when that issue gets resolved it would have to be resolved by the Court.

Counsel for Pennsylvania General agreed not to further question Reese about the letter because the privilege issue had to be "resolved by the Court."

One month later, on September 7, 2010, defendants filed a motion to compel the deposition of Rothberg. Defendants argued that "Rothberg was intimately involved with both the development of the facts in the underlying environmental claim and the submission of these claims to the insurers," and the January 2005 letter was relevant to defendants' "bad faith claims" and their "affirmative defense relating to plaintiff's breach of the duty to cooperate in the investigation of the ...


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