OPINION & ORDER
This matter comes before the court on a motion by the defendant, Travelers Insurance Co., joined by several other defendants,
I. BACKGROUND
This action arises out of an insurance coverage dispute regarding remediation costs for environmental damage to the land and water at a petroleum terminal and storage facility located in Jersey City, New Jеrsey, commonly known as Tankport. Pittston purchased the Tankport facility in 1954. In 1983, Ultramar America Ltd. acquired Tankport pursuant to a stock purchase agreement. The agreement contained an indemnity provision under which Pittston agreed to indemnify Ultramar for liability resulting from petroleum spills at the site prior to the purchase.
In 1988, Ultramar filed a complaint in this district rеlating to chromium and petroleum contamination at the Tankport site. Pursuant to a settlement agreement, Pittston agreed to indemnify Ultramar for 80% of cleanup costs for remediation of petroleum contamination at Tankport.
Pittston and Ultramar submitted the proposed settlement agreement to their insurers for comment. The insurers, now defendants, claim thаt there was not sufficient time to adequately respond, and did not respond or responded that the plaintiff should act as a “reasonable uninsured.”
After settlement of the underlying litigation, Pittston initiated this action seeking indemnification under comprehensive general liability (CGL) policies and comprehensive marine liability policies (CMLP). The insurers claim that the plaintiff fаiled to comply with certain conditions precedent and therefore is not covered under the policies.
Pittston has refused to provide documents which relate to the underlying Ultra-mar — Pittston litigation and to issues of insurance coverage for the Tankport site. Plaintiff asserts that the documents are protected by the attorney-client privilege and thе work product doctrine.
II. ANALYSIS
The matters presented in the instant motion involve an increasingly common dispute between an insured and insurer regarding the ability of the insurer to discover otherwise privileged materials generated in an underlying litigation for which the insured is seeking indemnification. To begin, the defendants concede that plaintiffs are not obligated to producе privileged documents directed specifically to coverage questions at issue. See Independent Petrochemical Corporation v. Aetna Casualty and Surety,
Common Interest Doctrine
The common interest doctrine has its origins in the joint attorney doctrine, 8 Wig-more, Evidence § 2312,
The chief instance occurs when the same attorney acts for two parties having a common interest, and each party communicates with him. Here the communications are clearly privileged from disclosure at the instance of a third person. Yet they are not privileged in a controversy between the two original parties, inasmuch as the common interest and employment forbade concealment by either from the other. See also Eureka Investment Corp. v. Chicago Title Ins. Co.,743 F.2d 932 (1984).
The application of the attоrney-client privilege in the joint attorney context has been adopted in the New Jersey Rules of
The common interest doctrine is an application of the joint attorney doctrine. Under the common interest doctrine, although an attorney actually represents only one party, there is no waiver of the attorney-client privilege by disclosure оf privileged communications to third parties with a “community of interest”. A community of interest exists where different persons or entities “have an identical legal interest with respect to the subject matter of a communication between an attorney and client concerning legal advice ... The key consideration is that the nature of the interest be identicаl, not similar, and be legal, not solely commercial.” Duplan Corp. v. Deering Milliken Inc.,
A quandary arises when the rule is used offensively, as here, to compel production of otherwise privileged materials. It seems clear that use of the doctrine is warranted when there is a dispute between insurer and insured regarding underlying litigation in which thе insured was represented by an attorney appointed by the insurer. See Truck Ins. Exchange v. St. Paul Fire and Marine Ins. Co.,
The primary issue is whether the documents were generаted with the reasonable expectation that the documents would be concealed from plaintiffs insurer. See IPC v. Aetna Casualty and Surety,
However, the court in IPC v. Aetna expressly grounded its determination on the fact that “the defendants are obligated, at this time to defend plaintiffs in the underlying dioxin-related cases. To do this, access to documents prepared in anticipation of those claims are essential.” IPC v. Aetna,
The Court in Carey Canada Inc. v. Aetna Casualty and Surety Co.,
“the documents were prepared in an atmosphere of uncertainty as to the scope of any identity of interest shared by the plaintiff and Aetna [the insurer]. In this context plaintiffs could reasonably have expected that documents concerning settlement in the underlying cases would be privileged and hence uridiscoverable.” Carey Canada, at 251.
The court emphasized that the communications sought were made after the interests of the parties had divergеd. Id. at 252.
In Waste Management v. International Surplus Lines,
There is little case law in New Jersey construing the use of the common interest doctrine as sought here. In In re Environmental Insurance, Declaratory Judgment Action (SCM v. Lumbermans Mutual, et al.), 5 Mealey’s Lit.Rep.: Insurance, Issue 48 Octоber 22, 1991 at D-l (Superior Court, Union County, 1991), the court adopted the view of the Illinois Supreme Court in Waste Management. In Historic Smithfield Development Comyany v. Chelsea Title and Guarantee Co.,
To permit insurers unrestrained access to attorney-client communications and work product where those insurers refused to take part in litigation despite notice and an оpportunity to participate would distort the “common interest” doctrine. The use of the doctrine sought by the defendants is a far cry from its original application in the joint representation context. Notwithstanding the opinion in Waste Management and SCM v. Lumbermans Mutual
The interests of the parties to this action when Pittston and Ultramar entered intо their litigation were not “identical”. See Duplan,
There is no actual “common interest” since the situation inevitably presented is one in which the insurеr claims that there is no coverage for the underlying claim. Therefore, theoretically, it is of no import or consequence to the insurer whether or how much the “uninsured” has incurred in liability unless and until the insurer has been forced, through a subsequent judgment, to accept that there is an actual common interest.
Further, the fiction that there is no reasonable expectation of privacy due to an identity of interest is contrary to the perception under which the insured would operate in the underlying litigation. Particularly in the environmental liability context,
Defendant Travelers is in a somewhat different position from that of the marine insurer defendants in that Travelers was not notified of the petroleum claim or the settlement until three dаys prior to the settlement. However, it would be illogical to impute that there was no reasonable expectation of privacy vis-a-vis Travelers alone since the plaintiff was aware of the position of its other insurers as evidenced by the outright denial, cryptic denial (“act as a reasonable uninsured”), or evasion found in the responses to the insured’s request for the insurers’ positions on coverage. The plaintiff acted in the underlying litigation cognizant of the position of the majority of its insurers.
The common interest doctrine is best applied in the context of an actual triadic relationship between insured, attorney and insurer. Based upon the circumstances under which the plaintiff acted in the underlying litigation, Pittston communicated with its attorneys in an atmosphere of uncertainty as to any identity of interest with its insurers and with a reasonable expectation of privacy. Therefore, the documents generated from such communications are privileged and may be withheld from discovery.
Documents “In Issue”
The defendants also contend that the attorney-client and work product documents in the privileged document log should be produced because these documents are “in issue” in this litigation; therefore, any assertion of privilege is impliedly waived.
The “in issue” doctrine is operative when the party has asserted a claim or defense that he intends to prove by use of the privileged materials. Remington Arms,
First, “there must be a legitimate need ... to reach the evidence sought to be shielded. Id. at 243 [398 A.2d 882 ]. Second, “there must be a showing of relevance and materiality of that evidence to the issue before the court.” Id. at 243-244 [398 A.2d 882 ], Lastly, the party seeking to bar the assertion of privilege must show “by a fair preponderance of the evidence including all reasonable inferences that the information cannot be secured from a less intrusive source.” Id. at 244 [398 A.2d 882 ].
Although the Wolosoff court did not explicitly include as a factor that the party seeking protection must have injected the communications into the action, the сourt did consider that as an important issue. In support of its conclusion, the court cited to several cases in which this injection was the prevalent factor. See Wolosoff,
The defendants have offered several reasons why they feel that the documents sought are “in issue” or germane to a material issue before the court. This includes information regarding the insured’s knowledgе regarding contamination at the site and the reasonableness of the settlement between the parties.
However, the plaintiff has not sought to use or inject any privileged documents as a part of a claim or defense. Therefore the “in issue” doctrine is inapplicable.
Work Product
Pursuant to Fed.R.Civ.P. 26(b)(3), materials prepared in anticipation of litigation or for trial by another party by or for that party’s representative may be produced “only upon a showing that the party seeking discovery has a substantial need of the materials in the preparation of the party’s case and that the party is unable to without undue hardship to obtain the substantial equivalent of the material by other means.” As set forth above, the information which the defendants seek may be obtained by other less intrusive means. Also, the defendants have not shown a substantial need for these particular documents.
Cooperation Clause
Thе defendants also contend that the cooperation clause in the insurance certificates creates a contractual obligation to produce the documents. One such cooperation clause provides:
The insured shall cooperate with the company, and, upon the company’s request, assist in making settlements, in the cоnduct of the suits and enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of bodily injury or property damage with respect to which insurance is afforded under this policy; and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses ... (Defendants’ moving briеf, Exhibit 9).
It has been held that such clauses can apply “without limitation or qualification” and can be invoked in spite of the fact that the parties have taken adversarial postures, See Waste Management,
Other Documents
The defendant marine insurers point out that no protection can be afforded several documents in the plaintiff’s privilege log (Brief at 9, N.10). The three documents, correspondence between representatives of Pittston and Ultramar, are not prоtected by any privilege and therefore should be produced.
III. CONCLUSION For the reasons set forth above, the motion of the defendants for production of the documents contained in plaintiff’s privileged document log shall be denied except as provided herein.
SO ORDERED.
Notes
. Joined in the motion are Employers Insurance of Wausau, American Marine Underwriters, Inc., Hartfоrd Ins. Co., Hartford Fire Ins. Co., Allianz Ins. Co., Ancon Ins. Co., Rochdale Ins. Co., Chiyoda Fire and Marine Ins. Co., Unigard Mutual Ins. Co., Unione Italiana Reinsurance Co., Gibbs and Co., and London Market Insurers.
. These documents are numbered: 29, 31, 32, 34, 35, 36, 59, 60, 61, 62, 65, 67, 70, 72, 78, 81, 119, 189, 224, 225, 230, 233, 336, 239, 240, 242, 253, 254, 262, 264, 265, 267, 268, 269, 272, 273, 274, (as the documents are listed in Exhibit 1 of defendant’s memorandum).
. The court presumes that New Jersey law is applicable to questions of privilege pursuant to Judge Wolin's opinion of May 26, 1992 and Fed.R.Evid. 501.
. 2A:84A-20 Lawyer-client privilege
(2) Exceptions. Such privilege shall not extend ... (c) ... Where 2 or more persons have employed a lawyer to act for them in common, none of them can assert such privilege as against the others as to communications with respect to that matter.
. Although the defendants contend that in presumptively applying New Jersey law the SCM v. Lumbermans Mutual opinion should act as precedence, no New Jersey court could accept the unpublished opinion as precedence under New Jersey Court Rule 1:36-3. Although instructive, this opinion is not binding.
. This is true notwithstanding the production of the memo of plaintiffs counsel outlining the settlement and commenting that it is an “excellent result”. (Traveler’s Reply Brief, Exhibit I).
. Those documents are 1) Memo of March 8, 1990, 2) Letter of March 12, 1990, and 3) facsimile of March 27, 1990.