The insurer’s motion to compel documents and communications from another insurer was denied. Ins. Co. of Pa. v. Liberty Mut. Fire Ins. Co., 2025 U.S. Dist. LEXIS 178726 (D. N.J. Sept. 12, 2025).

Jacobs Engineering firm suffered a verdict in state court of $2,579,000.00. Insurance Company of the State of Pennsylvania (ICSP) insured Jacobs and provided coverage and a defense for the underlying case. ICSP wrote to Liberty Mutual demanding that Liberty Mutual provide coverage and pay ICSP its policy limit of $1,000,000. ICSP contended that Jacobs was an additional insured under Liberty Mutual’s policy. This letter was the first time ICSP made a demand to Liberty Mutual. Liberty Mutual responded that coverage was denied and rejected ICSP’s demand for indemnificaiton and contribution. Liberty Mutual contended Jacobs was not an additional insured under its policy, and even if it was, ICSP’s demand was after the underlying action had been tried and judgment entered.

ICSP sued Liberty Mutual. Prior summary judgment motions were filed and the court concluded that acobs was an additional insured under the Liberty Mutual policy. The court further decided that there were issues of material facts for the jury to decide, including whether ICSP waived, or was estopped from, recovery because it did not tender a defense of the underlying action until after the jury verdict was rendered.

At the Rule 30 (b) (6) deposition of Liberty Mutual, the representative testified that advice of counsel was relied upon to determine Jacobs was not an additional insured. The representative further testified that Liberty Mutual did not investigate whether Jacobs had other insurance because Jacobs was not an insured of Liberty Mutual.

ICSP moved to compel all documents and communications relied upon in determining whether to investigate whether Jacobs had professional liability coverage and whether to tender to any such carrier on behalf of Jacobs for the underlying action.

The court noted that Liberty Mutual’s evaluation focuses on whether it was obligated to contribute to the judgment in the amount of policy limits. This hinged upon whether Jacobs was an additional insured under the policy. The communicaitons and work product surrounding outside counsel’s coverage determination were not part of Liberty Mutual’s routine business activities and typical claim investigations. Liberty Mutual anticipated litigation at the time it began investigating coverage of Jacobs after receiving ICSP’s demand letter. There was no doubt that Liberty Mutual’s communications with outside counsel were intended to be confidential and made when litigation was reasonably anticipated. Liberty Mutual satisfied the test for work product privilege.

Turning to whether Liberty Mutual waived the attornely-client and work product privileges by placing the advice of outside counsel “at issue,” the court found that Liberty Mutual did not. ICSP argued that outside counsel’s advice was placed “in issue” when Liberty Mutual relied on it to explain why it did not seek or investigate the existence of other applicable coverage for Jacobs. But there was no indication that outside counsel did so. Rather, after being told that Jacobs was not covered by the policy, the claim adjuster appeared to have independently concluded that there was no need to then explore whether Jacobs had other insurance. There was no evidence that outside counsel advised Liberty Mutual whether to investigate if Jacobs had other insurance. At no point had Liberty Mutual tried to use privileged information as the proverbial “sword and shield.” The record demonstrated that Liberty Mutual did not intend to prove the late-notice defense through the use of privileged materials.

Therefore, ICSP had not established an “at issue” waiver, and its request to compel on this basis was denied.