Plaintiff seeks disclosure of the underwriting file of defendant, documents held by non-party witness Steven Rosenfeld, Esq., an order directing Mr. Rosenfeld to answer questions in a deposition regarding his representation of Flatiron Entertainment d/b/a/ Avalon Nightclub (Flatiron) and defendant's disclaimer of Flatiron's coverage. Defendants and Mr. Rosenfeld oppose the motion primarily on privilege grounds. Also raised in the opposition are procedural issues which the defendants assert are sufficient to deny the motion. Preliminary, as to the procedural defects, the court necessitated the making of the instant motion instead of the original in camera review and therefore the failure to include an affirmation of good faith is not sufficient cause to deny the instant application.

At the heart of this issue is attorney-client privilege and attorney work product privilege in a situation where the insurer retained counsel for its insured and later disclaimed coverage. It is clear that the attorney's client is the insured and therefore the privilege belongs to the insured rather than the insurer. Woodson v. American Transit Ins. Co.,280 AD2d 328 [1st Dep't 2001]. Contrary to plaintiff's assertion that Rosenfeld waived the privilege CPLR 4503 makes clear that an attorney cannot waive the attorney-client privilege rather waiver is only effective when done by the beneficiary of the privilege or their personal representative.

As there is no waiver by the client, i.e., Flatiron a determination must be made as to whether the disclosure sought falls into one of the delineated privileges. CPLR 3101 [*2]provides for "full disclosure of all evidence material and necessary in the prosecution or defense of an action." The words "material and necessary" are to be construed broadly to require upon request, "any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity." Allen v. Crowell-Collier Pub. Co., 21 NY2d 403 [Ct App 1968]. The test is one of "usefulness and reason." Id. Concededly, full disclosure must yield at times. Thus, CPLR § 3101 provides for limited exceptions to the general rule favoring complete disclosure. Privileged matter, such as that falling within the scope of the attorney-client privilege, attorney's work product, and material prepared for litigation. Such material may not be discovered unless the court finds that it can no longer be duplicated and that denying disclosure will result in "injustice or undue hardship." Kenford Co., Inc. v. Erie County, 55 AD2d 466 [1977].

In order to raise a valid claim of privilege, the party seeking to withhold the information must show it was a "confidential communication" made between the attorney and the client in the context of legal advice or services. Documents which are not primarily of a legal character, but express substantial nonlegal concerns are not privileged. In insurance contexts reports and materials prepared by attorneys to assist the defendants in determining whether to accept or reject plaintiff's claim and to evaluate the extent of plaintiff's loss are considered material prepared in the ordinary course of business and is not entitled to exemption from discovery. Westhampton Adult Home, Inc. v National Union Fire Ins. Co., 105 AD2d 627 [1st Dep't 1984]. Further, the payment or rejection of claims has been held to be part of the regular business of an insurance company. Consequentially, reports which aid it in the process of deciding which actions to pursue are made in the regular course of business and are discoverable. Bertalo's Rest. v. Exchange Ins. Co., 240 AD2d 452 [1997].

Therefore, Mr. Rosenfeld and the defendants are ordered to provide the plaintiff with all communications, reports, and other documents which pertain to the coverage, defense, and subsequent disclaimer. Any notations or information pertaining to the defense of the underlying tort action may be blacked out, as that information is not discoverable. The defendants and non party witness shall provide the delineated discovery within 60 days of entry of this order. Mr. Rosenfeld is ordered to appear at an EBT at which time testimony may be taken regarding the above disclosures. No question which has been asked at the previous deposition may be asked again. The parties are to appear for a status conference in Part 13 at 11 a.m. on July 8, 2011.This constitutes the decision and order of the court.

J.S.C.