The opinion of the court was delivered by: Magistrate Judge Martin C. Ashman
MEMORANDUM OPINION AND ORDER
Plaintiffs Michael and Marilyn Stopka ("the Stopkas"), and Chateau Arlington, LLC ("Chateau Arlington") (together, "Plaintiffs") have sued Defendant American Family Mutual Insurance Company, Inc. ("American Family") for negligence, breach of contract, and promissory estoppel related to its handling of the remediation of fire damages to the Stopkas' home. Currently before the Court is American Family's motion to compel. The Court rules on this motion under District Judge John W. Darrah's referral for a decision pursuant to N.D. Ill. Rule 72.1. On June 29, 2011, the Court held a hearing on the motion and found that Plaintiffs' privilege log was not sufficient to determine if the privileges they asserted could be applied to the documents Plaintiffs sought to withhold. The Court ordered Plaintiffs to submit the disputed documents for an in camera review, which they have now done. Based on the Court's examination of these materials, it finds that American Family's motion is granted in part and denied in part.
On September 29, 2003, Chateau Arlington, which is held by Plaintiffs Michael and Marilyn Stopka, obtained title to a piece of real property in Barrington Hills, Illinois on which the Stopkas planned to build a single-family home. In 2006, Chateau Arlington entered an agreement with Augustine Custom Homes, Inc. to construct the home, and Augustine then contracted with various subcontractors, including Complete Flashings, Inc., to complete aspects of the home's construction. According to Plaintiffs, Complete Flashings caused a fire to start on the roof of the building on September 10, 2008 that led to significant fire, smoke, and water damage. Construction then ceased so that remediation work could begin on the damaged portions of the house.
Plaintiffs claim that American Family had issued a $2,000,000 pre-occurrence insurance policy to Complete Flashings as of the date of the fire. Plaintiffs' second amended complaint alleges that American Family communicated directly with the Stopkas and their accountant, Jerry Wolowicki ("Wolowicki"), through its agent Gerald Hayes and agreed to undertake the remediation required to repair the home. Plaintiffs further claim that Mr. Hayes subsequently communicated primarily through Wolowicki, who also acts as the Stopkas' financial advisor. Various contractors and sub-contractors were retained to do the work, and American Family eventually returned control over the construction site to Augustine Homes in November, 2008. American Family also hired a third-party company to conduct indoor air quality surveys to assess the possible presence of mold.
Unhappy with the results of the third-party's efforts, the Stopkas hired their own consultant, who concluded that American Family's remediation work had not been properly carried out and that additional repairs were necessary. The parties were unable to settle their dispute without litigation, and Plaintiffs brought the instant suit on September 22, 2010 under the Court's diversity jurisdiction. 28 U.S.C. § 1332. American Family served its request for production on Plaintiffs, including a request for "all communications constituting, discussing or related to insurance coverage for damage caused by the subject fire, regardless of the insurer or the type of insurance." (Def's. Mot., Ex. A at ¶ 20). Plaintiffs provided some documents in response to this request, but also submitted a privilege log that identified twenty-two items Plaintiffs claim are protected by the attorney-client privilege, the work product doctrine, and the accountant-client privilege. Plaintiffs have now provided the documents at issue for an in camera review to determine of either of these privileges apply. The documents concern communications between the Stopkas, Wolowicki, and attorneys Chris Hennessy and Steven Pearson.
When a civil action arises under a court's diversity jurisdiction, a court determines most privileges in accordance with state law. Budinich v. Beckton Dickinson & Co., 486 U.S. 196, 198 (1988) ("[S]tate law generally supplies the rules of decision in federal diversity cases . . . ."); Grochocinski v. Mayer Brown Rowe & Maw LLP, 251 F.R.D. 316, 321 (N.D. Ill. 2008). In this case, Plaintiffs reside in Illinois, and American Family is located in Wisconsin. The parties assume that Illinois courts would apply Illinois' privilege rules instead of those of Wisconsin. As Illinois appears to have the most significant contacts with the underlying facts of the case, the Court accepts the parties' assumption without further analysis. See CSX Transp., Inc. v. Lexington Ins. Co., 187 F.R.D. 555, 559 (N.D. Ill. 1999) (examining Illinois' choice-of-law rules on discovery issues).
The attorney-client privilege promotes open discussions between attorneys and their clients by preventing the disclosure of certain kinds of communications. Upjohn v. United States, 449 U.S. 383, 389 (1981). Under Illinois law, the party asserting the privilege carries the burden of demonstrating that it applies. Pyramid Controls, Inc. v. Siemens Indus. Automations, Inc., 176 F.R.D. 269, 271 (N.D. Ill. 1997). To do so, the party must show that "the statement originated in a legal capacity for the purpose of securing legal advice or services, and remained confidential." Equity Residential v. Kendall Risk Mgt., Inc., 246 F.R.D. 557, 563 (N.D. Ill. 2007) (quoting Caremark, Inc. v. Affiliated Computer Servs., Inc., 192 F.R.D. 263, 265 (N.D. Ill. 2000)). Such statements are protected only on a showing that they: (1) were made to an attorney acting in his or her legal capacity; (2) originated in a belief that they would not be disclosed; (3) involved legal advice; and, (4) remained confidential. Consolidation Coal Co. v. Bucyrus-Erie Co., 89 Ill.2d 103, 119, 432 N.E.2d 250 (1982). The protection extends to communications flowing from the client to the attorney, as well as from the attorney to the client. Equity Residential, 246 F.R.D. at 563. Communications involving business instead of legal advice are not protected. See Square D Co. v. E.I. Electronics, Inc., 264 F.R.D. 385, 391 (N.D. Ill. 2009). The Illinois Supreme Court has made clear that the privilege is to be construed within the narrowest limits possible. Waste Mgt., Inc. v. Int'l Surplus Lines Ins. Co., 144 Ill.2d 178, 190, 579 N.E.2d 322 (1991).
By contrast, courts sitting in diversity consider the work product doctrine solely on the basis of federal law. Abbott Labs. v. Alpha Therapeutic Corp., 200 F.R.D. 401, 405 (N.D. Ill. 2001). This privilege protects documents that an attorney or a representative of a party creates in anticipation of litigation in order to prepare or analyze a client's case. Fed. R. Civ. P. 26(b)(3); Sandra T.E. v. South Berwyn Sch Dist. 100, 600 F.3d 612, 618 (7th Cir. 2010). Its protection is "distinct from and broader than the attorney-client privilege." United States v. Nobles, 422 U.S. 225, 238 n.11 (1975) (citation omitted). A lawsuit need not be underway for the doctrine to apply "provided the prospect of litigation [is] not remote." Mattenson v. Baxter Healthcare Corp., 438 F.3d 763, 768 (7th Cir. 2006). This protection only prevents the disclosure of protected documents or communications, however, not the underlying facts. See Upjohn, 449 U.S. at 395-96.
Unlike federal common law, Illinois has also created a statutory accountant-client privilege.*fn1 Like the attorney-client privilege, this privilege also promotes open and forthright disclosures by individuals using accounting services. In re October 1985 Grand Jury No. 746, 124 Ill.2d 466, 481, 530 N.E.2d 453 (1988) (Clark, J., dissenting). Four elements are required for the accountant-client privilege: (1) the communication must originate in a confidence that it will not be disclosed; (2) the confidentiality element must be essential to maintaining the relation of the parties involved; (3) the relationship itself must be one that public opinion believes should be protected; and, (4) disclosing the communication would injure the relationship between the parties involved more than the underlying litigation would be benefitted by its disclosure. Id. at 475; Zepter v. Dragisic, 237 F.R.D. 185, 189 (N.D. Ill. 2006) (citation omitted). The accountant-client privilege does not extend to communications that are disclosed to third parties unless those parties have a common interest with the disclosing party. Id.
The twenty-two documents in Plaintiffs' privilege log involve email communications between a variety of individuals related to American Family's handling of the remediation of the Stopkas' home. The individuals sending and receiving the emails vary, but all the messages contain one common element: the Stopkas' accountant, Jerry Wolowicki, was either the recipient, directly or by carbon copy, or the sender of them. All but five of the emails also involve at least one of the Plaintiffs' attorneys. Setting aside the colorful, and altogether unhelpful, expressions of indignation each side directs at the other's alleged perfidy, the main points of dispute are whether Wolowicki's participation in the communications gives rise to the accountant-client privilege, and whether the communications are protected by the attorney-client privilege or the work product doctrine.
A. The Work Product Doctrine
Plaintiffs claim that six of the twenty-two entries in their privilege log are protected by the work product doctrine. For its part, American Family has overlooked this privilege by mistakenly claiming that Plaintiffs did not assert it in their privilege log. Plaintiffs' response brief notes that the privilege was asserted for six documents, but American Family again overlooks this clarification in its reply brief and appears to have abandoned any argument it might have raised on this issue. The Court's own review of the items submitted for an in camera review shows that each of the emails at issue was created just before or soon after this action was filed, and each falls within the scope of the privilege. Accordingly, the Court finds that American Family has waived any objection to Plaintiffs' reliance on the work product doctrine and that the six documents are protected from discovery. These include: (1) STP-PRIV004-005; (2) STP-PRIV0012; (3) STP-PRIV0013; (4) STP-PRIV0026; (5) STP-PRIV0032; and, (6) STP-PRIV0033.
B. The Accountant-Client Privilege
Unlike the attorney-client privilege, which belongs to the client but can be asserted by an attorney on the client's behalf, In re Marriage of Decker, 153 Ill.2d 298, 313, 606 N.E.2d 1094 (1992), Illinois' accounting privilege "inures only to the accountant. It cannot be raised or claimed by the client."*fn2 Western Employment Ins. Co. v. Merit Ins. Co., 492 F. Supp. 53, 55 (N.D. Ill. 1979) (emphasis added); see also Baylor v. Mading-Dugan Drug Co., 57 F.R.D. 509, 510 n.2 (N.D. Ill. 1972). Unfortunately, Plaintiffs present no argument on why this clear rule of law does not prevent them from invoking the accounting privilege. Wolowicki is the accountant in this case, and Plaintiffs do not claim that he has asserted the privilege. Clearly, he is not doing so in this proceeding. Plaintiffs do not contend that they are asserting it on his behalf or, for that matter, that they would have the right to do so under Illinois law. Thus, Plaintiffs cannot rely on a privilege that belongs to their accountant to protect documents that they themselves possess. See Western Employment , 492 F. Supp. at 55 (protecting documents held by an accountant but ordering a non-accountant to produce the same documents). Plaintiffs state, without explanation, that the documents ...