¹ Policies. Plaintiff DLC is a real-estate development company with ownership and business interest in numerous subsidiaries used to facilitate projects around the world. In early 2018, Defendants BIC and GAIC issued separate insurance policies1 – the Primary Policy and the Excess Policy, respectively – to Plaintiff DLC for the policy period of January 28, 2018 through January 28, 2019. (Doc. 37 at 3-4.) BIC and GAIC subsequently issued two additional policies2 to Plaintiff to provide coverage for the policy period of January 28, 2019 through January 28, 2020. (Id.) Collectively, the Policies provide inter alia primary and excess coverage for employee theft, forgery or alteration, and loss outside the premises. (Id. at 4.) DLC is listed as the “Named Insured” on both the Primary and Excess Policies. (See Doc. 37 at 4.) Plaintiff TCD is an entity that was formed in the Spring of 2018 for the express purpose of purchasing and acquiring Taymouth Castle, which is located in Perthshire, Scotland. (Doc. 37 at 8.) Plaintiff TCD is “owned 100% by [Plaintiff] DLE.” (Id. at 4.) The parties dispute whether Plaintiff TCD qualifies as a named insured under the Policies. (Compare Doc. 37 at 5 (stating “Each of the Plaintiffs qualify as Named Insureds under the Policies.”); Doc. 40 at 6 (denying Plaintiffs’ allegation that each of the Plaintiffs qualifies as a Named Insured).)

² Notice of Loss Claim. On March 18, 2019, DLC, through its insurance brokers Smith McGehee Insurance Services (SMIS) and CRC Insurance Services (CRC), notified Defendants of a potential claim under the policies. (See Doc. 66 at 3.) Specifically, the Notice of Loss Claim stated: Please be advised that we need to put you notice [sic] with regards to a crime incident the insured is still investigating. Initial feedback is that the insured 21 has experienced a theft of funds perpetrated by their legal team. The insured is in the process of putting together additional information, but in the 22 meantime please confirm receipt and setup claim files at your earliest. 23 (Doc. 66 at 3.) 24

³ Plaintiff DLC Requests Retroactive Addition of TCD and DeJoria 25 Trust. 26 1 Specifically, BIC issued Policy No. BCCR-45002757-20 (the “Primary Policy”), and 27 GAIC issued Policy No. XSC E315871 00 00 (the “Excess Policy”), as defined by the parties. (See Doc. 37 at 3-4.) 28 2 BIC issued Policy No. BCCR-45002757-21, and GAIC issued Policy No. XSC E315871 01 00. (Doc. 37 at 3-4.) On July 26, 2019, BIC received an email from CRC, forwarded from SMIS, requesting BIC to add Plaintiff TCD and non-party DeJoria Trust as Joint Insureds to the Primary Policy, retroactive to January 28, 2019. (See Doc. 66 at 3; Doc. 67-1 at 7.) “Notably, and despite DLC having previously requested numerous entities be added as Joint Insureds, this was the first time DLC requested an endorsement be made retroactive.” (Doc. 66 at 3.) On July 29, 2019, BIC issued Endorsement No. 24, adding TCD and DeJoria Trust as Joint Insureds for the first time. (Id. at 4.)

⁴ Plaintiff DLC Submits Two Proofs of Loss. On July 30, 2019, the day after BIC issued Endorsement No. 24, DLC submitted two proofs of loss claiming losses incurred, in whole or in part, by TCD and the DeJoria Trust. (See Doc. 66 at 4; Doc. 37 at 8-17.) A. Plaintiffs’ First Loss. Plaintiffs’ first loss allegedly resulted from U.K. Solicitor Stephen Jones’s theft of money that Plaintiff TCD had entrusted to its English Partner, Jirehouse, in connection with purchasing the Taymouth Castle. (See Doc. 37 at 8-14, Doc. 67 at 3.) Specifically, Plaintiffs allege that “In April 2018, TCD wired a total of $14,050,000 (the “Initial Purchase Funds”) to the care and custody of its partner Jirehouse’s Trustees General Client Account in two separate wires.” (Id. at 11.) “Plaintiffs provided the Initial Purchase Funds to Jirehouse for the express purpose of being used to purchase the Property.” (Id.) On or about May 30, 2018, the Plaintiffs finalized the purchase contract for the property with the sellers. (Id. at 12.) “The transaction for the sale of the Property was to be completed in December 2018.” (Id.) Unbeknownst to Plaintiffs, by the time the transaction was to be completed, Jirehouse no longer had the funds needed to complete the transaction because 24 the Initial Purchase Funds had already been stolen. It appears that Jones— without Plaintiffs’ authority, knowledge, or consent— took more than $12.75 25 million of the Initial Purchase Funds from Jirehouse’s Trustees General Client Account and used the funds to make payments on liabilities and 26 expenses owed by Jones, Jirehouse, and/or EFL to third-parties. The stolen funds have not been repaid and are unrecoverable. 27 28 (Id.) Plaintiffs allege that between May 2018 and March 2019, Jones engaged in “a series of tactics to delay Plaintiffs from discovering his misdeeds[,]” including requesting additional capital in November 2018, and raising false compliance issues to secure surplus funds between December 2018 and March 2019. (Id. at 12-13.) “On March 6, 2019, Plaintiffs discovered that Jones and Jirehouse had no intention of repaying the funds and that Jones had in fact stolen the funds.” (Id. at 13.) “While the Initial Purchase Funds were in the care and custody of Jirehouse, Jones . . . stole at least $12,754,185.99 of the Initial Purchase Funds. To date, these funds have not been repaid or recovered.” (Id. at 14.) B. Plaintiffs’ Second Loss. Plaintiffs allege that their second loss of £4,980,479.00 resulted from “a forgery of a written promise resulting in an unauthorized loan taken out after the purchase of Taymouth Castle, which was signed by John Clark and secured by the castle property.” (Doc. 37 at 14-16.) Specifically, in late 2018, a person – believed to be Clark – forged an application to procure a loan from a non-party lender. (Id. at 14.) The application, which was drafted without the knowledge or approval of Plaintiffs, contained a forged signature and information of DLC’s ultimate beneficial owner as a Guarantor and ultimate beneficial owner of the loan. (Id.) Based on the forged loan application, the lender processed and issued the loan, under which the lenders agreed to provide up to £5,076,528. (Id.) “The forgery on the application created a written promise to pay a sum certain that resulted in an unauthorized loan being drawn against the Property.” (Id. at 15.) “On or about February 21, 2019, Clark executed a charge that essentially pledged the Property as security for any amounts owed under the loan. (Id.) In March 2019, Plaintiffs discovered the existence of the loan and the fraud and losses arising from the forged loan application. (Id.) “To preserve their interest in the Property, Plaintiffs were forced to agree to a settlement with [the lender] under which Plaintiffs were required to pay £4,980,479 to [the lender] to pay off the outstanding balance of the [loan] and obtain a release of [the lender’s] secured interest in the Property.” (Id. at 16.) Plaintiff TCD has paid the U.S. Dollar equivalent of £4,980,479 (more than USD $5 million) to the lender as part of the settlement. (Id.)

⁵ Denial of Plaintiffs’ Claims. On August 28, 2019, BIC notified Plaintiffs that it had retained the law firm of Goldberg Segalla to assist in Berkley’s investigation of Plaintiffs’ two losses. (Doc. 37 at 16.) On May 21, 2020, BIC issued a written denial of Plaintiffs’ insurance claims under the Primary Policy. (Id.) On June 1, 2020, GAIC issued a written denial of Plaintiffs’ insurance claims under the Excess Policy. (Id. at 17.) b. Filing of this Action. On June 25, 2020, Plaintiffs filed a complaint against Defendants in the Maricopa County Superior Court. (Doc. 1-3.) On August 8, 2020, Defendant BIC removed the matter to this Court on the basis of diversity jurisdiction, initiating this action. (Doc. 1.) On December 4, 2020, the Court held a Scheduling Conference, and issued a Scheduling Order in this action. (Docs. 33, 34.)3 That same day, Plaintiffs filed their First Amended Complaint (FAC) against Defendants. (Doc. 37.) In their FAC, Plaintiffs seek inter alia declaratory judgment that Defendants have wrongfully refused to indemnify Plaintiffs for two insured losses under a commercial crime policy BIC issued to DLC (Primary Policy) and an excess policy GAIC issued to DLC (Excess Policy). (Id.) Plaintiffs allege that the first loss resulted from a U.K. solicitor’s theft of approximately $12,754,185.99 that Plaintiffs had entrusted to an English partner, Jirehouse, to facilitate purchasing the Taymouth Castle in Perthshire, Scotland. (Id. at 8- 14.) Plaintiffs allege the second loss of £4,980,479.00 resulted from “a forgery of a written promise resulting in an unauthorized loan taken out after the purchase of Taymouth Castle, which was signed by John Clark and secured by the castle property.” (Id. at 14-16.) All told, Plaintiffs seek approximately $18 million from Defendants for their alleged wrongful denials of Plaintiffs’ two loss claims under the Policies. (See Docs. 37, 66 at 2, and 67 at 2-3.) Plaintiffs also assert that Defendant BIC has breached its obligation of good 3 The Court has since granted two extensions of the case management deadlines. (Docs. 28 59, 64.) The current discovery deadline is March 11, 2022, and the dispositive motion deadline is April 8, 2022. (See Doc. 64.) faith and fair dealing. (Doc. 37 at 21-23; Doc. 67 at 3.) c. Answers and Counterclaims. On December 18, 2020, Defendants BIC and GAIC each filed an Answer and Counterclaim to Plaintiffs’ Amended Complaint. (See Docs. 39, 40.) Therein, Defendants allege that, on July 26, 2019, Plaintiff DLC sought to retroactively include additional entities, including Plaintiff TCD, as insureds under the Policies, as if they had been covered since January 28, 2019. But Plaintiffs did not inform Defendants that TCD had already incurred a loss as alleged in Plaintiffs’ Amended Complaint. (See id.) On July 29, 2019, BIC issued the requested retroactive endorsements. (Id.) Therefore, Defendants allege Plaintiffs’ “failure to disclose that TCD already incurred a loss when [DLC] requested that it be included as an insured constitutes a fraudulent and material misrepresentation, omission, concealment of fact or incorrect statement that was material to the acceptance of the risk or to the hazard assumed by BIC.” (Doc. 40 at 39. See also Doc. 39 at 31.) Accordingly, Defendants seek recission of the retroactive endorsements under Ariz. Rev. Stat. § 20-1109 and common law. (Id.) On January 8, 2021, Plaintiffs filed an Answer to each Counterclaim. (Docs. 41, 42.) d. Pending Discovery Disputes. 1. First Joint Notice. On November 15, 2021, the parties filed their first Joint Notice of Discovery Dispute (First Joint Notice). (Doc. 60.) Therein, Defendants argue that Plaintiffs have improperly withheld discovery pursuant to the attorney-client privilege and the work product protection, and seek a court order directing Plaintiffs to withdraw their work product claims and to order an in camera review of the remaining documents to determine the validity of Plaintiffs’ attorney-client privilege claims. Plaintiffs oppose Defendants’ request. (Id.) On November 17, 2021, the Court ordered the parties to submit briefing regarding their dispute in the First Joint Notice. (Doc. 63.) On November 25, 2021, Defendants submitted their brief in support of their position in the First Joint Notice. (Doc. 66.) On December 1, 2021, Plaintiffs filed their Response in opposition to Defendants’ Brief. (Doc. 67.) 2. Second Joint Notice. On November 23, 2021, the parties filed a second Joint Notice of Discovery Dispute (Second Joint Notice). (Doc. 65.) Therein, Plaintiffs assert that Defendant BIC has improperly withheld discovery pursuant to the attorney-client privilege and work product protection and seek a court order directing BIC to produce the withheld documents. (Id. at 2.) On December 15, 2021, the Court ordered the parties to submitted briefing regarding the dispute in the Second Joint Notice. (Doc. 71.) In that same order, the Court set a hearing on both the First and Second Joint Notice to be held on January 11, 2022. (Id. at 2.) On December 29, 2021, Plaintiffs filed their Brief in Support of their Position in the Second Joint Notice. (Doc. 72.) On January 6, 2022, Defendants BIC and GAIC each submitted their response to Plaintiffs’ Brief. (Docs. 73, 74.) e. Discovery Hearing. On January 11, 2022, the parties appeared before the Court for a discovery hearing on both the First and Second Joint Notice. (Doc. 75.) III. Analysis. Based on discussions held with the parties at the hearing (doc. 75), and the parties’ filings on both the First and Second Joint Notice (docs. 60, 65, 66, 67, 72, 73, 74), the Court finds three primary issues in dispute: (1) the timing of each party’s claims of work product protection; (2) the validity of each party’s claims of attorney-client privilege related to communications with certain third-party agents; and (3) whether the crime fraud exception applies to certain documents that Plaintiffs claim are protected by attorney-client privilege. a. Work Product Protection. Both parties have withheld responsive documents from production pursuant to the work product protection. Both parties assert that the opposing parties claims of work product protection are improper. The Court will address each party’s claims. 1. Legal Standard. To qualify for work-product protection, documents must: (1) be “prepared in anticipation of litigation or for trial” and (2) be prepared “by or for another party or by or for that other party’s representative.” In re Grand Jury Subpoena, Mark Torf/Torf Envtl. Mgmt., 357 F.3d 900, 907 (2003); Fed. R. Civ. P. 26(b)(3). “[T]he work product doctrine applies to documents created by investigators working for attorneys, provided the documents were created in anticipation of litigation.” In re Grand Jury Subpoena, 357 F.3d at 907 (citing United States v. Nobles, 422 U.S. 225, 239 (1975)). The party asserting the work-product immunity has the burden of demonstrating that the at-issue documents are work-product. Hernandez v. Tanninen, 604 F.3d 1095, 1102 (9th Cir. 2010) (recognizing burden is on party invoking work-product immunity). To determine whether a document qualifies for protection under the work-product protection, the Ninth Circuit has adopted a broad “because of” test. See In re Grand Jury, 13 F.4th 710, 714 (9th Cir. 2021). The “because of” test “does not consider whether litigation was a primary or secondary motive behind the creation of a document.” Id. (citing In re Grand Jury Subpoena, 357 F.3d at 908). “It instead ‘considers the totality of the circumstances and affords protection when it can fairly be said that the document was created because of anticipated litigation, and would not have been created in substantially similar form but for the prospect of that litigation.’” Id. The purpose of the work-product protection is “to preserve a zone of privacy in which a lawyer can prepare and develop legal theories and strategy with an eye toward litigation, free from unnecessary intrusion by his adversaries.” Id. at 715 (quoting United States v. Adlman, 134 F.3d 1194, 1196 (2d Cir. 1998).) “[T]he work-product doctrine upholds the fairness of the adversarial process by allowing litigators to creatively develop legal theories and strategies—without their adversaries invoking the discovery process to pry into the litigators’ minds and free-ride off them.” Id. (citing Allen v. Chi. Transit Auth., 198 F.R.D. 495, 500 (N.D. Ill. 2001) (explaining that the intent of the work-product doctrine “is to protect the adversarial process by providing an environment of privacy” and insure “that the litigator's opponent is unable to ride on the litigator's wits”)). Id. // 2. Plaintiffs’ Claims of Work-Product Protection. In the First Joint Notice, Defendants assert that Plaintiffs have improperly withheld documents pursuant to the work product protection that were created prior to Defendants’ denial of Plaintiffs’ claims. (Doc. 60 at 2.) Specifically, Defendants argue that Plaintiffs’ claims of work product protection for documents dating back as early as March 14, 2019 is improper because Plaintiffs did not notify BIC of their claims until March 18, 2019, or provide their proof of loss until July 30, 2019, and BIC did not make a coverage determination until April 3, 2020. (Id.) In response, Plaintiffs argue that “[d]ue to the value and nature of the loss, Plaintiffs anticipated the probability of litigation to obtain the coverage to which Plaintiffs are entitled from the outset.” (Id. at 3 (citing In re Grand Jury, 357 F.3d at 907 (documents prepared for a dual purpose were protected by the work-product doctrine because “the treat of impending litigation animated every document [the attorney’s agent] prepared.”)).) In a declaration provided by Plaintiff DLC’s general counsel, Mr. Jeffrey D. Holland, Mr. Holland states that Given the complex nature of these insurance claims, and the substantial amount of damages suffered by Plaintiffs, I anticipated that litigation would 17 be necessary to resolve the disputed insurance coverage issues since initially learning of the loss in March 2019, as I was already dealing with multiple 18 legal matters overseas involving the subject matter of the insurance claim. 19 (Doc. 67-1 at 4, ¶ 14.) 20 At the hearing, the Court heard from all parties on this issue. Defendants reiterated 21 that it is “not reasonable” for a party to anticipate litigation prior to providing an insurance 22 carrier with a notice of claim. Specifically, Defendants argued that: 23 In making the distinction between the communications in this March 2019 24 timeframe when the Plaintiffs claim work product vs attorney client claims. So, work-product, in my experience and looking at the cases that have been 25 cited, it would be unprecedented to say that you can reasonably anticipate litigation before you even made a claim. I can’t think of a single case in an 26 insurance context that has said before a claim is even given to the carrier, we anticipate litigation. In that case you have no idea what the carrier’s position 27 would be, you have no idea what facts might be revealed in investigation. If they anticipated litigation, it simply wasn’t reasonable. 28 (Audio Recording of January 11, 2022 Hearing at 10:29:50–10:30:40.) Defendants’ argument is not persuasive. As stated at the hearing, it seems reasonable to the Court that, given the complexity of Plaintiffs’ underlying insurance claims, the value of the loss asserted, and Plaintiffs’ representation that litigation was anticipated because Plaintiffs were “already dealing with multiple legal matters overseas involving the subject matter of the insurance claim[,]” Plaintiffs anticipated litigation regarding their claims prior to Defendants’ actual denial of those claims. Defendants have not cited, nor has the Court found, any case law supporting that proposition that it is impossible for a party to anticipate litigation of an imminent insurance claim prior to filing or receiving a denial of that claim. Considering the totality of the circumstances, the Court finds that Plaintiffs’ assertions of work-product protection are reasonable. See In re Grand Jury, 13 F.4th at 714. Accordingly, the Court will deny Defendants’ request to set those work-product claims aside. 3. Defendants’ Claims of Work-Product Protection. In the Second Joint Notice, Plaintiffs assert that Defendants have improperly withheld, pursuant to the work-product doctrine, documents created after April 2, 2020. (Doc. 65 at 2.) Specifically, Plaintiffs argue that the work-product doctrine “does not protect [BIC’s] documents prepared before May 21, 2020,” because BIC “did not formally deny Plaintiff’s [sic] claims until May 21, 2020, and there is no basis to find that documents created between April 2, and May 21, 2020 were prepared or obtained because of the prospect of litigation rather than as part of [BIC’s] ordinary business.” (Doc. 72 at 9.) In response, Defendants argue that BIC reasonably anticipated litigation not later than April 3, 2020, because that is the date on which Mr. Oliva provided BIC with a “letter containing Mr. Oliva’s legal analysis relating to DLC’s claims” recommending that those claims be denied. (Doc. 74 at 8-10.) Defendants also provide a sworn declaration from Mr. Oliva, stating that “No later than April 3, 2020, all documents and communications I prepared were done so in anticipation of litigation.” (Doc. 74-2 at 3, ¶ 7.) The Court finds that Defendants have sufficiently shown that documents created after April 3, 2020 in anticipation of litigation are protected by the work-product doctrine. Although “[m]aterials prepared as part of insurance claim investigations are generally not considered work product due to the industry's need to investigate claims[,]” the nature of the insurer’s investigation “may shift from an act taken in the ordinary course of business to an act undertaken in anticipation of litigation when a sufficient degree of adversity arises between the insurer and the insured.” Labertew v. Chartis Prop. Cas. Co., 2018 WL 1876901, *2 (D. Ariz. April 19, 2018) (internal quotation omitted). Here, Defendants’ assertion that their receipt of Mr. Oliva’s April 3, 2020 letter detailing his legal analysis and recommending that DLC’s claims be denied gave rise to Defendants’ anticipation of litigation is sufficient to establish that materials prepared after that date are properly protected under the work-product doctrine. See Centex Homes v. NGM Ins. Co., No. CV-19-01392-PHX-MTL, 2020 WL 5593759, at *4 (D. Ariz. Sept. 18, 2020) (finding that materials prepared as part of insurance claim investigations may be deemed eligible for work-product protection if “in light of the nature of the document and factual situation in the particular case, the document can be fairly said to have been prepared or obtained because of the prospect of litigation.”) (citing In re Grand Jury Subpoena, 357 F.3d at 907), reconsideration denied sub nom. Homes v. NGM Ins. Co., No. CV-19-01392-PHX-MTL, 2020 WL 5819565 (D. Ariz. Sept. 30, 2020). Accordingly, the Court will deny Plaintiffs’ request to set aside Defendants’ claims of work-product protection for documents created after April 3, 2020. b. Attorney-Client Privilege. Both parties assert that the opposing party has improperly withheld production of documentation pursuant to the attorney-client privilege. The Court will address each party’s claims. 1. Legal Standard. Federal courts look to state law to determine the applicability of evidentiary privileges to discovery disputes in diversity actions. Fed. R. Evid. 501 (“[I]n a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.”). In Arizona, the attorney-client privilege is defined by statute. See Ariz. Rev. Stat. § 12-2234.4 For a communication to be protected by the attorney-client privilege, “the communication must be made to or by the lawyer for the purpose of securing or giving legal advice.” Samaritan Foundation v. Goodfarb, 862 P.2d 870, 874 (1994) (en banc). “Where legal advice of any kind is sought from a professional legal advisor in his capacity as such, communications relating to that purpose, made in confidence by [a] client are, at his instance[,] permanently protected from disclosure by himself or by the legal advisor, unless the protection be waived.” In re Fischel, 557 F.2d 209, 211 (9th Cir. 1977) (internal numbering omitted). The attorney-client privilege conceals only those communications and advice that the client has a reasonable expectation will remain solely within the knowledge of the client, the attorney, and the necessary agents of each. Id. at 212; United States v. Ruehle, 583 F.3d 600, 609 (9th Cir. 2009) (finding a client’s communication to his attorney was not “made in confidence” where it was made for the 4 Section 12-2234 provides: 16 A. In a civil action an attorney shall not, without the consent of his client, be 17 examined as to any communication made by the client to him, or his advice given thereon in the course of professional employment. An attorney's 18 paralegal, assistant, secretary, stenographer or clerk shall not, without the consent of his employer, be examined concerning any fact the knowledge of 19 which was acquired in such capacity. 20 B. For purposes of subsection A, any communication is privileged between an attorney for a corporation, governmental entity, partnership, business, 21 association or other similar entity or an employer and any employee, agent or member of the entity or employer regarding acts or omissions of or 22 information obtained from the employee, agent or member if the communication is either: 23 1. For the purpose of providing legal advice to the entity or 24 employer or to the employee, agent or member. 25 2. For the purpose of obtaining information in order to provide legal advice to the entity or employer or to the employee, agent 26 or member. 27 C. The privilege defined in this section shall not be construed to allow the employee to be relieved of a duty to disclose the facts solely because they 28 have been communicated to an attorney. purpose of transmission to outside auditor). Confidentiality must be affirmatively established by the privilege proponent and is not presumed. See Weil v. Inv./Indicators, Research & Mgmt., Inc., 647 F.2d 18, 25 (9th Cir. 1981) (“[T]he burden of proving that the attorney-client privilege applies rests . . . with the party asserting it.”); In re Grand Jury Proceedings, Thursday Special Grand Jury Sept. Term, 1991, 33 F.3d 342, 354 (4th Cir. 1994) (“[T]he mere relationship between the attorney and the client does not warrant a presumption of confidentiality.”). Additionally, “[t]he attorney-client privilege may extend to communications with third parties who have been engaged to assist the attorney in providing legal advice. If the advice sought is not legal advice, but, for example, accounting advice from an accountant, then the privilege does not exist.” United States v. Richey, 632 F.3d 559, 566 (9th Cir. 2011) (citing Weil, 647 F.2d at 24). “‘What is vital to the privilege is that the communication be made in confidence for the purpose of obtaining legal advice from the lawyer.’” United States v. Gurtner, 474 F.2d 297, 288-99 (9th Cir. 1973) (emphasis in original) (quoting United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961)). Finally, when the client voluntarily discloses privileged communications to someone outside the attorney-client relationship, the privilege is waived. Tennenbaum v. Deloitte & Touche, 77 F.3d 337, 341 (9th Cir. 1996). The voluntary disclosure of a privileged communication may also destroy the privilege as to other communications relating to the same subject matter that, in fairness, ought to be considered together. Weil, 647 F.2d at 24; Fed. R. Evid. 502(a). 2. Plaintiffs’ Claims of Attorney Client Privilege. In the First Joint Notice, Defendants assert three challenges to Plaintiffs’ claims of attorney-client privilege: (1) Defendants challenge Plaintiffs’ claims of attorney-client privilege for approximately 50 communications with SMIS, the broker Plaintiffs engaged to procure the policies at issue (doc. 60 at 2); (2) Defendants argue that, even if Plaintiffs’ communications with SMIS were privileged, “the crime-fraud exception applies” and an in camera review of those communications is warranted (id. at 2-3); and (3) Defendants challenge Plaintiffs’ claims of attorney-client privilege for documents that “were only carbon copied to in-house counsel in an attempt to protect otherwise non-privileged communications” (id. at 3). The Court will address each argument. A. SMIS. Defendants first argue that Plaintiffs have improperly withheld communications between Plaintiff DLC’s in-house counsel, Mr. Holland, and DLC’s insurance broker, SMIS, under the attorney-client privilege. (Doc. 66 at 6-8.) Specifically, Defendants allege that these communications took place in the ordinary course of business and thus are not protected. (Id.) In response, Plaintiffs argue that Mr. Holland’s communications with SMIS were for the purpose of obtaining information that would be used to provide legal advice to DLC, and thus that the communications are covered under the privilege. The Court agrees. Courts “have long recognized that ‘the advocate and counselor [needs] to know all that relates to the client’s reasons for seeking representation’ if he is to provide effective legal advice.” In re Pac. Pictures Corp., 679 F.3d 1121, 1126 (9th Cir. 2012) (quoting Trammel v. United States, 445 U.S. 40, 51 (1980)). Arizona courts interpret the attorney-client privilege as including communications of investigators acting at the direction of the corporation’s lawyer, including communications between the investigator and non-employees. See Salvation Army v. Bryson, 273 P.3d 656, 662 (Ariz. Ct. App. 2012). See also United States v. Graf, 610 F.3d 1148, 1158 (9th Cir. 2010) (reasoning that “too narrow a definition of ‘representative of the client’ will lead to attorneys not being able to confer confidentially with nonemployees who, due to their relationship to the client, possess the very sort of information that the privilege envisions flowing most freely.”). Here, Plaintiffs have provided a declaration from Mr. Holland averring that the communications with SMIS at issue were “to obtain information for the purpose of developing legal recommendations and strategies in connection with the anticipated litigation with Defendants, and to be able to provide informed and candid advice to Plaintiffs.” (Doc. 67-1, Ex. A, at 4-5 ¶16.) Defendants argue that descriptions of Mr. Holland’s communications on the Plaintiffs’ privilege log contradict Mr. Holland’s claim. (See Doc. 66 at 7.) Specifically, Defendants argue that Plaintiffs’ privilege log Entry 8225 and Entry 8246 describe communications that “make[] no sense” if they were created for the purposes Plaintiffs allege. (Doc. 66 at 7.) “It is far more likely that the emails Holland sent on July 19 and 22, 2019, about the structure of the Taymouth Castle deal were for ordinary business purposes associated with the request SMIS made just a few days later to add TCD and the DeJoria Trust as Joint Insureds.” (Id. at 7-8.) Defendants’ argument is not persuasive. As discussed at the hearing, it seems equally plausible that Mr. Holland communicated with SMIS to provide them with information regarding the structure of Taymouth Castle deal and Plaintiffs’ corporate organizational structure so that, in return, SMIS could provide Holland with information for the purpose of developing legal recommendations for Plaintiffs. Defendants do not provide any further argument or evidence rebutting Mr. Holland’s declaration that the communications at issue were for the purpose of developing legal recommendations and strategies in connection with this anticipated litigation. Accordingly, the Court will deny Defendants’ request to compel production of the privileged communications. B. Crime-Fraud Exception. Defendants next argue that “even if these communications were otherwise privileged, the crime-fraud exception applies under the circumstances.” (Doc. 66 at 8.) Arizona “has long recognized a ‘crime-fraud’ exception to the [attorney-client] privilege.” Kline v. Kline, 212 P.3d 902, 911 (Ariz. Ct. App. 2009). “[T]he privilege is not extended when there is a prima facie showing that a communication with an attorney was used to perpetuate a crime or fraud.” Id. “Once the privilege has been established, a party attempting to set it aside under the crime-fraud exception must demonstrate ‘a factual basis adequate to support a good faith 5 Entry 822 describes an email between Mr. Holland and SMIS for the purpose of “obtaining or providing information in order for counsel to provide legal advice regarding 27 Taymouth Castle Structure.” (Doc. 66-1, Ex. A, at 269.) 6 Entry 824 describes an email between Mr. Holland and SMIS “for the purpose of 28 obtaining or providing information in order for counsel to provide legal advice regarding Plaintiffs’ corporate and organizational structure. . . .” (Doc. 66-1, Ex. A, at 269.) belief by a reasonable person’ that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies.” Clements v. Bernini in & for Cty. of Pima, 471 P.3d 645, 649 (Ariz. 2020) (quoting United States v. Zolin, 491 U.S. 554, 572 (1989) (internal citation omitted)). Here, Defendants argue that Plaintiffs engaged in a fraud by seeking to retroactively add entities to the Policy that had already suffered insurable losses without disclosing those potential losses to BIC. (See Doc. 66 at 7-9.) Specifically, Defendants assert that “[t]he timeline of Plaintiffs’ actions strongly suggests Plaintiffs realized as they were preparing to submit a proof of loss that the entities that suffered the alleged losses, TCD and the DeJoria Trust, were not named as Joint Insureds under the Policies[.]” (Doc. 66 at 8.) Thus, “Plaintiffs scrambled to have their brokers request an endorsement retroactively adding those entities before disclosing any facts about the losses to BIC[.]” (Id. at 8-9.) And Plaintiffs’ intentional failure to disclose knowledge that the new entities had already suffered an insurable loss was a material and fraudulent omission in breach of Section C of the “Arizona Changes” Endorsement to the Primary Policy.7 (Audio Recording of the January 11, 2022 Hearing at 11:13:15-11:14:20.) Defendants provide the following summarized timeline of relevant events: 7 The “Arizona Changes” Endorsement states: 19 We will not pay for any loss or damage in any case involving 20 misrepresentations, omissions, concealment of facts or incorrect statements: 21 1. That are fraudulent; 22 2. That are material either to the acceptance of the risk or to the hazard assumed by us; and 23 3. Where, if the true facts had been made known to us as required either by 24 the application for the Policy or otherwise, we in good faith would either: 25 a. Not have issued the Policy; 26 b. Not have issued the Policy in as large an amount; or 27 c. Not have provided coverage with respect to the hazard resulting in the loss. 28 (See Doc. 1-3 at 81.) | ee 2 March 18,2019 | First Notice of Potential Clarm Provided to Defendants 3 March 29, 2019 | Plaintiffs Begin Drafting Proofs of Loss (See Entry 771). 4 June 20, 2019 Plaintiffs advise “we are in the process of completing our proof of loss.” June 27, 2019 Plaintiffs request an extension to July 31, 2019 to submit proof of loss 5 July 19, 2019 to | Plaintiffs and SMIS exchange emails about “Taymouth Castle Structure,” July 22, 2019 “Plaintiffs’ corporate and organizational structure,” “corporate formation 6 documents for... Taymouth Castle DLC, LLC,” and the “insurance 7 claims” (See Entries 822-824). July 26, 2019 Plaintiffs seek to retroactively add TCD and the DeJoria Trust as Joint 8 Insureds (the first time Plaintiffs ever requested an entity be added retroactively) and ask BIC to “forward us the endorsement on Monday.” 9 July 26, 2019 to | Plaintiffs and SMIS exchange emails about the insurance claims and a 10 July 28, 2019 “draft of a proof of loss form” (See Entries 825-828). July 29, 2019 BIC issues endorsement adding TCD and the DeJoria Trust as Joint 11 Insureds (without knowledge that TCD and the DeJoria Trust had already suffered a loss or that DLC did not have any financial interest in the 12 DeJoria Trust 13 July 30, 2019 Plaintiffs submit two proofs of loss seeking coverage for losses allegedly suffered in part by TCD and the DeJoria Trust. 14 15 || (Doc. 66 at 9.) 16 In response, Plaintiffs do not contest Defendants’ described timeline of events; || instead, Plaintiffs argue that the timing is purely coincidental. (Doc. 67 at 9-10.) Plaintiffs 18 || insist that “Mr. Holland did not direct the broker to add TCD to the named insured schedule on or around July 26, 2019 (an action which the broker seems to have taken on its own || once it noticed a clerical mistake) and does not recall any conversations related to the additional of TCD as an insured at any time prior to, on, or around July 26, 2019.” (/d.) || Mr. Holland avers to the same in his provided declaration. (See Doc. 67-1, Ex. A, at 5 4417- || 18.) Plaintiffs’ argument is not persuasive. 24 The Court agrees with Defendants that the timeline of events leading up to 25 || Plaintiffs’ filing of their two proofs of loss is suspicious and provides at least circumstantial || evidence supporting Defendants’ claim that the crime-fraud exception applies. Defendants’ 27 || argument is further bolstered by the fact that it was SMIS who emailed CRC seeking to 28 || retroactively update the Policies with new entities. (See Doc. 67-1, Ex. B, at 7 July 26,