Muse Apartments, LLC v. Travelers Casualty
Muse Apartments, LLC v. Travelers Casualty
2014 WL 11997863 (W.D. Wash. 2014)
December 2, 2014
Lasnik, Robert S., United States District Judge
Summary
The court found that Travelers had not provided sufficient evidence to support its claim of undue burden, and thus cost shifting or splitting was not appropriate. The court also found that Travelers had not provided any evidence to support its contention that claim data was not stored so as to allow for an electronic search to identify claims brought by 1031 exchange facilitators. Plaintiff was thus entitled to its reasonable expenses incurred in making the motion, including attorney's fees.
Muse Apartments, LLC, Plaintiff,
v.
Travelers Casualty and Surety Company of America, Defendant
v.
Travelers Casualty and Surety Company of America, Defendant
Case No. C12-2021RSL
Signed
November 24, 2014
Filed December 02, 2014
Counsel
Stephanie L. Grassia, Matthew V. Pierce, Pauline Victoria Smetka, Helsell Fetterman LLP, Seattle, WA, for Plaintiff.Joel E. Wright, Marc Rosenberg, Pamela J. DeVet, Lee Smart PS Inc., Seattle, WA, for Defendant.
Lasnik, Robert S., United States District Judge
ORDER GRANTING IN PART PLAINTIFF'S MOTION TO COMPEL AND DENYING DEFENDANT'S MOTION FOR A PROTECTIVE ORDER
*1 This matter comes before the Court on “Plaintiff's Motion to Compel Discovery” (Dkt. # 93) and “Defendant's Cross-Motion for Rule 26(c) Protective Order” (Dkt. # 105). Plaintiff has asserted a claim of negligence against Travelers, arguing that it is liable for the acts of its agent, Bell-Anderson Insurance.[1] The existence of an agency relationship and causation are disputed. Having reviewed the memoranda, declarations, and exhibits submitted by the parties,[2] the Court finds as follows:
A. First Interrogatories and Second Requests for Production
On February 14, 2013, plaintiff served its First Interrogatories and Second Requests for Production on Travelers, which responded on March 18, 2013. With regards to Interrogatory No. 5 and Requests for Production 10, 12, 13, 14, and 16, the responses consisted of nothing more than objections or the statement “No responsive documents.” Decl. of Stephanie L Grassia (Dkt. # 94), Ex. B. Three days before the deadline for filing discovery motions, plaintiff requested a conference to discuss the deficiencies in defendant's responses. Decl. of Larry Setchell (Dkt. # 95), Ex. B. At the conference, defense counsel indicated that she was not prepared to discuss Interrogatory No. 5 or Requests for Production 10, 12, 13, 14, and 16. Decl. of Larry Setchell (Dkt. # 95) at ¶ 10.[3] Each of these discovery requests will be considered below.
Interrogatory No. 5: Identify any and all claims from 2007 to the present date that involved employee theft, employee dishonesty, fidelity bond, or similar coverage for any of your 1031 exchange facilitator insureds.
Travelers objected to Interrogatory No. 5 on the ground that Travelers does not maintain a list of insureds who are 1031 exchange facilitators and that it would be unduly burdensome (a) to manually search files to identify such insureds or (b) to collect information regarding the tens of thousands of commercial fidelity claims filed around the country since 2007. Dkt. # 94 at 16-17. Travelers provided no responsive information in March 2013.
*2 Plaintiff's theory of the case is that Travelers did, contrary to its prior assertions, provide the type of coverage 1031 ECI sought in 2009 and that it was only the negligence of its agent (and not some sort of regulatory or other limitation) that prevented 1031 ECI from obtaining the coverage that would have protected plaintiff from loss. Interrogatory No. 5 seeks evidence that is clearly relevant to the causation issue, and Travelers' has not justified its complete failure to respond. It has not attempted to explain how its records are maintained or to identify the sorts of information that could be obtained through electronic searches without having to pull hard copies of files located throughout the country.[4] Travelers has taken an all-or-nothing approach to the discovery request: if it cannot identify every fidelity claim made under a policy issued to a 1031 exchange facilitator, it will not identify any. Such a tactic thwarts the discovery process. To the extent responsive information was available – even if incomplete – it should have been produced in a timely manner with a clear explanation of why further investigation would be unduly burdensome.
Travelers does not, in fact, state that it is unaware of any claims made under a commercial fidelity policy by an insured that is a 1031 exchange facilitator or identified the steps it took to locate responsive information. Nor has Travelers stated, much less shown, that it cannot search its electronic data for policies issued to insureds with “1031,” “exchange,” and/or “facilitator” in their names. The reference to tens of thousands of files stored throughout the country appears to be a red-herring. Plaintiff is not interested in every claim made on a commercial fidelity policy: the information is only relevant if the claim were made on a policy issued to a 1031 exchange facilitator. Travelers provides no information regarding the number of such claims, but it is presumably far less than tens of thousands. On the record presented, Travelers has not shown that conducting computerized searches to identify the relevant insureds and then reviewing their files for responsive claims would be unduly burdensome. If, in the alternative, the Court assumes that responding to Interrogatory No. 5 will require a manual examination of every hard copy file that is related to a commercial fidelity policy, Travelers has the option of making the records available to plaintiff pursuant to Fed. R. Civ. P. 33(d) rather than simply declaring that production would be too hard.
Request for Production No. 10: Please produce complete and certified copies of all fidelity bonds or crime policies Travelers has issued to other exchange facilitators such as 1031 ECI, LLC since 2005.
Travelers objected to Request for Production No. 10 on the grounds of relevance, vagueness, and undue burden. As discussed above, the type of policies issued to other 1031 exchange facilitators is relevant, and Travelers has failed to show that searching for such policies would be unduly burdensome. To the extent the term “fidelity bond” is vague, Travelers shall respond as to all commercial fidelity policies.
Request for Production No. 12: Please produce complete copies of all policies specifically entitled “fidelity bonds” that you filed with the Washington Insurance Commissioner since 2002.
Request for Production No. 13: Please produce any written or electronic claims handling standards, policies, and/or guidelines for the adjustment of crime and fidelity claims for Washington State for the period 2005 to the present.
Travelers responded to both Request for Production Nos. 12 and 13 with “No responsive documents.” Dkt. # 94 at 19. While it may be hard to believe that Travelers has no claims handling policies related to the adjustment of crime claims arising in the State of Washington, Travelers has fully responded to the requests and plaintiff has not established that the responses are untrue.
*3 Request for Production No. 14: Please produce your underwriting guidelines, circulars, commercial lines manuals, or any other document that governs the issuance of “fidelity bonds” and crime policies in Washington.
Travelers objected to Request for Production No. 14 as irrelevant and seeking confidential commercial information. In its cross-motion for protective order, Travelers abandons the relevance objection, but argues that the request “is overbroad and seeks proprietary information” and that the dispute “might have been avoided had Muse sought to work with Travelers to craft a mutually agreeable protective order.” Dkt. # 105 at 9. Travelers makes no attempt to identify the types of responsive documents it has or to explain why those documents should not be revealed or should only be revealed under certain protections. Contrary to Travelers' argument, plaintiff did work with Travelers to agree on the terms of a protective order in February 2013 (Dkt. # 17), but the Court rejected the proposed order in large part because it gave the parties “too much discretion to designate anything and everything as ‘confidential’ ” (Dkt. # 18). Now, as then, simply asserting that a document is confidential is not enough to warrant a protective order.
Request for Production No. 16: Please produce the claims files for all claims you identified in response to Interrogatory No. 5 above.
Travelers objected to Request for Production No. 16 on the same grounds as it objected to Interrogatory No. 5. Those objections are overruled.
B. Fourth Requests for Production
On July 23, 2014, plaintiff served its Fourth Requests for Production on Travelers, which responded on August 22, 2014. Travelers raised a number of objections, but noted that some responsive documents “in our counsel's possession have already been provided or made available and are available for inspection and copying.” Dkt. # 94 at 8. Plaintiff identified a number of deficiencies with the production, including the failure to provide a privilege log or to make the responsive documents available for review, at a meet and confer on September 30, 2014. Defense counsel agreed to prepare a privilege log related to the claims filed by clients of 1031 ECI, confirmed that the files would be made available to plaintiff's counsel, and promised to ask Travelers to revisit its answers to Requests for Production Nos. 18 and 19. Counsel was unable to estimate when a supplemental production would be made. Dkt. # 95 at 8. The day before plaintiff's counsel was scheduled to review the documents, defense counsel notified her that, with the exception of “the claim file” that had already been produced, there were no other responsive, non-privileged documents in the files related to clients of 1031 ECI and that Travelers therefore had “nothing to provide for your inspection and copying tomorrow.” Dkt. # 94 at 29 (emphasis in original). Defense counsel also indicated that she had asked Travelers to review its responses to Requests for Production Nos. 18 and 19 “and will supplement if there are other responsive documents.” Dkt. # 94 at 30.
With the deadline for filing discovery motions fast approaching, plaintiff's counsel requested another meeting to confer regarding the outstanding issues. Defense counsel did not respond to a number of communications, and plaintiff unilaterally scheduled a meeting for October 15, 2014, one day before the filing deadline. At the conference, Travelers refused to produce any documents or a privilege log in response to Requests for Production Nos. 20 and 21 and, although it was hopeful that it could supplement its responses to Requests for Production Nos. 18 and 19 by the end of the week, it could not provide a date certain. Plaintiff filed this motion the next day.[5]
*4 Request for Production No. 18: Please provide a full and complete copy of your agency file with Bell-Anderson, including a copy of all agency agreements (or similar agreements) between you and Bell-Anderson.
Travelers objected to Request for Production No. 18 on the grounds that it could not understand the phrase “agency file,” that the request was overbroad as to time, and that it was irrelevant because “Bell-Anderson did not act as Travelers' agent in the 1031 ECI transactions.” Dkt. # 94 at 8. The vagueness and relevance objections border on the ridiculous. In the context of this case, the “agency file” is clearly the collection of documents establishing or related to the relationship between Travelers and Bell-Anderson. Because the nature of that relationship is hotly contested, the documents are obviously relevant to an issue in this case. Travelers provided a copy of said “agency file” the day after plaintiff filed this motion.
Request for Production No. 19: Please produce all your correspondence (including e-mails) with Bell-Anderson concerning the scope of its agency or any limitations on its authority.
Travelers objected to this request as overbroad as to time and the “potential number of correspondents within Travelers,” unduly burdensome because the parties had agreed to stay the case pending mediation, irrelevant because “Bell-Anderson did not act as Travelers' agent in the 1031 ECI transaction,” and protected under the work product doctrine. Dkt. # 94 at 8. The relevance objection is overruled: Travelers cannot simply declare an issue of fact resolved and then refuse to produce relevant documents on the ground that there is no fact issue. The overbreadth objection suggests that Travelers made no effort to locate correspondence and emails related to the scope of Bell-Anderson's agency or authority and therefore had no idea how many correspondents were at issue.[6]Any agreed “stay” of this litigation has expired, and Travelers has not shown that production would be unduly burdensome. Nor has Travelers supported its claim that its correspondence with Bell-Anderson regarding the scope of its agency and authority was created in anticipation of litigation. The objections are overruled.
Travelers produced a “handful” of documents on October 17, 2014, some of which may have been responsive to Request for Production No. 19. If Travelers has not performed a thorough and complete search for all correspondence (including emails) between it and Bell-Anderson related to the scope of Bell-Anderson's agency or authority to represent Travelers or sell its policies, it must do so now.
*5 Request for Production No. 20: Please produce all documents evidencing any communications between you or your agents or attorneys and Richard Dance and his agents or attorneys.
Request for Production No. 21: Please produce all documents evidencing any communications between you or your agents or attorneys and 1031 ECI, LLC and its agents or attorneys not included in response to RFP No. 20 above.
Travelers objected to Request for Production Nos. 20 and 21 because it could not understand the term “agent,” the requests were overbroad as to time and the number of potential correspondents within Travelers, it would be unduly burdensome to respond because the parties had agreed to stay the case pending mediation, and the documents are protected by the work product doctrine. All of the objections except privilege have been abandoned. Travelers argues that all communications between its counsel and nonparties that occurred after this lawsuit was filed are not only protected by the work product doctrine, but need not be included in a privilege log or otherwise memorialized.
Travelers misreads Request for Production Nos. 20 and 21: they are not limited to correspondence from or to Travelers' counsel and they seek all documents evidencing communications with 1031 ECI and its agents, regardless of whether they occurred before or after this lawsuit was filed. In its response, Travelers argues that “[t]here was no communication between Travelers and these witnesses prior to the litigation.” Dkt. # 105 at 4. The documents cited in support of this contention show only that the underwriter for the 1031 ECI policy had no direct contact with Mr. Dance in August 2009. That is not, however, responsive to the discovery requests, and there is no indication that Travelers searched for any communications with its insured or its agents that may have occurred in the three years before this action was filed.
With regards to post-litigation communications between the insurer and its insured, Travelers' blanket claim of work product protection is untenable. While it is possible to imagine circumstances in which such a blanket claim might be justified and a court would be willing to presume that documents generated after a certain date were prepared in anticipation of litigation (see Capitol Records, Inc. v. MP3tunes, LLC, 261 F.R.D. 44, 51 (S.D.N.Y. 2009)), this is not one of them. 1031 ECI and Travelers had an on-going business relationship as insured and insurer. Although that relationship spawned a number of lawsuits, the context suggests that correspondence between the insurer and its insured is more likely related to the insurance agreement –e.g., claims for coverage, requests for additional information, discussions of policy provisions and the scope of coverage – than to have been prepared in anticipation of litigation or for trial. Travelers provides no information regarding the nature of any communications that may have arisen either before or after this lawsuit was filed in October 2012. While the Court can imagine documents to which the work product doctrine would apply, such as notes of an interview with Mr. Dance generated by Travelers' counsel or investigator that occurred in anticipation of litigation, there is no indication that such documents exist. Given the circumstances of the business relationship, the evidence provided, and the complete absence of anything more than a blanket refusal to produce or provide any information regarding the nature of the communications, the Court will not assume that such documents are more than a mere possibility. Travelers has not shown that the work product doctrine applies, much less that the protection should be presumed to apply to all communications after a particular date.
C. Cost Shifting
*6 As discussed above, Travelers' objections to Interrogatory No. 5 and Requests for Production Nos. 10, 14, 16, 19-21 have not been properly supported and Travelers will be required to provide full and complete responses. Despite the presumption that the responding party will bear the expense of complying with discovery requests, Travelers requests that plaintiff be required to pay the wages of any employee that spends time identifying insureds who are 1031 exchange facilitators and reviewing those files to determine whether a fidelity claim was made. Because Travelers has failed to support its claim of undue burden, it has likewise failed to show that cost shifting or splitting is appropriate here.
D. Attorney's Fees
Pursuant to Fed. R. Civ. P. 37(a)(5), if a motion to compel “is granted –or if the disclosure or requested discovery is provided after the motion was filed – the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion ... to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees.” An award of fees will not be made if the movant failed to meet and confer, the nondisclosure was substantially justified, or “other circumstances make an award of expenses unjust.” Both parties claim a right to attorney's fees in this instance. Dkt. # 93 at 11; Dkt. # 105 at 12.
Travelers' meritless objections and false promises that responsive documents would be made available for review at counsel's office necessitated the motion to compel. Other than its steadfast assertion that it has no documents responsive to Requests for Production Nos. 12 and 13, none of its positions was substantially justified (and in fact most were abandoned when plaintiff filed its motion). Defendant repeatedly suggests that, had plaintiff accepted its invitation to work together to address the objections, Travelers might have been willing to provide responsive information and documents at some point during the litigation. Unobjectionable discovery requests should be answered within thirty days, however, not met with multiple objections in a bid to force the opposing party to negotiate or abandon the requests. Travelers essentially refused to produce anything based on questionable, if not frivolous, objections, abandoned most of its objections, and has failed to support its request for a protective order. In this context, Travelers' discovery failures are not excused simply because plaintiff declined its invitation to future negotiations. Plaintiff is entitled to its reasonable expenses incurred in making the motion, including attorney's fees.[7]
For all of the foregoing reasons, plaintiff's motion to compel (Dkt. # 93) is GRANTED in part and defendant's motion for protective order (Dkt. # 105) is DENIED. Travelers shall, within fourteen days of the date of this order, provide full and complete responses to Interrogatory No. 5 and Requests for Production Nos. 10, 14, 16, and 19-21. All objections other than privilege have been waived. To the extent defendant withholds documents and/or redacts confidential information, a privilege log sufficient to allow plaintiff and the Court to evaluate the claim of privilege must be provided within the time allowed. At a minimum, the privilege log must identify the nature of the document, its date, the parties thereto (and their connection to this litigation, if relevant), the privilege that justifies the failure to disclose, and any other information necessary to show that the privilege applies.
*7 Plaintiff shall, within seven days of the date this Order is filed, submit evidence regarding the reasonable fees and costs incurred in making this motion. The fee petition shall be noted on the Court's calendar for the third Friday after filing.
Dated this 24th day of November, 2014.
Footnotes
In 2009, third-party 1031 ECI, LLC worked with Bell-Anderson to obtain a fidelity bond for the protection of its clients as required by RCW Ch. 19.310. 1031 ECI submitted a “Fidelity Bond/Commercial Crime Insurance Application” to Travelers, and Bell-Anderson issued a “proof of insurance” indicating that a policy had been obtained that provided insurance against losses resulting from the theft of client money or property. The “proof of insurance” was incorrect, however: the policy that was procured and subsequently provided to 1031 ECI expressly excluded coverage for theft of client funds. Plaintiff alleges that Bell-Anderson was negligent, that Travelers is responsible for that negligence, and that Travelers' negligence proximately caused plaintiff damage.
The article attached to the Declaration of Matthew V. Pierce (Dkt. #125) as Exhibit A is irrelevant and has not been considered.
The Court finds that the meet and confer requirement is satisfied.
In its cross-motion for protective order, Travelers argues that “[c]laim data is not stored so as to allow for an electronic search to identify claims brought by 1031 exchange facilitators.” Dkt. # 105 at 8. No declaration or other evidence is offered in support of this contention.
The Court finds that the meet and confer requirement is satisfied.
Travelers' objection to the time covered by this request may have some merit, but it is impossible for plaintiff or the Court to tell when its relationship with Bell-Anderson began, whether changes to the scope of that relationship occurred over time, and when discussions relevant to the relationship that existed in 2009 took place. Given the paucity of the record, the Court declines to arbitrarily limit plaintiff's request. Had Travelers been more forthcoming in the first place, a reasonable accommodation of its concerns could likely have been made.
Plaintiff is not, however, entitled to fees for time spent meeting and conferring regarding the perceived deficiencies in the discovery responses. Only fees incurred in making the motion are recoverable.