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Black & Veatch Corp. v. Aspen Insurance UK Ltd.

United States District Court, District of Kansas

February 28, 2014

ASPEN INSURANCE UK LTD, et al., Defendants.


K. Gary Sebelius U.S. Magistrate Judge

This matter comes before the Court upon Defendants Aspen Insurance (UK) Ltd., Catlin Lloyd’s Syndicate 2003, Liberty Mutual Insurance Europe (UK) Ltd.’s (collectively, the “Liability Insurers”) Motion to Compel Production of AON Risk Services Northeast, Inc. (“AON”) Documents and For Other Relief (ECF No. 143). For the following reasons, the Court hereby grants the Liability Insurers’ motion in most respects.

I. Relevant Background

The present dispute stems from a March 13, 2013 subpoena served by the Liability Insurers on AON, a third-party, requesting production of certain documents. On August 13, 2013, AON produced some of the requested documents, but not all. For the withheld documents, AON stated that it was instructed by Plaintiff Black & Veatch Corporation (“B&V”) not to produce such documents on the basis of privilege and work-product protection. AON also informed the Liability Insurers that a privilege log would be provided by B&V for the withheld documents. B&V subsequently submitted a privilege log listing forty-one documents[1] claimed to be protected under the work-product doctrine, attorney-client privilege, and/or insurer-insured privilege. In the instant motion, the Liability Insurers move for an order overruling B&V’s objections and compelling production of all but two of the withheld documents. The two documents the Liability Insurers do not seek are letters authored by David Dekker, one of B&V’s attorneys. In the alternative, the Liability Insurers request the withheld documents be submitted for an in camera review to determine the applicability of B&V’s privilege objections.

This lawsuit originated out of a series of agreements B&V made with American Electric Power Service Corporation in its own capacity and/or as agent for other power companies (collectively, the “Owners”), to engineer, procure material and equipment for, and construct several wet flue gas desulfurization systems, also known as jet bubble reactors (“JBRs”), for four power plants. Prior to the construction of the JBRs, B&V procured commercial general liability coverage from several insurers with regard to the JBR projects. B&V argues that in 2007 Allied North America received a brokerage commission for co-brokering a commercial umbrella policy with the Liability Insurers.[2] B&V further asserts that Allied North America was acquired by AON in December 2009.[3] Neither Allied North America nor AON are parties to this litigation. B&V claims that it has maintained a long-term broker-client relationship with Allied North America and AON.[4] Further, B&V avers that AON was and remains a significant broker of B&V’s insurance program and receives substantial commissions on an annual basis in connection with B&V’s policies.[5] The Liability Insurers, however, argue that Allied North America was not the broker of the commercial umbrella policy. They assert that Jardine Lloyd Thompson, Ltd. brokered the policy, which is shown on the policy’s Declarations page.[6] Further, the Liability Insurers claim that Jardine Lloyd Thompson, Ltd. was and is the wholesale broker for B&V’s general liability coverage in the United States.[7]

After construction of the JBRs, the Owners alleged significant defects to the JBR components. B&V entered into an agreement with the various Owners and paid them a lump-sum for repair costs and also agreed to replace defective components. The total amount incurred by B&V was several millions of dollars. To recover some of the incurred costs, B&V submitted a claim to its professional liability carriers and filed suit against MTI, a subcontractor who performed work on the JBRs. In 2009, B&V retained outside legal counsel and gave notice to the Liability Insurers of the losses it sustained. That same year, the Liability Insurers issued a reservation of rights letter to B&V. In 2012, B&V brought this breach of contract and declaratory judgment action against various insurance providers, including the Liability Insurers, seeking damages and an adjudication of rights, duties, and obligations under certain insurance policies.

B&V asserts that the withheld documents are protected from disclosure because AON was a representative of B&V when the documents were created. Further, B&V claims that the documents were prepared in anticipation of litigation, created after B&V retained outside counsel, and created after B&V received the 2009 reservation of rights letter. Before addressing the B&V’s privilege objections, the Court must first examine whether the procedural conference requirement was met.

II. Procedural Conference Requirement

Fed. R. Civ. P. 37(a)(1) and D. Kan. Rule 37.2 require a moving party, in good faith, to confer with opposing counsel before filing a motion to resolve any discovery disputes. When a motion is filed, it “must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.”[8] The duty to confer generally requires counsel to “converse, confer, compare views, consult, and deliberate, or in good faith attempt to do so.”[9] In this case, the Liability Insurers confirm that the parties have conferred in good faith, which included a “Local Rule 37.1 conference call, ” in an attempt to resolve their disputes about the withheld documents. After a review of the Liability Insurers’ submissions, the Court finds the parties made several attempts to confer and compare views, and therefore, have satisfied the procedural conference requirement.

III. Discussion

Fed. R. Civ. P. 26(b)(1) provides that “[f]or good cause, the court may order discovery of any matter relevant to the subject matter involved in the action.” When a party fails to make disclosure of discovery, the opposing party may file a motion to compel. When a motion to compel is filed and asks the court to overrule certain objections, the objecting party must specifically show how each discovery request is objectionable.[10] Objections initially raised but not supported in the objecting party’s response to a motion to compel are deemed abandoned.[11]Similarly, any objections not asserted in the initial response to a discovery request but raised in response to a motion to compel will be deemed waived.[12]

In this case, B&V’s response to the present motion only reasserts its work-product and attorney-client privilege objections, not its insurer-insured objection. Therefore, B&V’s insurer-insured privilege objection is deemed abandoned. The Court will only address B&V’s work-product and attorney-client privilege objections.

As the party asserting work-product protection and attorney-client privilege, B&V bears the burden of establishing that either or both apply.[13] To carry that burden, B&V must make a “clear showing” and “‘describe in detail’ the documents or information to be protected and provide ‘precise reasons’ for the objection to discovery.”[14] The “Federal Rules of Civil Procedure require a fairly detailed and specific showing to withhold discovery on privilege grounds.”[15] Fed.R.Civ.P. 26(b)(5) provides that when a party withholds documents or other information based upon a privilege or subject to protection as trial-preparation materials, the party must “(i) expressly make the claim; and (ii) describe the nature of the documents, communications, or tangible things not produced or disclosed-and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.”

Further, B&V must “provide sufficient information to enable the Court to determine whether each element of the asserted objection is satisfied.”[16] This burden can be met only by an evidentiary showing based on competent evidence and cannot be discharged by mere conclusory assertions or blanket claims of privilege.[17] Moreover, the objecting party has the burden to establish the existence of the privilege or immunity prior to the time a court is asked to determine its sufficiency and applicability.[18] A party‚Äôs failure to meet the required showing when the trial court is asked to rule upon the existence of the privilege is not excused because the document is later shown to be one that would have been privileged if a ...

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