Stewart Title Guaranty Company v. Credit Suisse

Filing 123

MEMORANDUM DECISION AND ORDER re granting in part and denying in part 61 MOTION to Compel Discovery filed by Credit Suisse. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (krb)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
Case No. 1:11-cv-00227-BLW

STEWART TITLE GUARANTY
COMPANY, a Texas corporation,

MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
CREDIT SUISSE, Cayman Islands Branch,
Defendant.

INTRODUCTION
The plaintiff Stewart Title has submitted 141 documents to the Court for an in camera
inspection to determine if the documents are protected by the attorney/client privilege. Both
parties have submitted briefing on the issue. For the reasons explained below, the Court finds
that portions of the documents are protected by the privilege while other portions must be
produced. The Court sets forth its decision in detail below.
BACKGROUND
This discovery dispute started when defendant Credit Suisse filed a motion to compel the
production of documents containing communications between Stewart Title and its counsel at the
law firm of Faegre Benson. Stewart Title objected, claiming that the documents were protected
by the attorney/client privilege and the work product doctrine. The Court issued a decision
finding the work product doctrine inapplicable, and giving counsel direction on the claims of
privilege. The Court relied on the recent decision in Cedell v. Farmers Insurance Co. of
Washington, 295 P.3d 239 (Wash.Sup.Ct. 2013). Adopting that holding, the Court presumed that
the entire file was not protected by privilege and required Stewart Title to show how the

ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

privilege applied to each document it sought to protect. The Court ordered Stewart Title to
produce all of the challenged documents that deal primarily with the factual investigation of the lien
claims and those that discuss both coverage and factual matters. In instances where there was a close
question regarding the privileged content of the documents to be produced, the Court directed
Stewart Title to submit the documents to the Court for in camera review.
Pursuant to the Court’s Order, Stewart Title produced hundreds of documents to Credit
Suisse, and also submitted 141 pages of documents to the Court for in camera review.

ANALYSIS
In the supplemental briefing, Credit Suisse pointed out that it has a fraud claim against
Stewart Title. Credit Suisse claims that Stewart Title had a secret plan devised in the early fall of
2010 to deny coverage for the Banner liens, some of the largest at issue, but not tell Credit Suisse
until after the state court ruled on the validity of that lien claim. According to Credit Suisse, that
allowed Stewart Title to “exploit for itself the ‘negotiating leverage’ created by the timing of trial
and the uncertainty of settlement with Banner II (the general contractor) [to settle claims that
were clearly covered].” See Supplemental Brief (Dkt. No. 107) at p. 5. Stewart Title adamantly
denies this claim, but it presently exists in the case and provides a legitimate basis for discovery.
There is no privilege for documents “sufficiently related to” allegations that the client is
engaged in a fraudulent scheme while seeking the advice of an attorney. See In re Napster Inc.
Copyright Litig., 479 F.3d 1078, 1090 (9th Cir. 2007), abrogated on other grounds by, Mohawk
Indus., Inc. v. Carpenter, 558 U.S. 100 (2009). The best evidence of the fraud “is likely to be in
the hands of the party invoking the privilege” and hence is discoverable. Id.
This analysis gives the Court further guidance for its in camera review. The Court will
order the production of documents (1) that are sufficiently related to Credit Suisse’s fraud claim
that Stewart Title decided in the fall of 2010 to deny the Banner liens, and (2) that relate to
ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

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Stewart Title’s investigation and evaluation of the lien claims. The following table contains the
Court’s rulings at to each document reviewed in camera. The page numbers include the entire
document submitted, although in most cases Stewart Title is claiming that only the yellow
highlighted portions of those documents are privileged. In some instances, for a single multipage document, the Court has decided to compel production of some pages and/or paragraphs
and order the redaction of other pages and/or paragraphs.
The Court’s decisions set forth in the table below relate to the yellow highlighted material
contained in the particular document referenced.
Date

Page Numbers

Decision

September 13, 2010

3961

Discoverable. Relates to fraud
claim/Banner lien.
Part discoverable. Redact paragraphs 3
& 4. Produce everything else as it
relates to fraud claim/Banner lien and
evaluation of other liens.
Discoverable. Relates to fraud
claim/Banner lien.
Discoverable. Relates to fraud
claim/Banner lien.
Privileged

March 16, 2010

3964 (thru 0003)

Undated

3965 (thru 0003)

March 15, 2010

9343 (0002 to 0003)

May 11 2009

14731 (thru 0002)

March 30, 2011

17117 (thru 0002)

March 25 2011

17203 (thru 0002)

September 10, 2010

18516

September 10, 2010

18534

March 31, 2011

19468 (thru 0002)

June 1 2011

28223 (thru 0002)

Privileged. Discussion of law firm
retention generally.
Privileged. Discussion of law firm
retention generally
Discoverable. Relates to fraud
claim/Banner lien.
Discoverable. Relates to fraud
claim/Banner lien.
Privileged. Discussion of law firm
retention generally.
Privileged.

Dec. 29, 2009

4694

Privileged

May 12 2009

4163

Privileged. General settlement strategy.

ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

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May 12 2009

3921

Privileged. General settlement strategy.

Dec. 16 2009

3398 (thru 0002)

Privileged. General settlement strategy.

June 10 2009

2077 (thru 0002)

Privileged.

Sept 7 2010

1834 (thru 0002)

Sept 7 2010

1764

Discoverable. Relates to fraud
claim/Banner lien.
Privileged. General settlement strategy.

Sept 7 2010

1708

Privileged.

May 11 2009

146 (thru 0002)

Privileged.

June 12 2009

89 (thru 0002)

May 12 2009

07

The highlighted portion in the e-mail of
June 12 2009 relates to the fraud
claim/Banner lien and is discoverable.
The highlighted portion in the e-mail
dated June 10 2009 is privileged.
Privileged. Bond discussion.

May 12 2009

08

Privileged. Bond discussion.

May 11 2009

01

Privileged. (same as 146)

Undated

1635 (thru 0003)

June 26 2009

3378

Discoverable. Relates to fraud
claim/Banner lien.
Privileged.

August 11 2009

1618 (thru 0003)

Privileged. Counsel general strategy

August 18, 2009

600 (thru 0004)

August 31 2009

601 (thru 0002)

Nov. 20 2009

23046 (thru 0002)

Discoverable. Appears to relate to lien
investigations.
Discoverable. Appears to relate to lien
investigations.
Privileged.

Nov 20 2009

23049

Privileged.

March 9 2010

627 (thru 0002)

March 15 2010

1608 (thru 0003)

Paragraphs 1 (all subparts), 3, 5, 8 and 9
are all discoverable as they related to
fraud/Banner liens. Other paragraphs
are privileged.
Discoverable. Relates to fraud
claim/Banner lien.

ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

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March 23 2010

633 (thru 0004)

September 2 2010

18590

Sept 10 2010

18518 (647 thru 648-0003)

Sept 10 2010

18519 (thru 0003)

May 6 2009

3430

Discoverable. Relates to fraud
claim/Banner lien.
Discoverable. Relates to fraud
claim/Banner lien.
Discoverable. Relates to fraud
claim/Banner lien.
Discoverable. Relates to fraud
claim/Banner lien.
Privileged. General legal research.

May 7 2009

3430

Privileged (same e-mail as above)

Aug 13 2009

19136 (thru 012)

Privileged. General legal research

Sept 18 2009

1623 to 1624 (thru 0007) & Privileged. General legal research
19135 (thru 002)

March 12 2010

632 (thru 0007)

Privileged. Memo regarding counsel.

Aug 19 2010

649 (thru 0003)

Privileged. General legal research.

Aug 19 2010

638 (thru 0006)

Privileged. General legal research.

Sept 3 2009

19141 (pages -10 to -14)

Privileged.

Dec 15 2009

373 (pages -012 to -015)

Privileged.

April 15, 2010

434 (thru 0019)

August 23 2010

485 (thru -0033)

Nov 16 2009

23116

The only portions that are privileged are
(1) the “Policy Defenses” paragraph on
pages -0014 to -0015; and (2) the fourth
bullet point on page -0016, and (3) all
bullet points on page -0017. They shall
be redacted and the remainder of the
memo shall be produced.
The following highlighted portions are
not privileged as they related to fraud
claim/Banner liens: (1) paragraph (3) at
page -0009; (2) paragraph highlighted at
page -0013; (3) second bullet point on
page -0016 carried over to -0017 and
including first full bullet point on -0017;
and (4) two paragraphs highlighted on
page -0024.
Privileged.

ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

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Oct 18 2010

18169 (at page -0002)

Privileged.

0007)
April 16 2010

9158 (thru -0002)

Privileged. LID related.

April 26 2010

9095 (thru -0003)

Privileged. Gold course related.

Oct 18 2010

1776 (thru -0006)

Privileged. Golf course related.

June 1 2010

1668

Privileged. LID related.

May 27 2010

1525 (thru 0006)

Privileged. Golf course related.

March 21 2011

17296

March 11 2011

17297

Undated

17298 (thru 0022)

Discoverable. Relates to fraud
claim/Banner lien.
Discoverable. Letter to opposing
counsel, not to client.
Privileged. Draft complaint.

March 16 2011

17302

Discoverable. Relates to fraud
claim/Banner lien.

Conclusion
In its earlier decision, see Memorandum Decision (Dkt. No. 81), the Court ruled on Credit
Suisse’s motion to compel by granting it in part and reserving a decision in part pending this in
camera review. Now that the in camera review has been completed, the Court will grant the
motion in part and deny it in part in accordance with the rulings made above.
Stewart Title is directed to make the redactions noted above and produce the material
immediately to Credit Suisse.
ORDER
In accordance with the Memorandum Decision set forth above,

ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

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NOW THEREFORE IT IS HEREBY ORDERED, that the motion to compel (docket no.
61) is GRANTED IN PART AND DENIED IN PART in accordance with the rulings made
above.

DATED: August 14, 2013

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

ORDER RE. JOINT MOTION TO EXTEND DISCOVERY DEADLINES

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