Artisan and Truckers Casualty Co. v. A&K Rentals, LLC, et al.

Filing 79

ORDER denying 68 Motion to Compel. Signed by Magistrate Judge Reona J. Daly on 10/31/2017. (dam)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

ARTISAN AND TRUCKERS CASUALTY CO.,
Plaintiff,
vs.
A&K RENTALS, LLC, et al.,
Defendants.

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Case No. 3:17 CV 27 JPG/RJD

MEMORANDUM AND ORDER
DALY, Magistrate Judge:
This matter comes before the Court on Defendant Burlington Insurance Company’s
Motion to Compel and the discovery dispute conference held on September 7, 2017. (Docs. 66,
68.) On January 11, 2017, Plaintiff commenced this action, seeking a declaratory judgment on
insurance coverage for a wrongful death suit filed in state court. (Doc. 1.) According to the
complaint, Plaintiff was the insurer of Defendant A&K Rentals, LLC (“A&K Rentals”), who
owned the tractor-trailer operated by the decedent. 1 Defendant Burlington Insurance Company
(“Burlington”) was the insurer of Defendant American Complete Access Hoist and Platform,
LLC (“American Complete”), who employed the decedent.
On September 7, 2017, at Defendant Burlington’s request, the Court held a discovery
dispute conference regarding whether Plaintiff was required to produce statements made to
Plaintiff’s attorney by Walter Terry, a principal of Defendant A&K Rentals, and Adam Terry and
Tony Evans, principals of Defendant American Complete.

Plaintiff asserts attorney-client

privilege on behalf of Defendants A&K Rentals and American Complete. At the discovery

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The parties’ briefs further indicate that Defendant American Complete was listed as an Additional Insured on the
insurance policy; in other words, Plaintiff was also the insurer of Defendant American Complete.

dispute conference, the Court requested additional briefing from the parties with a focus on the
principals’ understanding of their relationship with Plaintiff’s attorney and the context in which
the statements were taken.
“It is well established in Illinois that, where the insurer is under an obligation to defend
the insured, the communication is protected by the attorney-client privilege.” Exline v. Exline,
659 N.E.2d 407, 410 (Ill. App. Ct. 1995). “This rule underscores the fact that the insurance
carrier usually selects the attorney under a common liability contract.” Hyams v. Evanston
Hosp., 587 N.E.2d 1127, 1129 (Ill. Ct. App. 1992). “Therefore, the insured may properly
assume that the communication is made to the insurer as an agent for the dominant purpose of
transmitting it to an attorney for the protection of the interests of the insured.” Id.
The record reflects the following events. Plaintiff issued a policy, insuring Defendants
A&K Rentals and American Complete, which required that the insureds cooperate with Plaintiff
with respect to claims and lawsuits and allow Plaintiff to take signed, recorded statements from
the insured. On January 5, 2015, the incident underlying the wrongful death lawsuit occurred.
In March and April 2015, Plaintiff’s attorney sent letters to Walter Terry and Adam Terry, which
identified the attorney as representing Plaintiff, referenced the policy and underlying incident,
and sought to arrange a time for an examination under oath and document production. 2 Walter
Terry and Adam Terry were advised that Plaintiff was providing a defense in the wrongful death
lawsuit pursuant to a reservation of rights due to questions regarding coverage. On May 28,
2015, the examinations took place. At the discovery dispute conference, Plaintiff’s counsel
represented that Plaintiff had assigned defense counsel and was providing the defense in the
underlying lawsuit.

Defendant American Complete, through correspondence to Plaintiff’s

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The letters also mentioned that the examinations would take place in the presence of a court reporter. The resulting
transcripts are the statements at issue in the instant discovery dispute.

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attorney, and Defendant A&K Rentals, through counsel at the discovery dispute conference,
represented that Walter Terry and Adam Terry understood that the examinations were taken for
the purpose of defending the underlying lawsuit.
The record reflects that Plaintiff is providing a defense for Defendants A&K Rentals and
American Complete and has assigned them legal counsel for that purpose. The record further
reflects Walter Terry and Adam Terry understood that the statements were taken for the purpose
of defending the underlying lawsuit. Walter Terry and Adam Terry were thus entitled to assume
that their statements at the examination were made to Plaintiff for the dominant purpose of
transmitting it to an attorney for the protection of the interests of Defendants A&K Rentals and
American Complete. Therefore, attorney-client privilege attaches to those statements.
Defendant Burlington cites W. States Ins. Co. v. O’Hara, 828 N.E.2d 842 (Ill. Ct. App.
2005), for the proposition that the attorney-client privilege did not attach to the written
statements. In W. States Ins., the insurer settled several tort claims against the insured by third
parties prior to filing a coverage action. Id. at 844-46. The insured moved to compel the
production of documents related to the settlements, but the insurer refused, citing attorney-client
privilege. Id. The trial court granted the motion to compel, and the insurer appealed. Id. The
appeals court upheld the decision of the trial court, finding that the common-interest doctrine
applied. Id. at 848-49. The appeals court reasoned that, at the time of the settlements, the
insured and the insurer shared a common interest in defending the tort claims against the insured
and that the attorney who prepared the documents at issue was acting on behalf of both the
insured and insurer. Id.
W. States Ins. is distinguishable from the instant discovery dispute. W. States Ins. did not
hold that attorney-client privilege did not attach to the requested documents; rather, the case held

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that the parties in that case shared a common interest and could not assert the privilege against
each other. Unlike W. States, Ins., here, the insured is not seeking documents from the insurer or
vice versa, and there is nothing to indicate that the written statements were made pursuant to
Plaintiff and Defendant Burlington’s common interest.
Defendant Burlington also argues that allowing Plaintiff access to the written statements
but denying Defendant Burlington access to them would result in unfair prejudice during the
depositions of Defendants A&K Rentals and American Complete’s principal officers. However,
Defendant Burlington offers no authority for the proposition that attorney-client privilege can be
defeated upon a showing of unfair prejudice. Defendant Burlington further suggests that
Plaintiff’s attorney has a conflict of interests and should be disqualified because he has
represented Plaintiff and Defendants A&K Rentals and American Complete, who are adverse in
the instant action. See In re Paul L.F., 947 N.E.2d 805 (Ill. App. Ct. 2011). To the extent
Defendant Burlington intends to pursue this argument, it may file a motion to disqualify counsel;
however, the Court has observed nothing to suggest that Plaintiff’s counsel established an
attorney-client relationship with Defendants A&K Rentals and American Complete.
For the foregoing reasons, Defendant Burlington Insurance Company’s Motion to
Compel (Doc. 68) is denied.

SO ORDERED.
DATED: October 31, 2017

s/
Reona J. Daly
l
UNITED STATES MAGISTRATE JUDGE

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