Certain Underwriters at Lloyd's, London v. Morrow et al

Filing 85

MEMORANDUM OPINION AND ORDER by Magistrate Judge H. Brent Brennenstuhl on 10/6/2017. The motion of Horizon Transport to quash the subpoena issued byMorrow to Brown & Brown DN 80 , is DENIED. The motion of Bermel-Schanz to quash the subpoena issued by Morrow to Brown & Brown, DN 78 , is DENIED IN PART and GRANTED IN PART. To the extent the motion advocates quashing the subpoena on relevance grounds, the motion is denied. To the extent the motion advocates quashing the subpoena on privilege grounds, the motion is granted in part. Response to subpoena due by 10/23/2017. cc: Counsel(JWM)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:16-CV-00180-GNS

CERTAIN UNDERWRITERS AT
LLOYD'S, LONDON Subscribing to
Policy No. NAC050614-1-NTL5-150226-4

PLAINTIFFS

VS.

EUGENE C. MORROW, Individually and as
Personal Representative For the Estate of
MARGARET E. MORROW, Deceased;
HORIZON TRANSPORT, INC.; KLAUS
BERMEL-SCHANZ; STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY;
SCOTTSDALE INDEMNITY COMPANY; AND
ALFA MUTUAL INSURANCE COMPANY

DEFENDANTS

MEMORANDUM, OPINION,
AND ORDER
Before the Court are two related motions. DN 78 is the motion of Defendant Klaus
Bermel-Schanz to quash a subpoena issued by Defendant Eugene C. Morrow to non-party Brown
& Brown of Ohio, LLC. DN 80 is a similar motion to quash by Defendant Horizon Transport,
Inc.
Nature of the Case
This is an action for declaratory judgment under 28 U.S.C., § 2201 as to whether Plaintiff
has insurance coverage obligating it to defend or indemnify Bermel-Schanz against claims
arising from a motor vehicle accident. That accident is the subject of a wrongful death lawsuit
also pending in this court. See Civil Action No. 1:16-CV-00158-JHM-HBB. The policy in
question is a “Non-Trucking Liability Policy” under which only Bermel-Schanz is insured.

Plaintiff contends that the policy only provides coverage for personal use of a vehicle, and
coverage is not provided for use of the vehicle while in the business of, or furthering the business
of, a motor carrier. Plaintiff contends that, at the time of the accident, Bermel-Schanz was
operating the vehicle for the benefit of and in furtherance of the business of Horizon Transport
(DN 1).
Defendant Eugene C. Morrow appears in this action individually and as personal
representative of the Estate of Margaret E. Morrow.

Morrow is also the Plaintiff in the

companion wrongful death action.
The Subpoena in Question
Defendant Morrow filed a notice of issuance of a subpoena duces tecum (DN 70). The
subpoena commands Brown & Brown of Ohio, LLC to provide the following documents:
1.

Complete copy of the entire insurance file(s) for Klaus Bermel-Schanz from October 16,
2013 to Present.

2. All communication, documents, electronic records, emails, faxes and file notes regarding
communication with Klaus Bermel-Schanz regarding obtaining Non-Trucking Liability
(NTL) coverage for his vehicle leased to Horizon Transport.
3. All communication, documents, electronic records, emails, faxes and file notes regarding
communication with Horizon Transport regarding Klaus Bermel-Schanz.
4. All communication, documents, electronic records, emails, faxes and file notes regarding
communication with Transportation Insurers, Inc. regarding Klaus Bermel-Schanz.
5. All communication, documents, electronic records, emails, faxes and file notes regarding
communication with National Driver Association regarding Klaus Bermel-Schanz.

2

6. All documents regarding how many Non-Trucking Liability policies that Brown &
Brown of Ohio secured for individuals who had lease agreements with Horizon Transport
from October 16, 2013 – October 13, 2015.
(DN 70-1).
Bermel-Schanz’ Motion to Quash
Bermel-Schanz asserts that the subpoena should be quashed pursuant to Fed. R. Civ. P.
45(d)(3)(A)(iii) because the request “requires disclosure of privileged or other protected matter”
and no exception or waiver to such privilege or protection applies. Bermel-Schanz also contends
that the request is overbroad and largely irrelevant. He expresses concern that production of his
insurance file will include information protected by the attorney-client privilege or work product
doctrines.
Horizon Transport’s Motion to Quash
Horizon likewise brings its motion under Rule 45(d)(3)(A). As to items 2 and 3 in the
subpoena, Horizon contends the requests are irrelevant and not proportional to the needs of the
case and represent “an invasion of privacy." Horizon objects to item 6 arguing it is “overly
broad, burdensome, irrelevant, and is not proportional to the needs of the case or the underlying
tort action” (DN 80, p. 4). Horizon also states that it is “unaware of the nature and extent of the
documents requested” but speculates that “it is very likely these files contain a large number of
documents, documents that have absolutely nothing to do with this litigation” (Id.).
Morrow’s Responses
Morrow begins by noting that Brown & Brown has not objected to the subpoena and has
in fact sent Morrow the requested documents. Morrow contends the documents are relevant to
the case because it believes Bermel-Schanz failed to secure the proper amount of insurance

3

required by his contract with Horizon. Morrow also notes that Horizon no longer has BermelSchanz’s file from 2015 and thus Brown & Brown’s files are the only source of information.
Morrow further notes that Bermel-Schanz and Horizon face no expense in Brown & Brown’s
production.
Turning to Bermel-Schanz’s contention that some of the documents may be privileged or
work product, Morrow notes that Brown & Brown is an insurance agency and not the actual
insurer for Bermel-Schanz (DN 81).

With regard to Horizon’s privacy interest, Morrow

contends Horizon has failed to demonstrate a privacy interest in the documents other than a bare
assertion.
Horizon’s Reply
Horizon picks up Bermel-Schanz’ concern about disclosure of confidential information
under Asbury, noting that it is possible Bermel-Schanz may have communicated information
about the claim to his insurance agent or the file may reflect communications between BermelSchanz and the insurance carrier. Horizon contends that Morrow should be required to return the
documents to Brown & Brown and reissue the subpoena so that “it properly restricts the scope of
the documents he seeks to those documents bearing on the issue of the amount of Mr. BermelSchanz’s insurance coverage” (DN 83, p. 3).
Discussion
A. Standing to move to quash
As a general proposition, a party does not have standing to quash or object to a Rule 45
subpoena served on a non-party, unless the party can demonstrate a privilege or other personal
right in regard to the requested documents. Queen v. City of Bowling Green, No. 1:16-CV00121-JHM, 2017 U.S. Dist. LEXIS 160425, *8 (W.D. Ky. Sept. 29, 2017). Here Bermel-

4

Schanz has demonstrated standing insofar as he contends the requested documentation may
contain privileged attorney-client communications. Horizon, however, has not indicated that it
had a relationship with Brown & Brown which might be considered subject to the attorney-client
relationship. While it argues that there might be confidential communications in the requested
documents, it offers no basis upon which to conclude that the confidence extended to anyone
other than Bermel-Schanz and, consequently, Horizon fails to demonstrate standing to move to
quash on the basis of privilege or personal right.
B. Undue burden
As to Horizon’s objection that the subpoena imposes an undue burden, Rule 45 does not
provide a party other than the one to whom the subpoena is directed with standing to object on
that basis. Polylok Inc. v. Bear Onsite, LLC, No. 3:12-CV-535-DJH-CHL, 2016 U.S. Dist.
LEXIS 173289, *6 (W.D. Ky. Dec. 15, 2016) (citing Tullis v. Umb Bank, N.A., No. 3:06-CV7029, 2011 U.S. Dist. LEXIS 139368 (N.D. Ohio, Dec. 5, 2011)).
C. Relevance
Both Bermel-Schanz and Horizon object on general grounds of relevance. Rule 45(d)(3)
does not identify irrelevance as a reason for quashing a subpoena. However, courts have ruled
that the scope of discovery under a subpoena is the same as the scope of discovery under Rule
26. Queen, 2017 U.S. Dist. LEXIS 160425 at *11. Rule 26, in turn, permits discovery of any
nonprivileged matter that is relevant to any party’s claim or defense and is proportional to the
needs of the case. Rule 26(b)(1).
Bermel-Schanz’s motion makes a generalized contention that the information requested
lacks relevance. Bermel-Schanz states that the request for the contents of his insurance file from
October 2013 to the present “would result in the release of information wholly irrelevant to the

5

issues in the case, with some of that information likely being protected” (DN 78, p. 3). He does
not, however, offer an explanation of how the information sought in the subpoena lacks
relevance to the case.
Likewise, Horizon only offers sweeping generalities that the information requested likely
involves “a large number of documents, documents which have absolutely nothing to do with
this litigation” (DN 80, p. 4). Morrow responds to Bermel-Schanz’s and Horizon’s contentions
with its own contention that discovery in the case has demonstrated that Horizon permitted
Bermel-Schanz to drive for it without having $1,000,000 in insurance coverage as required by
the contract between them. As Horizon no longer has Bermel-Schanz’s file, Morrow contends
the subpoenaed documents are relevant to the question of whether this exception was afforded
other drivers as well, or if there was an internal error by Horizon regarding the lease agreement.
As neither movant has provided rebuttal to this argument other than broad generalization, neither
movant has made a compelling case that the information subpoenaed lacks relevance.
D. Privilege
Having concluded that Bermel-Schanz has standing to object to the subpoena on grounds
that it calls for production of material to which he claims a privilege or other personal right,
attention now turns to an evaluation of whether material in Brown & Brown’s possession might
qualify for protection. Bermel-Schanz describes Brown & Brown as “an insurance agency
through which [he] acquired one of the policies at issue in this litigation” (DN 78,p. 2). BermelSchanz expresses concern that the documents sought by the subpoena may include information
that is protected by the attorney-client privilege or the work product doctrine. He is further
concerned that some information may be confidential in nature, such as his financial information

6

and social security number. He relies upon Asbury v. Beerbower, 589 S.W.2d 21 (Ky. 1979) in
support of the proposition that communications in the possession of Brown & Brown can be
afforded privileged status.
In Asbury the Kentucky Supreme Court endorsed the principle set out in 81 Am.Jur.2d,
Witnesses, Sec. 193 that “a report or other communication made by an insured to his liability
insurance company, concerning an event which may be made a basis of a claim against him and
which is covered by the party, is a privileged communication, as being between an attorney and
client . . .” Asbury 589 S.W.2d at 217. In endorsing the rule, the court reasoned that, in most
situations in which an insured’s defense counsel is selected by the insurance carrier, “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.
Morrow responds to Bermel-Schanz’s argument by noting that Brown & Brown is an
insurance agency/broker, and not the actual liability insurer providing coverage and defense. As
a result, Morrow contends there can be no Asbury extension of the attorney-client privilege
under the present facts. Morrow further contends that Bermel-Schanz has already provided a
great deal of personal information in the course of discovery and any additional disclosure
reflected in Brown & Brown’s file is de minimus.
In this instance, Bermel-Schanz is at a disadvantage in asserting his privilege argument
because he can only speculate as to the contents of Brown & Brown’s file. While Morrow is
correct that Brown & Brown is not the liability insurer, Brown & Brown was the agent from
whom Bermel-Schanz procured the policy of insurance. It is not impossible that Bermel-Schanz
might have made some communications to Brown & Brown as a conduit for communicating
with his liability insurer. He should have the opportunity to inspect the file so that he can

7

identify any documents to which he believes an attorney-client privilege applies.

The

undersigned notes, however, that the privilege, if it applies at all, would be limited to
communications between Bermel-Schanz and Brown & Brown concerning the subject motor
vehicle accident and which he reasonably believed were for purposes of transmitting that
information to the liability insurer. Asbury does not support extension of the privilege beyond
that limited scope. See Haney v. Yates, 40 S.W.3d 352 (Ky. 2000) (Communications to safety
department of self-insured entity not entitled to privilege.).
ORDER
For the forgoing reasons, the motion of Horizon Transport to quash the subpoena issued by
Morrow to Brown & Brown DN 80, is DENIED. The motion of Bermel-Schanz to quash the
subpoena issued by Morrow to Brown & Brown, DN 78, is DENIED IN PART and
GRANTED IN PART. To the extent the motion advocates quashing the subpoena on relevance
grounds, the motion is denied. To the extent the motion advocates quashing the subpoena on
privilege grounds, the motion is granted in part. BY NO LATER THAN OCTOBER 23, 2017,
Morrow shall provide to Bermel-Schanz all documents produced by Brown & Brown in response
to the subpoena. Bermel-Schanz shall review the documents and, within 14 days of receipt,
return all for which he does not assert a claim of privilege. He shall retain any documents for
which privilege is claimed and simultaneously provide Morrow with a privilege log.

October 6, 2017

Copies:

Counsel

8