Fidelity National Title Insurance Company v. Captiva Lake Investments, LLC

Filing 177

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that the motion of defendant Captiva Lake Investments, LLC, for sanctions [Doc. #116] is denied. IT IS FURTHER ORDERED that, no later than December 3, 2012, plaintiff Fidelity National Title Insurance Compa ny shall file a status report addressing the progress of its consultation with e-discovery specialists. IT IS FURTHER ORDERED that plaintiffs motion for hearing [Doc. #122] is denied. ( Status Report due by 12/3/2012.). Signed by District Judge Carol E. Jackson on 11/16/2012. (KMS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
FIDELITY NATIONAL TITLE
INSURANCE COMPANY,

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Plaintiff,
vs.
CAPTIVA LAKE INVESTMENTS, LLC,
Defendant.

Case No. 4:10-CV-1890 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on the motion of defendant Captiva Lake
Investments, LLC, (Captiva) for sanctions. Plaintiff Fidelity National Title Insurance
Company (Fidelity) has filed a response in opposition to the motion and the issues are
fully briefed. Captiva asks the Court to strike Fidelity’s pleading or, in the alternative,
to permit a forensic computer expert to examine Fidelity’s computer system. Fidelity
seeks a hearing on the sanctions motion.
I.

Background

In May 2011, Captiva asked Fidelity to produce its claims file and documents
related to evaluation of coverage under the policy at issue in this declaratory judgment
action. Fidelity objected based on assertions of attorney-client privilege and workproduct doctrine. At the same time, Fidelity produced a privilege log purporting to list
all withheld materials.

It was later determined that the log did not include two

categories of information -- the Major Claims Reports and data maintained in Fidelity’s
Claims Processing System (the CPS).

About a year after it served its discovery

requests, Captiva found a reference to the CPS in a recently produced claims handling
guide. Similarly, Captiva learned about the Major Claims Reports during a deposition

conducted on May 23, 2012. Instead of producing these newly uncovered documents,
Fidelity included them in an updated privilege log.
Captiva filed a motion to compel and, on August 17, 2012, following an in
camera review, the Court granted the motion. The Court determined that Fidelity had
waived any claim to attorney-client privilege or work-product protection by failing to
include the Major Claims Reports and the CPS in its privilege log and ordered Fidelity
to produce this information.

On September 4, 2012, Fidelity produced several

documents to defendant. Captiva contends that the production was deficient in that
several months of Major Claims Reports are missing. In addition, Fidelity produced
only some of the data from the CPS.
In its motion, Captiva also asserts that Fidelity failed to produce (1) a coverage
letter dated July 21, 2010; (2) an “LPS Final Report” dated March 16, 2010; (3) a
“LDR” or “Loan Document Review” file; (4) a box of notebooks; (5) a “final report to
Randall McHargue” dated March 16, 2010; and (6) 642 documents contained on a CD.
The Court’s August 17th order required Fidelity to produce Major Claims Reports and
CPS data. To the extent that Captiva seeks sanctions for deficient production of other
materials not addressed by that order, the motion is premature.
II.

Discussion

In order for the Court to impose sanctions under Rule 37, “there must be an
order compelling discovery, a willful violation of that order, and prejudice to the other
party.” Chrysler Corp. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999).

The rule

provides that a court may strike a party’s pleadings or dismiss the action. Fed.R.Civ.P.
37(b)(2)(A). However, the court should resort to the sanction of dismissal only “when
the failure to comply has been due to . . . willfulness, bad faith, or any fault of

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petitioner.” Hairston v. Alert Safety Light Products, Inc., 307 F.3d 717, 718-19 (8th
Cir. 2002) (citations omitted) (alteration in original). Any sanction imposed must be
just and relate to the claim at issue in the order to provide discovery. Avionic Co. v.
General Dynamics Corp., 957 F.2d 555, 558 (1992).
In response to the Court’s order, Fidelity produced several Major Claims Reports
to Captiva. Missing from their production were reports from July, August, November
and December 2010. Captiva promptly asked whether reports existed for the missing
months. Fidelity conducted a further search of its records and located the reports for
November and December 2010, which it produced on September 14, 2012. Some
excerpts of the reports for July and August 2010 were located and produced after
Captiva filed the instant motion.
With respect to the CPS, Fidelity produced only partial data in response to the
Court’s order. CPS is a computer-based application with multiple fields into which
users input information on successive screens. When the Court directed Fidelity to
provide documents for in camera review, it provided screenshots of the various fields,
stating that no hard copy of the data in the system existed.

There are several

deficiencies in the screenshots -- often, information appearing at the bottom of a
computer screen is below the margin of the printed page and thus not captured in the
printing process. In addition, screenshots only capture the data as it exists on the
screen at that moment.

Thus, there is no information regarding who input the

information or the date on which it was entered.

Screenshots also provide no

information about the earlier contents of any particular field, as each new entry
overwrites any existing entries. As the Court noted, this is information that would
presumably be available if the data were produced in an electronic format. In response

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to this observation, Fidelity purports to have transferred data for one of the two claims
files into a spreadsheet, which is even less informative than the screenshots. When
Captiva protested, Fidelity stated that it “was in contact with e-discovery specialists to
figure out what else can be done with respect to the information in CPS.” [Doc. #1163].
The Court can say without hesitation that the proceedings in this case present
an extremely unflattering picture of Fidelity’s document and data management
practices. And, the Court appreciates Captiva’s frustration with the manner in which
Fidelity has produced documents. Nonetheless, the record does not support a finding
that Fidelity’s conduct rises to the level of a willful violation of the order compelling
production. Thus, Captiva’s request for dismissal will be denied.
Captiva alternatively asks the Court to order a forensic examination of Fidelity’s
computer system. While this request has some appeal, the Court will deny it at this
time. When Captiva filed the instant motion on September 17th, this matter was set
for trial on October 22nd and Captiva was rightly concerned that time was running out.
After the motion was briefed, the Court removed the matter from the October 22nd
trial docket. A new trial date of June 17, 2013, has been established and thus the
parties have some leeway to cooperate in the appropriate resolution of their discovery
disputes in order to avoid further litigation on these issues. Of greater concern to the
Court, however, is that the discovery fight kept the parties from filing summary
judgment motions on a key legal question; namely, whether coverage exists under the
insurance policy. The Court has now established a new summary judgment schedule
and urges the parties to focus their attention on this issue. In the meantime, Fidelity
is directed to continue searching its records for documents that are responsive to the

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Court’s order.

In addition, it should continue its consultation with e-discovery

specialists to produce the CPS data in a useful format. The Court will direct Fidelity to
provide a status report on those efforts.
Accordingly,
IT IS HEREBY ORDERED that the motion of defendant Captiva Lake
Investments, LLC, for sanctions [Doc. #116] is denied.
IT IS FURTHER ORDERED that, no later than December 3, 2012, plaintiff
Fidelity National Title Insurance Company shall file a status report addressing the
progress of its consultation with e-discovery specialists.
IT IS FURTHER ORDERED that plaintiff’s motion for hearing [Doc. #122] is
denied.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 16th day of November, 2012.

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