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

Filing 44

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that the motion of plaintiff Fidelity National Title Insurance Company to quash subpoena [Doc. #34] is denied. IT IS FURTHER ORDERED that Sauerwein, Simon & Blanchard, P.C., shall produce all documents responsive to the defendants subpoena within fifteen (15) days of the date of this Order. Signed by Honorable Carol E. Jackson on 6/17/11. (KXS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
FIDELITY NATIONAL TITLE INS. CO.,
Plaintiff,
vs.
CAPTIVA LAKE INVESTMENTS, LLC,
Defendant.

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

MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s motion to quash a subpoena duces
tecum, pursuant to Fed.R.Civ.P. 45(c)(3). Defendant opposes the motion and the
issues are fully briefed.
I.

Background

Plaintiff Fidelity National Title Insurance Company (Fidelity) filed this action
seeking a declaration that it is not obligated under a policy of insurance to provide
coverage to defendant Captiva Lake Investments, LLC, (Captiva) for mechanics liens
filed against a development project.1 Captiva asserts counterclaims for declaratory
judgment, breach of contract, and tortious interference.
Fidelity is providing Captiva with a defense against the mechanics liens, subject
to a reservation of rights. To that end, Fidelity has retained the law firm of Sauerwein,
Simon & Blanchard, P.C. (SSB), to challenge the validity, enforceability, and priority
of the mechanics’ liens, and to defend the priority of Captiva’s interest in the property.
Captiva complains that the liens are grossly overstated and do not reflect actual time

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Fidelity is the successor-by-merger to Lawyers Title Insurance Corporation
which issued the policy under consideration to National City Bank of the Midwest
(NCB). Defendant Captiva is the assignee of NCB pursuant to a loan sale agrement.

and materials invested in the property.

Captiva asked SSB to retain a construction

expert witness to conduct a forensic examination of the liens.

Fidelity denied

authorization for SSB to do so, stating that the policy insures solely against claims that
competing liens have priority over the insured deed of trust and that the value of the
liens falls outside the scope of the determination of priority.
Captiva served a subpoena duces tecum on SSB, seeking production of four
categories of documents: (1) those related to SSB’s representation in the mechanics
liens lawsuits, (2) all correspondence and communications between SSB and the
insurer related to SSB’s work on the liens; (3) all documents prepared by SSB
attorneys evaluating or referring to the liens; and (4) all billing records for SSB’s work
on the liens. Fidelity asserts that the subpoena requires the disclosure of material
protected by attorney-client and the work product privileges and seeks an order to
quash.
II.

Legal Standard

In general, a party “may obtain discovery regarding any nonprivileged matter
that is relevant to any party’s claim or defense.” Rule 26(b)(1). A party withholding
information on a claim that it is privileged or subject to work-product protection has
the burden to establish that the privilege applies. DeKalb Genetics Corp. v. Syngenta
Seeds, Inc., 4:06CV01191 ERW, 2007 WL 2030130, *1 (citing United States v. Evans,
113 F.3d 1457 (7th Cir. 1997)). Under Rule 45, a court “must quash or modify a
subpoena that . . . requires disclosure of privileged or other protected matter, if no
exception or waiver applies.” Rule 45(c)(3)(A)(iii). “A person withholding subpoenaed
information under a claim that it is privileged or subject to protection as trialpreparation material must: (i) expressly make the claim; and (ii) describe the nature

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of the withheld documents . . . in a manner that, without revealing information itself
privileged or protected, will enable the parties to assess the claim.” Rule 45(d)(2)(A).
III.

Discussion

In a diversity action such as this, “the privilege of a witness, person,
government, State, or political subdivision thereof shall be determined in accordance
with State law.” Fed.R.Evid. 501; Ayers Oil Co. v. American Business Brokers, Inc.,
2009 WL 4725297, at *1 (E.D. Mo. Dec. 2, 2009). Work product claims are governed
by federal law. Pepsico , Inc. v. Baird, Kurtz & Dobson LLP, 305 F.3d 813, 817 (8th
Cir. 2002) (citing Baker v. General Motors Corp., 209 F.3d 1051 (8th Cir. 2000) (en
banc)).
Fidelity argues that it has an attorney-client relationship with SSB and thus is
entitled to invoke the attorney-client privilege to prevent disclosure to Captiva.
Captiva argues in response that it has an attorney-client relationship with SSB which
entitles it to access to SSB’s file. In actuality, both Fidelity and Captiva are clients of
SSB. See In re Allstate Ins. Co., 722 S.W.2d 947, 952 (Mo. 1987) (finding “no reason
why the same lawyer may not represent both” the insurer and the insured); Shapiro
v. Allstate Ins. Co., 44 F.R.D. 429, 431 (E.D. Pa. 1968) (counsel represented both
insurer and insured and insurer cannot require counsel to withhold information from
insured).
Communications between attorney and client are generally protected from third
parties. Fed.R.Evid. 501; § 491.060(3), Mo. Rev. Stat. A general exception to the
privilege exists, however, when a lawyer represents two clients in a matter of common
interest. The privilege cannot be claimed by one client with respect to communications
between him and the attorney in a subsequent action between the two clients. F.P.

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Woll & Co. v. Valiant Ins. Co., 2003 WL 23281280, at *3 (E.D. Pa. Feb. 12, 2003);
Central Nat’l Ins. Co. of Omaha v. Medical Protective Co. of Fort Wayne, Ind., 107
F.R.D. 393, 394 (E.D. Mo. 1985); see also “The Privilege of Co-Clients,” Restatement
(Third) of Law Governing Lawyers § 75(2) (“Unless the co-clients have agreed
otherwise, a [privileged] communication . . . is not privileged as between co-clients in
a subsequent adverse proceeding between them.”); Model Evid. Code § 211 (1942)
(“When two or more persons acting together become clients of the same lawyer as to
a matter of common interest, none of them has as against another of them any
[attorney-client] privilege with respect to that matter.” In the context of an attorney
retained by an insurer to provide a defense for an insured, the privilege applies in an
action brought by a third person; however, “it [does not] seem disputed that there is
not privilege where the controversy is between the insured . . . and the company itself
over the company’s liability under the policy.” Kenneth Broun, McCormick on Evidence
§ 91.1 (6th ed. 2006). See F.P. Woll, supra; Perez v. Sphere Drake Ins., Ltd., 2002
WL 31618812, at *3 (D. Virgin Islands Feb. 15, 2002) (rejecting attorney-client
privilege and citing cases). Thus, Fidelity may not invoke the attorney-client privilege
to require SSB to withhold information from Captiva.
With respect to the work-product privilege, an insurer may invoke it with respect
to specific documents that were prepared by the common attorney in anticipation of
the subsequent litigation between the insured and the insurer. F.P. Woll, 2003 WL
23281280, at *4. Fidelity is represented by other counsel in this declaratory judgment
litigation and asserts that SSB’s role is limited to defense of the mechanics’ liens.
Presumably, therefore, SSB’s documents were all prepared for the underlying litigation.
The Court is left to rely on guess-work because Fidelity has failed to produce a privilege

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log allowing Captiva (or the Court) to assess a work-product claim. The Court finds
that Fidelity has failed to meet its burden to establish that the work-product privilege
applies.
Accordingly,
IT IS HEREBY ORDERED that the motion of plaintiff Fidelity National Title
Insurance Company to quash subpoena [Doc. #34] is denied.
IT IS FURTHER ORDERED that Sauerwein, Simon & Blanchard, P.C., shall
produce all documents responsive to the defendant’s subpoena within fifteen (15) days
of the date of this Order.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 17th day of June, 2011.

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