DeClue v. Transportation Insurance Company
MEMORANDUM AND ORDER: For the reasons stated above, IT IS HEREBY ORDERED that the motion of third party defendant A.I.G. Agency, Inc. to compel responses to Interrogatory 8 and Requests for Production 17 and 18 (Doc. 118) is sustained. Unless other wise agreed to by the parties, or subject to further order, this information shall be produced within 14 days of this date. IT IS FURTHER ORDERED that the motion of third party defendant A.I.G. Agency, Inc. to compel a response to Request for Production 13 is denied. IT IS FURTHER ORDERED that the motion of third party defendant A.I.G. Agency, Inc. to compel a response to Interrogatory 7 (Doc. 118) is denied as moot. Signed by Magistrate Judge David D. Noce on 3/4/2013. (KMS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
Third Party Plaintiff,
A.I.G. AGENCY, INC., d/b/a
ASSOCIATED INSURANCE GROUP,
Third Party Defendant.
No. 4:11 CV 117 DDN
MEMORANDUM AND ORDER
This action is before the court on the motion of third party defendant A.I.G. Agency,
Inc. to compel discovery responses from third party plaintiff Transportation Insurance
Company. (Doc. 118.) The court heard oral argument on January 31, 2013.
On November 29, 2010, plaintiff Paul Declue commenced this action in the Circuit
Court of St. Louis County against defendant Transportation Insurance Company for
“equitable garnishment” under R.S.Mo. § 379.200. Cf. Mo. S. Ct. R. 90. On January 19,
2011, defendant Transportation Insurance invoked diversity of citizenship subject matter
jurisdiction to remove the action to this court.
28 U.S.C. §§ 1332, 1441, 1446.
December 23, 2011, defendant Transportation Insurance filed a third party complaint
adding third party defendant A.I.G. Agency, Inc. (Doc. 31.) On January 23, 2013, Sheri
Chipman, as personal representative of Paul Declue’s probate estate, moved to substitute
herself as plaintiff, which the court granted. (Doc. 127.)
According to plaintiff’s complaint, the following allegedly occurred. On June 29,
2000, Transportation Insurance issued a general liability insurance policy to Ralph Declue
d/b/a Declue Tree Service.
(Doc. 5 at ¶ 5.)
On November 20, 2000, Transportation
Insurance through A.I.G. Agency issued a certificate of insurance naming Hayden Homes
as an additional covered party. (Id. at ¶ 6.) On November 24, 2000, Paul Declue suffered
serious bodily injuries when working on property owned by Hayden Homes. (Id. at ¶ 7.)
Prior to February 11, 2004, Paul Declue made pre-suit claims against Declue Tree
Service and Hayden Homes.
These claims were tendered to defendant Transportation
Insurance for defense and indemnity coverage.
Transportation Insurance rejected the
tender of the defense and the indemnity. (Id. at ¶ 1st 9.)
On February 11, 2004, Paul Declue filed suit in the Circuit Court of St. Louis
County against Declue Tree Service and Hayden Homes. (Id. at ¶ 8.) Declue Tree Service
and Hayden Homes tendered the suit for defense and indemnity to Transportation
Insurance, but Transportation Insurance rejected it.
On October 2, 2006, after
plaintiff dismissed Declue Tree Service from the suit, the Circuit Court granted a consent
judgment to Paul Declue against Hayden Homes in the amount of $550,000.00. (Id. at ¶
2nd 9.) Plaintiff Sheri Chipman, as substitute plaintiff for Paul Declue, as the judgment
debtor seeks satisfaction of the judgment against Transportation Insurance under R.S.Mo.
§ 379.200. (Id. at ¶10.)
In its second amended answer and affirmative defenses, Transportation Insurance
denies liability for the state court judgment for several reasons and further alleges the
state court judgment “is invalid and based on collusion or fraud of the parties to that
Consent Judgment.” (Doc. 83, at 3.)
In Transportation Agency’s second amended third party complaint against A.I.G.
Agency, the following allegedly occurred. The policy issued to Declue Tree Service stated
coverage in the amount of a $100,000 per occurrence. (Doc. 86 at ¶ 4.) A.I.G. Agency
acted as broker for purposes of issuing the policy with no authority to endorse or amend
policies. (Id. at ¶ 5.) On November 20, 2000, without seeking permission or informing
Transportation Insurance, an A.I.G. Agency employee issued a certificate of insurance to
Hayden Homes that added Hayden Homes as a covered party and stated coverage in the
amount of $1,000,000 per occurrence. (Id. at ¶ 6.) Third party plaintiff Transportation
Insurance seeks indemnification from third party defendant A.I.G. Agency due to its
unauthorized conduct in the event plaintiff is successful against Transportation
Insurance. (Id. at ¶¶ 10-17.)
In its answer to the third party complaint, A.I.G. Agency alleges in part in summary
fashion that Transportation Insurance has failed to mitigate its damages. (Doc. 90 at 5.)
II. MOTION TO COMPEL
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In its motion to compel, A.I.G. Agency seeks responses from Transportation
Insurance to Interrogatories Nos. 7 and 8 and to compel production of documents in
response to its Requests for Production Nos. 13, 17, and 18.
However, in its reply
memorandum, A.I.G. Agency informed the court that it no longer sought to compel a
response to Interrogatory Number 7. (Doc. 129 at 3.)
A. Interrogatory No. 8 and Requests for Production No. 17 and 18
A.I.G. Agency’s Interrogatory No. 8 states:
Interrogatory No. 8: Identify each act or omission of (a) Declue Tree Service,
(b) Ralph Declue, (c) Hayden Homes, or (d) any other person or entity
determined by your claims adjuster to give rise to liability to Paul Declue,
and for each, state the reason for the determination that it gave rise to
(Doc. 118-1 at 5.)
A.I.G. Agency’s Requests for Production Nos. 17 and 18 state:
Request for Production No. 17:
All documents concerning, pertaining to,
or relating to any act or omission of (a) Declue Tree Service, (b) Ralph
Declue, (c) Hayden Homes, or (d) any other person or entity determined by
your claims adjuster to give rise to liability to Paul Declue.
Request for Production No. 18:
All documents concerning, pertaining to,
or relating to the reason(s) for your claims adjuster’s determination that any
act or omission of (a) Declue Tree Service, (b) Ralph Declue, (c) Hayden
Homes, or (d) any other person or entity gave rise to liability to Paul Declue.
(Doc. 118-2 at 5-6.)
In its initial and first supplemental responses to these discovery requests,
Transportation Insurance claimed the attorney-client and work product privileges and
stated that the responses require disclosure of confidential business information and trade
secrets and that the answers could be found in previously produced discovery and
(Doc. 118-1 at 5; Doc. 118-2 at 6-7.)
Regarding Interrogatory No. 8,
Transportation Insurance also responded that:
[I]t is Transportation [Insurance]’s position that the Certificate did not
alter or amend the policy issued by Transportation [Insurance[ and that
[A.I.G. Agency] did not have the authority to bind Transportation [Insurance]
to the content of that Certificate, and that Transportation [Insurance] would
have had to have issued an endorsement to the policy at issue to make the
changes that are the subject of this lawsuit. The errors of [A.I.G. Agency]
include the errors that have been identified on the certificate of insurance in
this case, as well as its failures to implement adequate policies and
procedures to ensure that such errors did not occur.
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(Doc. 118-1 at 5.)
Transportation Insurance further addressed Interrogatory No. 8 in its second
supplemental response, stating in relevant part:
Transportation [Insurance] . . . further makes clear that the damages
being sought in the Third-Party Complaint are based on the Order and
Judgment entered in the underlying action filed by Paul Declue and located
at TIC 000001-000002 . . . As far as acts or omissions of (a) Declue Tree
Service, (b) Ralph Declue, (c) Hayden Homes, such do not appear to be
relevant to the damage claim being brought by Plaintiff against
Transportation [Insurance] or by Transportation [Insurance] against [A.I.G.
Agency] and so were not considered significant to potential liability to Paul
Declue based on the claims asserted in Plaintiff’s complaint.
(Doc. 123-1 at 7-8.)
A.I.G. Agency maintains that with these discovery requests it seeks to determine
Transportation Insurance’s position on the liability of those insured by Transportation
Insurance without reference to the validity and binding nature of the certificate of
insurance and that Transportation Insurance fails to address this inquiry. Transportation
Insurance argues that because Hayden Home’s liability has been determined, it is no
longer relevant or discoverable in this case and that it clearly responded with its view that
the act creating liability to plaintiff is the underlying consent judgment.
argues that this information is relevant to determine whether Transportation Insurance
mitigated its damages.
As an initial matter, Transportation Insurance failed to answer A.I.G. Agency’s
Interrogatory No. 8.
Although the information sought may be contained in other
documents already produced by Transportation Insurance, A.I.G. Agency is entitled to
signed interrogatory answers by Transportation Insurance.
On the relevance objection, Fed. R. Civ. P. 26(b)(1) states that “parties may obtain
discovery regarding any matter, not privileged, that is relevant to the claim or defense of
any party.“ A.I.G. Agency has alleged failure to mitigate damages as an affirmative defense
against Transportation Insurance.
In this diversity action, for the substantive rules of
decision the court must look to the law of Missouri. Heacker v. Safeco Ins. Co. of Am., 676
F.3d 724, 727 (8th Cir. 2012) (“Missouri law applies to the equitable garnishment issues in
this diversity case.”).
Missouri law incorporates the avoidable consequences doctrine, also known as the
duty to mitigate, and the burden of proof rests with defendant A.I.G. Agency “to show the
opportunity the injured party [(Transportation Insurance)] had to mitigate and the
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reasonable prospective consequences.” Smith v. City of Miner, 761 S.W.2d 259, 261 (Mo.
Ct. App. 1988); Shaughnessy v. Mark Twain State Bank, 715 S.W.2d 944, 954-55 (Mo. Ct.
A.I.G. Agency argues that Transportation Insurance might have acted
differently during the events leading up to the consent judgment in the state court suit
including accepting the tender of Hayden Homes’ defense or participating in the settlement
of plaintiff’s lawsuit. The court concludes that A.I.G. Agency’s discovery request is relevant
to the claims and defenses alleged. Fed. R. Civ. P. 26(b)(1).
Accordingly, A.I.G. Agency’s motion to compel a response to Interrogatory No. 8 is
sustained. Further, Transportation Insurance must produce any documents relating to its
response, or, if such documents have already been produced, Transportation Insurance
must specifically identify the documents.
B. Request for Production No. 13
A.I.G. Agency’s Request for Production No. 13 states:
Request for Production No. 13:
Your claims file(s) for any claim(s) against
the Transportation Policy concerning, pertaining to, or relating to Plaintiff,
Hayden Homes, and/or the events described in the Petition and/or ThirdParty Complaint.
(Doc. 118-2 at 3.)
Transportation Insurance objected to this request for production on the grounds of
relevance, the attorney-client and work product privileges, the fact that certain documents
contain confidential business information or trade secrets, and because it had previously
produced the discovery. (Id. at 3-4.)
The information sought by A.I.G. Agency is relevant to its affirmative defense that
Transportation Insurance failed to mitigate its damages for which it seeks judgment
against A.I.G. Agency.
A.I.G. Agency seeks access to Transportation Insurance’s claim file
to determine whether Transportation Insurance could have mitigated damages by
accepting the tender of the defense of Hayden Homes or contributing to an earlier
settlement of the underlying lawsuit. Considering the scope of A.I.G. Agency’s affirmative
defense, the discovery request is relevant.
Transportation Insurance states that it has produced the entire claim file except for
internal investigative files that include communications with counsel and its insured.
According to Transportation Insurance, the documents are identified in a privilege log filed
with the court (Doc. 110-1) and are protected by attorney-client and work product
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Finally, Transportation Insurance maintains that it has not waived the
A.I.G. Agency argues that the privileges do not protect every document in the claims
file and that Transportation Insurance waived the privileges by seeking indemnification.
Specifically, the documents A.I.G. Agency seeks to compel are limited to those generated
prior to the filing of the instant lawsuit.1 “When a party claims that certain documents are
privileged and provides a list or log of those documents, the other party, the one seeking
discovery, must take the initiative, for if the party seeking discovery does not press for in
camera review of a particular document, the process ends with the claim of privilege de
facto upheld.” PaineWebber Group, Inc. v. Zinsmeyer Trusts P'ship, 187 F.3d 988, 992
(8th Cir. 1999).
Accordingly, the court limits its inquiry to whether Transportation
Insurance waived the privileges.
“Rule 501 of the Federal Rules of Evidence provides that state law supplies the rule
of decision on privilege in diversity cases.” Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d
726, 731 (8th Cir. 2002). Under Missouri law, information is protected by attorney-client
privilege if it is voluntarily transmitted between a client and lawyer in confidence by a
means that does not generally disclose information to third parties. Missouri v. Longo,
789 S.W.2d 812, 815 (Mo. Ct. App. 1990); Mo. Rev. Stat. § 491.060(3). A waiver of the
attorney-client privilege may be found where the client places the subject matter of the
privileged communication at issue. Sappington v. Miller, 821 S.W.2d 901, 904 (Mo. Ct.
Work product privilege is defined by Fed. R. Civ. P. 26(b)(3)(A), which states:
Ordinarily, a party may not discover documents and tangible things that
are prepared in anticipation of litigation or for trial by or for another party or
its representative. . . But, subject to Rule 26(b)(4), those materials may be
(i) they are otherwise discoverable under Rule 26(b)(1); and
(ii) the party shows that it has substantial need for the materials to
prepare its case and cannot, without undue hardship, obtain their
substantial equivalent by other means.
Fed. R. Civ. P. 26(b)(3)(A). Work product privilege may also be waived, and the privilege
should be “applied in a commonsense manner in light of reason and experience as
determined on a case-by-case basis.” Pamida, 281 F.3d at 732. To determine whether
1 In its reply memorandum, A.I.G. Agency limited its request to documents created prior to
November 1, 2010. (Doc. 129 at 5.) The proposed cutoff date predates plaintiff’s filing of
the petition in this suit by about a month.
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Transportation Insurance waived the work product privilege, the court must consider
whether it intended to waive the privilege and the interests of fairness and consistency. Id.
In its third party complaint, Transportation Insurance seeks indemnification
including attorney fees for the instant action.2 (Doc. 86.) Under Missouri law, to establish
a claim for indemnity, Transportation Insurance must show: (1) “the discharge of an
obligation by the plaintiff”; (2) “the obligation discharged by the plaintiff is identical to an
obligation owed by the defendant”; and (3) “the discharge of the obligation by the plaintiff
is under such circumstances that the obligation should have been discharged by the
defendant, and defendant will be unjustly enriched if the defendant does not reimburse
the plaintiff to the extent that the defendant's liability has been discharged.” Beeler v.
Martin, 306 S.W.3d 108, 111 (Mo. Ct. App. 2010).
In a similar case, Pamida, Inc. v. E.S. Originals, Inc., 281 F.3d 726 (8th Cir. 2002),
the plaintiff sought indemnification from the defendant for the costs incurred in the
defense and settlement of a patent infringement action. Id. at 728. The defendant sought
from plaintiff depositions and documents relating to the patent infringement suit in order
to investigate plaintiff’s handling of the suit and the propriety of the attorney fees sought
by plaintiff. Plaintiff moved to quash the discovery requests, which the court granted. Id.
at 728-29. On appeal, the Eighth Circuit found that the defendant’s entitlement to the
requested discovery turned on whether plaintiff waived its attorney-client and work
product privileges. Id. at 731. The Eighth Circuit concluded that the plaintiff waived both
“by filing a lawsuit for indemnification seeking recovery for legal expenses thereby putting
the work of its attorneys directly at issue in the case.” Id.
Despite the similarities, this court finds that the matter before it is distinguishable
from Pamida. First, A.I.G. Agency has indicated to the court that its request for discovery
is limited to documents created prior to November 1, 2010 to avoid documents prepared
for the instant action.
In Pamida, the Eighth Circuit found the plaintiff’s request for
attorney fees in particular constituted waiver of the privileges. Pamida, 281 F.3d at 731;
PETCO Animal Supplies Stores, Inc. v. Ins. Co. of N. Am., 2011 WL 2490298, *15 (D.
Minn. 2011). Here, Transportation Insurance seeks fees only for the instant action, and
thus, arguably waived the attorney-client privilege only for such related documents.
2 In its third party complaint, Transportation Insurance also seeks attorney fees incurred
in “prior actions asserted by Plaintiff, Hayden Homes, or Amerisure, prior demands made
by Plaintiff, Hayden Homes or Amerisure.”
(Doc. 86 at 6-7.)
At oral argument,
Transportation Insurance indicated that it no longer sought these attorney fees.
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Effectively, A.I.G. Agency limited its request to documents protected by attorney-client
privilege, which Transportation Insurance did not waive.
Second, in Pamida, the Eighth Circuit applied Nebraska law, and here, Missouri
Missouri courts have held that seeking indemnification for attorney fees
does not waive attorney-client privilege. State ex rel. Chase Resorts, Inc. v. Campbell, 913
S.W.2d 832, 837 (Mo. Ct. App. 1995). Accordingly, the court finds no waiver of attorneyclient privilege regarding the documents requested by A.I.G. Agency.
The privilege log filed by Transportation Insurance indicates that each document
protected by attorney-client privilege is also protected by work product privilege.
Therefore, even if the court found waiver of the work product privilege, attorney-client
privilege would continue to apply, which renders further discussion of work product
Transportation Insurance’s designation of information as proprietary, confidential,
or trade secret, does not completely bar discovery of such material. Taiyo Int'l, Inc. v.
Phyto Tech Corp., 275 F.R.D. 497, 500 (D. Minn. 2011) (citing Fed. Open Mkt. Comm. of
Fed. Reserve Sys. v. Merrill, 443 U.S. 340, 362 (1979)). However, Fed. R. Civ. P. 26(c)
allows courts to issue protective orders for such information. In re Remington Arms Co.,
Inc., 952 F.2d 1029, 1032 (8th Cir. 1991).
Accordingly, A.I.G. Agency’s motion to compel production for Request for
Production No. 13 is denied.
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For the reasons stated above,
IT IS HEREBY ORDERED that the motion of third party defendant A.I.G. Agency,
Inc. to compel responses to Interrogatory 8 and Requests for Production 17 and 18 (Doc.
118) is sustained. Unless otherwise agreed to by the parties, or subject to further order,
this information shall be produced within 14 days of this date.
IT IS FURTHER ORDERED that the motion of third party defendant A.I.G. Agency,
Inc. to compel a response to Request for Production 13 is denied.
IT IS FURTHER ORDERED that the motion of third party defendant A.I.G. Agency,
Inc. to compel a response to Interrogatory 7 (Doc. 118) is denied as moot.
/S/ David D. Noce______________
UNITED STATES MAGISTRATE JUDGE
Signed on March 4, 2013.
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