LIBERTY INTERNATIONAL UNDERWRITERS CANADA v. SCOTTSDALE INSURANCE COMPANY et al

Filing 177

MEMORANDUM OPINION AND ORDER granting 157 Motion to Quash, etc. Signed by Magistrate Judge Joel Schneider on 2/23/17. (js)

[Doc. No. 157]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
LIBERTY INTERNATIONAL
UNDERWRITERS CANADA,
Plaintiff,

Civil No. 12-4934 (NLH/JS)

v.
SCOTTSDALE INSURANCE COMPANY,
et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on plaintiff’s “Motion to
Quash and/or Preclude Issuance of Subpoenas” [Doc. No. 157]. The
Court received defendants’ response [Doc. No. 166], plaintiff’s
reply [Doc. No. 170], and held oral argument on February 15,
2016. For the reasons to be discussed, plaintiff’s motion is
GRANTED.
Background
The Court will not summarize in detail the relevant fact
background

which

is

well

known

to

the

parties.

Plaintiff

is

seeking to recover from defendants Scottsdale and Infinity $1
million

plus

$769,383.58

in

attorneys’

fees

that

it

paid

in

November 2011 to settle the Borgata Fire Litigation wherein it
was alleged that Liberty’s insured, Tractel, was a cause of the
September

23,

2007

fire.

Before
1

the

fire

the

owners

of

the

Borgata hired Tractel to install window washing scaffolding and
thereafter

Tractel

subcontracted

the

work

to

Infinity.

After

Borgata and Tractel settled for $1 million a Joint Stipulation
of Dismissal was filed with the Superior Court of New Jersey on
or about November 30, 2011. The Joint Stipulation provided that
Tractel and its insurers assigned to the Borgata their claims
and causes of action related to the September 23, 2007 fire.
Defendants argue plaintiff lacks standing to pursue this lawsuit
because of the assignment. Plaintiff argues it did not authorize
the

assignment.

Tractel

and

the

Borgata

also

entered

into

a

final Settlement Agreement signed on November 22, 2011. Infinity
settled the fire litigation in November 2012. In this lawsuit
plaintiff

argues

Infinity

harmless.

Plaintiff

also

should
argues

indemnify
Scottsdale

and

hold

agreed

Tractel

to

insure

Tractel as an indemnitee of Infinity. Brief at 21.
Defendants’ subpoenas are directed to the lawyers and firms
involved in the Borgata/Tractel settlement. In defendants’ words
they are entitled to discovery from coverage counsel, defense
counsel

and

plaintiff’s

counsel

about

their

non-privileged

communications with Scottsdale, Tractel and LIU. Brief at 3.
During the fire litigation Tractel was represented by Dennis R.
Withers (“Withers”), LLP, David Azotea, Esquire (“Azotea”), and
Glenn

Callahan,

coverage

counsel

Esquire,
for

(“Callahan”).

itself,

David
2

LIU

Gabianelli,

also

retained

Esquire,

then

with Squire Sanders (US), LLP. Withers was employed with the
Robins Kaplan, LLP, law firm during the fire litigation.
To date, defendants have issued six (6) subpoenas seeking
depositions of four (4) attorneys, and litigation files from
three (3) law firms. These are:
1.
Deposition subpoena to David Gabianelli, Esquire,
San Francisco, CA. Witness asked to produce his entire
Borgata fire file.
2.
Document
subpoena
to
Francisco, CA. Witness asked
Borgata fire file.

Squire
Sanders,
San
to produce its entire

3.
Document subpoena to Robins Kaplan, New York NY.
Witness asked to produce its entire Borgata fire file.
4.
Deposition
subpoena
to
Dennis
R.
Withers,
Esquire, Atlanta, GA. Withers asked to produce his
entire Borgata fire file. (Lead defense counsel).
5.
Deposition subpoena to David J. Azotea, Esquire,
Atlantic City, NJ. Azotea asked to produce his entire
Borgata fire file. (Local counsel).
6.
Deposition
subpoena
to
Glenn
P.
Callahan,
Esquire, Philadelphia, PA. Callahan asked to produce
his entire Borgata fire file. (Local counsel).
Defendants also intend to issue similar subpoenas to Borgata’s
lawyers.
Substantial discovery has already taken place in the case.
Insofar as plaintiff is concerned, it has already produced for
deposition its Rule 30(b)(6) witness (two times), its V.P. of
Casualty Insurance, its V.P. of Claims, and a representative of
Tractel.

Plaintiff

also

produced

Tractel’s

documents

and

all

non-privileged documents concerning the contracts at issue in
3

the litigation, plaintiff’s claim file, plaintiff’s underwriting
file,

and

documents

litigation

and

addition,

the

plaintiff

and

communications

Tractel

settlement

produced

unredacted

regarding
and

the

fire

negotiations.

copies

of

the

In

legal

invoices for defense costs incurred on behalf of Tractel. Brief
at 4-6.
To support its motion plaintiff argues: (1) if not already
produced,

the

requested

discovery

is

available

from

less

intrusive means than an attorney; (2) the burden of the proposed
discovery outweighs its importance; (3) defendants already have
the

discovery

excessive

and

they

need;

cumulative;

(4)
and

the

(5)

requested

defendant

discovery

has

no

is

right

to

challenge the reasonableness and amount of Tractel’s settlement.
In opposition defendants argue: (1) they are seeking relevant
non-privileged information not produced in discovery; (2) the
non-privileged information they seek is not available from other
sources;

and

(3)

depositions

of

attorneys

on

important

fact

questions are not barred.
Discussion 1

1

Defendants have questioned whether the Court may address
subpoenas that have not yet been served or issued. The answer is
clearly yes. The Court has authority to limit discovery “on its
own” pursuant to Rule 26(b)(2)(C). It is a wasteful exercise to
wait until defendants serve their subpoenas on the Borgata’s
lawyers to quash Borgata’s depositions. See Rule 1 (the federal
rules shall be administered to secure the just, speedy, and
inexpensive determination of every action and proceeding).
4

The

Court

agrees

with

the

parties

that

depositions

of

attorneys are not necessarily off limits. As the Court noted in
Costantino v. City of Atlantic City, C.A. No. 13-6667 (RBK/JS),
2014 WL 12607724, at *3 (Dec. 16, 2014), although there is no
prohibition against taking the depositions of counsel, courts
closely scrutinize the requests. Courts examine three factors to
decide

if

whether

an

the

attorney’s
proposed

deposition

deposition

should

focuses

go

on

forward:

central

(1)

factual

issues rather than peripheral concerns; (2) availability of the
requested information from other sources; and (3) harm to the
party’s represented rights. Johnston Development Group, Inc. v.
Carpenters Local Union No. 1578, 130 F.R.D. 348, 353 (D.N.J.
2014; Stepanski v. Sun Microsystems, Inc., No. 2700, 2011 WL
8990579,
Further,

at

*18

(D.N.J.

depositions

of

Dec.

9,

attorneys

2011)(citation

are

not

divorced

omitted).
from

the

requirements in Rule 26(b) that are applicable to all discovery.
Thus,

the

benefit

of

the

requested

discovery

must

be

proportional to its burden and expense. Under amended Rule 26,
relevancy

alone

is

not

sufficient

to

obtain

discovery.

The

requested discovery must also be proportional to the needs of
the case. In re Bard Filters Prod. Liab. Litig., 317 F.R.D. 562,
564-65 (D. Ariz. Sept. 16, 2016).
On the whole the Court finds that the burden and expense of
the requested discovery outweighs its likely benefit. The Court
5

also finds that the three Johnston factors weigh in plaintiff’s
favor. Thus, plaintiff’s motion to quash defendants’ subpoenas
will be granted.
1.

Defense Counsel

Defendants have identified several areas they want to cover
at defense counsel’s depositions. One area defendants want to
explore is the reasonableness of Tractel’s settlement. The Court
finds

that

evaluate

defendants

Tractel’s

already

have

settlement.

sufficient

Defendants

discovery

have

to

plaintiff’s

complete non-privileged Borgata fire litigation file relating to
Tractel and its own complete fire file relating to Infinity.
Defendants are privy to the same material facts Tractel knew
about

when

million.

Tractel

Additional

had

to

decide

attorney

whether

depositions

to

settle

will

not

for
add

$1
any

material facts to this analysis. The Court is not required to
indulge defendants and give it discovery on every conceivable
issue that arises in the case. As the Court noted in In re:
Benicar (Olmesartan Products Liability Litigation), Master Dkt.
No. 15-2606 (RBK/JS), 2016 WL 5817262, at *5 (D.N.J. Oct 4,
2016):
If the Court permitted depositions to be taken to
answer every conceivable question litigants raise, and
fill every “gap” a party raises, discovery would never
end. Moreover, the Court would be abdicating its role
to efficiently manage the litigation. See Fed. R. Civ.
P. 26(b)(1) Advisory Committee Note to 2015 Amendment.
(“The parties and the court have a collective
responsibility to consider the proportionality of all
6

discovery and
disputes”).

consider

it

in

resolving

discovery

Defendants argue they want Tractel’s counsel’s status reports.
If any part of these reports are non-privileged, they should
have already been produced. However, the Court suspects the bulk
of the reports are protected by the attorney-client privilege
and/or work-product doctrine. Defendants provide no support for
their argument that plaintiff waives its privileges by seeking
coverage for Tractel under Scottsdale’s policy.
The Court is also cognizant of the fact that defendants’
subpoenas will undoubtedly raise objections from the attorneys
and law firm recipients based on privilege and burdensomeness
grounds. These objections will further bog down this protracted
litigation.
provide

Since

the

defendants

attorney

with

any

depositions

new

material

are

unlikely

fact

to

information

relevant to the reasonableness of Tractel’s settlement, the cost
and burden to respond to the subpoenas will be substantial. The
subpoenas

will

also

further

bog

down

the

case

in

motion

practice. Accordingly, the subpoenas will be quashed. The burden
and

expense

of

the

requested

attorney

depositions

is

disproportional to their likely benefit.
Defendants also want to depose defense counsel about the
reasonableness

of

their

bills.

Defense

counsel’s

unredacted

bills speak for themselves about what they spent time on and how
much time was spent. Defendants have not identified a single
7

specific area they have concerns about. The Court finds that
depositions of defense counsel regarding their bills will not
add material new information to what defendants already know
about the bills. In re Benicar, supra. Further, the burden and
expense

of

the

depositions

regarding

counsel’s

bills

will

substantially outweigh the likely benefit to be derived from the
depositions.

The

fact

that

the

reasonableness

of

defense

counsel’s bills is a sideshow is evidenced by the fact that the
bill issue was raised at the tail end of discovery and has not
been an issue in the previous 4 1/2 years of the case.
Defendants

also

want

to

inquire

about

non-privileged

communications between defense counsel and plaintiff. Brief at
3. Since defendants do not identify what these communications
are, and the Court is at a loss to evaluate their relevance and
importance, the request to depose defense counsel about this
open-ended area is denied. Defendants already had an opportunity
to

question

plaintiff

and

Tractel

about

these

non-privileged

areas at their depositions.
To be clear, it is no secret the main reason defendants’
want to depose defense counsel is to question them about whether
plaintiff

authorized

the

Borgata

settlement

and/or

assignment

with Tractel. However, the Court has already ruled this area
involves

privileged

communications

between

plaintiff

and

its

defense counsel. On December 8, 2016 [Doc. No. 142], the Court
8

held

that

plaintiff

did

not

waive

its

privilege.

The

Court

reiterated its finding when it denied defendants’ Motion for
Reconsideration on January 25, 2107. [Doc. No. 159]. Given that
the documents exchanged amongst plaintiff and defense counsel
regarding their settlement discussions are privileged, testimony
regarding the same subject area is also privileged.
The Court is not oblivious to defendants’ frustration about
not

obtaining

discovery

regarding

plaintiff’s

privileged

communications. No doubt the discovery is relevant to key issues
in the case. Nevertheless, the Third Circuit has held that even
if facts are “vital, highly probative, and directly relevant or
go to the heart of an issue,” this does not justify a privilege
waiver. Rhone-Poulenc Rorer, Inc. v. Home Indemn. Co., 32 F.3d
851,

863

(3d

subpoenas
ground

Cir.

directed

the

Court

1994).
to

Tractel’s

denied

documents. 2

settlement

The

Court

defense

defendants’

Thus,

will

quash

counsel

request

plaintiff’s

defendants’
on

for

motion

the

same

Tractel’s

requesting

to

quash the subpoenas directed to Tractel’s defense counsel is
granted.
2.

Plaintiff’s Coverage Counsel

Defendants’ request to depose plaintiff’s coverage counsel
is

denied

for

the

same

reasons

2

already

explained.

The

Defendants are appealing the Court’s denial of its Motion for
Reconsideration. [Doc. No. 171]. If the Court’s decision is
reversed it may be compelled to revisit this Order.
9

depositions will inevitably raise privilege issue and the Court
has

already

ruled

that

the

crux

of

what

defendants

want

to

question counsel about is privileged.
3.

Borgata’s Counsel

Defendants’ request for the files and testimony of Bogota’s
attorneys

is

also

denied.

To

the

extent

plaintiff

wants

the

facts Borgata relied upon to evaluate the Tractel settlement,
these

facts

are

already

known

by

defendants.

To

the

extent

defendants want to explore Borgata’s settlement strategy and why
and

how

they

structured

the

settlement

(Brief

at

15),

the

testimony is plainly privileged and off-limits to defendants’
discovery.

Thus,

plaintiff’s

motion

requesting

to

quash

the

subpoenas directed to Borgata’s lawyers and law firm is granted.
Conclusion
For the foregoing reasons, the Court will grant plaintiff’s
Motion to Quash. Having been intimately involved in the long
history of the case, the Court is well-equipped to exercise its
broad

discretion

appropriate

to

scope

manage

of

the

discovery.

docket

and

Allstate

to

Life

decide
Ins.

Co.

the
v.

Stillwell, C.A. No. 15-8251 (AET) 2017 WL 557336, at *2 (D.N.J.
Feb.

10,

burden

2017)(citations

and

expense

of

omitted).

the

The

proposed

Court

attorney

finds

that

depositions

the
is

disproportionate to the likely benefit to be derived from the
depositions.

Defendants

already
10

have

the

non-privileged

information they seek, and the other information defendants seek
to obtain is privileged.
Accordingly, for the foregoing reasons,
IT IS HEREBY ORDERED this 23rd day of February, 2017, that
plaintiff’s Motion to Quash is GRANTED; and it is further
ORDERED as follows:
1.
Sanders,

The subpoenas plaintiff issued to Gabianelli, Squire
Robins

Kaplan,

Withers,

Azotea

and

Callahan

are

QUASHED. To the extent the subpoenas have already been served,
defendants shall notify these persons/entities of this ruling
within three (3) days of the entry of this Order.
2.

Defendants

are

barred

from

issuing

the

proposed

deposition and document subpoenas to the Borgata’s lawyers and
law firm.

s/Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge

11