Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Charter Oak Fire Insurance Co. v. American Capital, Ltd.

United States District Court, Fourth Circuit

May 17, 2013



DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for review in this insurance coverage dispute is the motion filed by Plaintiffs The Charter Oak Fire Insurance Company and Travelers Property Casualty Company of America (together, "Travelers" or "Plaintiffs") seeking reconsideration of a limited portion of the court's February 11, 2012 ruling. (ECF No. 172). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Plaintiffs' motion will be denied.

I. Background

In light of the numerous memorandum opinions that have been issued in this case ( e.g., ECF Nos. 42, 64, 77, 92, 170), some familiarity with the underlying facts of the parties' dispute is presumed. During discovery, Defendants American Capital, Ltd., Scientific Protein Laboratories, Inc., and SMG (together, "Defendants") requested that Plaintiffs produce all claims handling materials relating to the underlying heparin and personal injury lawsuits involving Defendants. In response, Travelers produced a limited number of claims handling documents from August 2008, but withheld approximately 596 other documents, most of which were created on or after September 1, 2008. Travelers also provided a privilege log indicating that each of the withheld documents is protected by both the attorney-client privilege and the work product doctrine. (ECF No. 122-5).

Defendants moved to compel, arguing that the documents withheld by Plaintiffs are not protected by the attorney-client privilege or the work product protection and that, in any event, Travelers waived any privilege or protection that may have otherwise attached to the documents by asserting a rescission claim that places at issue the extent and timing of Travelers' knowledge regarding the falsity of certain representations made by American Capital in its insurance applications. (ECF No. 119). On December 21, 2012, after conducting a motions hearing, Judge Schulze issued an oral ruling granting Defendants' motion, which she later confirmed in a paperless order. (ECF Nos. 147, 148). As to the applicable legal principles, Judge Schulze first held that the "general rule" is that documents "either shared with or created by lawyers including facts and non-legal opinions and thoughts about the facts" are within an insurance company's "ordinary course of business" and thus are not protected by either the attorney-client privilege or the work product protection doctrine. (ECF No. 154-1, at 77). Second, Judge Schulze held that any documents created pursuant to the Maryland Insurance Regulations are not protected at all. ( Id. ). Third, Judge Schulze held that "ordinarily, a factual investigation regarding coverage that is done by an insurance company is not protected, whether it is performed by in-house or outside counsel." ( Id. ). Applying these principles to the facts presented to her, Judge Schulze went on to conclude that this case "moved outside of that ordinary business function on September 18, 2[008], " when American Capital refused to meet with Travelers to discuss coverage for the underlying heparin suits. Accordingly, Judge Schulze ruled that "there is protection" for documents created after this date. ( Id. at 78). Judge Schulze further held that, as to those documents that were presumptively protected ( i.e., those created before September 18, 2008), Travelers waived the documents' protected status by asserting a rescission claim that turns, in part, on the extent and timing of Travelers' knowledge about American Capital's purported misrepresentations in its applications for the subject policies.

Plaintiffs filed numerous objections to Judge Schulze's ruling. (ECF No. 154). Relevant to the instant motion for reconsideration, Plaintiffs argued that Judge Schulze clearly erred in determining that Travelers' communications with its in-house and outside coverage counsel that occurred prior to September 18, 2008, are not protected by the attorney-client privilege. ( Id. at 11-18). First, Plaintiffs contended that, by tying the applicability of the attorney-client privilege to the date when Plaintiffs reasonably anticipated coverage litigation about the heparin lawsuits, Judge Schulze improperly conflated the attorney-client privilege with the work product doctrine. ( Id. at 13). Second, Plaintiffs contended that Judge Schulze clearly erred by concluding that, before September 18, Travelers consulted with counsel primarily for the business purpose of adjusting American Capital's insurance claims because "[n]othing in the record suggests that coverage counsel was retained to conduct a factual investigation regarding coverage or do anything other than provide legal advice." ( Id. at 12-13). In support of this argument, Plaintiffs cited to the deposition testimony and affidavit of Edward Zawitoski, who averred that, at all times, he held responsibility for adjusting American Capital's claim and consulted counsel only for the purpose of seeking legal advice. ( Id. at 15-16).

By memorandum opinion and order issued on February 11, 2013, the court overruled Plaintiffs' objections in part and sustained them in part. (ECF Nos. 170 & 171). Applying the deferential standard of review required by Fed.R.Civ.P. 72(a), the court found no clear error in Judge Schulze's conclusions regarding the presumptive applicability of the attorney-client privilege and the work product protection. (ECF No. 170, at 12-16). Specifically with respect to the attorney-client privilege, the court interpreted Judge Schulze's ruling as holding that Plaintiffs failed to meet their evidentiary burden of establishing the privilege's presumptive applicability to those documents created before September 18, 2008, because it was only as of that date when Judge Schulze viewed the evidence as establishing that Plaintiffs were consulting with coverage counsel primarily in a legal (as opposed to a business) capacity. ( Id. at 15-16). The court went on to uphold Judge Schulze's waiver ruling, but sustained Travelers' objections as to the scope of the relief awarded. ( Id. at 17-23).

On February 15, 2013, Plaintiffs filed the instant motion seeking reconsideration of the "limited portion" of the court's ruling regarding the applicability of the attorney-client privilege prior to September 18, 2008. (ECF No. 172). Defendants filed an opposition (ECF No. 177), and Plaintiffs replied (ECF No. 179).

II. Standard of Review

Because Plaintiffs seek reconsideration of a non-final, interlocutory order, their motion is properly analyzed under Fed.R.Civ.P. 54(b). See Fed.R.Civ.P. 54(b) ("[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action... and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities."). The precise standard governing a motion for reconsideration of an interlocutory order is unclear. Although the standards articulated in Rules 59(e) and 60(b) are not binding in an analysis of Rule 54(b) motions, see Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003), courts frequently look to these standards for guidance in considering such motions, Akeva L.L.C. v. Adidas Am., Inc., 385 F.Supp.2d 559, 565-66 (M.D. N.C. 2005). The Akeva court recognized that

[p]ublic policy favors an end to litigation and recognizes that efficient operation requires the avoidance of re-arguing questions that have already been decided. Most courts have adhered to a fairly narrow set of grounds on which to reconsider their interlocutory orders and opinions. Courts will reconsider an interlocutory order in the following situations: (1) there has been an intervening change in controlling law; (2) there is additional evidence that was not previously available; or (3) the prior decision was based on clear error or would work manifest injustice.

Id. (citations omitted); see also Beyond Sys., Inc. v. Kraft Foods, Inc., No. PJM-08-409, 2010 WL 3059344, at *1-2 (D.Md. Aug. 4, 2010) (applying this three-part test when evaluating a motion for reconsideration under Rule 54(b)). A motion for reconsideration under Rule 54(b) may not be used merely to reiterate arguments previously rejected by the court. Beyond Sys., Inc., 2010 WL 3059344, at *2.

III. Analysis

In their motion, Plaintiffs do not proffer any newly available evidence or identify any intervening change in controlling law. Instead, Plaintiffs spend five pages arguing that Judge Schulze committed clear error in ruling on the applicability of the attorney-client privilege to Plaintiffs' claims handling materials. In other words, Plaintiffs merely reiterate the arguments that were previously rejected by this ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.