The opinion of the court was delivered by: Henry Pitman, United States Magistrate Judge
Defendant, TIG Insurance Company ("TIG"), moves to compel plaintiff, AIU Insurance Company ("AIU"), to produce documents responsive to twelve requests propounded in TIG's First Set of Document Requests (Docket Item 25). For the reasons set forth below, defendant's motion is granted in part and denied in part.
This is an action seeking damages and declaratory relief for breach of four reinsurance contracts*fn1 entered into between AIU and defendant's predecessor (Complaint, dated Aug. 7, 2007 ("Compl.") ¶¶ 26-33). Under the reinsurance contracts, TIG is obligated to indemnify AIU for payments made pursuant to umbrella insurance policies*fn2 that AIU had issued to its insured, Foster Wheeler Corporation and its affiliates ("Foster Wheeler") (Compl. ¶¶ 1, 13).
Foster Wheeler is a manufacturer of boilers and other steam generating and heat exchange equipment and, since the late 1970s, it has been the subject of thousands of asbestos-related personal injury claims (Compl. ¶ 18). Due to these asbestos-related claims, in February 2001, certain insurers commenced an action in New York State Supreme Court against Foster Wheeler, seeking declaratory relief regarding the parties' rights and obligations under Foster Wheeler's primary and excess insurance policies, including the umbrella insurance policies (the "2001 Foster Wheeler New York State Court Action")(Compl. ¶¶ 18-19). In July 2001, Foster Wheeler filed a third party complaint against its insurers, including AIU, also seeking declaratory relief as to its excess insurance policies (Third Party Complaint, Index No. 600777/01, dated July 25, 2001, attached as Ex. 14 to the Declaration of Julie Rodriguez Aldort, Esq., dated April 16, 2008 ("Aldort Decl.")).
On June 30, 2006, Foster Wheeler and its excess insurers, including AIU, settled the 2001 Foster Wheeler New York State Court Action, and AIU began making payments to Foster Wheeler pursuant to the settlement agreement (Compl. ¶¶ 20, 24; Confidential Settlement Agreement and Mutual Release between Foster Wheeler, LLC and AIU Insurance Co., dated June 30, 2006, attached as Ex. 11 to the Aldort Decl.). On January 25, 2007, AIU sought reimbursement of these settlement payments by submitting a reinsurance claim to TIG pursuant to the reinsurance contracts; AIU attached an August 16, 2006 document purportedly sent to AIU's other reinsurers describing the settlement (Compl. ¶ 24; Letter of Judy Mariotti, dated August 16, 2006, attached as Ex. 11 to the Aldort Decl.; Letter of Richard E. Kafaf, dated January 25, 2007, attached as Ex. 11 to the Aldort Decl.).
In February 2007, in response to AIU's claim, TIG began an investigation of its potential exposure under the reinsurance contracts and requested that AIU provide information concerning when AIU first received notice of Foster Wheeler's claim under the umbrella insurance policies (Letter of Michael Staley, dated Feb. 2, 2007, attached as Ex. 16 to the Aldort Decl.; Letter of Michael Staley, dated April 3, 2007, attached as Ex. 17 to the Aldort Decl.). In response on April 26, 2007, AIU sent TIG an August 15, 2005 coverage counsel opinion that AIU had received from Cozen O'Connor (Memorandum of Cozen O'Connor, dated Aug. 15, 2005 ("Cozen Memorandum"), attached as Ex. 18 to the Aldort Decl.). The opinion bore the heading "ATTORNEY-CLIENT COMMUNICATION/PRIVILEGED AND CONFIDENTIAL" and provided background on the dispute between AIU and Foster Wheeler (Cozen Memorandum at 1, TIG 000044). Specifically, this opinion letter noted that, in March 1992, AIU received notice of AIU's potential exposure under certain excess insurance policies (Cozen Memorandum at 14, TIG 000057).
In May 2007, TIG requested an audit of AIU's records relating to AIU's claim under the reinsurance contracts. In anticipation of the audit, AIU and TIG executed a confidentiality agreement on July 2, 2007 (Reinsurer Common Interest Confidentiality Agreement, dated July 2, 2007 ("Confidentiality Agreement"), attached as Ex. A to the Declaration of William R. Pascale, dated April 14, 2008 ("Pascale Decl.")). Under the agreement, AIU granted TIG access to all records relating to Foster Wheeler's claims for coverage under the reinsurance contracts (Confidentiality Agreement at TIG 000005). In return, TIG agreed that any disclosure of documents drafted by AIU's coverage counsel would not "constitute a waiver of any applicable privilege[.]" (Confidentiality Agreement at TIG 000005, ¶ 2).
From July 9 to July 11, 2007, William Pascale and Joseph Loggia conducted an audit of AIU's files relating to the Foster Wheeler account (Pascale Decl. at ¶ 9). As part of the audit, AIU provided TIG with, among other things, (1) documents prepared by AIU's coverage counsel, (2) documents relating to a 1988 suit involving asbestos claims against Foster Wheeler's affiliate, Forty-Eight Insulations, and (3) a February 27, 1992 letter from Foster Wheeler to its claims broker that purportedly identified the potential for involvement of the umbrella insurance policies (Pascale Decl. at ¶ 12-14, Ex. B). After the audit, TIG requested copies of these documents from AIU, but AIU refused (Pascale Decl. at ¶ 15). In addition, TIG asked AIU whether AIU had provided TIG access to all documents produced or obtained by AIU from the time it issued the umbrella insurance policies to Foster Wheeler through the date of the audit (Rein-surance Inquiry Reply, dated August 2, 2007, ("TIG Reinsurance Reply") at TIG 002704, attached as Ex. 5 to the Aldort Decl.). AIU responded, in substance, that it had not (TIG Reinsurance Reply at TIG 002704).
Thereafter, AIU commenced suit against TIG, alleging that TIG breached the reinsurance contracts by failing to indemnify AIU for its share of the settlement payments (Compl. ¶ 25).
In its Answer, TIG asserts a "prompt-notice" defense, claiming that it is not obligated to indemnify AIU because AIU breached the reinsurance contracts by failing to provide TIG with prompt notice of AIU's potential exposure for the Foster Wheeler asbestos claims (Am. Ans. at 14; Def. Mem. at 1).
A. The Document Requests at Issue
The present discovery dispute arises from TIG's attempt to obtain documents relevant to its prompt-notice defense. Specifically, TIG seeks documents reflecting AIU's knowledge of its potential exposure under the umbrella insurance policies it issued to Foster Wheeler. TIG argues that such knowledge would shed light on when AIU's contractual obligation to give TIG prompt notice of "any occurrence or accident which appears likely to involve this reinsurance [contract]" was triggered. (Reinsurer Agreements and Conditions, Ex. C attached hereto at ¶ B).
TIG is seeking production of documents responsive to document requests numbered 4, 6, 7, 8, 9, 13, 14, 15, 16, 17, 18, 19 (see TIG Insurance Company's First Set of Document Requests, dated October 25, 2007, attached as Ex. 21 to the Aldort Decl.), arguing that the withheld documents contain, or are likely to lead to the discovery of, admissible evidence relevant to TIG's prompt-notice defense (Def. Mem. at 1). TIG has organized these requests into three groups according to the nature of the documents sought.
The first group (Nos. 6, 7, 8, 9, 17, 18, 19) seeks documents reflecting historical information concerning AIU's knowledge of its potential liability to Foster Wheeler under the umbrella insurance policies (Def. Mem. at 7). The second group (Nos. 4, 14, 15, 16) seeks documents relating to AIU's notice to its other reinsurers concerning AIU's settlement with Foster Wheeler of the coverage claims (Def. Mem. at 8). The third group (No. 13) seeks documents relating to TIG's July 2007 audit of AIU (Def. Mem. at 8).
B. Objections to the Document Requests
AIU objected to document requests Nos. 7-10, 12-15, and 17 "to the extent that [these requests] seek documents that are privileged under law, whether under the attorney-client privilege, the work product doctrine, or any other privilege or immunity" (AIU Insurance Company's Responses and Objections to TIG Insurance Company's First Set of Document Requests, dated December 12, 2007 ("AIU's Response") at 7-10, 12-15 and 17, attached as Ex. 1 to the Aldort Decl.). Subject to this objection, AIU agreed to produce those documents that did not include work-product or implicate the attorney-client privilege.
AIU also limited its responses to all of the document requests by excluding documents related to what it termed "other claims" in two ways. First, AIU asserted a general objection to all requests for coverage counsel documents to the extent the requests sought documents unrelated to the 2001 Foster Wheeler New York State Court Action. Second, AIU qualified its response to document requests Nos. 4, 6-8, and 14-18 by stating that it would produce documents only "to the extent they relate to the subject matter of this lawsuit" or to the ...