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AIU Insurance Co. v. TIG Insurance Co.

July 8, 2009

AIU INSURANCE COMPANY, PLAINTIFF,
v.
TIG INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Pitman, United States Magistrate Judge

OPINION AND ORDER

I. Introduction

By notice of motion dated September 15, 2008, TIG Insurance Company ("TIG") moves for partial reconsideration of my Opinion and Order dated August 28, 2008 ("August 28 Order") (Docket Item 233). The August 28 Order granted in part and denied in part AIU Insurance Company's ("AIU") motion to compel the production of documents listed on TIG's privilege log as withheld on the basis of the attorney-client privilege and the work-product doctrine (Docket Item 40). TIG now moves for partial reconsideration with regard to twenty-five of the documents which I ordered produced.

II. Facts

A. Basis of Underlying Claims

Familiarity with the facts contained in my August 28 Order is assumed. I restate them here only to the extent necessary for an understanding of the issues raised by the present motion.

AIU brings this action alleging breach of contract and seeking declaratory relief for TIG's failure to pay amounts due under four reinsurance contracts*fn1 (the "Reinsurance Contracts") (Complaint, dated Aug. 7, 2007 ("Compl.") ¶¶ 26-33).

AIU issued four umbrella insurance policies to the Foster Wheeler Corporation and its affiliates ("Foster Wheeler") covering the period from October 1, 1978 to October 1, 1982 (Compl. ¶ 11). AIU subsequently reinsured its exposure under the umbrella insurance policies with International Insurance Company, TIG's predecessor company, pursuant to the Reinsurance Contracts (Compl. ¶ 12). Under the Reinsurance Contracts, AIU is obligated to provide "[p]rompt notice . . . to [TIG] of any occurrence or accident which appears likely to involve" the Reinsurance Contract, and TIG is obligated to indemnify AIU for payments it makes to Foster Wheeler pursuant to the umbrella insurance policies (Certificate of Facultative Reinsurance Number CFR 0062, dated Apr. 19, 1979 ("CFR 0062") at TIG 1163, ¶¶ B, C, annexed as Exhibit 2 to Declaration of Julie Aldort, Esq., dated May 19, 2008 ("Aldort Decl.")).

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). Because of these asbestos claims, in February 2001, Foster Wheeler became engaged in coverage litigation with its primary and umbrella insurers (Compl. ¶¶ 18-19). On June 30, 2006, Foster Wheeler and AIU settled their claims and AIU began making payments to Foster Wheeler pursuant to the settlement agreement (Compl. ¶¶ 20, 24). On January 25, 2007, AIU sought reimbursement of these settlement payments pursuant to the Reinsurance Contracts by submitting a reinsurance claim to TIG and attaching the settlement agreement between Foster Wheeler and AIU (Letter to Michael Staley of TIG, dated Jan. 25, 2007, annexed as Exhibit 1 to Aldort Decl.). This letter was AIU's first notice to TIG that TIG faced potential exposure under the Reinsurance Contracts for the Foster Wheeler asbestos claims (Amended Answer, dated Apr. 22, 2008 ("Am. Ans.") ¶ 18).

TIG responded to AIU's January 25 letter by noting that AIU has a duty to provide TIG with prompt notice of "any occurrence or accident which appears likely to involve" the Reinsurance Contracts and requesting documentation regarding AIU's first notice of Foster Wheeler's claims (TIG Letter, dated Feb. 2, 2007, annexed as Exhibit D the Declaration of Marc L. Abrams, Esq., dated May 6, 2008 ("Abrams Decl."), quoting CFR 0062 at TIG 1163, ¶¶ B, C). On February 12, 2007, TIG retained the law firm of Butler Rubin Saltarelli & Boyd LLP ("Butler Rubin") to obtain legal advice regarding TIG's rights and obligations under the Reinsurance Contracts, to consider possible legal action against AIU, and to prepare possible defenses to potential litigation (Declaration of John Parker, Esq., dated May 19, 2008 ("Parker Decl.") ¶ 13; Aldort Decl. ¶ 3). Between February and May of 2007, Michael Staley, an Assumed Reinsurance Senior Claims Specialist, and his manager, William Pascale, an Assumed Reinsurance Senior Claims Manager (Parker Decl. ¶¶ 7-8) continued to investigate AIU's claim for payment under the Reinsurance Contracts by requesting documents from AIU. In its correspondence throughout this period, TIG continued to expressly reserve all rights under the Reinsurance Contracts.

Apparently dissatisfied with the documents AIU provided, in May 2007, TIG requested an on-site audit of AIU's files pursuant to the access-to-records clause in the Reinsurance Contracts (Parker Decl. ¶ 20; TIG Letter, dated May 15, 2007, annexed as Exhibit 6 to Aldort Decl.). The purpose of the audit was to identify information bearing on the timing of AIU's knowledge of potential claims under the umbrella insurance policies (Parker Decl. ¶ 20). In July, 2007, Pascale and Joseph Loggia, an outside consultant retained by TIG, reviewed AIU's files (Parker Decl. ¶ 22).

Thereafter, on August 7, 2007, AIU commenced this suit against TIG, alleging that TIG had breached the Reinsurance Contracts by failing to indemnify AIU for its share of the settlement payments (Compl. ¶ 25). In its Amended Answer, TIG asserts a lack-of-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).

B. The Present Discovery Dispute

On November 12, 2007, AIU served its First Request for Production of Documents on TIG (Aldort Decl. ¶ 8). After an initial production of documents, TIG withheld and redacted documents on the basis of attorney-client privilege and the work-product doctrine, listing the documents in privilege and redaction logs (TIG's Privilege Log, dated Mar. 25, 2008 ("Priv. Log"), annexed as Exhibit M to Abrams Decl.; TIG's Redaction Log, dated Mar. 25, 2008, annexed as Exhibit N to Abrams Decl.). After a series of meet-and-confer sessions between counsel, AIU filed the instant motion to compel. On or about June 24, 2007, I directed that the documents in issue be submitted to my chambers for in camera review.

After reviewing the documents in camera, I found that many*fn2 of the documents were not privileged attorney-client communications or attorney work-product and on August 28 I issued an Order which directed the production of these documents. TIG now moves for partial reconsideration with respect to approximately twenty five (25) of the documents that I ordered produced.

III. Analysis

The legal principles governing the attorney-client privilege and the work-product doctrine are set forth in my August 28 Order, ...


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