1260 BB Property, LLC v. Certain Underwriters at Lloyd’s and London Market Companies, et al.

Case Number

23CV00285

Case Type

Hearing Date / Time

Wed, 03/27/2024 - 10:00

Nature of Proceedings

Motions to Compel (2)

Tentative Ruling

For Plaintiff 1260 BB Property, LLC: Jared M. Katz, Eric J. Munoz, William J. Ryan, and Gregory J. Scandaglia.

For Defendants Lexington Insurance Company, Ace American Insurance Company, American International Group UK Limited, Assicurazioni Generali SPA UK Branch, Certain Underwriters at Lloyd’s and London Market Companies, Great Lakes Reinsurance (UK), Lloyd’s Underwriter Syndicate, Sompo Canopius dba Canopius Underwriting Agency Inc., Westport Insurance Corporation, Zurich Insurance PLC UK Branch, and Chubb Insurance Company of Canada: Ron H. Burnovski, Charles W. Deutsch, Sava Alexander Vojcanin

For Defendant Liberty Mutual Fire Insurance Company: Nicholas J. Boos.

                               

RULING

For the reasons set forth below:

1. The hearing on the motions is continued to May 1, 2024, at 10:00 a.m. in this department.
2. Defendants shall file a revised declaration of Stuart Whiteside, certified or declared under the laws of the State of California, no later than April 3, 2024. ​​​​​​
   1. Plaintiff shall file any argument or objections to the revised Whiteside declaration no later than April 17, 2024.
3. Both parties shall give notice to Four Seasons Hotels Limited, no later than April 3, 2024, advising Four Seasons of the nature of this action, the records pertaining to Four Seasons that are being sought, and advising Four Seasons that they have until April 17, 2024 to file and serve any objections to disclosure of the requested documents. If no objection is filed by that time, the Court will consider the lack of objection as consent to disclosure of certain documents sought by Plaintiff.
   1. Both parties shall serve their notice to Four Seasons on the other parties and file a copy with the Court.

Background

On January 23, 2023, Plaintiff 1260 BB Property, LLC filed its complaint against multiple entity Defendants. The complaint contains four causes of action for: (1) Breach of Contract; (2) Declaratory Judgment against primary insurers; (3) Declaratory Judgment against excess insurers; and (4) Breach of the Implied Covenant of Good Faith and Fair Dealing.

As alleged in the complaint: Plaintiff is the owner of the Four Seasons Resort the Biltmore Santa Barbara (“hotel”). (Complaint, ¶ 2.) The hotel was insured under insurance policies procured by Four Seasons Hotel Ltd. for a policy period of April 1, 2017, to April 1, 2018. (Ibid.) During the policy period, the hotel suffered substantial property damage and economic loss from the Thomas Fire and the ensuing debris flow and mudslide totaling in excess of $64,000,000.00. (Ibid.) On the claims related to the fire, Plaintiff suffered in excess of $6,700,000.00 in insured losses, of which certain Defendant insurers have paid $5,953,000.00 but have refused to pay in excess of $793,000.00. (Id., at ¶ 3.) On the claims related to the mudslide, Plaintiff suffered in excess of $58,000,000.00 in insured losses, of which certain Defendants responsible for the first layer of primary insurance of $50,000,000.00 have paid $46,670,264.00. (Id. at ¶ 4.) The excess insurers have refused to pay any amount of the losses above the $50,000,000.00 primary policy limits. (Ibid.) Attached to the complaint as Exhibits B through M are copies of relevant insurance policies related to the claimed losses.

[Note: For purposes of these motions, “Defendants” shall mean all Defendants other than Liberty Mutual and Lexington Insurance Company.]

On May 8, 2023, Plaintiff served requests for production of documents, requesting 35 categories of documents, on numerous Defendants. The requests are, with minor exceptions, identical. Defendants provided responses to most of the requests with objections based on privilege and that the requests were overbroad, unduly burdensome, not proportional to the needs of the litigation, irrelevant, and not reasonably calculated to lead to the discovery of admissible evidence.

Plaintiff now moves to compel further responses to requests Nos. 3, 4, 5, 6, 7, and 14. Plaintiffs also seek to compel production of all documents listed on Defendants’ privilege logs which have been withheld or redacted, or to which Defendants have shared with third-party AON.

Defendants oppose the motion on the grounds that they have provided proper responses to all written discovery and that they did not waive attorney-client or work product privilege with respect to documents withheld on those grounds.

Plaintiff also moves to compel further written responses and production of documents regarding a subpoena for production of business records by third-party Sedgwick Claims Management Services, Inc. arguing that attorney client privilege was waived as to certain documents.

Defendants oppose the motion on the grounds that the attorney client privilege was not waived.

Analysis

Privilege Logs

“[I]f a party responding to an inspection demand timely serves a response asserting an objection based on the attorney-client privilege or work product doctrine, the trial Court lacks authority to order the objection waived even if the responding party fails to serve a privilege log, serves an untimely privilege log, or serves a privilege log that fails either to adequately identify the documents to which the objection purportedly applies or provide sufficient factual information for the propounding party to evaluate the objection.” (Catalina Island Yacht Club v. Superior Court (2015) 242 Cal.App.4th 1116, 1126.)

As reflected in their privilege logs, Defendants rely on the attorney client privilege for withholding, or redacting, multiple documents.

Plaintiff argues, with respect to both motions, that Defendants’ privilege logs are deficient, and that attorney client privilege was waived with respect to multiple categories of documents because they contain communications with Aon representative Melanie Fenlon. With respect to the motion to compel further written responses to the subpoena served on Sedgwick, that is Plaintiff’s only argument.

“As used in this article, “ ‘confidential communication between client and lawyer’ ” means information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.” (Evid. Code § 952; Italics added.)

“The privilege is given on grounds of public policy in the belief that the benefits derived therefrom justify the risk that unjust decisions may sometimes result from the suppression of relevant evidence.” [Citations.]’ [Citation.] ‘[T]he privilege is absolute and disclosure may not be ordered, without regard to relevance, necessity or any particular circumstances peculiar to the case.’ [Citation.]” (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 732, 101 Cal.Rptr.3d 758, 219 P.3d 736 (Costco ).) “ ‘[The privilege] is not to be whittled away by means of specious argument that it has been waived. Least of all should the Courts seize upon slight and equivocal circumstances as a technical reason for destroying the privilege.’ [Citation.]” (Blue Ridge Ins. Co. v. Superior Court (1988) 202 Cal.App.3d 339, 345.)

“The attorney-client privilege “ ‘deserves a particularly high degree of protection in this regard since it is a legislatively created privilege protecting important public policy interests, particularly the confidential relationship of attorney and client and their freedom to discuss matters in confidence.’ ” [Citations.]” (Korea Data Systems Co. v. Superior Court (1997) 51 Cal.App.4th 1513, 1516.)

Defendants have provided a declaration of Stuart Whiteside with respect to Aon and Melanie Fenlon. Whiteside declares as follows:

“Aon UK Limited made use of a complex underwriting facility(ies) at its disposal, which is identified as an “ ‘Aon Client Treaty’ ” (“ACT”) to place and provide fractional portions of the property insurance coverage for Four Seasons Hotels Ltd.” (Whiteside Dec., ¶ 6.)

“I understood Melanie Fenlon to be an employee of an Aon-related entity acting on behalf of the ACT interests with respect to the claims that form the basis of this litigation. Melanie Fenlon was designated as the conduit to receive and provide information reasonable and necessary for subscribing ACT entities to participate in the Insuring Market’s investigation and adjustment of the Claims. Specifically, it is my understanding that Melanie Fenlon would receive Sedgwick reports and upload them through the Electronic Claims File (“ECF”) platform for ACT subscribing insurers and syndicates to review. The ECF is the system used to notify and update Lloyd’s Insurers of claims.” (Whiteside Dec., ¶ 7.) “At all relevant times I understood Melanie Fenlon to be acting on behalf of the ACT for purposes of my communication with the ACT subscribing syndicates.” (Whiteside Dec., ¶ 9.)

Plaintiff has objected to the declaration on the grounds that it is not certified as executed under the laws of the State of California as required by Code of Civil Procedure section 2015.5. The declaration ends with: “I declare [] under penalty of perjury that the foregoing is true and correct and that this Declaration is executed on February 29, 2024 in New York, New York.” Plaintiff is correct that the lack of compliance with that section makes the declaration inadmissible. (See, Kulshrestha v. First Union Commercial Corp. (2004) 33 Cal. 4th 601.)

Because of the nature of the attorney client privilege, and the strong protections it provides, Defendants will be given an opportunity to cure the defect to comply with Code of Civil Procedure section 2015.5.

Whether or not communications with Fenlon are protected under the attorney client privilege is central to both motions. As such, the Court will continue the hearing on this matter.

Also, because the Court has concerns regarding the privacy rights of non-party Four Seasons Hotels Limited, both parties will be ordered to give notice of the nature of this litigation, the documents sought relating to Four Seasons, and advise Four Seasons that they have the right to file an objection to be considered by the Court.

The parties are encouraged to continue meet and confer efforts pending the continued hearing date.