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Fidelity and Deposit Company of Maryland v. Travelers Casualty and Surety Company of America

United States District Court, D. Nevada

May 31, 2017

FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Plaintiff,
v.
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, et al. Defendants

          ORDER RE: MOTION TO COMPEL (ECF NO. 168)

          GEORGE FOLEY, JR. United States Magistrate Judge

         This matter is before the Court on Plaintiff's Motion to Compel Travelers to Produce Documents Previously Withheld as Privileged (ECF No. 168), filed on April 14, 2017. Defendant Travelers filed its Opposition (ECF No. 203) on April 28, 2017. Plaintiff filed its Reply (ECF No. 208) on May 5, 2017. The Court conducted a hearing in this matter on May 22, 2017.

         BACKGROUND

         Plaintiff Fidelity and Deposit Company (“Fidelity”) filed its complaint against Big Town Mechanical, LLC (“Big Town”) and Travelers Casualty and Surety Company (“Travelers”) on March 6, 2013. Complaint (ECF No. 1). Fidelity alleged that in 2010 Big Town contracted with the Clark County School District to complete heating, ventilation and air conditioning (HVAC) and school modernization projects at five elementary schools. Id. at ¶ 6. Travelers issued performance and labor and material bonds for the projects on behalf of Big Town as principal. Id. at ¶ 7. Big Town subcontracted a portion of the work to F.A.S.T. Systems, Inc. (FAST). Fidelity issued performance and payment bonds on behalf of FAST. FAST subsequently defaulted on its subcontract(s). Fidelity arranged for the completion of its work and made payments in excess of the $75, 000 limits on each of the five bonds it issued. Fidelity demanded that Big Town provide an accounting of the balance due on the FAST subcontract(s) and pay the balance to Fidelity. Big Town allegedly failed to provide an accounting or pay over the remaining balance on the FAST subcontract(s). Id. at ¶ 9-39. Fidelity therefore seeks recovery of the balances due under the subcontracts from Travelers. Travelers filed an amended answer and counterclaim against Fidelity in July 2014 in which it alleged that FAST's work was not complete and did not comply with the plans and specifications. Travelers alleges that it was required to pay in excess of $1, 000, 000 to repair and replace defective work performed by FAST and to complete its work on the project. Counterclaim (ECF No. 47). Travelers alleges that it was entitled to apply set offs against the balances due under the FAST subcontracts and recover additional damages from Fidelity based on FAST's defective and incomplete performance. Id. at ¶ 20.

         The initial discovery plan and scheduling order was entered on May 24, 2013. Order (ECF No. 13). The Court thereafter granted numerous extensions of the discovery and other scheduling deadlines. On September 27, 2016, the parties filed their eighth stipulation and order to extend discovery and related deadlines. Stipulation (ECF No. 126). The parties stated that they desired to proceed to mediation. They also stated that their respective document disclosures exceeded 825, 234 pages, which they were still in the process of organizing, reviewing and analyzing. Id. at pgs. 3-4. They further stated that “[t]he litigation has already resulted in the production of more than 1, 523, 223 pages of construction related documents from third parties in response to subpoenas.” Id. at pg. 8. The Court granted the extension of discovery and other pretrial deadlines on October 17, 2016. Minutes of Proceedings (ECF No. 132). The parties thereafter participated in a mediation conference on February 2, 2017, which was unsuccessful.

         Prior to the mediation, the parties apparently conducted discovery in a cooperative manner as evidenced by their numerous stipulations to extend the discovery period and the absence of disputed discovery motions. From November 2013 until approximately the end of October 2016, Travelers was represented by an attorney in the law firm of Booth, Mitchell & Strange LLP who then left the firm. On November 1, 2016, attorney Greg Smith was granted permission to practice in this case and he has been Travelers' primary counsel since that time. Prior to March 16, 2017, Fidelity was represented by the Faux Law Group. On that date, attorneys with the law firm of Kolesar & Latham entered their appearances as counsel for Fidelity. Since the unsuccessful mediation and the association of new counsel for Fidelity, the parties' relationship has become substantially more contentious. Fidelity has filed three motions for partial summary judgment, a motion to serve additional interrogatories, a motion to take 55 depositions and a motion for sanctions based on Travelers' alleged spoliation of evidence. Travelers, in turn, has filed a motion to dismiss one of Fidelity's causes of action.

         Presently before the Court is Fidelity's motion to compel production of previously withheld documents based on Travelers' failure to assert proper objections or timely serve a privilege log. On December 3, 2013, Travelers served responses to Fidelity's first set of requests for production. Motion (ECF No. 168), Exhibit 1. In response to Request No. 1 and other requests, Travelers stated that it had offered to make available to Fidelity “all documents that are not privileged, and will produce all non-privileged documents responsive to this request . . . .” Id. at pg. 2. Travelers objected to Requests Nos. 6, 7, 10, 11, and 12 on the grounds that they seek “materials that may be privileged and confidential under either the attorney work product and/or attorney client privileges.” Id. On April 1, 2015, Travelers served responses to Fidelity's second set of requests for production. Requests Nos. 23, 24, 25, 26, 27, and 38 requested “all Communications and Documents” regarding Travelers' alleged claims or damages. Travelers objected to these requests on the grounds that they seek “information that may be privileged pursuant to the attorney work product/client privileges.” Motion (ECF No. 168), Exhibit 1. Without waiving its objections, Travelers stated that it would produce all non privileged communications and documents responsive to the requests. Id. On November 8, 2016, Travelers responded to Fidelity's fourth set of requests for production. Motion (ECF No. 168), Exhibit 1. Travelers objected to Request Nos. 47 and 48 on the grounds that they seek information that may be privileged either under the attorney client and/or work product privileges.

         Fidelity's new counsel sent Travelers' counsel a letter on March 16, 2017 regarding its document production. Motion (ECF No. 168), Exhibit 3. Fidelity's counsel asserted that Travelers' privilege objections to Fidelity's requests for production were not proper and that a party who withholds documents on the basis of the attorney-client privilege or work product doctrine must provide a privilege log that complies with Fed.R.Civ.Pro. 26(b)(5) or the privilege is waived. Id. at pgs. 2-3. Following a conference on April 6, 2017, Travelers' counsel produced a partial privilege log on April 7, 2017. Id. at Exhibit 5. Fidelity argues, however, that Travelers has already waived the attorney-client privilege and work product doctrine by failing to assert proper objections in its responses and in failing to timely provide a privilege log.

         Travelers stated in its opposition that the March 16, 2017 letter was Fidelity's first complaint to Travelers about its privilege objections. Opposition (ECF No. 203), pg. 3. Fidelity attached to its reply a letter that prior counsel sent to Travelers counsel on January 28, 2015 which raised the issue of Travelers' privilege objections. Reply (ECF No. 208), Exhibit 1. In that letter, Fidelity's counsel stated that Travelers had a duty to supplement its Rule 26(a) disclosures since it was now alleging a claim for damages in its counterclaim. Fidelity also took issue with the adequacy of Travelers's answers to interrogatories and responses to requests for production of documents. Id. at pgs. 1-2. The letter also stated:

Similarly, the responding party to a request for production of documents must produce them “as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request”. (FRCP 34 (b)(E).) In that regard, your client's responses were deficient. Also the responses to both interrogatories and the requests for production of documents appear to assert privileges, yet no privilege logs were produced.

Id. at pg. 2.

         Travelers' counsel responded by letter on February 4, 2015. Reply (ECF No. 208), Exhibit 2. His letter addressed Fidelity's request for supplementation of Travelers' Rule 26(a) disclosures and the manner in which Travelers was producing documents, but did not address Travelers' failure to provide a privilege log.[1] There is no evidence that the parties' counsel communicated further regarding Traveler's privilege objections or the failure to serve a privilege log until Fidelity's counsel sent his March 16, 2017 letter.

         DISCUSSION

         Rule 26(b)(5)(A) of the Federal Rules of Civil Procedure states that “[w]hen a party withholds information otherwise discoverable by claiming that the information is privileged or subject to protection as trial-preparation material, the party must: (i) expressly make the claim; and (ii) describe the nature of the documents, communications, or tangible things not produced or disclosed-and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.” Compliance with Rule 26(b)(5)(A) may be accomplished by providing a privilege log, although it may be necessary to supplement the privilege log with affidavits or declarations if the basis for the claim of privilege cannot be adequately assessed from the privilege log. RBS Citizens, N.A. v. Husain, 291 F.R.D. 209, 218 (N.D.Ill. ...


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