Houston Casualty Company v. National Union Fire Insurance Company of Pittsburgh

Background

Houston Casualty Company brought an insurance action against National Union Fire Insurance Company of Pittsburgh, PA, and Does 1 through 30. National Union was Anderson Hay & Grain’s primary insurer, while Houston Casualty issued an excess policy. After a jury awarded $3.5 million against Anderson Hay in an underlying personal-injury action, Houston Casualty alleged that National Union had unreasonably refused to settle that action within its policy limits. Houston Casualty asserted claims for equitable subrogation, unjust enrichment, and declaratory relief.

The discovery dispute involved a July 31, 2017, email written by Stephen Acker of Acker & Whipple, the law firm representing Anderson Hay in the underlying action. The email evaluated that action. Acker & Whipple initially produced the email to all parties but later sought to claw it back, arguing that it had been unintentionally produced and was protected by the work-product doctrine. The work-product doctrine generally protects materials prepared in anticipation of litigation, including an attorney’s opinions and mental impressions. The parties agreed that similar advice in an August 2, 2017, email had been sent to National Union and was discoverable.

An earlier discovery order favored Houston Casualty. Acker & Whipple then sought reconsideration, and National Union sought to join that motion. The court stayed the earlier order while considering reconsideration but allowed the email to be used in depositions.

Analysis

Civil Local Rule 7-9 permits reconsideration of an interlocutory order only upon a material difference in previously presented facts or law that could not reasonably have been known earlier, newly arising material facts or a change in law, or a manifest failure to consider material facts or dispositive legal arguments previously presented.

Acker & Whipple argued that the court had applied the wrong standard for waiver of work-product protection and had improperly presumed that the email was transmitted outside the firm. The court rejected those arguments. It explained that the earlier ruling was based on the evidence then presented, including the email’s addressing and its production during discovery. The court had concluded that a jury could determine that the email was sent to National Union and that work-product protection was therefore waived.

Acker & Whipple also submitted new declarations from a forensic expert, Ray Adams, and Patrick Fuller, a National Union representative. They stated that National Union had not received the email. The court found those declarations insufficient for reconsideration because Acker & Whipple should have investigated and presented evidence about transmission before the earlier hearing. The court further stated that the record was inconclusive. The email was addressed to “Ray,” counsel had said it was stored with materials sent to the client, and Stephen Acker could not remember a related telephone conversation. The court concluded that the email could help a jury determine what information had actually been communicated to National Union and should remain discoverable.

Rulings

Judge William Alsup denied the motion for reconsideration. The court did not resolve the underlying insurance dispute in this order. It stated that Houston Casualty was inclined to be allowed to use the email at trial, subject to any motions in limine.

The court also denied Acker & Whipple’s administrative motion to seal two documents: part of Leslie Burnet’s deposition testimony and the July 31, 2017, email with an attached deposition-summary memorandum. The court found that good cause had not been shown. It ordered the documents to be filed publicly by January 7 at noon, while keeping them and the order under seal and staying the order until that time to allow a party to seek emergency relief from the court of appeals.