Tower 570 Company LP v. Affiliated FM Insurance Company

Background

An energy event on May 20, 2019, caused significant damage to 570 Lexington Avenue, including damage to an electrical riser and vault and the release of asbestos. Tower 570 Company LP, which the opinion identifies as the building’s owner, sought insurance coverage from Affiliated FM Insurance Company and Travelers Property Casualty Company of America. Travelers later settled its dispute with Tower 570 and was no longer involved in the pending motion.

Affiliated FM moved to compel documents that Tower 570, and two non-parties acting at Tower 570’s direction—Goldman Copeland Consulting Engineers and Universal Management and Contract, Inc.—had withheld under the attorney-client privilege and the work product doctrine. The court required a representative sample for private judicial review. Affiliated FM selected 84 documents; Tower 570 agreed that seven documents—390, 391, 396, 397, 398, 399, and 412—were not protected and would be produced. Tower 570 submitted the remaining 77 documents for review.

Legal standards

The attorney-client privilege protects confidential communications between a client and lawyer made mainly to obtain or provide legal advice. Including a third party does not necessarily destroy the privilege when that person is the client’s agent, confidentiality was reasonably expected, and the person’s involvement was necessary to obtain informed legal advice. The privilege can be waived by voluntarily disclosing the communication to a third party.

The work product doctrine generally protects documents and tangible things prepared because of expected litigation or trial. The material need not have been prepared by a lawyer, and it need not have been created primarily or exclusively to assist with litigation. Disclosure does not necessarily waive work-product protection unless it was likely to reveal the material to an adversary.

Court’s analysis

The court rejected Affiliated FM’s categorical arguments. It held that communications involving Tower 570’s construction managers, public adjuster, and engineer could be protected because of the technical nature of the issues. It also held that communications among Tower 570 employees could remain privileged when they relayed confidential legal advice within the organization, even if a lawyer was not included in the particular communication.

The court also rejected the argument that work-product protection could not apply to documents created before Travelers partially denied coverage on June 25, 2019. Federal law governed the work-product question. The court found evidence that Tower 570 anticipated litigation earlier, including that it began consulting the same outside litigation firm on June 3, 2019, and had concerns about possible litigation involving Consolidated Edison of New York. The court therefore concluded that documents created before June 25 could qualify for work-product protection.

Regarding the McBride Report, the court held that later drafts could remain protected even though Tower 570 had produced a final version and an earlier draft. The court found that the report was prepared because of expected litigation and that counsel was consulted in preparing the later drafts. Documents 108, 145, 208, 210, 221, 344, 347, 367, 422, 426, and 429 were protected work product. Related emails—Documents 107, 144, 207, 209, 220, 366, 368, 369, 419, 420, 424, and 428—received the same protection.

The court also found attorney-client protection for Documents 105, 106, 110, 114, 180, 181, 183, 184, 189, 190, 213, 276, 291, 302, 303, 343, 345, 349, 350, 351, 352, 353, 354, 355, 356, 357, and 405 because the communications were made to obtain or provide legal advice. Documents 116 and 123, and Documents 341 and 342, were likewise protected attorney-client communications.

The court ordered production of Documents 117, 205, and 346 because Tower 570 relied only on attorney-client privilege and did not show that the communications sought or provided legal advice. Document 361 also had to be produced because it was an email to people unrelated to Tower 570 or its lawyers and was not itself work product. Documents 284, 297, 273, 285, 348, 413, 452, 454, 455, 456, 358, 359, 360, 364, 365, 421, 423, 425, and 453 also had to be produced for the reasons stated by the court, including that they were business communications, lacked legal advice, were not shown to have been prepared because of expected litigation, or contained only logos or similar images.

The opinion noted apparent errors in Tower 570’s privilege log or in the materials submitted for review, including documents that did not match their descriptions and documents that contained no substantive content.

Disposition

Judge Jesse M. Furman granted in part and denied in part Affiliated FM’s motion to compel. The court ordered Tower 570 to produce all documents the court found unprotected within one week, publicly file the chart previously submitted privately, and meet with the other parties to try to resolve any remaining document disputes.