Old White Charities, Inc. v. Bankers Insurance, LLC

IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF WEST VIRGINIA

BECKLEY DIVISION

OLD WHITE CHARITIES, INC.,

CASE NO. 5:17-CV-01375

Plaintiff,

vs.

BANKERS INSURANCE, LLC,

Defendant/Third Party Plaintiff,

vs.

ALL RISKS, LTD.,

Third Party Defendant.

O R D E R

On May 10, 2018 came the parties, by counsel, all for a hearing on Plaintiff Old White

Charities, Inc.’s (hereinafter “Old White”) Motion to Compel (ECF No. 64) and Motion for Leave

to Depose Melvin E. Tull. (ECF No. 109) Appearing for Old White were Michael Levine, Esq.

and David Nelson, Esq., for Defendant Bankers Insurance, LLC (hereinafter “Bankers”) were

Joshua Johnson, Esq. and Fazal Shere, Esq., and for Third Party Defendant All Risks, Ltd. by

telephone, Jeffrey Van Volkenburg, Esq. After hearing the arguments of counsel, the pleadings

filed in support of same, and having reviewed the pertinent legal authorities, the Court GRANTS

Plaintiff’s Motion to Compel and Motion for Leave to Depose Melvin E. Tull for the reasons

explained, infra:

Preliminary Matters

The undersigned held an informal in chambers conference concerning Plaintiff’s Motion

to Compel on April 26, 2018. (ECF No. 101) Afterwards, the parties were able to resolve many of

the issues raised in the Motion to Compel, however, in compliance with this Court’s Order (ECF

No. 102), the parties advised the undersigned that four of Plaintiff’s Requests for Admissions to

Banker could not be resolved outside of Court, necessitating the hearing for these remaining

discovery disputes.

On May 8, 2018, Plaintiff filed its Motion for Leave to Depose Melvin E. Tull. (ECF No.

109) While mindful that Bankers has had insufficient opportunity to file a formal response to this

Motion before the hearing on May 10, 2018, the undersigned found that the arguments and

Exhibits attached to Plaintiff’s Motion caused the undersigned grave concern for the candor owed

to this Court, and implicates the discovery disputes raised herein.

Relevant Law

Rule 36(a)(4) of the Federal Rules of Civil Procedure provides:

If a matter is not admitted, the answer must specifically deny it or state in detail

why the answering party cannot truthfully admit or deny it. A denial must fairly

respond to the substance of the matter; and when good faith requires that a party

qualify an answer or deny only a part of a matter, the answer must specify the part

admitted and qualify or deny the rest. The answering party may assert lack of

knowledge or information as a reason for failing to admit or deny only if the party

states that it has made reasonable inquiry and that the information it knows or can

readily obtain is insufficient to enable it to admit or deny.

Rule 37(a)(3)(B) allows a requesting party to seek an order compelling appropriate

responses when a party fails to provide an answer to interrogatories or requests for production. A

response is inadequate under these Rules when a party generally objects to discovery without

more; the party must show why the discovery request is improper. White v. Sam’s E., Inc., No.

5:14-cv-26106, 2016 WL 205494, at *1 (S.D. W. Va. Jan. 15, 2016). Answers, responses, or

document productions that are “evasive or incomplete” are treated as failures to answer or respond

to discovery requests. See Fed. R. Civ. P. 37(a)(4). Finally, Rule 37 also provides:

If the motion to compel is granted – or if the disclosure or requested discovery is

provided after the motion was filed – the court must, after giving the parties an

opportunity to be heard, require the party whose conduct necessitated the motion,

the party or attorney advising that conduct, or both to pay the movant’s reasonable

expenses incurred in making the motion, including attorneys’ fees.

Rule 37(c)(2) of the Federal Rules of Civil Procedure provides:

If a party fails to admit what is requested under Rule 36 and if the requesting party

later proves a document to be genuine or the matter true, the requesting party may

move that the party who failed to admit pay the reasonable expenses, including

attorney’s fees, incurred in making that proof. The court must so order unless:

(A) the request was held objectionable under Rule 36(a);

(B) the admission sought was of no substantial importance;

(C) the party failing to admit had a reasonable ground to believe that it might

prevail on the matter; or

(D) there was other good reason for the failure to admit.

Old White’s Argument Supporting Motion to Compel

As stated supra, the undersigned conducted an informal conference with the parties to

review the issues concerning Bankers’ responses to Old White’s discovery requests. The parties

were able to resolve many of these disputes after the conference, however, Old White notified the

Court that despite having revised some of its responses, Old White contended that Bankers still

failed to provide proper responses to four remaining Requests for Admissions:

REQUEST 9. Admit that Bankers knew, at the time it submitted the Application,

that Old White was relying on Bankers to procure coverage that would apply if

someone won the Hole in One Competition.

INITIAL RESPONSE: Bankers admits that it knew Old White was requesting a

policy consistent with the terms of the Application and the Addendum.

REVISED RESPONSE: Bankers admits that Old White was relying on Bankers’

assistance to procure coverage consistent with the terms of the Application and the

Addendum, but denies the rest of this Request because it improperly asks Bankers

to delve into Old White’s subjective reliance and thought process, and it assumes

that Old White requested coverage without conditions.

Old White argues that under the aforementioned Rules, this is a defective answer: First, the

Revised Response continues to evade the substance of the Request, which concerns Bankers’

knowledge at a particular point in time – when it submitted the Application. Bankers’ Revised

Response says nothing about its own knowledge, nor is it clear from the Revised Response whether

the Response is speaking to the time period specified in the Request, or some other point in

time. Third, the Revised Response fails to admit or deny the facts stated and, instead, couches the

admission in facts that are not part of the Request. For example, nowhere in Old White’s Request

is there any reference to the Application or its terms. Old White contends that during the

conference, this Court pointed out and directed that if Bankers cannot admit the facts, as stated in

the Request, then it should deny the Request, but it cannot change the Request to a statement that

serves Bankers’ interests. Old White asserts that is exactly the case with Request 9.

Next, Old White states that Bankers’ response to Request 10 also fails to comply with the

Rules:

REQUEST 10. Admit that Bankers knew, at the time it procured the Policy, that

Old White was relying on Bankers to procure coverage that applied if someone won

the Hole in One Competition.

INITIAL RESPONSE: Bankers admits that it knew Old White was requesting a

policy consistent with the terms of the Application and the Addendum.

REVISED RESPONSE: Bankers admits that Old White was relying on Bankers’

assistance to procure coverage consistent with the terms of the Application and the

Addendum, but denies the rest of this Request because it improperly asks Bankers

to delve into Old White’s subjective reliance and thought process, and it assumes

that Old White requested coverage without conditions.

Again, Old White argues that this is a defective answer for the same reasons argued regarding

Bankers’ response to Request 9.

With regard to Request 34, Old White asserts Bankers’ answer is also inadequate pursuant

to the Rules:

REQUEST 34. Admit that Bankers notified Old White on June 29, 2015 that the

coverage Old White had requested for the Hole in One Competition had been

bound.

INITIAL RESPONSE: Bankers denies this Request to the extent that it states or

infers that Old White requested a policy without a yardage limitation. Bankers

admits that it notified Old White on June 29, 2015 that coverage consistent with the

Application and the Addendum to the Application had been bound. Bankers denies

any other matter that is not specifically admitted.

REVISED RESPONSE: Bankers denies this Request to the extent that it states or

infers that Old White requested a policy without a yardage limitation with its

inclusion of “the coverage Old White had requested for the Hole in One

Competition.” Bankers admits that it notified Old White on June 29, 2015 that

coverage had been bound. Bankers denies any other matter that is not specifically

admitted.

Old White contends that Bankers’ Revised Response improperly denies facts that are not contained

within the Request. To the extent Bankers believes that the Request suggests or infers certain facts,

Old White insists that the proper procedure is for Bankers to state an objection to that effect and

then respond to the Request subject to the stated objection. It is improper, however, for Bankers to

couch its objection in the form of a denial by denying facts that are not stated in the Request. Old

White asserts that that denial, therefore, should be withdrawn.

With respect to Request 41, Old White again contends that Bankers’ answer is defective:

REQUEST 41. Admit that Bankers did not determine whether the binder was

consistent with the coverage that Old White had directed Bankers to procure.

INITIAL RESPONSE: Bankers denies this Request to the extent that it states or

infers that Old White requested a policy without a yardage limitation. Bankers

admits that All Risks forwarded the binder to Bankers on the day before the 2015

Greenbrier Classic, June 30, 2015, at 3:14 p.m., and that Bankers did not determine

whether the binder was consistent with the Application and the Addendum prior to

the 2015 Greenbrier Classic.

REVISED RESPONSE: Bankers denies this Request to the extent that it states or

infers that Old White requested a policy without a yardage limitation with its

inclusion of “the coverage that Old White had directed Bankers to procure.”

Bankers admits that it did not determine whether the binder was consistent with the

Application and the Addendum prior to the 2015 Greenbrier Classic.

Old White argues that Bankers’ Revised Response suffers from the same defects in Bankers’

Revised Response 34 discussed supra.

In its response (ECF No. 98), Bankers argued that its Responses are not evasive, and consist

of good faith explanations for its answers. During the hearing, Bankers argued that the

aforementioned answers comply with the Rules and do respond to the substance of Old White’s

Requests. Additionally, Bankers asserted that Old White’s Requests assume facts that Bankers

cannot admit and therefore qualified their answers appropriately. In response to further questioning

from the bench, counsel for Bankers represented that Bankers finally admits to Requests 34 and

41, however, Bankers remained steadfast in its argument that responses to Requests 9 and 10 were

appropriate under the Rules as proper qualifications for its answers. Bankers explained that Old

White’s Requests 9 and 10 presume certain terms in the insurance coverage for the Hole in One

Competition that were not discussed between the parties.

Further, Bankers contends that Old White’s Motion to Compel Bankers responses to

Requests 9 and 10 bears a striking resemblance to the situation explored in Tri-State Hosp. Supply

Corp. v. U.S., 226 F.R.D. 118 (D.C. Feb. 28, 2005). In that case, the plaintiff moved for judicial

determination if the government’s responses to two requests for admission were sufficient and

objections justifiable. Id. at 137-138. The requests and responses at issue were the following: “Tri-

State made payment to its Pakistani suppliers of surgical instruments in the amount specified on

invoices accompanying the merchandise” to which the government admitted and included the

qualifying statement: “payments that Tri-State made to its Pakistani suppliers did not reflect the

negotiated price paid by Tri-State for the surgical instruments.” Id. at 137. The plaintiff, Tri-State,

argued that the government’s additional non-responsive qualification violated Rule 36(a). Id.

The next request and response at issue was: “During execution of a search warrant at Tri-

State on March 28, 1994, Tri-State personnel showed Customs agents financial records reflecting

that Tri-State made payments in the amount of the higher invoice price.” Id. at 138. The

government responded: “Admit that during execution of a search warrant at Tri-State on March

28, 1994, Tri-State personnel showed Customs agents financial records reflecting that Tri-State

made payments in an amount higher than the negotiated price for the surgical instruments, and

that those higher payments were reflected on the invoices that accompanied the merchandise and

deny the remainder of this request for admissions.” Id. (italics in original) Again, Tri-State argued

that the italicized portion of the response was unresponsive and violated Rule 36(a). Id.

Ultimately, the court found that the government’s responses to requests for admissions

were adequate because the term “payment” was a key legal issue in the underlying case and the

government was permitted to answer the way it did as a means of explaining its position. Id.

Similarly, Bankers contends that it will not be “bullied into an admission it does not want to make.”

Id.

Old White argued that this case is not a contract case, where terms of the insurance

coverage for the Hole in One Competition are at issue, but is a negligence case, which concerns

Bankers’ alleged negligence in procuring insurance coverage on Old White’s behalf. Therefore,

the responses offered by Bankers violate Rule 36(a).

After a lengthy colloquy with the Court, Bankers announced to the Court that it will again

revise its responses to Requests 9 and 10.

Discussion

The undersigned finds Bankers’ responses to Requests 9 and 10 fail to meet the standard

of being sufficient answers to Old White’s Requests pursuant to Rule 36(a). Bankers’ responses

are unresponsive to the substance of the matter requested; Bankers’ responses do not admit or deny

the substance of the matter, but instead, proffers factual allegations that suit its own interests.

Indeed, Bankers’ denials to the extent that the Requests “improperly asks Bankers to delve into

Old White’s subjective reliance and thought process” is wholly inadequate under the Rules and

totally fails the requirement that an answer be based on good faith. Accordingly, the undersigned

GRANTS Old White’s Motion regarding Requests 9 and 10, and ORDERS that Bankers amend

its responses to Requests 9 and 10 in conformity with the Rule. Further, the undersigned GRANTS

AS MOOT Old White’s Motion with regard to Requests 34 and 41, to which Bankers

ADMITTED as announced during the hearing.

Relevant Law

Pursuant to Rule 501 of the Federal Rules of Evidence, in civil proceedings state law

governs privilege regarding a claim or defense for which state law supplies the rule of decision.

Therefore, West Virginia law applies in determining the scope of the attorney-client privilege;

communications are protected under this privilege only when:

(1) both parties must contemplate that the attorney-client relationship does or will

exist; (2) the advice must be sought by the client from that attorney in his capacity

as a legal adviser; (3) the communication between the attorney and client must be

intended to be confidential.

See, State v. Burton, 163 W. Va. 40, 254 S.E.2d 129 (W. Va. 1979).

The Fourth Circuit has adopted the “classic test” for determining the existence of attorney-client

privilege:

The privilege applies only if (1) the asserted holder of the privilege is or sought to

become a client; (2) the person to whom the communication was made (a) is a

member of the bar of a court, or his subordinate and (b) in connection with this

communication is acting as a lawyer; (3) the communication relates to a fact of

which the attorney was informed (a) by his client (b) without the presence of

strangers (c) for the purpose of securing primarily either (i) an opinion on law or

(ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the

purpose of committing a crime or tort; and (4) the privilege has been (a) claimed

and (b) not waived by the client.

United States v. Jones, 696 F.2d 1069, 1072 (4th Cir. 1982) (quoting United States v. United Shoe

Machinery Corp., 89 F.Supp. 357, 358–59 (D.Mass.1950)). “The burden is on the proponent of

the attorney-client privilege to demonstrate its applicability.”1 Jones, 696 F.2d at 1072.

The work product doctrine is governed under Rule 26(b)(3) of the Federal Rules of Civil

Procedure. This Rule does not protect documents from discovery unless they are prepared in

anticipation of litigation or reveal the mental impressions, conclusions, opinions, or legal theories

of a party’s attorney or other representative concerning the litigation.

In State ex rel. USF & G v. Canady, 194 W.Va. 431, 460 S.E.2d 677, 684–85 (1995), the

Supreme Court of Appeals of West Virginia noted that “[a]s the attorney-client privilege and the

work product exception may result in the exclusion of evidence which is otherwise relevant and

material and are antagonistic to the notion of the fullest disclosure of the facts, courts are obligated

to strictly limit the privilege and exception to the purpose for which they exist.” Id. at 684.

However, “[c]ourts must work to apply the privilege in ways that are predictable and certain”

keeping in mind that “[t]he privilege forbidding the discovery of evidence relating to

communications between an attorney and a client is intended to ensure that a client remains free

from apprehension that consultations with a legal advisor will be disclosed.” Id. at 684 (citations

omitted).

1 See also, State ex rel. USF & G v. Canady, 194 W. Va. 431, 460 S.E.2d 677, 684 (1995) (the claimant bears the

burden of establishing the applicability of the attorney-client privilege or the work product exception).

To determine whether a document was prepared in anticipation of litigation, “the primary

motivating purpose behind the creation of the document must have been to assist in pending or

probable future litigation.” State ex rel. United Hospital Center, Inc. v. Bedell, 199 W.Va. 316,

484 S.E.2d 199, 213 (1997). Consistent with the findings of the United States Court of Appeals

for the Fourth Circuit in In re Grand Jury Proceedings, 33 F.3d 342, 348 (4th Cir. 1994), USF & G

held that the work product protection is analyzed in two contexts: fact work product and opinion

work product:

Both are generally protected and can be discovered only in limited circumstances.

Fact work product can be discovered upon a showing of both a substantial need and

an inability to secure the substantial equivalent of the materials by alternate means

without undue hardship .... Opinion work product is even more scrupulously

protected as it represents the actual thoughts and impressions of the attorney, and the

protection can be claimed by the client or the attorney.

USF & G, 460 S.E.2d at 691 (quoting In re Grand Jury Proceedings, 33 F.3d at 348).

In State ex rel. Allstate Ins. Co. v. Gaughan, 203 W.Va. 358, 508 S.E.2d 75, 92 (W.Va.

1998), the West Virginia Supreme Court of Appeals provided guidance in analyzing work product

issues, and determined that a case-by-case approach is

more sound in determining whether documents in an insurance claim file were

prepared in anticipation of litigation. The trial court should consider the nature of

the requested documents, the reason the documents were prepared, the relationship

between the preparer of the document and the party seeking its protection from

discovery, the relationship between the litigating parties, and any other facts

relevant to the issue.

(quoting Askew v. Hardman, 918 P.2d 469, 473–74 (Utah 1996)).

Old White’s Argument for Deposing Melvin E. Tull

Shortly before the hearing on its Motion to Compel, Old White filed for leave to depose

Melvin E. Tull, who is general counsel for Bankers. (ECF No. 109) Old White argues that in Talbot

2002 Underwriting Capital Ltd., et al. v. Old White Charities, Inc., et al., No. 5:15-cv-12542

(S.D.W. Va. originally filed Aug. 19, 2015), provides important background information to this

instant matter, specifically, deposition testimony given by Bankers representatives in the Talbot

case. (ECF No. 110 at 1-2) In short, Old White asserts that two Bankers representatives, Marshall

Fleming and Gene Hayes, testified during their depositions on May 4, 2018 and May 2, 2018,

respectively, that they gave false testimony in the Talbot case as to the coverage sought on Old

White’s behalf for the Hole in One competition.2 (Id. at 2) Old White directs the Court’s attention

to the letter dated July 21, 2015 written by Melvin Tull to Old White’s insurer HCC that Old White

would not have accepted a distance limitation in its insurance for the Hole in One competition, and

that Bankers would not have allowed such a limitation. (Id. at 2-3; ECF No. 109-5) It is this critical

issue on which Messrs. Fleming and Hayes have recently changed their testimonies. (ECF No. 110

at 3)

Old White argues that these recent developments illustrate good cause for a limited

extension of the deadline to complete depositions in this case. (Id.) Old White cannot determine if

Messrs. Fleming and Hayes were untruthful in Talbot or here, or vice versa, and believes that

Melvin Tull can shed light on the apparent incongruence or falsehood. (Id. at 6) Old White argues

that Melvin Tull was acting as an advocate on behalf of Old White in the Talbot case and clearly

stated that there was no distance limitation considered by Old White in obtaining insurance

coverage. (Id.) Because Melvin Tull was not acting in his capacity as general counsel for Bankers

at that time, there is no attorney-client privilege here – in fact, he was acting on behalf of Old

White to secure payment of insurance proceeds. (Id. at 7-8) Melvin Tull’s deposition is sought to

see what facts he relied upon when he wrote that July 21, 2015 letter, nothing more, and facts are

2 Mr. Fleming recently testified that he did not provide truthful testimony in Talbot (ECF No. 109-1); Mr. Hayes

recently testified that his testimony in Talbot was “an incongruity” with his more recent testimony and that he could

not answer as to why his testimony changed in the last two years (ECF No. 109-4). (ECF No. 4-5)

not privileged. (Id. at 8) Finally, Old White asserts that an extension of the deposition deadline to

allow for Melvin Tull’s deposition will not alter the Scheduling Order in any meaningful way. (Id.)

During the hearing, Bankers argued that Old White should not be permitted to depose

Melvin Tull because he is Bankers’ general counsel, and there is no way this would not violate the

attorney-client privilege. Melvin Tull, in his capacity as general counsel, obtained the facts from

his client, Bankers, in order to write that letter, which speaks for itself. Bankers contends that Old

White seeks communications, which are always privileged, and therefore, this Court should not

grant the Motion.

Discussion

While the undersigned notes that Bankers did not have time to file a formal response to

Old White’s Motion, the fact that Bankers identified at least two of its representatives as Rule

26(a)(1)(A)(i) witnesses, Messrs. Fleming and Hayes, in the instant case (ECF No. 109-2 at 3),

both of whom gave completely inconsistent and potentially false testimony in this case, is

compelling circumstances and provides good cause for Old White’s Motion. Bankers also

identified in this case as additional Rule 26(a)(1)(A)(i) witnesses: “[a]ny individual identified by

any party in Talbot 2002 Underwriting Capital, Ltd., et al. v. Old White Charities, Inc., et al., No.

5:15-cv-12542”, which includes Melvin Tull. (ECF No. 109-2 at 4; ECF No. 109-3 at 3) As stated

before, these consist of compelling circumstances supporting Old White’s Motion.

Although at first blush, Old White’s reasons for deposing Melvin Tull do not seem to

trigger attorney-client privilege or work product doctrine privilege, the undersigned recognizes

that Bankers can submit an appropriate privilege log and/or assert the appropriate privilege in

response to any questions posed by Old White to Melvin Tull. Nevertheless, the undersigned

cautions counsel for Bankers to tread carefully here, given the marked inconsistencies in the sworn

testimonies provided by at least two of its own fact witnesses. Accordingly, Old White’s Motion

for Leave to Depose Melvin E. Tull is GRANTED. Bankers’ objection to same is noted.

Ancillary Matters

During the hearing, the undersigned heard two polar opposite assertions by the parties: Old

White asserted that Bankers’ expert testified that insurance policies exist that do not include a

yardage or distance limitation, whereas Bankers asserted that its expert testified that no such

insurance policies exist.

It is clear to the Court that both positions cannot be true. Either Bankers’ expert testified

that a policy without yardage limitations does exist or testified that a policy without yardage

limitations does not exist. It is hard for the undersigned to imagine how both attorneys arguing the

position could both be right. The undersigned is very concerned that an officer of the Court may

have misrepresented a statement of fact. Misrepresentations of fact by Counsel will not, and

cannot, be tolerated.3 The undersigned believes it is important to determine if, in fact, Counsel for

one of the parties made a misrepresentation of fact to the Court. The undersigned therefore

ORDERS that Counsel for the parties have until the close of business on May 21, 2018 to submit

information that they rely upon to assert that one of Banker’s experts testified that a policy without

yardage limitations does exist (as asserted by Counsel for Old White) or does not exist (as asserted

by Counsel for Bankers) as represented to this Court during the hearing on May 10, 2018. Upon

receiving the same, the Court will determine if a further hearing is necessary, and will give Counsel

an opportunity to argue if sanctions would be appropriate should the Court find that a

misrepresentation was in fact made by one of the Counsel for the parties.

3 The Court is very troubled by the apparent, well-grounded, representations that two representative for Bankers have

admitted to having given false testimony in a companion case as noted, supra. With that knowledge in mind and

finding it difficult for both representations to co-exist, the Court believes that the interest of justice demands that

further inquiry be made by the Court to determine if either Counsel has attempted to mislead the Court.

As an additional matter, counsel for Old White advised the Court that they have been

waiting for Bankers to respond to Old White’s request to produce notes that were composed during

the Hole in One negotiations. Old White had no knowledge of these notes until depositions were

taken on or about April 27, 2018, and points out that as of May 10, 2018, Bankers has not been

able to respond to this request, that is to confirm or deny the existence of these notes or whether

they existed at one time and were destroyed. Bankers represented to the Court and to counsel for

Old White that it will provide a full response to this inquiry by Monday, May 14, 2018.

Accordingly, the undersigned ORDERS that Bankers fully respond to Old White’s request by end

of business (5:00 p.m.) on May 14, 2018.

Pursuant to Rule 37, Old White is invited to file the appropriate motion for sanctions

outlining the reasons why sanction are appropriate in this matter and including the time it took to

prosecute the Motion to Compel. Bankers shall be permitted to file an appropriate pleading setting

forth why this Court should not issue sanctions and any other objections to the accounting of time

filed by Old White.

In accordance with Rule 72(a) of the Federal Rules of Civil Procedure, the ruling set forth

above on this non-dispositive motion may be contested by filing, within 14 days, objections to

this Order with District Judge Irene Berger. If objections are filed, the District Court will

consider the objections and modify or set aside any portion of the Order found clearly to

be erroneous or contrary to law.

The Clerk is requested to send a copy of this Order to all counsel of record.

ENTER: May 14, 2018.

OmarJ.Aboulhosn ss—S

United States Magistrate Judge

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