Court Opinion

ID: 9964070
Source: CourtListenerOpinion
Date Created: 2024-04-26 20:09:54.099788+00
Date Added: 2024-06-11T08:25:09.333536
License: Public Domain

Certain Underwriters at Lloyd's, London v NL Indus.,
                           Inc.
               2024 NY Slip Op 31411(U)
                     April 22, 2024
           Supreme Court, New York County
        Docket Number: Index No. 650103/2014
                  Judge: Andrea Masley
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                                        INDEX NO. 650103/2014
  NYSCEF DOC. NO. 1157                                                                                            RECEIVED NYSCEF: 04/22/2024

            SUPREME COURT OF THE STATE OF NEW YORK
            COUNTY OF NEW YORK: COMMERCIAL DIVISION PART 48
            ----------------------------------------------------------------------------------- X

             CERTAIN UNDERWRITERS AT LLOYD'S, LONDON,                                               INDEX NO.         6501 03/2014
             COMMERCIAL UNION INSURANCE COMPANY PLC,
             INDEMNITY MARINE ASSURANCE COMPANY LTD.,
             NORTHERN ASSURANCE COMPANY LTD., OCEAN                                                 MOTION DATE
             MARINE INSURANCE COMPANY LTD., WINTERTHUR
             SWISS INS. CO. LTD., WORLD AUXILIARY INSURANCE                                         MOTION SEQ. NO.      034 035
             CORPORATION LTD., YASUDA FIRE & MARINE INS.
             CO. (UK) LTD., YASUDA, UK, YORKSHIRE INSURANCE
             COMPANY LTD., ATLANTA INTERNATIONAL                                                     DECISION+ ORDER ON
             INSURANCE COMPANY, GOVERNMENT EMPLOYEES                                                       MOTION
             INSURANCE COMPANY, ONEBEACON AMERICA
             INSURANCE COMPANY, REPUBLIC INSURANCE
             COMPANY, and STONEWALL INSURANCE COMPANY,

                                                          Plaintiffs,

                                                - V -

             NL INDUSTRIES, INC.,ACE AMERICAN INSURANCE
             COMPANY, ACE PROPERTY & CASUAL TY INSURANCE
             COMPANY, AIG PROPERTY CASUAL TY COMPANY, AIU
             INSURANCE COMPANY, ALLIANZ UNDERWRITERS
             INSURANCE COMPANY, ALLSTATE INSURANCE
             COMPANY, AMERICAN HOME ASSURANCE COMPANY,
             ARROWOOD INDEMNITY COMPANY, CENTRAL
             NATIONAL INSURANCE COMPANY OF OMAHA,
             CENTURY INDEMNITY COMPANY, CONTINENTAL
             INSURANCE COMPANY, DAIRYLAND INSURANCE
             COMPANY, EMPLOYERS INSURANCE COMPANY OF
             WAUSAU, EMPLOYERS MUTUAL CASUAL TY
             COMPANY, EVEREST REINSURANCE COMPANY,
             EXECUTIVE RISK INDEMNITY, INC.,FEDERAL
             INSURANCE COMPANY, FIRST STATE INSURANCE
             COMPANY, GRANITE STATE INSURANCE COMPANY,
             HARTFORD ACCIDENT AND INDEMNITY COMPANY,
             INSCO LTD., THE INSURANCE COMPANY OF THE
             STATE OF PENNSYLVANIA, LANDMARK INSURANCE
             COMPANY, LEXINGTON INSURANCE COMPANY, MT.
             MCKINLEY INSURANCE COMPANY, MUNICH
             REINSURANCE AMERICA, INC.,NATIONAL CASUALTY
             COMPANY, NATIONAL UNION FIRE INSURANCE
             COMPANY OF PITTSBURGH, PA, NEW ENGLAND
             INSURANCE COMPANY, NEW HAMPSHIRE
             INSURANCE COMPANY, OLD REPUBLIC INSURANCE
             COMPANY, PACIFIC EMPLOYERS INSURANCE
             COMPANY, RIUNIONE ADRIATICA DI SICURTA, TIG
             INSURANCE COMPANY, TRAVELERS CASUALTY &
             SURETY COMPANY, TRAVELERS PROPERTY
             CASUAL TY COMPANY OF AMERICA, TWIN CITY FIRE
             INSURANCE COMPANY, UTICA MUTUAL INSURANCE
             650103/2014 CERTAIN UNDERWRITERS AT vs. NL INDUSTRIES, INC.                                                Page 1 of4
             Motion No. 034 035

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                                                                                                          INDEX NO. 650103/2014
  NYSCEF DOC. NO. 1157                                                                              RECEIVED NYSCEF: 04/22/2024

             COMPANY, WESTCHESTER FIRE INSURANCE
             COMPANY, ZURICH AMERICAN INSURANCE
             COMPANY, ZURICH SPECIAL TIES LONDON LTD., and
             CERTAIN LONDON MARKET INSURANCE COMPANIES,

                                                          Defendants.
            ----------------------------------------------------------------------------------- X

            HON. ANDREA MASLEY:

            The following e-filed documents, listed by NYSCEF document number (Motion 034) 1093, 1094, 1095,
            1096, 1097, 1098, 1099, 1100, 1101, 1102, 1103, 1104, 1105, 1106, 1107, 1113, 1137
            were read on this motion to/for                CONFIRM/DISAPPROVE AWARD/REPORT

            The following e-filed documents, listed by NYSCEF document number (Motion 035) 1123, 1124, 1125,
            1126, 1131, 1132, 1133, 1134, 1135, 1136, 1142
            were read on this motion to/for                            LEAVE TO FILE

            Upon the foregoing documents, it is

                      For the reasons stated on the record on April 17, 2024, plaintiffs' motion 034 to

                           "1) [D]isaffirm[] Paragraph 5 of the 'Order' by Special Discovery Master
                           Richard P. Swanson, dated October 9, 2023 and filed October 10, 2023
                           (NYSCEF 1080), and
                           2) [C]ompel[] defendant NL Industries, Inc. ('NL') to produce its internal
                           documents and communications related to the subject matters addressed in
                           the affidavit of its general counsel, John Powers, in support of NL's motion to
                           stay (NYSCEF 231 ), his affidavit in opposition to the Insurers' summary
                           judgment motion (NYSCEF 67 4 ), and his declaration in support of NL's
                           motion for summary judgment against Allstate Insurance Company (NYSCEF
                           796), without regard to its claims of privilege over those materials." (NYSCEF
                           1093, OSC [mot. seq. no. 034])

            is denied. "An 'at-issue waiver' of the attorney-client privilege occurs where a party
            affirmatively places the subject matter of its own privileged communication at issue,
            such as by asserting a claim or defense that the party intends to prove by use of the
            privileged material." (2138747 Ontario Inc. v Lehman Bros. Holdings, Inc., 210 AD3d
            412, 413 [1st Dept 2022] [citations omitted].)

                      Likewise, the court denies plaintiffs' motion 035

                      "to supplement the record on [motion 034] ... [with] a supplemental
                      memorandum accompanying the excerpts of the transcript of the [January 17,
                      2024] deposition of NL's General Counsel John Powers." (NYSCEF 1123,
                      Notice of Motion at 1-2 [mot. seq. no. 035].)
             650103/2014 CERTAIN UNDERWRITERS AT vs. NL INDUSTRIES, INC.                                  Page 2 of 4
             Motion No. 034 035

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                                                                                              INDEX NO. 650103/2014
  NYSCEF DOC. NO. 1157                                                                 RECEIVED NYSCEF: 04/22/2024

                   John Powers, Esq., NL's General Counsel, submitted four affidavits in this action.
            (NYSCEF 231, Jan. 24, 2019 affidavit in support of motion to stay; NYSCEF 317, Feb.
            15, 2019 affidavit in support of NL's reply in support of a stay; NYSCF 674, Oct. 9, 2019
            affidavit [43 pages, 201 paragraphs, and 32 exhibits NYSCEF 675-706] in further
            support of NL's opposition to Insurers' motion for summary judgment; NYSCF 796, July
            15, 2022 declaration in support of NL's motion for summary judgment against Allstate.)

                      In his October 9, 2023 Order, Special Master Richard P. Swanson determined
            that:

                      "5. Plaintiffs and the Insurers contend there was a waiver by NL of the attorney-
                      client privilege by the filing of a 43-page affidavit containing legal argument by
                      NL's in-house counsel John Powers. I read the cases cited at the August 23,
                      2023 hearing/conference at which the parties first addressed this issue, in
                      particular MBIA Ins. Corp. v. Patriarch Partners VIII, LLC, 2012 WL 2568972
                      (S.D.N.Y.), relied on by the Insurers, and Deutsche Bank Trust Company of
                      Americas v. Tri-Links Investment Trust, 43 A.D.3d 56,837 N.Y.S.2d 15 (1st Dep't
                      2007), relied on by NL. Both cases stand for the same proposition, namely, that
                      when a party is going to put counsel on the stand as a witness to testify to the
                      meaning and intent of a contract, and related legal principles attendant thereto,
                      there is a waiver of the attorney-client privilege. The parties chose to cite the
                      case that they cited because on the facts of the specific case, each of these two
                      cases came to a different outcome. We are all familiar with the all-too-common
                      practice in state court in New York of attorneys filing affidavits or affirmations
                      putting forth certain facts and documents, and even legal arguments (including
                      case citations at times), without ever intending for that attorney to testify as a
                      witness or to waive any otherwise applicable privilege. NL's counsel has
                      represented that NL will not call Mr. Powers as a witness in this case and based
                      on that representation I am choosing to consider Mr. Powers' affidavit as an
                      attorney's affidavit filed in the manner and for the limited purpose set forth above,
                      and therefore not constituting a privilege waiver, although given the length and
                      subject matter of the affidavit it is frankly a close question. If NL in fact
                      designates Mr. Powers as a witness, or decides to try to call him to testify, then I
                      would conclude that a privilege waiver has in fact occurred. The practice of
                      having attorneys file affidavits and affirmations too often confuses the role of the
                      attorney, the sources of the attorney's knowledge and the capacity in which the
                      attorney is acting, and such confusion has in fact occurred here. I strongly
                      encourage NL to discontinue this practice going forward." (NYSCEF 1104, Oct. 9,
                      2023 Order by Richard P. Swanson ,i 5.)

                   Powers was deposed for 13 hours. (NYSCEF 1131, NL's Memo of Law at 6 or
            9/171; NYSCEF 1133, June 22, 2023 Depa tr; NYSCEF 1134, Jan. 17, 2024 Depa tr.)
            The court reviewed the snippet of the Powers deposition transcript, and it changes

            1
                NYCEF pagination.
                650103/2014 CERTAIN UNDERWRITERS AT vs. NL INDUSTRIES, INC.                   Page 3 of 4
                Motion No. 034 035

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                                                                                                        INDEX NO. 650103/2014
  NYSCEF DOC. NO. 1157                                                                            RECEIVED NYSCEF: 04/22/2024

            nothing. 2 Powers' statements are not privileged and some are not even legal in nature,
            e.g. that since 1949, NL has tried to purchase the broadest and most economical
            insurance policies. (NYSCEF 1125, Powers Depa tr at 152:9-155:8.) Further, the
            Insurers' questions of Powers concerning his understating of the law in the State of New
            York and of the decisions of the Santa Clara court were inappropriate. (See Kaye v Tee
            Bar Corp., 151 AD3d 1530, 1531 [3d Dept 2017].) Powers' declination to answer such
            questions was consistent with the Special Master's order. (NYSCEF 1104, Oct. 9, 2023
            Order by Richard P. Swanson.) The Insurers have not established that "invasion of the
            privilege is required to determine the validity of a claim or defense of the party asserting
            the privilege." (Deutsche Bank Tr. Co. of Americas, 43 AD3d at 63 [citations omitted].)

                       Accordingly, it is

                       ORDERED that the Insurers' motions 034 and 035 are denied; and it is further

                       ORDERED that the Insurers shall submit the transcript to be so ordered.

                       4/22/2024
                         DATE                                                        ANDREA MASLEY, J.S.C.

                                        ~
                CHECK ONE:                  CASE DISPOSED                     NON-FINAL DISPOSITION

                                            GRANTED         0    DENIED       GRANTED IN PART          □ OTHER
                APPLICATION:                SETTLE ORDER                      SUBMIT ORDER

                CHECK IF APPROPRIATE:       INCLUDES TRANSFER/REASSIGN        FIDUCIARY APPOINTMENT    □ REFERENCE

            2While the court appreciates that NL filed the entire transcript (NYSCEF 1133 and
            1134), parties are reminded to read the Part 48 procedures and comply with them.
            Deposition transcripts are to be filed in NYSCEF in full, not excerpts. ( See e.g.
            NYSCEF 1125.)
                650103/2014 CERTAIN UNDERWRITERS AT vs. NL INDUSTRIES, INC.                             Page 4 of 4
                Motion No. 034 035

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