United States District Court,

E.D. Michigan,

Southern Division.

Carolyn WRIGHT, Plaintiff,

v.

CAM HILTZ TRUCKING, et al., Defendants.

 

No. 13–CV–14690.

Signed Nov. 25, 2014.

 

Kevin H. Seiferheld, Gursten, Koltonow, Southfield, MI, for Plaintiff.

 

William S. Cook, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Novi, MI, for Defendants.

 

OPINION AND ORDER DENYING PLAINTIFF’S MOTION TO COMPEL (Dkt.38)

MARK A. GOLDSMITH, District Judge.

I. INTRODUCTION

*1 This matter is presently before the Court on Plaintiff’s motion to compel production of Defendant Hayward’s statement to his insurer (Dkt.38). For the reasons stated below, the Court denies the motion.

 

II. BACKGROUND

Plaintiff Carolyn Wright filed suit against Defendants Paul Hayward and Cam Hiltz Trucking in Wayne County Circuit Court, which Defendants then removed to this Court based on diversity of citizenship. See Compl., Ex. A to Removal Notice (Dkt.1). Plaintiff alleges that Hayward was operating a freightliner semi-tractor-trailer and struck Plaintiff’s car while attempting to change lanes on Interstate 94. Id. ¶¶ 5, 8. According to Plaintiff, this contact caused her vehicle to “spin out,” resulting in a spinal injury to Plaintiff. Id. ¶¶ 8, 12. Plaintiff further alleges that Cam Hiltz Trucking, the owner of the tractor-trailer operated by Hayward in the course and scope of his employment, is liable for Hayward’s actions based on respondeat superior, negligent entrustment, and various statutory doctrines. Id. ¶¶ 6, 19–22, 28–35.

 

Less than two months after this December 27, 2012 accident, Plaintiff’s counsel wrote a letter to Cam Hiltz, stating that he represented Plaintiff in connection with “personal injuries resulting from a collision which occurred on December 2[7], 2012.” 2/11/2013 Preservation Letter, Ex. C to Defs. Resp. at 2 (cm/ecf page) (Dkt.39–4). The nine-page letter demanded that Cam Hiltz preserve certain evidence related to the accident, delineated in 54 categories of information and/or documents. Id. On February 27, 2013, Northbridge Insurance, Cam Hiltz’s insurance company, responded to Plaintiff’s counsel by acknowledging receipt of the preservation letter, and stating that its “investigation into this matter has commenced.” 2/27/2013 Insurer Letter, Ex. D. to Defs. Resp. at 2 (cm/ecf page) (Dkt.39–5). Ten days later, on March 8, 2013, an insurer representative met with Hayward, at which time he gave a statement. Pl. Mot. at 1; Defs. Resp. at 2, 4 (Dkt.39). This action was then filed on October 2, 2013.

 

At an earlier stage in this litigation, the parties had a number of discovery disputes, including whether Hayward’s statement should be produced. Plaintiff filed a motion to compel (Dkt.26), which the Court denied in part. As is pertinent to the instant motion, the Court concluded that the Hayward statement was privileged pursuant to Federal Rule of Civil Procedure 26(b)(3)(A). See 8/21/2014 Order at 2 (Dkt.31).

 

Since the Court’s August 21, 2014 order, Hayward has been deposed (Dkt.38–1), and Cam Hiltz has produced its employee manual (Dkt.38–4). During his deposition, Hayward was asked whether he had “any reason to think or believe that there would be any litigation or lawsuit” between the time of the accident and his statement to the insurer, to which he replied, “No, sir.” Hayward Dep. at 92. When asked whether he “anticipated any litigation or lawsuit,” Hayward stated, “No.” Id. at 92–93. Hayward further testified that, in connection with another accident, he had completed an incident report for Cam Hiltz out of a concern for possible litigation; but he did not fill out a report after this accident because he did not anticipate any litigation. Id. at 128–129.

 

*2 Cam Hiltz’s employee manual states that Cam Hiltz’s insurance company “must be notified of … [a]ll accidents involving a third party.” Employee Manual, Ex. 4 to Pl. Mot. at 14 (Dkt.38–4). The manual further states that “once [the employee] report[s] the accident, [Cam Hiltz] will contact the insurance company.” Id.

 

Based on the foregoing information learned in discovery, Plaintiff has filed the instant motion to compel Hayward’s statement to his insurer (Dkt.38).

 

III. ANALYSIS

Federal Rule of Civil Procedure 26(b)(1) provides that “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense.” However, under the work-product doctrine, “documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative … including the other party’s … insurer” are ordinarily not discoverable. Fed.R.Civ.P. 26(b)(3)(A); Biegas v. Quickway Carriers, Inc., 573 F.3d 365, 381 (6th Cir.2009). In determining whether a document was prepared in anticipation of litigation, a court asks: “(1) whether a document was created because of a party’s subjective anticipation of litigation, as contrasted with an ordinary business purpose, and (2) whether that subjective anticipation of litigation was objectively reasonable.” Biegas, 573 F.3d at 381 (quoting United States v. Roxworthy, 457 F.3d 590, 594 (6th Cir.2006)) (internal quotation marks omitted). If a document is prepared in anticipation of litigation, the fact that it also serves an ordinary business purpose does not deprive the document of work-product protection, Roxworthy, 457 F.3d at 598–99, but the burden is on the party claiming protection to show that anticipated litigation was the “driving force behind the preparation of each requested document.”   Id. at 595.

 

1. The Law–of–the–Case Doctrine

At the outset, Defendants argue that, in light of the Court’s prior order ruling that the statement was not discoverable, the law-of-the-case doctrine bars Plaintiff from re-litigating the same issue. Defs. Resp. at 5. Defendants contend that Plaintiff had the option to seek reconsideration under Local Rule 7.1(h), but chose not to do so. Id.

 

The law-of-the-case doctrine “posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” Scott v. Churchill, 377 F.3d 565, 569–570 (6th Cir.2004) (quoting Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983)) (internal quotation marks omitted). Importantly, however, the doctrine does not absolutely bar a district court from reconsidering pretrial rulings. Peralta v. Dillard, 744 F.3d 1076, 1088 (9th Cir.2014); Gillig v. Advanced Cardiovascular Sys., Inc., 67 F.3d 586, 589 (6th Cir.1995) (“At the trial court level, the doctrine of the law of the case is little more than a management practice to permit logical progression toward judgment. Prejudgment orders remain interlocutory and can be reconsidered at any time.”). The doctrine does not remove a district court’s jurisdiction to reconsider, or otherwise preclude a district court from reconsidering, an issue previously decided in the case. Gillig, 67 F.3d at 590. It is a doctrine addressed to the Court’s discretion—not a limitation on its power to decide an issue. Arizona, 460 U.S. at 618 (“Law of the case directs a court’s discretion, it does not limit the tribunal’s power.”).

 

*3 Rouse v. DaimlerChrysler Corporation, 300 F.3d 711, 715 (6th Cir.2002), cited by Defendants, does not counsel otherwise; in fact, it undermines Defendants’ position. In Rouse, the Sixth Circuit reversed the district court for applying an overly wooden approach to the law-of-the-case doctrine. The district court had refused to consider, based on law-of-the-case, whether ERISA invalidated a domestic relations order, reasoning that an earlier assigned judge had upheld the validity of the order on a different theory. The Sixth Circuit held that it was an abuse of discretion to refuse to address the merits of a new argument based on law-of-the-case. Id. at 714.

 

That is the same error that Defendants urge this Court to commit. Plaintiff has pointed to new evidence in the record, developed through discovery, which was not available when the Court ruled on the earlier motion to compel. Nothing in the law-of-the-case doctrine absolutely forbids a court from considering such newly discovered evidence, or counsels that it should disregard such evidence. Adopting Defendants’ view would convert a useful tool for litigation management into a judicial straitjacket that would prevent a court from deciding an issue on the merits.

 

Therefore, the Court finds that law-of-the-case does not bar it from reconsidering whether Hayward’s statement to the insurer is discoverable.

 

2. Defendant Hayward’s Subjective Anticipation of Litigation

Plaintiff argues that Hayward did not subjectively anticipate litigation arising from the accident when he made his statement to Cam Hiltz’s insurer. Pl. Mot. at 2–3. For support, Plaintiff cites the portion of Hayward’s deposition testimony in which he stated that he did not have any reason to think or believe that there would be any litigation, and that he did not anticipate any litigation. Id. at 3. Plaintiff further argues that the insurer did not anticipate litigation because Hayward stated in his deposition that the insurance company’s investigator told him that “this is probably the last you will ever hear about it.” Id.

 

While Hayward may not have had a subjective anticipation of litigation, the Court finds that this is not dispositive of either Cam Hiltz’s or its insurer’s anticipation of litigation. The preservation letter sent by Plaintiff’s counsel was no idle communication. It unequivocally communicated the likelihood of a suit being filed; the specific demand that evidence be preserved was a clear signal that litigation was reasonably likely. O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 587 (6th Cir.2009) (“[D]uty to preserve evidence is triggered when a party has notice that the evidence is relevant to litigation or should have known that the evidence may be relevant to future litigation[.]” (quotation marks and ellipsis omitted)); Sampson v. City of Cambridge, Md., 251 F.R.D. 172, 179, (D.Md.2008) (holding that “although litigation had not yet begun, defendant reasonably should have known that the evidence described in the [preservation] letter ‘may be relevant to anticipated litigation’ ” (quoting Silvestri v. Gen. Motors Corp., 271 F.3d 583, 591 (4th Cir.2001))). In fact, it is hard to fathom why an attorney would demand that documents be preserved if there were not an intention to lodge a claim or file a lawsuit. Therefore, the preservation letter triggered an objectively reasonable expectation of litigation for both Cam Hiltz and its insurer.

 

*4 Further, the insurer’s expectation of litigation is evidenced by its own letter, in which it acknowledged receipt of the preservation letter and initiation of an investigation into the accident. Given the temporal nexus between the preservation letter, the acknowledgment of the preservation letter, and the taking of Hayward’s statement, the anticipation of litigation appears to have been the driving force behind the taking of the statement. Therefore, the Court finds that Cam Hiltz and its insurer both reasonably anticipated litigation.FN1

 

FN1. Defendants argue that the insurer representative’s comment to Hayward after he gave his statement—that Hayward would probably not hear anything further about the case—does not prove that litigation was not anticipated by the insurer prior to the giving of the statement. It simply reflects the representative’s thinking after hearing Hayward’s version of events. It says nothing about the representative’s state of mind before Hayward gave his statement.

 

3. Cam Hiltz’s Insurer–Notification Policy

Plaintiff argues that Hayward’s statements to the insurer were made with an ordinary business purpose. Pl. Mot. at 5. In support, Plaintiff contends that Cam Hiltz’s employee manual establishes that it is the regular business practice of Cam Hiltz to have its employees report accidents to the company’s insurer. Id. However, reporting an accident is not the equivalent of a full-dress witness statement solicited by the insurer. Routine reporting of accidents to insurers—which the employee manual mandates—is simply a sound business practice, even if litigation is not anticipated, because the insured and the insurer never know with certainty whether a claim will be made. For that reason, courts have held that such routine “investigative reports sent by an insured to an insurance company are generally considered to have been created in the ordinary course of business rather than in anticipation of imminent litigation,” Calabro v. Stone, 225 F.R.D. 96, 99–100 (E.D.N.Y.2004). But, as Calabro makes clear, where there are “benchmarks in the progression” towards litigation, id. at 100—of which there were none in that case—a subsequent document prepared by or for an insurer will be protected.

 

Here, such “benchmarks” are vivid. Plaintiff’s letter demanding preservation of documentation clearly signaled litigation, making the insurer’s decision to take Hayward’s statement unquestionably in anticipation of litigation. A routine obligation to report all accidents does not strip a statement prepared in anticipation of litigation of its privileged character.

 

IV. CONCLUSION

For the reasons stated above, the Court denies Plaintiff’s motion to compel the production of Defendant Hayward’s statements to his insurer (Dkt.38).

United States District Court,

D. Connecticut.

GREAT LAKES INTERNATIONAL TRADING, INC., Plaintiff,

v.

TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Defendant.

 

No. 3:13–cv–01522 (JAM).

Signed Nov. 26, 2014.

 

Claurisse Campanale–Orozco, Thomas L. Tisdale, Tisdale Law Offices LLC, Southport, CT, for Plaintiff.

 

Wystan M. Ackerman, Raymond T. Demeo, Robinson & Cole, LLP, Hartford, CT, for Defendant.

 

RULING RE CROSS–MOTIONS FOR SUMMARY JUDGMENT

JEFFREY ALKER MEYER, District Judge.

*1 This case involves an insurance coverage dispute arising from flooding at a warehouse near a river in New Jersey. Because I conclude that the insurance policy contains a clear exclusion for flood damage of the type at issue in this case, I will grant summary judgment in favor of the insurance company defendant.

 

BACKGROUND

In late October 2012, Hurricane Sandy struck the East Coast of the United States, visiting much of its wrath on coastal areas of New Jersey. One of Sandy’s many victims was Building # 8 of the Refrig–It Warehouse facility in South Kearny, New Jersey. Sandy damaged the warehouse in at least two ways. First, floodwaters from the nearby Hackensack River inundated the warehouse. Second, high winds sheared open parts of the warehouse’s roof, allowing extensive rainwater to enter inside.

 

Plaintiff Great Lakes International Trading, Inc. imports food products such as seeds, dried fruits, and edible nuts for sale in the United States. When Hurricane Sandy damaged the New Jersey warehouse, it caused more than $1.5 million of damage to plaintiff’s goods that were stored there.

 

Plaintiff had insurance coverage from defendant Travelers Property Casualty Company of America. One of the policies was a “Marine Open Cargo Policy” that covers ocean freight shipments of Great Lakes’ goods. Doc. # 35–5 at 2–15. Because the marine policy does not extend to risks associated with the storage of on-land goods in warehouses after their shipment, the parties agreed to a separate “Warehouse Coverage” endorsement. This endorsement includes up to $5 million of coverage for goods at the New Jersey warehouse. Doc. # 35–4 at 3. Most important for this case, however, the endorsement provides that “the peril of Flood is excluded” from coverage for the New Jersey warehouse location. Id.

 

This lawsuit arises from the foregoing flood exclusion in the policy. Defendant has paid plaintiff nearly $900,000 for damages that defendant believes was caused by rainwater entering the warehouse through openings in its roof. But defendant has otherwise denied payment for losses of about $650,000 that it believes are attributable to damage from the river’s floodwaters. The parties have cross-moved for summary judgment on the same legal issue: whether defendant is liable under the endorsement for damages stemming from the flood of the New Jersey warehouse.

 

DISCUSSION

The principles governing a motion for summary judgment are well established. Summary judgment may be granted only if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014). Here, I need not determine whether genuine fact issues remain, because the parties have agreed that the sole basis for dispute in their cross motions for summary judgment concerns a purely legal interpretation of the parties’ insurance contract.

 

*2 This Court has diversity jurisdiction, and the parties agree that I should apply the law of New Jersey where the damage occurred. New Jersey applies familiar principles of insurance contract law. The terms of an insurance policy in New Jersey are to be given their plain and ordinary meaning, with ambiguity construed in favor of the insured. Moreover, an exclusion from coverage is to be strictly construed against the insurer, and the burden remains on the insurer to show that a policy exclusion applies. See generally Mem’l Properties, LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525, 46 A.3d 525 (2012); Flomerfelt v. Cardiello, 202 N.J. 432, 44143, 997 A.2d 991 (2010).

 

The Warehouse Coverage endorsement contains a clear exclusion for flooding at the New Jersey warehouse. The exclusion states as follows: “It is further understood and agreed that the peril of Flood is excluded for the following location” and then lists the name and address of the New Jersey warehouse. Doc. # 35–4 at 3. That exclusion plainly extends to the type of inundation by means of rising waters from the Hackensack River that occurred in this case. “When a body of water overflows its normal boundaries and inundates an area of land that is normally dry, the event is a flood .” In re Katrina Canal Breaches Litig., 495 F.3d 191, 214 (5th Cir.2007) (footnote omitted); see also Bilbe v. Belsom, 530 F.3d 314, 317 (5th Cir.2008) (“We have repeatedly held that the term ‘flood’ includes storm surges.”); Wayne D. Taylor, Arthur J. Park & Sean O’Brien, Unique Coverage Issues in Flood Losses, 48 Tort Trial & Ins. Prac. L.J. 619, 631 (2013) (“[T]he majority of dictionaries, legal treatises, and courts agree that [the ordinary meaning of] ‘flood’ generally means the overflow of a body of water on a normally dry area, regardless of whether the water comes from a natural or man-made source.”).

 

Rather than pointing to any ambiguity in the pertinent language of the flood exclusion (that “the peril of Flood is excluded” from coverage for the New Jersey warehouse location), plaintiff relies on the fact that the flood exclusion is not located in a part of the Warehouse Coverage endorsement that lists other exclusions.FN1 Instead, the exclusion is quite infelicitously tacked on at the very end of the endorsement without its own paragraph number or sub-heading and as if conjoined to a collection of several preceding paragraphs that appear under a subheading for “Earth Movement Sublimit & Deductible” and that refer to sublimits and deductibles for losses stemming from “earth movements” such as earthquakes. From this locational discrepancy (which might well have stemmed from a draftsperson’s desire to cram the remaining endorsement text onto a single page), plaintiff contends that the flood exclusion applies only when an earthquake or other earth movements induce a flood.

 

FN1. Paragraph 4 of the Warehouse Coverage endorsement sets forth exclusions for causes such as conversion, mysterious disappearance, loss or damage from wear-and-tear, and loss resulting from delay.

 

I am not persuaded. Although the flood exclusion surely could more appropriately have been set off from other text or located elsewhere in the endorsement, its wording inter se as a flood exclusion is clear. Moreover, the preambular words to the exclusion—that “[i]t is further understood and agreed” (emphasis added)—make clear that the flood exclusion stands apart from the remainder of the preceding paragraphs referring to earth-movement related sublimits and deductions. Indeed, there is no common sense reason why an exclusion would or should be tethered to a sublimit or deduction; they deal with wholly different aspects of coverage. Nor is it plausible to conclude that the parties’ interest with respect to protecting goods at a coastal New Jersey location was to limit liability only to earth-movement-induced floods as opposed to floods of any other (and far more likely) origin.

 

*3 The most that can be said is that the flood exclusion was awkwardly set adrift within the Warehouse Coverage endorsement. An insurance company should know better. But the entire endorsement is only two pages, and there is no claim that its odd location amounted to concealment from a sophisticated business party insured. See Amherst Country Club, Inc. v. Harleysville Worcester Ins. Co., 561 F.Supp.2d 138, 148 (D.N.H.2008) (reference to groundwater movement under heading for “earth movement” exclusion did not make exclusion ambiguous, because “[w]hatever general impression the title of the exclusion might cause, the language of the provision” was otherwise clear).

 

In short, the words of the flood exclusion admit of no earth-movement-induced limitation. Just as I cannot overlook the exclusion in its entirety, I cannot re-write the parties’ contract to incorporate a limit on the exclusion as plaintiff proposes.

 

Noting that a flood itself may result from non-excluded reasons such as a hurricane or storm, plaintiff seems to contend that coverage may still exist under the efficient-proximate-cause or concurrent-causation doctrines. FN2 “The concurrent causation doctrine allows for recovery where the loss essentially is caused by an insured peril with the contribution of an excluded peril merely as part of the chain of events leading to the loss,” and “the efficient proximate cause doctrine allows coverage if an insured peril is the proximate cause of the loss, even if other contributing causes specifically are excluded from coverage.” Taylor et al., 48 Tort Trial & Ins. Prac. L.J. at 634–35; see also Flomerfelt, 202 N.J. at 447–48 (discussing concurrent causation doctrine); Assurance Co. of Am., Inc. v. Jay–Mar, Inc., 38 F.Supp.2d 349, 353–54 (D.N.J.1999) (discussing concurrent-causation and efficient-proximate-cause doctrines).

 

FN2. Although plaintiff seemed to press this point at oral argument, plaintiff’s briefing sought only to distinguish cases cited by defendant on grounds that—unlike the policy here—they involved policies with anti-concurrent cause language, and plaintiff stated that “[d]espite Travelers’ focus on these cases, we do not reach this issue because the flood exclusion is ambiguous at best.” Doc. # 36 at 14–15.

 

Here, the exclusion plainly applies to a “flood” without limitation. Floods are not spontaneous and might always be ascribed to underlying causes. It would plainly defeat the purpose of a flood exclusion were a plaintiff permitted to circumvent it by means of attributing a classic flood of the kind at issue in this case to non-excluded sources. See, e.g., In re Katrina Canal Breaches Litig., 495 F.3d at 223 (rejecting reliance on efficient-proximate-cause and concurrent-causation doctrines because “here, on these pleadings, there are not two independent causes of the plaintiffs’ damages at play; the only force that damaged the plaintiffs’ properties was flood”).

 

CONCLUSION

For the foregoing reasons, I conclude that the flood exclusion for the New Jersey warehouse is not ambiguous and properly applies to damages arising from inundation in the warehouse due to rising of nearby river waters. Accordingly, defendant’s motion for partial summary judgment (Doc. # 35) is GRANTED, and plaintiff’s cross-motion for summary judgment (Doc. # 38) is DENIED.

 

It is so ordered.