United States District Court, M.D. Louisiana
RICHARD L. BOURGEOIS, JR. UNITED STATES MAGISTRATE JUDGE.
the Court is LM Insurance Corporation and Liberty Mutual Fire
Insurance Company's (collectively, “Liberty”)
Motion to Compel DMI to Produce Settlement Agreement and
Related Documents (R. Doc. 18) filed on July 5, 2017. The
motion is opposed. (R. Doc. 25). Liberty has filed a Reply.
(R. Doc. 29).
before the Court is Hymel Davis & Peterson L.L.C.'s
(“Hymel”) Motion to Quash Subpoena to Hymel Davis
& Peterson L.L.C. or for Protective Order (R. Doc. 21)
filed on July 13, 2017. The motion is opposed. (R. Doc. 24).
DMI has filed a memorandum in support of the Motion. (R. Doc.
the foregoing motions concern the same documents sought in
discovery, the Court considers them together.
Background and Procedural History
brings this action for declaratory relief against defendants
Scott Folse, DMI Contractors, Inc., and DMI Pipe Fabricators,
L.L.C. (collectively, “DMI”) arising from
DMI's claim for reimbursement for a settlement of claims
asserted against them in the underlying lawsuits of Powko
Industries, L.L.C. v. Folse, , M.D. La. No.
3:15-cv-388-BAJ-SCR (“the Federal Lawsuit”) and
Powko Industries, L.L.C. v. DMI Contractors, Inc. and DMI
Pipe Fabrication, L.L.C., 19th Judicial
District Court No. 629238 (“the State Lawsuit”).
(R. Doc. 1; R. Doc. 16 “Am. Compl.”).
seeks declaratory relief regarding its obligations under four
consecutive Commercial General Liability and Umbrella Excess
Liability policies issued to DMI Contractors, effective for
one-year terms from October 30, 2009 to October 30, 2013, and
to which DMI Pipe was subsequently added as an additional
named insured (the “Policies”). (Am. Compl.
¶¶ 7, 15).
alleges that on or about October 30, 2015, Powko Industries,
L.L.C., which was represented by Hymel in the underlying
litigation, settled its claims in the State and Federal
Lawsuits in exchange for payment of $1.5 million. (Am. Compl.
¶ 40). DMI denies that allegation, asserting that
“Powko agreed to general terms of a settlement with
[DMI] on November 2, 2015, [but] the terms of that settlement
continued to be negotiated up to December 8, 2015 when formal
settlement documents were executed.” (R. Doc. 17 at 8).
DMI's initial disclosures in this action provide that
pursuant to certain settlement documents, DMI paid Powko the
amount of “$1, 500, 000 together with attorneys
fees” incurred in the underlying State and Federal
Lawsuit. (R. Doc. 18-2 at 6). DMI further asserts in its
initial disclosures that it had in its possession, custody or
control the “Settlement Documents executed on December
8, 2015, ” which “support its defenses and/or
claims in this matter.” (R. Doc. 18-2 at 6).
November 15, 2015, Liberty informed DMI that it was denying
coverage for the settlement to the extent the settled claims
in the Federal Lawsuit were not covered by the Policies, and
that it was denying coverage for the settled claims in the
State Lawsuit because DMI had never tendered the State
Lawsuit for coverage. (Am. Compl. ¶ 41; R. Doc. 17,
“Am. Ans., ” ¶ 41).
January 11, 2017, Liberty removed the State Lawsuit on the
basis that DMI filed a Third Party Demand against Liberty,
conferring diversity jurisdiction over the action. See
Powko Industries, L.L.C. v. DMI Contractors, Inc. et
al., No. 17-cv-19-BAJ-EWD (M.D. La.). That same day,
Liberty filed the instant action for declaratory relief. (R.
Doc. 1). The Court remanded the State Lawsuit on the basis
that DMI did not obtain leave of court to file the Third
Party Demand. See Powko Industries, No. 17-cv-19,
ECF Nos. 19, 20.
17, 2017, Liberty again removed the State Lawsuit, this time
on the basis that the State Court judge signed an order
permitting DMI to file the Third Party Demand against
Liberty. See Powko Industries, L.L.C. v. DMI Contractors,
Inc. et al., No. 17-cv-458-BAJ-RLB (M.D.
La.). In the Third Party Demand, DMI asserts
that in accordance with its agreement to defend the
Defendants in the Federal Lawsuit pursuant to a reservation
of rights, Liberty assigned the defense to the attorney
Richard G. Duplantier, Jr. (“Duplantier”). (R.
Doc. 18-2 at 2). DMI further asserts that a mediation was
conducted on October 23, 2015, and that through Duplantier,
Liberty refused to contribute to the settlement or pay any
expenses of the mediator. (R. Doc. 18-2 at 2). DMI further
asserts that on November 2, 2015, all of the parties, with
the exception of Liberty, agreed to a settlement framework.
(R. Doc. 18-2 at 2). DMI seeks recovery from Liberty for
alleged bad faith breach of the duty to defend and settle the
claims in the State Lawsuit. (R. Doc. 18-2 at 3-4).
instant action, Liberty seeks declarations (1) that it does
not owe a duty to DMI in the State Lawsuit under the
Policies; (2) that the Policies do not cover the $1.5 million
settlement with regard to either the State Lawsuit or Federal
Lawsuit, and that Liberty has no duty to indemnify DMI for
the settlement; and (3) that DMI's bad faith claims
against Liberty are prescribed. (R. Doc. 16 at 14-18).
26, 2017, Liberty served Hymel, a non-party to this action,
with a subpoena for documents seeking production in New
Orleans, Louisiana, by July 14, 2017. (R. Doc. 21-2 at 1).
The subpoena seeks documents reflecting Hymel's
communications with DMI, Chad Rousse (another defendant in
the underlying lawsuits), and their attorneys (L. Loren
Kleinpeter, James R. Chastain, Jr., and Richard Duplantier)
concerning the claims asserted in the State Lawsuit and/or
Federal Lawsuit; the settlement of the State Lawsuit and/or
Federal Lawsuit; coverage for the claims asserted in the
lawsuits or settlement of the lawsuits; a copy of the
memorandum of settlement agreement; the final executed
settlement agreement; all documents reflecting any payment to
Powko in connection with the settlement; and all documents
reflecting communications between Hymel and DMI and/or Ms.
Kleinpeter concerning the Third Party Demand and the instant
declaratory judgment action. (R. Doc. 21-2 at 3-4). Liberty
specifically states in the subpoena that it is not seeking
the production of “any documents subject to the
attorney-client privilege or the work product
doctrine.” (R. Doc. 21-2 at 3-4).
28, 2017, DMI provided responses to Liberty's First Set
of Requests for Admission, Interrogatories and Request for
Production of Documents propounded in the instant action. (R.
Doc. 18-2 at 8-23). Liberty's Request for Production No. 1
seeks production of the final executed settlement agreement
between DMI and Powko. (R. Doc. 18-2 at 18). Liberty's
Request for Production No. 6 seeks production of all
documents related to the payments by DMI to Powko in
connection with the settlement. (R. Doc. 18-2 at 19). DMI
objected to the foregoing requests for production on the
basis that they did not seek relevant information. (R. Doc.
18-2 at 18, 20). Liberty now seeks an order compelling DMI to
produce the settlement agreement and the ...