Aetna Cas. and Sur. Co. v. Certain Underwriters at Lloyd's London

• Citation: 176 Misc.2d 605,676 N.Y.S.2d 727
• Parties: , 1998 N.Y. Slip Op. 98,218 AETNA CASUALTY AND SURETY COMPANY, Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, et al., Defendants.
• Decision Date: 17 February 1998
• Court: United States State Supreme Court (New York)

Page 727

676 N.Y.S.2d 727

176 Misc.2d 605, 1998 N.Y. Slip Op. 98,218

AETNA CASUALTY AND SURETY COMPANY, Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, et al., Defendants.

Supreme Court, New York County.

Feb. 17, 1998.

Sheft Golub & Kamelet, New York City (Gerald A. Greenberger, of counsel), and Lord Bissell & Brook, Chicago, IL (Robert B. Robinson, of counsel), for defendants.

Chadbourne & Park, L.L.P., New York City (Kenneth R. Pierce, of counsel), and Washington, DC (Philip S. Goodman, of counsel), for plaintiff.

LEWIS R. FRIEDMAN, Justice. ¹

In this motion defendants ("London Reinsurers") seek the return of certain documents that they inadvertently produced during the massive document production in this case. The London Reinsurers contend that the documents are protected by the attorney-client privilege or are attorney work product. There is also the claim that certain of the documents are irrelevant to this case. Plaintiff ("Aetna") argues only that the documents are not privileged or entitled to some form of work product protection. Thus the court need not address the question of whether there was waiver of the privilege by the "inadvertent" disclosure (see John Blair Communications v. Reliance Capital Group, 182 A.D.2d 578, 579, 582 N.Y.S.2d 720 [1st Dept.1995] ). The only question for decision is whether the London Reinsurers have established that the documents should not have been produced. ²

It appears that originally over 1300 pages of material were inadvertently produced. Aetna returned about 730 pages, leaving 44 documents ³, referred to as Exhibits 10--53 of the moving affidavits, consisting of about 600 pages as the subject of this motion. Prior to oral argument Aetna agreed to return two of the documents (Exs. 45, 53) and, at argument the court directed the return of two others (Exs. 43, 44). Thus this decision will deal with the remaining documents, which have been provided for the court's in camera review. The court has carefully reviewed the documents.

The issues in this case arise from environmental claims made against Aetna by a major chemical company. Aetna had written general liability and excess insurance polices in the 1960's which arguably covered environmental damage claims. The London Reinsurers through blanket treaties reinsured a portion of the pre-1970-71 risks. The company had asserted massive potential liability for environmental damage to governmental agencies and third parties. Aetna's insured claimed that there were "occurrences" covered by Aetna at more that 150 waste sites in the United States. In 1985, based on claims that there could be up to $60 million liability by Aetna per "occurrence", the insured sued Aetna, which had denied coverage. The litigation continued for nearly a decade. In 1995 just prior to trial Aetna settled the claims. In this action Aetna is seeking to allocate a portion of the total settlement, about 9%, to the London Reinsurers. In the decision and order dated June 9, 1997 this court granted partial summary judgment to Aetna, holding that the London Reinsurers could not challenge Aetna's decision to settle with its insured. Aetna has made a motion for summary judgment on the remaining questions impacting the allocation of losses to the London Reinsurers. This court had directed that certain discovery be conducted notwithstanding the already pending summary judgment motion (CPLR 3214). Aetna claims that the documents that are involved in this motion are relevant and material to its summary judgment motion.

The majority of the documents at issue (Exs.12-14, 17-28) are summaries, in the nature of minutes of meetings, often referred to as "workshops", of the ECRG, the Environmental Claims Reinsurance Group. The ECRG consisted of representatives of various Lloyd's Underwriters and other London based insurance companies, which referred to themselves as the "London Reinsurers", not to be confused with the reinsurers which have signed the various treaties at issue in this case. Some of the persons present at the ECRG meetings represented reinsurers involved in this case, while most are not involved here. The documents at issue were the typed minutes of the meetings which were sent to some of the participants with instructions to have them delivered to the others who had been present.

Either an American attorney or an English solicitor was present at each of the meetings in a stated effort to insure that privilege would attach to whatever was said during the meetings (see Ex. 23). Nearly all of the minutes, which were taken by counsel, begin with the notation that an attorney was present "and the discussions were intended to be privileged and confidential" and that notes of the participants "should be clearly marked 'privileged and confidential' to protect them from inadvertent disclosure, possibly in connection with litigation" (see, e.g., Exs. 19, 17, 22, 26). The minutes themselves are marked "PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION AND ATTORNEY WORK PRODUCT" or a similar notation (Exs.10-28).

It is well settled that in order for a communication to be absolutely privileged a confidential communication between client and attorney, in the course of a professional relationship, must be made for the purpose of seeking or providing legal advice or assistance and the communication itself must have been primarily or predominantly of a legal character (see Spectrum Systems Intl. Corp. v. Chemical Bank, 78 N.Y.2d 371, 377-78, 575 N.Y.S.2d 809, 581 N.E.2d 1055 [1991]; see Restatement, Law Governing Lawyers, Prop. Off. Draft No 1 [1996] § 122) ⁴. The mere presence of counsel cannot be used "to seal off disclosure" (Rossi v. Blue Cross & Blue Shield of Greater NY, 73 N.Y.2d 588, 593, 542 N.Y.S.2d 508, 540 N.E.2d 703 [1989] ). It is established that communications to or from counsel need not contain solely legal research if it integrates facts and the lawyer's legal advice (Spectrum, 78 N.Y.2d at 379, 575 N.Y.S.2d 809, 581 N.E.2d 1055) or includes "primarily or predominantly" legal communications (Rossi, 73 N.Y.2d at 594, 542 N.Y.S.2d 508, 540 N.E.2d 703). Of course, this court agrees with the long-held conclusion that there is no privilege where the attorney is present at a meeting as "a mere scrivener" and there is no consultation for legal advice (Pollock v. United States, 202 F.2d 281, 286 [5th Cir.1953] ).

The courts have generally held that the use of confidentiality labels on documents is not conclusive on the court's analysis (see California Union Ins. Co. v. National Union Fire Ins. Co., 1989 WL 48413 at ----, 1989 U.S. Dist. LEXIS 4996 [N.D.N.Y. 1989]; American Health Systems v. Liberty Health Systems, 1991 U.S. Dist. LEXIS 18368, * 6-7 [E.D.Pa. 1991] ). Since the Court of Appeals has made it clear that the label for retention of counsel is not binding (Spectrum, supra, 78 N.Y.2d at 379-80, 575 N.Y.S.2d 809, 581 N.E.2d 1055) this court concludes that it is not bound to accept the label counsel placed on the documents. Thus the court has reviewed the minutes, as suggested in Spectrum, to see if they satisfy the test for attorney-client privileged communications.

The court's review of the voluminous minutes makes it clear beyond question that the minutes reflect an industry-wide group of the leading London reinsurance Underwriters seeking economic solutions to the problems created by potentially huge losses to direct insurers in the United States which had ceded policies pursuant to blanket reinsurance treaties. Or, in alternative phrasing, they were seeking to keep environmental losses on this side of the Atlantic. They were aware of potential antitrust problems (Ex. 23) but, surprisingly, the minutes reflect that they did not ask for any advice from counsel in attendance on the subject. The subject of most of the meetings was the interpretation of the various treaty clauses that might be invoked by the primary insurers. At first blush this appears to be primarily a legal question. However, the court's review shows that the participants did not ask counsel for a legal analysis of the clauses, no doubt since the varying theories of interpretation were well known to this senior group of environmental reinsurance experts. Rather, the participants, on behalf of the London reinsurance market, sought to find economic solutions that would benefit the entire London market as a whole. ⁵ For example, in the meeting discussing whether reinsurers should pay for costs incurred in declaratory judgments there is not one word of discussion about the meaning of the clauses involved. Rather, the 11 pages of minutes reflect lengthy discussions by the Underwriters of the strategic or "commercial" consequences in refusing to pay United States ceding companies' declaratory judgment expenses. The participants were arguing the merits of supporting efforts that might result in valid defenses to underlying claims, as opposed to refusing those expensive payments only to be confronted with claims to pay for settlements, which might not be the result of utmost good faith with respect to the reinsurers (Ex. 26, 27). The court does not find that even the specific example, referred to by both sides to show the participation by counsel in the midst of one of the meetings, establishes that the comments of counsel related to issues that had economic significance. When one non-attorney ECRG participant noted that a reason had to be given for each rejection and that "this enables cedents to refine future presentations" the recorded comment of counsel was only that since proofs of loss were increasingly being submitted "this meant that the position of Underwriters on the various issues would be established and that Underwriters would find these positions difficult to modify in the future" (Ex. 18, ECU 3908). That is hardly "legal advice."

Aetna also contends that there are other reasons why it is impossible for the court to conclude that there were...