CH Props., Inc. v. First Am. Title Ins. Co., Civil No. 13–1354 (FAB)(JA).

• Decision Date: 30 September 2014
• Docket Number: Civil No. 13–1354 (FAB)(JA).
• Parties: CH PROPERTIES, INC., Plaintiff v. FIRST AMERICAN TITLE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Puerto Rico

48 F.Supp.3d 143

CH PROPERTIES, INC., Plaintiff

v.FIRST AMERICAN TITLE INSURANCE COMPANY, Defendant.

Civil No. 13–1354 (FAB)(JA).

United States District Court, D. Puerto Rico.

Signed Sept. 30, 2014

Motion denied. Jose A. Andreu–Fuentes, Pedro J. Lopez–Bergollo, Andreu & Sagardia Law Office, Nelson N. Cordova–Morales, Cordova Morales Law Offices, San Juan, PR, for Plaintiff.

Ricardo F. Casellas, Casellas, Alcover & Burgos PSC, San Juan, PR, Carla S. Loubriel, Hato Rey, PR, for Defendant.

OPINION AND ORDER

JUSTO ARENAS, United States Magistrate Judge.

I. BACKGROUND AND ARGUMENT

On August 5, 2002, plaintiff CH Properties, Inc. became the lessee of a tract of land belonging to the Puerto Rico Development Company, after receiving all leasing rights from Sunshine Isle Inn, LLC, which had originally acquired the leasing rights from Desarrollos Hoteleros de Carolina (Docket No. 17 ¹, pp. 2–3, 12–13). CH Properties, Inc. then requested a loan from FirstBank guaranteed by a first mortgage on the leasing rights (Docket No. 17, pp. 3, 13), for which defendant First American Title Insurance Company issued two title policies. One was in favor of FirstBank (Docket No. 17, pp. 3, 13) insuring them the first-rank on the mortgage taken by CH Properties, Inc. (Docket No. 17, pp. 4, 13) and the other in favor of CH Properties, Inc. guaranteeing the validity of the lease agreement (Docket No. 17, pp. 4, 13), obligating First American to provide legal defense and coverage regarding all claims in which the invalidity of the lease agreement was alleged or in which disturbance or invalidation of the possession and title on the insured lease was sought (Docket No. 17, pp. 4–5).

In April, 2005 a group called Comité de Vecinos de Isla Verde and the Compañía de Parques Nacionales filed separate complaints, which were consolidated against CH Properties, FirstBank and other entities, attacking the validity of the Lease Agreement. Members of the Comité de Vecinos de Isla Verde also invaded the tract of land in the purported defense of the people of Puerto Rico, preventing CH Properties, Inc. from entering or using the tract of land, roughly five acres (cuerdas ²) (Docket No. 17, pp. 5, 14). First American provided FirstBank legal representation and coverage according to the terms of the policy issued (Docket No. 17, pp. 6, 16).

On March 5, 2007, a complaint was filed in the United States District Court for the District of Puerto Rico against CH Properties, Inc. and other entities by the Chicago Title Insurance Co. (Docket No. 17, pp. 6–7), after which CH Properties, Inc. first came to request First American legal defense and coverage in all pending actions as well as the reimbursement of legal fees already paid (Docket No. 17, pp. 7, 19). First American only approved the petition in the consolidated state actions from that moment on, and not retroactively, because CH Properties, Inc. had not made its request in a timely manner as required by the policy, thus exponentially increasing litigation costs and hindering the defense (Docket No. 17, pp. 8, 19–20). They denied defense for the action in federal court since it concerned a contractual issue between two other parties that had no effect on CH Properties's title (Docket No. 17, p. 20).

The state actions were eventually dismissed in 2011 (Docket No. 17, pp. 8, 21). Regardless, CH Properties, Inc. filed a complaint on April 11, 2013 in the Puerto Rico Court of First Instance (Docket No. 1–1, ¶ 1) alleging a breach of the insurance agreement between the parties under the Puerto Rico Insurance Code, P.R. Laws Ann. tit. 26, §§ 101 et seq., and the Civil Code of Puerto Rico, P.R. Laws Ann. tit. 31, §§ 2991 et. seq. (Docket No. 17, p. 8). On May 7, 2013 defendant First American filed a Notice of Removal from the state court to the federal court, pursuant to 28 U.S.C. § 1441(a) (Docket No. 1, p. 2, ¶ 2).

During the process of discovery an impasse occurred in regards to a Privilege Log presented by defendant, claiming attorney-client communication and work product privileges (Docket No. 30, p. 1, ¶ 1). Plaintiff claimed that the information provided was not enough to enable the appearing party to put forth an informed challenge to the privileges claimed (Docket No. 30, p. 1, ¶ 2) and requested an order from the Court directing defendant to supplement the documents' descriptions (Docket No. 30, p. 2, ¶ 2).

On April 3, 2014, defendant responded (Docket No. 32) claiming that the revised descriptions provided for each of the documents withheld were sufficient under the Federal Rules to allow plaintiff and the Court to determine the grounds for attorney-client and work product privilege, without divulging confidential content (Docket No. 32, pp. 1–2).

On April 21, 2014, plaintiff replied to defendant's opposition to plaintiff's motion regarding the privilege log (Docket No. 32) by claiming that the privilege log provided by defendant did not make a prima facie showing of the privileges claimed (Docket No. 36, p. 1) since the descriptions of the documents or the notes in the log did not establish they were prepared or authored by an attorney because of an impending litigation (Docket No. 36, p. 3–4, ¶ 7), nor did they specify there was an attorney-client relationship between the identified senders and identified recipients. There was no reason provided for the creation and remittance of the documents nor any indication they contained legal advice or confidential information (Docket No. 36, p. 6–7, ¶ 13).

On June 6, 2014, defendant submitted a Second Revised Privilege Log (Docket No. 49), following a Court order dated April 21, 2014 for in camera inspection (Docket No. 35). On July 2, 2014, the Court determined that the description of the documents included satisfied Federal Rule of Civil Procedure 26(b)(5)(A), making a prima facie claim for all ten documents (Docket No. 61, p. 7).

The Court also found that documents 1, 2, and 3 were privileged pursuant to the attorney work product doctrine; documents 5, 6, 7, and 8 were not attorney-client privileged communications and that there was insufficient information provided to determine whether documents 4 and 10 were attorney-client privileged communications and whether document 9 was privileged attorney work product (Docket No. 61, p. 1). The Court ordered First American to produce documents 5, 6, 7, and 8 to plaintiffs, and to provide the information necessary regarding the titles and responsibilities of the persons involved in the communications and the relationship between their respective entities to determine the nature of documents 4, 9, and 10 (Docket No. 61, pp. 2, 12, 15).

Defendant complied with the Court's order on July 3, 2014 (Docket No. 63) but plaintiff filed a Motion for Reconsideration on the same day (Docket No. 64). It disagreed with the court's determination that First American presented a prima facie case pursuant to Federal Rule of Civil Procedure 26(b)(5)(A), since more information was required by the Court to determine whether documents 4, 9 and 10 were protected or not (Docket No. 64, p. 2). Regarding documents 1, 2, and 3 which were deemed to be protected, plaintiff claimed that they were materials prepared in the ordinary course of business by an insurance company and that in a first party claim against an insurer they were not protected (Docket No. 64, p. 3). Regarding the documents involving attorney Jose A. Fernández–Jaquete, plaintiff claimed that since he was going to be a witness for defendant they could not “use privileged information as both sword and shield by selectively using the privileged information to prove a point, but then invoking the privilege to prevent opposing party from challenging the assertion.” (Docket No. 64, p. 4).

On August 5, 2014 defendant replied in opposition to plaintiff's motion for reconsideration regarding evidentiary privileges (Docket No. 87), claiming that motions for reconsideration should only be “entertained by Courts if they seek to correct manifest errors of law or fact, present newly discovered evidence, or when there is an intervening change in law,” citing Silva Rivera v. State Ins. Fund Corp., 488 F.Supp.2d 72, 77 (D.P.R.2007), which cites Rivera Surillo & Co. v. Falconer Glass Indus., Inc., 37 F.3d 25, 29 (1st Cir.1994). Defendant claimed that CH Properties's motion “merely seeks to reargue the same legal arguments that were previously considered by the Court.” (Docket No. 87, p. 1).

First American Title Insurance Company argued that the Court's request for additional information regarding some of the documents was only an overly cautious measure taken before issuing a final ruling (Docket No. 87, p. 6) and that given the additional information provided on documents 4, 9, and 10 their privileged nature should be recognized and kept confidential (Docket No. 87 pp. 7–9).

The motion for reconsideration (Docket No. 64) was referred to me for disposition on July 21, 2014. (Docket No. 76).

II. STANDARD OF REVIEW AND ANALYSIS

“A motion for reconsideration may be considered as a motion under Federal Rule of Civil Procedure 59(e) ³. See Rosario–Méndez v. Hewlett Packard Caribe, 660 F.Supp.2d 229, 232 (D.P.R.2009).” Burgos–Yantin v. Municipality of Juana Diaz, 751 F.Supp.2d 345, 347 (D.P.R.2010). For a motion for reconsideration to be granted, the movant has to meet certain criteria. “A motion to alter or amend a judgment may be granted ... if the movant demonstrates that an intervening change in controlling law, a clear legal error, or a newly discovered evidence warrants modification of the judgment.” Soto–Padró v. Public Bldgs. Authority, 675 F.3d 1, 9 (1st Cir.2012) “ ‘[...] [A] district court's denial of a motion to alter judgment [is reviewed] for abuse of discretion.’ Markel Am. Ins. Co. v. Díaz–Santiago, 674 F.3d 21, 32 (1st Cir.2012); ACA Fin. Guar. Corp. [v. Advest, Inc.], 512 F.3d [46,] 55 [ (1st Cir.2008) ].” In re Genzyme Corp. Securities Litigation...