State ex rel. Kilroy Was Here, LLC v. Moriarty

Citation633 S.W.3d 406
Decision Date31 August 2021
Docket NumberNo. ED 109351,ED 109351
Parties STATE of Missouri EX REL. KILROY WAS HERE, LLC, et al., Relators, v. The Honorable Joan L. MORIARTY, Circuit Judge, Twenty-Second Circuit Court of Saint Louis Missouri, Respondent.
CourtCourt of Appeal of Missouri (US)

633 S.W.3d 406

STATE of Missouri EX REL. KILROY WAS HERE, LLC, et al., Relators,
The Honorable Joan L. MORIARTY, Circuit Judge, Twenty-Second Circuit Court of Saint Louis Missouri, Respondent.

No. ED 109351

Missouri Court of Appeals, Eastern District, WRIT DIVISION TWO.

Filed: August 31, 2021

FOR REALTORS: Todd I. Muchnick, Aaron D. Haber, 8151 Clayton Road, Suite 201, St. Louis, Missouri 63117, Brent L. Martin, 220 Salt Lick Rd., St. Peters, Missouri 63376, David M. Zevan, Rachel L. Roman, Anna E. Haber, 211 N. Broadway, Suite 2675, St. Louis, Missouri 63102, Gregory L. Shevlin, 12 West Lincoln St., Belleville, Illinois 62220.

FOR RESPONDENT: Gerald P. Greiman, 1 North Brentwood Blvd., Suite 1000, Clayton, Missouri 63105, Albert J. Bronsky, Jr., 800 Market Street, Suite 1100, St. Louis, Missouri 63101.

FOR DEFENDANT STARR INDEMNITY AND LIABILITY COMPANY: Gerald P. Greiman, 1 North Brentwood Blvd., Suite 1000, Clayton, Missouri 63105.

FOR DEFENDANT BRIAN MC BREARTY: Albert J. Bronsky, Jr., 800 Market Street, Suite 1100, St. Louis, Missouri 63101.

James M. Dowd, P.J., Angela T. Quigless, J., and Robin Ransom, S.J.


James M. Dowd, Presiding Judge

This discovery-related writ petition concerns the attorney-client privilege and work product doctrine and requires our examination of (1) the nature of communications between an attorney and a client that are within the scope of the representation, and therefore within the attorney-client privilege, and those that are not, (2) the discoverability of attorney work product and attorney mental impressions that are beyond the scope of the potential litigation for which the attorney was retained, and (3) the treatment to be given to attorney-client communications and attorney work product when those have strayed from the scope of the representation. We entered a preliminary order in mandamus, and a timely answer and suggestions in opposition were filed.

The underlying litigation here is the latest episode in an unfortunate saga that began on April 28, 2012, when a large tent, which Kilroy Was Here had installed for its bar patrons near Busch Stadium in downtown St. Louis, came unmoored during a storm killing one and seriously injuring seven others. After the victims filed a petition for damages alleging Kilroy was negligent in connection with the set up and maintenance of the tent, they offered to settle for $720,100 all claims against Kilroy and Kilroy's insurer Starr Indemnity and Liability Company, which was providing the defense through attorney Brian McBrearty.

Two days later, Kilroy, through separate counsel, demanded that Starr settle the claims for the amount the underlying plaintiffs had offered, which was within the $1 million policy limits, and advised that the failure to do so would expose Starr to liability for bad faith refusal to settle. As a result, on April 28, 2015, Starr retained attorney Keith Phoenix of the Sandberg, Phoenix, and von Gontard law firm (SPvG) to advise Starr with respect to its potential liability exposure for bad faith refusal to settle.

633 S.W.3d 411

On May 15, 2015, Starr, through Mr. Phoenix and on behalf of Kilroy, communicated its rejection of the underlying plaintiffs’ settlement demand by making a counteroffer of $249,999.99. No settlement was ultimately reached.

According to the record before us, Mr. Phoenix's involvement in the underlying case commenced shortly after he was retained. On May 18, 2015, Starr's claims diary noted that "STARR made 250K offer per Mr. Phoenix." Starr admitted that any offer to settle the underlying case was made on behalf of its insured, Kilroy. Later in the litigation, Mr. Phoenix made multiple attempts on behalf of Kilroy to settle the case, including with opposing counsel during trial.

Around the same time, Phoenix also became involved in the factual and legal issues pending in the case. For instance, he prepared a legal memorandum summarizing his legal research relating to Kilroy's "duty to monitor weather." In addition, Phoenix assisted at Starr's request in preparing motions to be filed in the underlying case. On February 4, 2016, a Starr representative emailed McBrearty and Phoenix requesting "monitoring counsel, Sandberg Phoenix, ... review the motion [for summary judgment] and provide feedback before it's filed." On February 9, 2016, a Starr employee emailed McBrearty certain case law Phoenix had provided relevant to the summary judgment motion addressing the expectations of a prudent person as to sudden weather changes. On February 29, 2016, Phoenix attended court for the hearing on Kilroy's motion for summary judgment.

On March 1, 2016, Phoenix requested McBrearty update him on the scheduling of the pretrial conference and on the status of the trial court's ruling on the motion for summary judgment. Phoenix was referred to as "monitoring counsel" and was kept updated on trial preparation matters, including the preparation of witnesses and he was copied on emails regarding trial strategy and witness testimony. Further, Phoenix reviewed the jury instructions that McBrearty intended to submit to the court on behalf of Kilroy.

The case proceeded to a jury trial in the Circuit Court of the City of St. Louis that resulted in a March 14, 2016, verdict in favor of the underlying plaintiffs and against Kilroy in the total amount of $5.2 million.1 We affirmed the judgment entered on the verdict in Martinez v. Kilroy Was Here LLC, 551 S.W.3d 491 (Mo. App. E.D. 2018).

On April 5, 2016, the underlying plaintiffs and Kilroy entered into an assignment-of-claims agreement under section 537.065,2 by which the underlying plaintiffs agreed to execute on the judgment solely to the extent of Kilroy's insurance coverage and to forgo execution against Kilroy's assets. In exchange, Kilroy partially assigned to the plaintiffs its claim against Starr for bad faith refusal to settle.3

The present lawsuit brought by the underlying plaintiffs and Kilroy (collectively "Relators") asserts claims for bad faith refusal to settle against Starr, and professional negligence and breach of fiduciary duty against McBrearty. The parties have conducted written discovery and deposed

633 S.W.3d 412

numerous witnesses including employees of Starr and Specialty Insurance Agency (SIA), the third-party administrator that handled Starr's day-to-day claims’ processing. Relators have obtained those portions of Starr's and SIA's files relating to the underlying claims which Starr has characterized as non-privileged. Other portions have been withheld pursuant to relevancy and privilege objections.

The dispute giving rise to this writ petition centers on a subpoena duces tecum directed to SPvG which requests "[t]he entire file, including correspondence, billing records, and any other documents, either received or generated, for the Kilroy litigation, or more specifically related to Martinez, et al., v. Kilroy was Here, LLC , 1222-CC02394." The subpoena also requested testimony relating to those matters.

Starr objected and moved to quash arguing the subpoena sought documents and information that were irrelevant and protected by the attorney-client privilege. The matter was briefed and heard on April 26, 2020 and on September 4, 2020, the Honorable Respondent sustained Starr's objections and quashed the subpoena finding that Relators failed to demonstrate any applicable exception or waiver of the attorney-client privilege.

Relators then filed this writ petition arguing Respondent acted in excess of her authority by granting Starr's motion to quash because the ruling is based on an erroneous conclusion of law. Relators assert the attorney-client privilege does not apply to the entire client file because in multiple instances on this record, Phoenix's conduct went beyond the scope of his representation of Starr in that at times he acted as a claims adjuster and at other times acted as Kilroy's de facto co-counsel by participating in Kilroy's defense in the underlying litigation.4

We find that the documents and testimony sought by Relators from the SPvG law firm may be discoverable to the extent: (1) Phoenix acted outside the scope of his representation of Starr which was purportedly to assess Starr's exposure for its alleged bad faith refusal to settle; (2) Phoenix acted as de facto co-counsel along with McBrearty in Kilroy's defense to the underlying wrongful death and personal injury suit; (3) Phoenix participated in claims adjustment activities or acted as a claims adjuster; and (4) that any other exception to the attorney-client privilege applies such as communications made in the presence of a third party.

Therefore, consistent with the principles and holdings set forth in this opinion, we make our preliminary order in mandamus permanent and remand this matter to the Respondent with directions to conduct (or to assign such task to a special master appointed pursuant to Rule 68.01) an in camera review of all the documents responsive to the subpoena at issue which have not already been produced with the purpose of determining which documents are discoverable and which are not. Moreover, Respondent shall permit the deposition pursuant to the subpoena duces tecum to proceed under the supervision of a special master with directions to...

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