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Lennar Mare Island, LLC v. Steadfast Insurance Co.

United States District Court, E.D. California

April 7, 2014



KENDALL J. NEWMAN, Magistrate Judge.

Presently pending before the court are two motions to compel, one filed by plaintiff/counter-defendant Lennar Mare Island, LLC ("LMI") and the other filed by defendant/counterclaimant Steadfast Insurance Company ("Steadfast"). (ECF Nos. 93, 94.) LMI's motion seeks to compel Steadfast's production of a large number of documents withheld on the claim of a number of privileges, but primarily the attorney-client privilege and work product immunity. Steadfast's motion seeks to compel LMI's production of documents it has withheld on the basis of what LMI terms in its privilege logs as a "joint interest" between it and the Navy and/or the City of Vallejo. The parties filed joint statements and supporting documentation for both motions on March 20, 2014.

A hearing on the motions was conducted on March 27, 2014. (ECF No. 102.) Attorney Ryan L. Werner appeared on behalf of LMI. Attorney Jane K. Baker appeared on behalf of Steadfast. After considering the parties' joint statements, supporting documentation, and the oral argument at the hearing, the court denies LMI's motion to compel without prejudice and partially grants Steadfast's motion to compel.


The background facts are taken from the parties' joint statements unless otherwise indicated.[1] The United States Navy ("Navy") operated a base at Mare Island in the City of Vallejo, California from 1852 to 1996. (ECF No. 63 at 2 (a prior Joint Statement).) The Navy's operations at this base resulted in contamination of certain sites located on Mare Island, requiring the Navy to investigate and remediate. (Id.) The Navy closed its base on Mare Island in 1996. (Id.) In 2002, the Navy conveyed title to the land of its former naval base to the City of Vallejo, and the City then conveyed title to a portion of the base known as the Eastern Early Transfer Parcel ("EETP") to LMI. (Id.)

In 2001, the Navy and the City of Vallejo ("City") entered into an Environmental Services Cooperative Agreement ("ESCA") in anticipation of these transfers. (Id.) Under the terms of the ESCA, the Navy agreed to pay the City $77.67 million, and the City agreed to perform environmental remediation of certain "Known Conditions" at the EETP. (Id.) The ESCA defined Known Conditions by reference to tables and figures identifying specific sites and contaminants and defined any condition that was a not a Known Condition as an "Unknown Condition." (Id.) The City had no responsibility under the ESCA for certain items referred to as "Navy Retained Conditions." (Id.)

Also in anticipation of the land transfers, the City and LMI entered into the Mare Island Remediation Agreement ("MIRA"). (Id. at 2-3.) In the MIRA, LMI agreed to undertake the City's remediation obligations under the ESCA. (Id. at 3.)

LMI hired CCI to perform remediation construction at Mare Island by entering into the Guaranteed Fixed Price Contract ("GFPC"). (Id.) The GFPC required CCI to perform "certain environmental services related to the remediation of contamination in the EETP." (Id.) Among these services was the "cleanup of specified Known Conditions" for a fixed price of $70.45 million. (Id.) The GFPC also stated that CCI would be required to cleanup Unknown Conditions under certain circumstances, "for additional compensation, when requested to do so by LMI." (Id.)

In addition, LMI and CCI each signed onto separate insurance policies with Steadfast. The insurance policy between Steadfast and CCI is the "RSL Policy, " which provided coverage to CCI in the event that the cost of cleanup of "Known Conditions" exceeded a specified threshold of $57.5 million. (Id. at 3-4.) The insurance policy between Steadfast and LMI is the "ELI Policy, " which "provides coverage to LMI for the cost of remediating pollution conditions that are not Known Pollution Conditions... as well as coverage for a list of special conditions described in an endorsement." (Id. at 3.)

The action brought by LMI against Steadfast involves seven sites in the EETP. (Id. at 5.) Each of the seven sites was the subject of a separate insurance claim by LMI under the ELI Policy. (Id.) Each of the claims surrounding each of the seven sites involve their own distinct facts. (Id.) However, without going into the factual details surrounding the parties' dispute with respect to each site, LMI generally alleges that Steadfast committed: (1) intentional interference with contract (i.e., LMI's contract with CCI); (2) breach of contract (between LMI and Steadfast); (3) tortious breach of the implied covenant of good faith and fair dealing; and (4) that LMI is entitled to declaratory relief. (Def.'s Notice of Removal, ECF No. 1, Ex. A at 1-6.)

Steadfast joined CCI as a cross-defendant, and Steadfast filed a counterclaim for declaratory relief as against LMI and CCI. (Def.'s Countercl. at 4, ECF No. 5.) CCI filed its own counterclaim against Steadfast for: (1) breach of contract; (2) declaratory relief; and (3) tortious breach of the implied covenant of good faith. (CCI's Answer & Countercl., ECF No. 12.)


A. LMI's Motion to Compel Documents from Steadfast

During the course of discovery thus far, Steadfast has made a number of separate productions of documents to LMI. Along with each production, Steadfast has provided one or more privilege logs to LMI setting forth the documents Steadfast has withheld and the privilege or privileges Steadfast claims entitle it to withhold each listed document. In its motion to compel, LMI takes contention with Steadfast's withholding of a large number of the documents Steadfast has identified as privileged in its privilege logs. In particular, LMI identifies eleven different categories of documents withheld by Steadfast that it argues should be produced because Steadfast's entries for these documents in its privilege logs either do not provide information sufficient to support a privilege claim or claim privileges that appear to be inapplicable on their face. In addition, LMI requests that the court order Steadfast to pay LMI's attorneys' fees associated with the present motion and as a result of the request letters sent to Steadfast over the course of the past eight months, which LMI contends were never responded to until recently.

As Steadfast states in its portion of the joint statement and as discussed at the hearing, it appears that Steadfast either has already produced or is willing to produce a large number of the documents LMI seeks through its motion to compel. In addition, Steadfast states in its portion of the joint statement that it has fixed many of the errors in its privilege logs that are highlighted by LMI and has provided both the court and LMI with amended versions of the portions of its logs that initially contained those errors. Furthermore, Steadfast's counsel informed the court during the hearing that it is working on providing LMI with an updated and comprehensive privilege log that identifies the documents it has already produced and corrects the errors present in its previous logs.

Given the above circumstances and the large number of documents at issue in this dispute, the court finds it appropriate to order the parties to continue to meet and confer regarding the documents at issue in this motion in order to determine which documents have already been or will be produced by Steadfast and to further narrow the list of documents to those that are genuinely in contention.[2] Furthermore, the court orders Steadfast to produce to LMI within fourteen days of this order both the documents Steadfast states it is willing to provide to LMI in its portion of the joint statement and an amended privilege log that comprehensively lists the documents that Steadfast is still withholding on the basis of a claimed privilege.

Accordingly, the court denies LMI's motion to compel at this time without prejudice to a later renewal after the parties have made the further meet and confer and production efforts outlined above to narrow the list of withheld documents to those that are actually still in dispute between the parties. Similarly, the court also denies LMI's request for attorneys' fees in ...

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