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In re Subpoena To Produce Documents of Clapp, Moroney, Bellagamba, Vucinich, Beeman & Scheley

United States District Court, N.D. California

July 31, 2014

In re: THE SUBPOENA TO PRODUCE DOCUMENTS OF CLAPP, MORONEY, BELLAGAMBA, VUCINICH, BEEMAN & SCHELEY and SUBPOENA TO TESTIFY IN A CIVIL ACTION AND FOR PRODUCTION OF DOCUMENTS OF ADRIENNE E. NORDSTROM, ESQ

ORDER RE MOTION TO MODIFY OR QUASH SUBPOENA TO TESTIFY AT CIVIL ACTION AND FOR PRODUCTION OF DOCUMENTS Re: Dkt. No. 1

JACQUELINE SCOTT CORLEY, Magistrate Judge.

KB Home Coastal, Inc. ("KB Home") and Fidelity & Guaranty Insurance Co. ("Travelers") are involved in an insurance coverage dispute in the United States District Court for the Central District of California. The dispute arises from KB Home's contention that the attorney, Adrienne Nordstrom, and law firm, Clapp, Moroney, Bellagamba, Vucinish, Beeman & Scheley ("the Law Firm" or "Clapp Moroney"), Travelers retained to represent KB Home in construction defect litigation has a conflict of interest which prevents them from representing KB Home. In connection with that litigation, KB Home served subpoenas on Nordstrom and Clapp Moroney. Now pending before the Court is the motion of Nordstrom and Clapp Moroney to quash the subpoenas. Having considered the parties' submissions and having had the benefit of oral argument on July 31, 2014, the Court GRANTS the motion in part and DENIES the motion in part. Clapp Moroney must produce a redacted version of the sought-after conflict check as it is relevant to KB Home's assertion of an actual conflict. The motion to quash the remainder of the subpoenas is granted as KB Home has not demonstrated the documents' relevance and/or that they cannot be obtained from Travelers. Finally, as Ms. Nordstrom has agreed to be deposed again, the motion to quash her deposition subpoena is denied.

BACKGROUND

Travelers issued a commercial general liability policy to West Coast Countertops under which KB Home was an additional insured ("the Policy"). The Policy allowed Travelers to retain counsel of its own choosing to represent its insured or any additional insured. In June 2012, KB Home was named as a defendant in a Riverside County construction defect lawsuit ("the Collins lawsuit"). After KB Home tendered its defense of the Collins lawsuit to Travelers under the Policy, Travelers agreed to defend KB Homes under a full reservation of rights. Travelers thereafter retained Nordstrom and Clapp Moroney to represent KB Home in the Collins lawsuit. KB Home subsequently notified Travelers that Nordstrom and the Law Firm were ethically conflicted from representing KB Home in the Collins action because they are, or in the past had, represented parties adverse to KB Home or KB Home-related entities.

Travelers disagreed with KB Home's conflict assessment and thus instituted a declaratory judgment/breach of contract action in the Central District of California against KB Home. Fidelity & Guaranty Insurance Co. (Travelers) et al., v. KB Home Coastal, Inc., et al., No. 13-cv-946 JAK (DBTx) (C.D. Cal.)[1] The gist of the complaint is that KB Home has breached the Policy by unreasonably refusing to accept Travelers' selection of counsel. KB Home filed a cross complaint alleging breach of contract, breach of the covenant of good faith and fair dealing, and for declaratory relief on the grounds that Travelers is obligated to retain unconflicted counsel to represent it in the Collins matter and other lawsuits in which KB Home has tendered its defense to Travelers. KB alleges further that Travelers has a pattern and practice of retaining ethically-conflicted counsel to represent home builder additional insureds such as KB Home.

Pursuant to Federal Rule of Civil Procedure 45, KB Home issued subpoenas to Nordstrom and Clapp Moroney. The subpoena to Clapp Moroney seeks documents related to Travelers retention of Clapp Maroney to represent any KB Home entity in any litigation, including the Collins litigation, and the subpoena to Ms. Nordstrom sought her deposition. (Dkt. No. 1-2, Exs. B & C.) The documents were to be produced on the same date as Ms. Nordstrom's deposition, June 4, 2014. Neither the Law Firm nor Ms. Nordstrom filed timely objections to the subpoena because of an alleged misunderstanding regarding who was responsible for filing the objections. However, once Ms. Nordstrom realized that objections had not been filed, she and the Law Firm retained counsel from Clapp Maroney on June 5, 2014, who filed a motion to quash the subpoenas on June 6, 2014. The motion to quash, however, was mistakenly filed in the District Court for the Eastern District of California and was denied without prejudice on this basis on June 25, 2014. The next day, the underlying motion to quash was filed. In the interim, Ms. Nordstrom appeared for her deposition on June 9, 2014 at which time she also produced some documents responsive to KB Home's subpoenas; additional documents were produced on June 24.

The parties have engaged in meet and confer efforts since the issuance of the subpoenas and Ms. Nordstrom's deposition and have narrowed the issues in dispute to the following documents:

1. Conflict check reports run by the Law Firm related to the Collins action; in particular, conflict checks performed on January 7, 2013 and January 10, 2013.
2. Documents identifying subcontractors represented by the Law Firm in California construction defect actions involving any KB entity (or an authenticated list of the same).
3. Documents identifying insurance carriers, including Travelers, who are current or past clients of the Law Firm (or an authenticated list of the same).
4. Documents identifying construction defect actions in which the Law Firm is currently retained by Travelers as counsel for any KB entity.

LEGAL STANDARD

Federal Rule of Civil Procedure 45 governs discovery of nonparties by subpoena. The scope of the discovery that can be requested through a subpoena under Rule 45 is the same as the scope under Rule 26(b). Fed.R.Civ.P. 45 Advisory Comm.'s Note (1970) ("[T]he scope of discovery through a subpoena is the same as that applicable to Rule 34 and other discovery rules."); Fed.R.Civ.P. 34(a) ("A party may serve on any other party a request within the scope of Rule 26(b)."). Rule 26(b) allows a party to obtain discovery concerning any nonprivileged matter that is relevant to any party's claim or defense. Fed.R.Civ.P. 26(b)(1).

A court must protect a nonparty subject to a subpoena if the subpoena "requires disclosure of privileged or other protected matter" or the subpoena "subjects a person to undue burden." Fed.R.Civ.P. 45(c)(3). A court must also limit discovery if it is unreasonably duplicative, if it can be obtained from a source that is more convenient or less burdensome, or if the burden of producing it outweighs its likely benefit. Fed.R.Civ.P. 26(b)(2)(C). The issuing court also may quash a subpoena if it determines that the subpoena ...


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