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San Diego Unified Port District v. National Union Fire Insurance Co. of Pittsburg, PA

United States District Court, S.D. California

June 7, 2017

SAN DIEGO UNIFIED PORT DISTRICT, Plaintiff,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PA, Defendant.

          ORDER ON JOINT MOTION FOR DETERMINATION OF DISCOVERY DISPUTE [ECF NO. 36]

          Hon. Mitchell D. Dembin United States Magistrate Judge.

         Before this Court is the parties' Joint Motion for Determination of Discovery Dispute filed on May 5, 2017. (ECF No. 36). The dispute is over the extent to which Defendant is entitled to discovery regarding Plaintiff's claim for “Brandt fees” as damages, and the timing of such discovery. “Brandt fees” are attorneys' fees incurred by a plaintiff to obtain the contract benefits under an insurance policy which are recoverable as economic damages resulting from the breach of the good faith covenant. Brandt v. Super. Ct., 37 Cal.3d 813, 817 (1985). Attorneys' fees expended to recover other types of damages are not recoverable as Brandt fees, so the attorneys' fees incurred by a plaintiff in a bad faith action must be allocated between recoverable fees incurred to obtain contract damages and non-recoverable fees incurred to obtain tort damages. Id.

         Defendant seeks to compel Plaintiff to produce unredacted copies of time records, billing invoices, and the attorney-client fee agreement. Defendant further seeks to compel Plaintiff to make Rule 26(a) disclosures concerning Brandt fee information.

         Plaintiff asserts attorney-client privilege and attorney work product objections. Plaintiff explains that its Brandt fees are continuing to accrue and claims that revealing these documents in this “active and ongoing litigation” would prejudicially reveal Plaintiff's ongoing litigation strategy to its adversary. Plaintiff offers to produce time records redacted to exclude descriptions of time spent that is not claimed as Brandt fee damages.

         Defendant contends that Plaintiff waived any privilege applying to these documents by claiming Brandt fees in this action. Defendant asserts that “the Port must produce un-redacted billing entries for any time that the Port wishes to recover as damages. To the extent that the Port determines that a particular time entry is not recoverable because it was not time spent trying to recover contract damages, only then is redaction appropriate.” (ECF No. 36 at 8:23-9:2 (emphasis in original)).

         Defendant is correct that “[b]y seeking to recover the fees expended in this litigation, Plaintiffs have waived the privileges that might have covered the information.” Mancini v. Ins. Corp. of N.Y., Case No. 07cv1750-L-NLS, 2009 WL 1765295 at *4 (S.D. Cal. June 18, 2009) (citing Luna v. Sears Life Ins. Co., Case No. 06cv2653-DMS-CAB, 2008 WL 2484596 at *1 (S.D. Cal. Jan. 11, 2008)); see also Foremost Ins. Co. Grand Rapids, Mich. v. Enriquez, Case No. 13cv1604-H-DHB, 2015 WL 11578510 at *3 (S.D. Cal. March 26, 2015) (requiring production of redacted copies of the attorney-client fee agreement and redacted copies of invoices in addition to the summary of fees and evidence of payments already produced); Fidelity Nat'l Fin. Mgmt. v. Nat'l Union Fire Ins. Co., Case No. 09cv140-AJB-CAB, 2011 U.S. Dist. LEXIS 48697, *3 (S.D. Cal. May 5, 2011) (finding plaintiff waived privilege claim to attorneys' fees information by claiming Brandt fees).

         Plaintiff's reliance on Lennare Mare Island, LLC v. Steadfast Ins. Co., Case No. 12cv2182-KJM-KJN, 2015 WL 1540631 (E.D. Cal. April 7, 2015) and Fidelity, supra, 2011 U.S. Dist. LEXIS 48697, *3, is misplaced.

         Plaintiff cites Lennare for its holding that

…at least some of the material [defendant] seeks to compel, in particular, information concerning [plaintiff's] legal bills, may relate to [plaintiff's] litigation strategy, such as descriptions of the legal services for which the Navy may be paying. Because of this fact, the court finds that production of such information is inappropriate at this pre-trial juncture.

Lennare, 2015 WL 1540631 at *6. Although this holding appears at first blush to be directly on point, the underlying circumstances were so different that the cited language has no relevance to the instant dispute. In Lennare, the defendant was not seeking billing records, invoices, attorney-client fee agreements and Rule 26 disclosures showing the amount, description and calculation of Brandt fees. Instead, the Lennare defendant was seeking testimony about reimbursement payments made to plaintiff by third parties for incurring Brandt fees to obtain insurance contract damages for a decontamination project. Lennare, 2015 WL 1540631 at *1; and see Case No. 2:12cv2182-KJM-KJN, ECF Nos. 255-2, 255-6, 263, 425). Consequently, the cited language from Lennare is not persuasive in the context of the instant dispute.

         Regarding the Fidelity case, Plaintiff argues that it stands for the proposition that Brandt does not require immediate disclosure and that Plaintiff can wait until some unspecified time before trial to produce the requested information. (ECF No. 36-2 at 4). Plaintiff is correct that then-Magistrate Judge Bencivengo only required production of the requested information by the close of discovery. But, at the time of the Order in Fidelity, only 15 days remained before the close of discovery. More significantly, Judge Bencivengo found the Plaintiff had waived any privilege by claiming Brandt fees, rejected Plaintiff's request to delay production, and warned that Plaintiff should produce the documents before the discovery period closed-just two weeks from the issuance of the order. Fidelity, 2011 U.S. Dist. LEXIS 48697 at *3. This Court does not interpret Judge Bencivengo's order as permitting plaintiffs claiming Brandt fees to wait until the close of discovery to produce their evidence, but instead reads the opinion as suggesting that delayed production of Brandt fees evidence could lead to sanctions.

         It appears that all of the magistrate judges in this District who have considered this issue have found that the plaintiff waived any applicable privileges by claiming Brandt fees, and ordered production forthwith. Plaintiff has not convinced this Court to take a different path. Consequently, Plaintiff must produce the time sheets, billing invoices, and fee agreement(s). Defendant concedes, however, that Plaintiff may redact information for time entries as to which Plaintiff does not seek to recover as damages.

         Similarly, Plaintiff's assertion of privilege does not shield it from making Rule 26(a) disclosures concerning Brandt fees. Rule 26(a) requires a party seeking damages to provide a copy or description of documents the party may use to support its claims, provide a computation of damages, and make documents supporting its claimed damages available for inspection and copying. Fed.R.Civ.P. 26(a). By asserting a claim for Brandt fees, Plaintiff has waived any privileges that would prevent disclosure of the documents supporting the damages Plaintiff seeks. R&R Sails, Inc. v. Ins. Co. of Penn., 673 F.3d 1240, 1247 (9th Cir. 2012) (finding district court did not abuse its discretion in concluding that party failed to timely make Rule 26(a) disclosures in support of Brandt fees demand, but reversing sanctions award for failure to consider whether failure was willful)). Plaintiff must comply with Rule 26(a) with respect to its claim for Brandt fees.

         The Court GRANTS Defendant's motion to compel discovery. Plaintiff is ORDERED to produce time sheets, billing invoices, and the relevant fee agreement(s). Plaintiff may redact billing entries or other parts of these documents that are irrelevant to Plaintiffs claim for damages, including billing entries for time that the Plaintiff does not seek to recover as contract damages. Plaintiff is ORDERED to not redact the billing entries for any time that ...


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