Wade Clark Mulcahy LLP

In Cadaret Grant & Co. v. Great Am. Ins. Co., No. CV216665GRBAYS, 2023 WL 4740184 (E.D.N.Y. July 25, 2023) plaintiff Cadaret sought coverage under the terms of a Financial Institution Bond issued by Great American Insurance Company for losses suffered by its clients after a representative of Cadaret engaged in a fraudulent investment scheme in which he used Cadaret client funds for his own personal purposes. Great American ultimately denied coverage, and Cadaret commenced a declaratory judgement action.

In the context of the litigation, Cadaret filed a motion to compel the production of documents withheld from discovery by Great American on the grounds of attorney-client privilege and the work product doctrine. Great American denied coverage on April 22, 2021, and the coverage action was commenced eight months later. The documents at issue were generated prior to both dates.

The individuals whose names appear on the documents are: (1) Timothy Markey a claims adjuster working for Great American; (2) Michael Graziano, Esq., an attorney working as outside counsel for Great American at the law firm of Eckert Seamans, and (3) John Ellison, Esq. an attorney working for Cadaret at the law firm of Reed Smith.

The bulk of the documents at issue were emails exchanged between Markey and Graziano between February 27, 2020, and February 12, 2021, which reveal Graziano’s involvement in Great American’s investigation of Cadaret’s claims. These emails include Markey's transmission of information regarding Cadaret's claims to Graziano and those asking that Graziano draft, for Markey, correspondence to be sent under Markey's name to counsel for Cadaret.

The remaining documents at issue are an email transmitting a draft of GAIC's coverage position, a seventeen-page letter dated March 22, 2021, from Graziano to Markey containing Graziano's legal opinion regarding coverage, and two emails following that letter.

Great American claimed that the emails exchanged prior to the March 22 letter were protected by attorney-client privilege.

The court, however, found that many of the documents “are nothing more than transmittal emails that either refer to requests for information, or the forwarding or downloading of such information.” Id. at 5. Further, the court found that “while these first twenty documents reflect communications between GAIC claims representative Markey and GAIC outside counsel Graziano, they demonstrate work performed by Graziano as a claims investigator rather than as legal counsel. They reflect discussions between Markey and Graziano, typically led by Markey, which culminate in typical requests for information regarding Cadaret's claims. Such documents reveal counsel working in an investigatory role.” Id. For these reasons, the court held that none of the first twenty claimed emails/documents were protected by attorney-client privilege.

As for the other documents, the court found that only the letter from Graziano to Markey dated March 22, 2021, falls within the claim of privilege because it shows Graziano’s legal analysis and opinions and was therefore primarily legal, rather than investigatory in nature.  The proceeding email contained no legal analysis and therefore was not privileged. The court found that the remaining documents prepared after the March 22 letter were essentially scheduling emails, and therefore also not privileged. The court ultimately granted Cadaret’s motion to compel, except for the March 22 letter.

The moral of the story? If you want your communications with coverage counsel to remain privileged, remember that it is your job to decide whether coverage is owed; you are in the business of deciding claims.  If you ask your coverage counsel what to do, you will likely lose the benefit of the attorney client privilege.

Special thanks to Mimi Osisek for her contributions to this post. For more information about the post or to learn more about WCM’s multi-state coverage practice, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.