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Feld v. Fireman's Fund Insurance Co.

United States District Court, District Circuit

July 3, 2013

KENNETH FELD, Plaintiff,
v.
FIREMAN'S FUND INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION

JOHN D. BATES, District Judge.

This action arises out of defendant Fireman's Fund Insurance Company's ("FFIC") refusal to fully reimburse plaintiff Kenneth Feld for more than $4.5 million in legal fees and expenses that Feld claims to have incurred in a prior, protracted legal battle in this district. Currently before the Court is FFIC's motion to compel discovery. For the reasons set forth below, the motion will be granted in part and denied in part.

BACKGROUND

In September 2008, Karen Feld filed a lawsuit (the "Underlying Action") against Kenneth Feld, [1] Karen's brother and the plaintiff here, based on events that allegedly took place in September 2007. Compl. [ECF 1] ¶ 9. Karen asserted claims of assault, battery, intentional infliction of emotional distress, negligent infliction of emotional distress, and false imprisonment; she sought damages of more than $110 million. Id.[2] Feld filed a counterclaim for trespass. Id . ¶ 11.

At the time of the events alleged in Karen's complaint, Feld had personal liability insurance coverage under a "Prestige Home Premier" policy (the "Policy") issued by FFIC. Id . ¶ 22. The Policy provided that FFIC would defend Feld against covered claims or suits against him. It had two components, a primary homeowner's policy and an excess liability policy. Id . ¶ 23. Under the primary policy, FFIC had a duty to "[p]rovide a defense at [its] expense by counsel of [its] choice"; under the excess policy, FFIC had a duty to "provide a defense at [its] expense by counsel of [Feld's] choice, from [FFIC's] list of approved vendors." Id . ¶¶ 28-30. The Policy did not specify hourly rates at which defense counsel would be paid.

On June 12, 2009, Feld notified FFIC of the Underlying Action and of his claim for coverage under the Policy. See Def.'s Mot. to Compel [ECF 14], Ex. 1, Letter from Charles Kirk to Kenneth Feld 1, 4 (Aug. 11, 2009) ("8/11/09 Kirk Letter"). FFIC agreed to defend Feld in the Underlying Action "subject to a full and complete reservation of rights." See id. at 9. Specifically, FFIC stated that the claims in the Underlying Action alleged intentional conduct and hence were "not covered by the Policy." Id . FFIC nevertheless agreed to provide a defense because Feld had denied the allegations and said that he acted in self-defense. Id. at 10. FFIC told Feld:

Subject to [FFIC's] reservation of rights, you may elect to choose your own counsel to defend you in this matter; otherwise we can appoint counsel for you. FFIC agrees to pay, at an agreed hourly rate, the reasonable and necessary legal fees and Court costs incurred by counsel to defend you subsequent to the date this matter was tendered to FFIC under a full reservation of rights, and in accordance with the terms and conditions of the subject Policy and those contained herein. Payment by FFIC for any legal expenses incurred on your behalf will not act as a waiver of any rights FFIC may have to adjust, allocate or assert that there is no coverage for any payment made.

Id.

Feld retained counsel from the law firm of Fulbright & Jaworski L.L.P. to represent him in the Underlying Action. Feld asserts that between August and October of 2009 FFIC Technical Director Charles Kirk and Fulbright attorney Caroline Mew had "a limited number of brief telephone conversations related to FFIC's stated coverage position." Compl. ¶ 61. Feld further asserts that, in one of these conversations, Kirk "unilaterally stated the rates that FFIC might be willing to pay, " but that "[a]t no point were any such rates ever agreed to by Fulbright or Kenneth Feld." Id . In October 2009, Kirk sent an email to Mew attempting to "confirm [their] recent conversations." Def.'s Mot. to Compel, Ex. 2, Email from Charles Kirk to Caroline Mew (Oct. 4, 2009). Kirk stated: "As insured selected counsel, we will agree to pay a rate not to exceed $250/hour for partners; $225/hour for associates; and $100/hour for paralegals. Any amount in excess of those rates would continue to be the insured's responsibility." Id . FFIC requested a budget from Fulbright, and in response, Mew sent Kirk a proposed budget which reflected the billing rates proposed by Kirk: $250/hour for partners, $225/hour for senior counsel and senior associates (a rate that, though not stated in Kirk's prior email, was consistent with the other rates stated therein), $200/hour for associates, and $100/hour for paralegals. See Def.'s Mot. to Compel, Ex. 4, Letter from Caroline Mew to Charles Kirk (Oct. 28, 2009) ("10/28/09 Mew Letter"). Mew provided the proposed budget as "a good faith estimate of the amount of time and expenses [Fulbright] anticipate[d] expending in [the Underlying Action], " but noted, "We do not consider this to be a binding representation of the fees and expenses that actually will be incurred in this matter." Id.

In a December 2009 letter to FFIC's outside counsel, Fulbright stated that it had "complied in good faith with FFIC's request for a case budget" and that the firm believed that the proposed budget - of about $1.7 million - was reasonable. See Pl.'s Opp'n to Def.'s Mot. to Compel [ECF 15] ("Pl.'s Opp'n"), Ex. 1, Letter from Lisa Joiner to Erik Lindemann 2-3 (Dec. 8, 2009) ("12/8/09 Joiner Letter"); see also 10/28/09 Mew Letter (proposed budget of about $1.4 million in fees and about $278, 000 in expenses). Fulbright urged against further attempts by FFIC "to restrict the type of work done or to reduce the hours worked, " stressing that FFIC was "currently paying only a fraction of the Firm's hourly rates with the remaining amounts being charged to Mr. Feld notwithstanding the insurance he ha[d] purchased from FFIC." 12/8/09 Joiner Letter 2-3. Fulbright agreed to submit periodic invoices to FFIC but refused to accept FFIC's proposed condition that Fulbright have only 30 days to appeal any "deductions or declinations" by FFIC. Id. at 2. Accordingly, Fulbright stated: "To simplify matters, FFIC may presume that [Fulbright] and Mr. Feld contest any and all amounts unpaid by FFIC on any bills presented by [Fulbright] to FFIC for payment unless FFIC is notified otherwise." Id.

Beginning in August 2010, Fulbright submitted a series of invoices to FFIC. The hourly rates in the invoices exceeded the rates set forth in Kirk's October 2009 email and Fulbright's proposed budget. See Def.'s Mot. to Compel, Ex. 5, Letter from Charles Kirk to Matthew Kirtland (Oct. 11, 2010). FFIC adjusted the rates and sent checks to Fulbright based on the rates FFIC had agreed to pay. See id. In addition to its refusal to pay the full hourly rates charged by Fulbright, FFIC refused to pay certain other fees and expenses for various reasons. Compl. ¶ 50.

Feld successfully defended the Underlying Action. The district court dismissed the negligent infliction of emotional distress claim on Feld's motion for partial summary judgment, and, following a two-week jury trial, the jury reached a verdict in Feld's favor on the remaining claims against him, though it did not find liability on his counterclaim for trespass. See Compl. ¶¶ 12, 17. The D.C. Circuit affirmed the judgment on appeal. See Feld v. Feld , 688 F.3d 779 (D.C. Cir. 2012).

Feld sought payment from FFIC for $4, 539, 042.78 in legal fees and expenses incurred during the Underlying Action. Compl. ¶ 39. FFIC reimbursed Feld for more than $2.1 million but has refused to reimburse $2, 418, 816.39 of the amount claimed. Id . ¶¶ 45-46.

Feld has filed this action against FFIC to recover the $2.4 million not paid by FFIC, alleging breach of contract and breach of the implied covenant of good faith and fair dealing. Most of the amount in dispute - about $2.2 million - stems from the parties' disagreement over Fulbright's billing rates. Id . ¶ 46. The parties' dispute over the remaining amount - less than $200, 000 - relates to the reasonableness and necessity of the underlying charges. See Def.'s Mot. to Compel 5-6.

Discovery has commenced, and a discovery dispute has arisen regarding several of FFIC's interrogatories and requests for production. FFIC has filed a motion to compel the production of documents and information. Specifically, FFIC seeks an order compelling Feld to produce all documents responsive to FFIC's Requests for Production ("Requests") Nos. 1-5, 7-10, 12-13, 15, 18, and 22-24, and to respond in full to FFIC's Interrogatories Nos. 3-4 and 14-15.

According to FFIC, the documents and information sought fall into three categories: (1) those Feld has agreed to produce but has not; (2) those reflecting or relating to Feld's understanding of his agreement with FFIC regarding the payment of defense costs; and (3) those going to the reasonableness and necessity of expending defense costs of $4.5 million in the Underlying Action. Def.'s Mot. to Compel 1.

Feld has filed an opposition to FFIC's motion to compel. He states that he has already "produced or agreed to produce all discoverable materials" and that the materials he has not produced are privileged, not relevant, or otherwise protected from disclosure. Pl.'s Opp'n 12-13, 18-19. FFIC argues that the materials sought are discoverable and that Feld may not assert a privilege to prevent their disclosure because he either has not established, or has waived, any privilege that might otherwise exist. See Def.'s Mot. to Compel 14. The Court ...


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