United States District Court, S.D. Texas, Houston Division
Westport Insurance Corporation, on its own behalf and Assignee of Houstoun Woodward, Eason, Gentle, Tomforde and Anderson, Inc., d/b/a Insurance Alliance, Plaintiff,
Pennsylvania National Mutual Casualty Insurance Company d/b/a Penn National Insurance, Defendant.
MEMORANDUM OPINION & ORDER
H. Miller United States District Judge
Pending before the court is plaintiff Westport Insurance
Corporation's (“Westport”) objections and
motion to modify the Magistrate Judge's order on in
camera inspection (Dkt. 76). Dkt. 77. After considering the
motion, the response, the reply, the record, and the
applicable law, the court is of the opinion that
Westport's objections should be SUSTAINED IN PART AND
OVERRULED IN PART and Westport's motion to modify should
be GRANTED IN PART AND DENIED IN PART. Id.
1, 2017, Magistrate Judge Nancy K. Johnson issued an order on
in camera inspection (the “Order”) requiring
defendant Pennsylvania National Mutual Casualty Insurance
Company d/b/a Penn National Insurance (“Penn
National”) to amend a privilege log and affidavits.
Dkt. 76. On June 15, 2017, Westport filed timely objections
and a motion to modify the Order. Dkt. 77. Westport does not
object to the substantive rulings of the Order. Id.
Penn National responded, and Westport replied. Dkts. 85, 88.
Penn National also filed a sur-reply to Westport's reply,
without seeking leave of court. Dkt. 89; L.R. Tex. 7.4. Under
the court's procedures, a party must first seek leave of
court to file any additional filings. Judge Miller's
Procedures, ¶ 6A. Therefore, the court will not consider
Penn National's additional filing (Dkt. 89). Id.
Legal Standard & Analysis
dispositive matters, the court “determine(s) de novo
any part of the magistrate judge's disposition that has
been properly objected to.” See Fed. R. Civ.
P. 72(b)(3). For nondispositive matters, the court may set
aside the Magistrate Judge's order only to the extent
that it is “clearly erroneous or contrary to
law.” Fed.R.Civ.P. 72(a); see also 28 U.S.C.
objects to the Magistrate Judge's finding of facts and
conclusions of law, and to statements that the Magistrate
attributes to “Westport's counsel” instead of
the preferred “Westport's retained counsel.”
Dkt. 77. Westport also seeks to introduce an affidavit from
its own insurance claims professional, James Redeker.
Id. The court will address each objection in turn.
Westport argues that the court mischaracterized evidence by
attributing evidence to “Westport's attorney”
or “Westport's counsel” when the court should
have attributed it to “Westport's retained
counsel” from the law firm Oldenettel &McCabe. Dkt.
77 at 12-13. Westport contends that this distinction is
important because the “statements could be improperly
used by Penn National to support its purported
Stowers defense and would result in prejudice to
Westport.” Id. at 14. Westport argues that it
“retained the firm Oldenettel & McCabe to represent
Insurance Alliance as defense counsel.” Id. at
13. The court attributed a report to Westport when it was
actually prepared by the firm, and not by Westport's own
attorneys. Id.; see, e.g., Dkt. 77 at 2
(objecting to the phrase “Penn National received an
email from Westport”).
extent that Westport is objecting to the Order's
reference to attorneys at Oldenettel & McCabe as
“Westport's attorney, ” or
“Westport's counsel, ” instead of
“Westport's retained counsel, ” that
objection is SUSTAINED. Westport's motion to modify the
Order is GRANTED and the Order shall read
“Westport's retained counsel” instead of
“Westport's attorney, ” or
“Westport's counsel, ” when referencing
attorneys at Oldenettel & McCabe.
Westport objects to the court's factual findings and
conclusions that Westport's retained counsel knew that
the legal exposure or jury verdict would exceed
Westport's policy limits, and that the court deemed that
Penn National reasonably anticipated Stowers
litigation as of May 24, 2010. Dkt. 77 at 2. Upon review of
the record, the court finds that the Magistrate Judge's
factual findings are not clearly erroneous. See Fed.
R. Civ. P. 72(a). The Order's factual findings and legal
conclusions are supported by several documents in the record,
including letters to Westport's retained counsel attached
to the affidavit of Boyd Wright, Penn National's claims
adjuster. Dkt. 73-1 at 5, 7 (Wright Aff.). Westport's
claims adjuster, James Redeker, sent two reservation of
rights letters to Jim Berger of Insurance Alliance and
carbon-copied Westport's retained counsel, Rick
Oldenettel, on April 16, 2008, and April 14, 2009.
Id. In pertinent part, the letter stated:
As you are aware, plaintiff's counsel believes this case
to be worth well in excess of your $5, 000, 000 in coverage
with us. Thus, I must inform you that a jury could
potentially return a verdict against you in excess of your
$5, 000, 000 policy limit with our company. Since there is
potential for personal exposure in excess of your $5, 000,
000 policy limit you should notify your personal attorney to
supervise and protect your interests.
On May 24, 2010, Wright sent Redeker a Stowers
Westport breached its duties to Insurance Alliance and Penn
National under Stowers [doctrine] and if Penn
National was required to contribute toward a judgment because
of Westport's negligence in failing to settle the claim
against Insurance Alliance within its policy limits Penn
National would seek recovery from Westport for amounts it was
required to pay. Dkt. 73-1 at 2, 31-32 (Wright Aff.).
on the record, the court finds no clear error in the factual
findings and legal conclusions. However, Westport also
objects to the factual findings due to a typographical error.
Dkt. 77. That objection is SUSTAINED. The Order reads
“On May 13, 2010, . . . Penn National's claims
adjuster was aware that the legal exposure to Insurance
Alliance was in excess of Westport's policy limits and
that Westport's [retained] attorney considered it a case
of 100% liability.” Dkt.77 at 2 (citing Dkt. 76 at 2).
The actual date of the letter is May 15, ...