Curtis Park Group, LLC v. Allied World Specialty Insurance Company

District Court, D. Colorado·Decided September 28, 2021·No. 1:20-cv-00552·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 20-cv-00552-CMA-NRN

CURTIS PARK GROUP, LLC,

Plaintiff,

v.

ALLIED WORLD SPECIALTY INSURANCE COMPANY

Defendants.

ORDER ON DEFENDANT’S OBJECTION TO THE SPECIAL MASTER’S ORDER RE DEPOSITION OF DEFENSE COUNSEL RYAN YATES (DKT. #143)

This matter is before the Court on Allied World Specialty Insurance Company (Allied World’s) Objection to the Special Master’s Order re Deposition of Defense Counsel Ryan Yates (Dkt. #143), referred to me by Judge Christine M. Arguello on August 10, 2021. (Dkt. #145.) Interested Party Ryan Yates joins in the Objection. (Dkt. #144.) BACKGROUND The Court has previously provided the factual background of this case (see Dkt. #46) and will not repeat it here except as necessary. This is an insurance coverage case arising from a Builders’ Risk insurance policy covering the construction of a condominium project being built by the Curtis Park Group, LLC (“Curtis Park”). The condominium project had a concrete slab that experienced deflection and cracking. Curtis Park made an insurance claim with the defendant insurer, Allied World. Allied World contends that the deflection was caused by a construction defect, and thus excluded from coverage. Curtis Park sued Allied World for denying coverage. It argues that Allied World has failed to explain the nexus between the construction defect and the deflection. Curtis Park also contends that is it is hampered by the fact that Allied World claims it based its coverage denial on the findings of Nelson Forensics (“Nelson”), the engineering company that Allied World consulted with to investigate the

deflection, but Nelson did not prepare a written report explaining how a construction defect caused the deflection. Instead, Nelson instead communicated its findings to the insurer only orally—and the insurer based its denial on those oral communications. Ryan Yates from the Yates Law Firm was coverage counsel and played an active role in investigating the deflection. He is also defending this case on behalf of Allied World. The present dispute raises the question of whether the Special Master correctly held that Curtis Park could depose Mr. Yates as to certain non-privileged topics. As the Special Master noted, the “issue of discovery concerning [Mr. Yates], counsel for [Allied World], has been addressed throughout this case.” (Dkt. #136 at 1.) Previously, on

November 30, 2020, I found that Mr. Yates initially was performing the functions that a claims adjuster would perform. He was “involved in coordinating the claim adjustment process, and was facilitating communication between the adjusters and the retained investigating experts.” (Dkt. #63 at 14–15.) Thus, I held that “many of [Mr. Yates’] communications are necessarily the ordinary business records of the insurance company.” (Id.) As such, those written communications were not entitled to protection under the attorney-client privilege or the work product doctrine. On March 12, 2021, the Special Master held a status conference where the parties raised the issue of whether Mr. Yates could be deposed. In his March 16, 2021 Order, and consistent with my finding that Mr. Yates acted in a non-privileged role as claim adjuster for Allied World, the Special Master ruled that Curtis Park could notice Mr. Yates’ deposition, but also stated that Allied World could move for a protective order if it thought “grounds still exist for not proceeding with the deposition.” (Dkt. 102 at 5.) Curtis Park noticed the deposition of Mr. Yates and, on June 30, 2021, Allied

World moved for a protective order to quash the deposition. (Dkt. #125.) Curtis Park responded (Dkt. #130) and Allied World replied. (Dkt. #133.) On July 20, 2021, the Special Master issued his ruling granting in part and denying in part Allied World’s motion for a protective order. (Dkt. #136.) He declined to quash the deposition notice but held that the questioning at the deposition will be limited to “1) communications among [Nelson], the Yates Law Firm and/or Allied [World] regarding Nelson’s investigation of the claim and 2) Mr. Yates’ role in drafting the reservation of rights letter.” (Id. at 8–9.) Allied World objected to the Special Master’s Ruling on August 10, 2021, arguing

that the Special Master improperly applied the laws limiting depositions of opposing counsel. (Dkt. #143.) Mr. Yates personally joined in Allied World’s Objection. (Dkt. #144.) The Federal Rules of Civil Procedure do not appear to contemplate a response to the objection of or its timing, so Curtis Park filed an unopposed motion requesting a date certain to respond to the Objection. (Dkt. #154.) The Court granted the motion and set Curtis Park’s response deadline on August 31, 2021 (Dkt. #156.) The Court also ordered that no reply brief was permitted. (Id.) The Court heard argument from the parties1 on September 9, 2019. (See Dkt. #161.) During the hearing, the Court granted Mr. Yates leave to file a reply in support of the Objection no later than September 15, 2021. (Dkt. #161). Mr. Yates timely submitted a reply (Dkt. #162) and Allied World joined in the reply. (Dkt. #163.) DISCUSSION

A. The Special Master’s Legal Conclusions Are Reviewed De Novo; His Factual Findings Are Final.

The parties agree, and there can be no dispute, that objections to a special master’s conclusions of law are reviewed de novo. Fed. R. Civ. P. 53(f)(4). However, the Special Master’s factual findings are not reviewable because the parties, with the court’s approval, stipulated that the findings of the Special Master would be final. Fed. R. Civ. P. 53(f)(3)(B). The Order Appointing David M. Tenner as Special Master (the “Order of Appointment”) provides, “[i]n reviewing the actions of the Special Master, the parties will be deemed to have stipulated that findings of fact made by the Special Master will be final, except for a party who objects to this portion of the Order, in writing and filed with the Court, within 7 days of the date of this Order.” (Dkt. #83 at 3, ¶ 5.) No party objected to this provision of the Order of Appointment. Therefore, I will not disturb the Special Master’s findings of fact. I note that, at oral argument, Allied World suggested that its failure to object to ¶ 5 of the Order of Appointment cannot, by itself, constitute agreement that all factual findings by the Special Master are binding. Citing Rembert v. Apfel, 213 F.3d 1331,

1 Ryan Yates is represented by Mr. Robert Baldwin (see Dkt. #132) and, as previously noted, joined in Allied World’s Objection. (Dkt. 144.) At oral argument, Mr. Baldwin argued the merits of Allied World’s Objection. For purposes of this Order, I attribute his argument to Allied World. 1333–34 (11th Cir. 2000), and McNab v. J & J Marine, Inc., 240 P.3d 1326, 1328 (11th Cir. 2001), Allied World analogized the present circumstances to consenting to a magistrate judge’s jurisdiction and argued that some kind of affirmative assent would be required to bind the parties to the factual findings of the Special Master. Simply failing to timely object, according to Allied World, is insufficient to bind it to the language in the

Order of Appointment. In Rembert, the district court clerk for the United States District Court for the District of Alabama issued a “Notice of Assignment to United States Magistrate Judge for Trial.” 213 F.3d at 1333.

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