M&C Holdings Delaware Partnership v. Great American Insurance Company

District Court, S.D. Ohio·Decided September 29, 2021·No. 1:20-cv-00121·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

M&C Holdings Delaware Partnership, et : al., : Case No. 1:20-cv-121 : Plaintiffs, : Judge Susan J. Dlott : v. : Order Denying Motion to Compel : Great American Insurance Company, : : Defendant. :

This matter is before the Court on Defendant’s Motion to Compel Production of Documents and for In Camera Review (Doc. 56). Great American seeks an order compelling Millennium1 to (i) produce all documents they have withheld solely on the basis of attorney- client privilege that involve communications with non-party Aon Risk Services Northeast, Inc. (along with any affiliates, “Aon”) and (ii) submit documents withheld on the basis of attorney- work product privilege for in-camera review. Millennium has submitted the documents for in camera review, but it argues that the documents are protected by attorney-client privilege and the work-product doctrine. For the reasons that follow, the Court will DENY Great American’s Motion. I. BACKGROUND A. Millennium’s Claim for Loss under Insurance Policy Millennium operates a chain of hotels throughout the United States. In the ordinary course of its business, Millennium paid commissions to third-party travel agencies in exchange for bookings at its One UN Hotel, located in New York, New York. A Millennium employee,

1 Plaintiffs M&C Holdings Delaware Partnership, M&C Hotel Interests, Inc., M&C Management Services (USA), Inc., CDL Hotels (USA), Inc. and RHM-88, LLC are collectively referred to as “Millennium.” Wayne Merdis, engaged in a fraudulent scheme to siphon off these commission payments from Millennium to fictious travel agencies created by Merdis. He both diverted payments legitimately owed to third-party travel agencies for services those travel agencies rendered, and he accepted payments for services which were not rendered at all. Millennium alleges that both types of commission payments amounted to $1,954,329.13, all of which it transferred to

Merdis’s fictitious travel agencies as a result of his fraudulent scheme. Great American had issued Millennium a crime insurance policy (“the Crime Policy”) for the period of May 31, 2017 through May 31, 2018. (Doc. 1-1 at PageID 20.) Millennium, through its insurance broker, Aon, notified Great American about the potential loss under the Crime Policy on June 23, 2017. (Doc. 18-2 at PageID 140.) Aon also provided Great American with a Proof of Loss form in the amount of $1,954,329 on August 31, 2018. (Id. at PageID 137– 138; Doc. 40-2 at PageID 465.) On December 17, 2019, Great American issued a letter to Millennium denying coverage for that portion of Millennium’s claim that involved bookings from legitimate travel agents and for part of the bookings from 2001 to 2007 for which

Millennium did not document whether legitimate travel agent bookings were involved. (Doc. 18-2 at PageID 151–154.) B. Millennium’s Relationship with Aon The parties dispute whether the communications that Aon had with Millennium’s legal counsel are protected by attorney-client privilege. The parties have provided limited facts regarding the services that Aon provided for Millennium. Aon agreed in an Engagement Letter dated November 27, 2017 to provide the following services to Millennium related to the Crime Policy and other coverage programs: Provide claims services as follows: • Document insurers’ claims services specifications (for marketing and annual carrier service planning purposes). • Advocate the Client’s interests with its insurers as respects claims. • Assist the Client in settlement discussions with the insurer. • Work with the Client and/or the Client’s claims counsel, as required. The total number of hours related to [Aon’s] claims services described above shall not exceed 20 hours per Annual Service Period. If claims service hours are expected to exceed this amount, [Aon] will discuss a broadened scope of service and additional compensation with the Client. (Doc. 55-1 at PageID 672.) Millennium and Aon also agreed that Aon would act as an independent contractor and not an agent of Millennium: For all purposes of this Engagement Letter, [Aon] shall be an independent contractor and not an employee or agent of Client, and nothing in the Engagement Letter shall be construed, or deemed to establish any partnership or joint venture between the parties, constitute any party the agent of the other, or authorize any party to make, or enter into, any commitments for or on behalf of any other party. (Id. at PageID 674.) Millennium and Aon then entered into Engagement Letter Amendment #1, dated January 23, 2019, to specifically address Aon’s services to Millennium related to Millennium’s insurance claim on the Crime Policy for the losses caused by Merdis’s theft. (Doc. 55-2 at PageID 681.) Aon agreed to provide the following services in Amendment #1: [Aon] Claim Services. Such services include: • Facilitate management of claims process with the Client; • Provide the Client advice and consultation on insurer coverage positions; • Collaborate with the Client on claim negotiation and resolution strategies; • Provide support to the Client in claim recovery process. (Id. at PageID 682.) Additionally, Aon stated its understanding that Millennium did not intend to waive its privileges when it shared its data with Aon: To the extent that any the Client data includes materials subject to the attorney- client privilege, work product doctrine or other applicable privilege concerning pending or threatened legal proceedings or investigations (the “Applicable Privilege”), We acknowledge that it is the Client’s desire, intention and understanding that the sharing of such material is not intended to waive or diminish its continued protection under the Applicable Privilege. Should We become subject to service of process or other lawful demand for disclosure of such data (“Demand for Information”), We will advise the Client of such Demand for Information, to the extent such notice is in itself lawful, permitting the Client, at its own expense, to intervene and object to such disclosure. (Id.) Millennium specifically stated its understanding in Amendment #1 that Aon “is not and is not holding itself out as a public adjuster nor is it providing any legal advice with respect to its activities hereunder” and that Aon would not provide services that “constitute the practice of law.” (Id. at PageID 861.) Millennium submitted the Affidavit of Adam Furmansky to further explain the relationship between Millennium and Aon. Furmansky is the Vice President of Aon Risk Services Northeast, Inc. since November 2017. (Doc. 57-1 at PageID 731.) He stated that Aon helped place the Crime Policy with Great American. (Id.) He explained the role that Aon played in regard to the claim arising from Merdis’s theft: 4. Starting in January 2019, Aon was formally engaged to provide claims advocacy services to Millennium regarding the Claim. These services are set forth in an expanded engagement letter that I understand was executed by Millennium and Aon. I was actively involved in all aspects of the Claim. 5. My understanding was that, during the relevant time period, Millennium lacked a dedicated staff to support complex commercial insurance claims, and did not have any personnel with substantial claims advocacy experience in this context. As part of my advocate role, I was often tasked to be the only person communicating with Great American and its representatives regarding the Claim throughout the year 2019. Accordingly, I (and other members of my staff from Aon) was the only representative for Millennium on a great number of the oral and written communications that occurred with Great American regarding the Claim. 6.

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M&C Holdings Delaware Partnership v. Great American Insurance Company, (S.D. Ohio 2021).

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