Windsor Securities, LLC v. Arent Fox LLP

273 F. Supp. 3d 512
CourtDistrict Court, S.D. New York
DecidedAugust 11, 2017
Docket16 Civ. 1533 (GBD) (GWG)
StatusPublished
Cited by18 cases

This text of 273 F. Supp. 3d 512 (Windsor Securities, LLC v. Arent Fox LLP) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Windsor Securities, LLC v. Arent Fox LLP, 273 F. Supp. 3d 512 (S.D.N.Y. 2017).

Opinion

OPINION AND ORDER

GABRÍEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE

The defendants in this case are an attorney and law firm who represented plaintiff Windsor Securities, LLC (‘Windsor”) in certain insurance transactions and an arbitration that arose, from one of those transactions. Windsor eventually fired the defendants, obtained replacement counsel to represent it in subsequent legal action related to the insurance transactions, and brought this suit against the defendants for malpractice. Before the Court is defendants’ motion to compel Windsor to produce communications with its replacement counsel.1 While Windsor asserts that the communications are protected by the attorney-client privilege and the work product doctrine, defendants argue that Windsor has waived protection of these communications because it has placed their content “at issue” in this case. For the following reasons, defendants' motion to compel is denied.

I. BACKGROUND

A. Complaint and Alleged Malpractice

The allegations in this case arise from Windsor’s decision in 2007 to. offer life insurance premium financing to five indi.viduals. See Complaint and Demand for Jury Trial, filed Feb. 29, 2016 (Docket # 1) (“Compl.”), ¶¶8-10, 15. In simple terms, Windsor loaned these individuals money to purchase life insurance, with a 15% interest rate on the loans. Id. ¶20. The life insurance policy was the solé collateral for the loan. Id. ¶ 10. Each insured created a trust to receive the loan from Windsor, and the trust acted as the borrower on the loan and owner of the policy. See id. ¶ 13. In addition to financing the policies with the initial loan, Windsor would pay the insurance premiums during the term of the loan. See id. ¶¶ 10, 14, .16, 21, Prior to the maturity date of the loans—referred to as “Premium Finance Loans”—Windsor’s intention was that the insureds would either: (1) cause the trusts to pay off the loan, in which case the trusts would remain the owner of the policy; or (2) “walk[] away from the policy by transferring ownership of the life insurance policy to Windsor,” though the individuals would remain the insureds. See id. ¶ 14. If option (2) was ' selected and ownership of the policy was transferred,. Windsor would either let the policy lapse for a total loss or. “continue to pay the premiums, as owner, with the hope that the ultimate death benefit would exceed the costs put into the policy.” Id. In the event of an uncured default under the [515]*515terms of the loan, Windsor could also compel transfer of ownership in the policy. See id. ¶ 19.

In June 2009, Windsor engaged defendant Julius Rousseau, III, and his law firm at the time to “provide general advice and representation to [Windsor] in connection with” the policies. Letter from Jhle Rousseau, dated June 5, 2009 (attached- as Ex. D to Compl.); accord Compl. ¶28. Rousseau continued to advise Windsor in this capacity after becoming a partner at defendant Arent Fox LLP in June 2010. Compl. ¶¶ 29-32. Rousseau and Arent Fox represented plaintiff “before and at the Maturity Dates for each of the Premium Finance Loans” at issue in this case. Id. ¶ 34. Between February 2010 and Februr ary 2011, following the advice of defendants, Windsor obtained' change of owner ship (“COO”) agreements from the trusts of the five individual insureds. Id. ¶¶ 49-50, 82-86, 112-113, 139-140, 162-163. Defendants specifically advised Windsor that the executed COOs gave Windsor ownership of and entitlement to the death benefits under the policies. Id. ¶¶ 51, 70-71, 87, 116, 146, 165. Notwithstanding these assurances, however, the validity of the transfers was eventually called into question.

On December 23, 2012, the first of the five insureds, John L. Bitter, died. Id ¶¶ 37, 52. When Windsor attempted to collect on the death benefits of Bitter’s policy, Bitter’s trustee filed a lawsuit on February 13, 2013, challenging Windsor’s ownership of the policy. Id. ¶¶ 54-58. The dispute was arbitrated as provided for by the financing agreement. Id ¶ 59. Rousseau represented Windsor during the arbitration. Id. ¶¶ 60-61, 63. On April 8, 2014, the Bitter arbitration- ended with a .ruling that, the COO agreement notwithstanding,--Bitter’s trust “retained ownership” of the Bitter life insurance policy. See “American Arbitration Association Interim Award,” dated Apr. 8, 2014 (attached as Ex. K to Compl.) (“Bitter Arbitration- Award”), at 7; accord Compl. ¶ 63. The arbitration decision found that Windsor failed to comply with a specific provision in the transaction documents and with California Civil Code § 9620 by not making a notification required by one of the loan documents. See Bitter Arbitration Award at 4-7. As a result, Windsor was only entitled to the premiums it had paid on the policy and interest at a rate of 10 percent. Id. at 7; .accord Compl. ¶ 63.

At about this time, Windsor began consulting other counsel on this and related issues. See Rousseau Decl. ¶ 3 (indicating that attorneys Darin Judd and Lauren An-tonino started representing Windsor “[a]round July.or August 2014” and were from then on included in communications between defendants and Windsor); “Privilege Log,” undated (attached as Ex. 10 to Heffer Decl.), at 1 (showing that as early as April 15, 2014, Windsor’s principal was receiving legal advice from Judd in this case)¡ The .parties dispute the substance and timing of these consultations. Windsor contends that it never “receive[d] concurrent advice from either Judd or Antonino (or their firms) on, the issues which are the basis” of the malpractice claims in this action. See PI. Opp’n at 2-3 (emphasis omitted). According to Windsor, the malpractice in this action was complete before replacement counsel was consulted, and neither Judd nor Antonino “ever gave transactional legal advice to Windsor with respect to the management. of any of the policies.at issue in this litigation.” See id. at 12-13; accord Declaration of Darin T. Judd in Opposition to Motion Seeking to Compel Discovery, dated June 6, 2017 (attached as Attach, 2 to PI. Opp’n) (“Judd Deck”), ¶¶ 3-7, 11; Affidavit of Lauren S. Antonino, dated-June 8, 2017 (attached as Attach. 3 to PI. Opp’n) (“Antonino Aff.”), ¶¶ 2-7,13. Defendants contend that Wind[516]*516sor received legal advice from counsel other than defendants beginning shortly after the April 2014 Bitter Arbitration Award. See Defs. Mem. at 1-3,12-13 & n.9.

• Windsor terminated Rousseau and Ar-ent Fox on September 9, 2014. Letter from Alan L. Frank, dated Sept. 9, 2014 (attached as Ex. I to Compl.); accord Compl. ¶ 36. On January 29, 2015, Windsor settled the Bitter matter with the assistance of new counsel. See Stipulation and Order to Release Interpleader Funds, dated Feb. 13, 2015 (attached as part of Ex. 2 to Heffer Decl.), at 3. The settlement amount was “significantly less than the full death benefits under the Bitter Policy.” Compl. ¶ 68 & n.5.

In light of the adverse arbitration ruling in the Bitter matter, the insurance providers of two other recently-deceased insureds, Joe E. Acker and Erwin A. Collins, filed interpleader actions challenging Windsor’s entitlement to these insureds’ death benefits. Id. ¶¶ 91-93, 119-121. Both the Acker and Collins trustees were represented by the same counsel who represented the Bitter trustee during the Bitter arbitration, and neither trustee had claimed any problem with Windsor’s ownership of the policies until after conclusion of the Bitter arbitration. See id. ¶¶ 92, 94, 120, 122.

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273 F. Supp. 3d 512, Counsel Stack Legal Research, https://law.counselstack.com/opinion/windsor-securities-llc-v-arent-fox-llp-nysd-2017.