While the insurer had waived certain privileges relating to the settlement of the underlying claim, based on the insurer’s concession that it would not advance an advice of counsel defense, the waiver would not be expanded to include all privileged communications and work product of the insurer’s attorneys.  The decision clarifies a prior decision which found a waiver of attorney client privileges related to the settlement of underlying asbestos claims. 

Previously, the court found that USF&G waived the attorney-client privilege as to communications between its officer, James Kleinberg, and Robert Omrod, the in-house lawyer whose advice Kleinberg disclosed at his examination before trial regarding preparation of the reinsurance billing.

“During the testimony of Kleinberg, many questions were asked regarding USF&G’s decision to allocate all claims to a single treaty year as opposed to spreading them over the several coverage years. This witness repeatedly revealed the advice he received regarding preparation of the bill. Consequently, he placed this matter at issue,” the panel concluded. “Therefore, the Reinsurers may seek testimony and production of documents regarding presentation of the reinsurance claim . . .  only to the extent that the discovery relates to disclosures made during James Kleinberg’s examination before trial testimony.”

The reinsurers urged a broad subject matter waiver, but USF&G asserted that it did not intend to advance an “advice of counsel” defense. Citing Kirschner v. Klemons (2001 WL 1346008, 2001 S.D.N.Y.), the court ruled that in light of USF& G’s representation, there is no need to expand the waiver.

“However, the scope of the waiver is narrowed in reliance on USF & G’s representation that ‘advice of counsel’ is not at issue,” the court concluded. “Accordingly, the court should strictly enforce this disclaimer at trial, and USF&G should not be permitted to raise this defense to Reinsurers’ claims.”

In its Dec. 8 order, the court clarified that its citation to Kirschner “ought to have made it clear that, based on cedant’s representation that it did not intend to use ‘advice of counsel’ as a defense, our finding of waiver did not extend to cedant’s communications with any other attorneys concerning this subject matter.”

‘In view of cedant’s concession, however, that it will not raise the “advice of counsel” defense and make any reference to attorney-client communications by cedant at the trial, we agree that the court should not permit cedant to raise this defense to reinsurers’ claims, or refer to any such communications,” the court ruled.