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CAUSE NO. 19-10-13793
HARRIS COUNTY MUNICIPAL IN THE DISTRICT COURT
UTILITY DISTRICT NO. 400
vs. MONTGOMERY COUNTY, TEXAS
MID CONTINENT CASUALTY JUDICIAL DISTRICT
COMPANY
DEFENDANT MID CONTINENT’S RESPONSE TO MUD 400’S
MOTION TO OVERRULE CLAIMS OF PRIVILEGE
AND PRIVILEGE OBJECTIONS
TO THE HONORABLE JUDGE OF THIS COURT:
Mid Continent Casualty Company (“Mid-Continent”), submits this Response to
Plaintiff's Motion to Ovenule Mid Continent’s Claims of Privilege and Privilege Objections
regarding documents reflecting communications between Mid Continent and its coverage
attomey, Brent Cooper.
BACKGROUND
In this case, Plaintiff, MUD 400, seeks to recover attomeys’ fees and expenses
it incurred.
in defending an underlying lawsuit. Mid Continent
was MUD 400’s insurer. MUD 400
tendered
the defense of the underlying
suit to Mid-Continent.
Upon receipt of the tenderof defense, Mid Continent sought legal advice regarding its
dutyto defend from attomey, Brent Cooper. Mid Continent offeredto defend
the insured
defendants in the underlying claim subject to a reservation of rights.
MUD 400 rejected the defense offered by Mid Continent and chose instead to hire its
own attomeys to defend itself and two other insured defendants in the underlying claim.
The underlying claim concluded in January of 2019. In February, 2019, MUD 400
demanded that Mid Continent reimburse it for all attomeys’ fees and expenses it had incurred in
defending itself and the two other insured defendants in the claim below. MUD 400 delivered
attomeys’ fees from four separate law firms that MUD 400 had allegedly engaged to defend
three insured defendants in the underlying suit.
With its demand for reimbursement, MUD 400 claimed that Mid Continent’s reservation
of rights letter had created a conflict of interest between the insured and the insurer which
pennitted MUD 400 to choose its own counsel. MUD 400 also claimed that conflicts between
the insured defendants were so significant that separate counsel were required for each and that
Mid Continent
was responsible for payment of all of the fees.
Upon receipt of MUD 400’s demand, Mid Continent again sought legal advice from
Brent Cooper regarding whether or not it was obligated
to reimburse plaintiff for the fees and
costs.
In this litigation, Plaintiffs have sent multiple discovery requests (interrogatories and.
requests for production) seeking the production of or information regarding the substance of
communications between Mid Continent and Brent Cooper, acting as coverage counsel
providing advice to the company. Mid Continent
has objectedto responding to these discovery
requests on the grounds that the information sought is protected by the attomey client privilege.
MUD 400 has now filed a motion to ovemule these claims of privilege and privilege
objections. MUD 400 says the objections should be overruled for fourreasons:
Because Mr. Cooper has been designated as an expert in this case,
MUD 400 is entitled to review privileged communications that
occurred even before this lawsuit existed and before Brent Cooper
‘was designated as an expert.
Mid Continent personnel reviewed privileged communications
with Brent Cooper prior to their depositions.
Brent Cooper “investigated” MUD 400’s claim on behalf of the
insurerand therefore was not acting in the capacity of an attomey.
A Mid Continent coverage committee considered Mr. Cooper's
advice in making its decision to deny the claim.
Mid Continent will address
these arguments in order.
ARGUMENT
The Communications at Issue are Privileged
Each of the communications MUD 400 seeks to discover are covered by the attomey
client privilege. They arose out of Mid Continent’s hiring Brent Cooper to provide legal
opinions and advice first regarding Mid Continent’s duty to defend the insureds in the
underlying lawsuit and then regarding Mid Continent’s legal duty to reimburse
MUD 400 for the
expenses it incurred in defending the underlying claim. Mid Continent did not request that Mr.
Cooper perform any factual investigation of the underlying claim. Instead, Mr. Cooper was
only asked to perform legal work and provide legal opinions to the company. All of the
documents to which Mid Continent objected, were either direct communications or they
reflected communications between Mid Continent representatives and Mr. Cooper or his
representatives
that were confidential and that were made to facilitate
Mr. Cooper's rendering
legal services to Mid Continent. Each of the documents
was created prior to the initiation of a
lawsuit and before Mr. Cooper was designated as an expert witness. Without question,
communications between the insurance company and coverage counsel are protected from
Exhibit 1, Affidavit of Robert Bryant, paragraph 6; Exhibit 2, Depositionof Roderick Evans, page 33, lines 16 20.
Exhibit 1, paragraph 9
Exhibit 1, paragraph 9.
discovery by the attomey client privilege. In e General Agents Ins. Co. of America, Inc., 224
S.W.3d, 806, 818, (Tex. App.Houston [14 Dist.] 2007, orig. proceeding) (communications
from coverage counsel to insurance company “clearly contain confidential communication made
for the purpose of facilitating the rendition of professional legal services” and “are covered by
the attomey client privilege.”).
That Brent Cooper
was Designated
as an Expert Witness Does Not Destroy the Privilege
Citing two mules of civil procedure and two cases that do not apply, MUD 400 contends
that because
Mr. Cooper has been designated as an expert witness in this case, his privilege
communications before the case existed and before he was designated as an expert are fair game
for discovery. Conflating the language of Rule 192.3(e) and 194.2(f), MUD 400 says that Mid
Continent “must disclose an expert’s mental impressions and opinions, the facts known by the
expert
that relate to or form the basis of the opinion, and all documents, reports or tangible items
prepared by the expert in anticipation of his testimony.”
Rule 194 does require that Mid Continent disclose the expert’s name, address and
telephone number, the subject matter on which the expert will testify, the general substanceof
the expert’s mental impressions and opinions and a brief summary of the basis of them and (for
retained experts) all documents, tangible things, reports, models or data compilations that have
been provided to, reviewed by, or prepared by, or for the expert in anticipation of the expert’s
testimony. Mid Continent has fully complied with this provision by responding to request for
disclosure and by submitting its designation of expert witnesses. Attached to Mid Continent’s
reply to request for disclosures were the documents that Mr. Cooper has reviewed in anticipation
of his testimony. They include the pleadings in the undedying claim, the policy, and
See, Exhibit 3 (Mid Continent’ s Amended Response to Plaintiff’ s Request for Disclosure) and Exhibit
4 (Mid
Continent’s Expert Designation).
correspondence between Mr. Cooper and MUD 400’s attomey relatedto MUD 400’s claim for
reimbursement. None of the documents Plaintiff is seeking to discover were attached to Mid
Continent’s response because Mr. Cooper has not reviewed those documents in anticipation of
testifying
in this case.
Plaintiff has cited no authority, and Mid Continent has discovered none, suggesting that
Rule 194.2 requires production of privileged communications that have not been reviewed by or
relied upon by an expert witness.
Similarly, Rule 194.3 regarding the scope of discovery does not require the production of
privileged communications which are not relied upon or reviewed by the expert in anticipation of
his testimony. Rule 192.3 says that with respect to testifying experts, a party may discover
the
expert's identity, the subject matter on which he is testifying, the facts known by the expert that
relate to or form the basis of the expert’s impressions, the expert’s mental impressions
and
opinions, and the documents or tangible things which he reviewed or upon which he relied.
Again, Plaintiff cites no authority, and there is no authority, stating that Rule 192.3 requires the
disclosure of privileged communications that the expert did not review and upon which he did
not rely in anticipation of his testimony.
Mr. Cooper's mental impressions and the basis for them have already been disclosed to
MUD 400. MUD 400 is free to depose Mr. Cooper regarding his impressions, what he reviewed.
in forming his impressions, and the facts of which he was aware relating to his impressions.
MUD 400 is not entitled to privileged attomey client communications created before this lawsuit
event existed, before Mr. Cooper was designated
as an expert, and which he has not reviewed
and upon which he has not relied in forming his opinions in this case.
Plaintiff makes a sweeping statement that the Texas Supreme Court has held that
privilege is waived with respect to items provided
by a testifying expert. The two cases Plaintiff
cites for this proposition not only do not say that, but they are inapplicable to the facts of this
case. In Re: Nat’] Lloyds Ins. Co., 532 S.W.2d 794 (Tex. 2017), the Supreme Court merely said
that if an attomey is designated as an expert to testify about the reasonableness and necessity of
his own fees, then his attomey fee bills which would otherwise be privileged. are discoverable.
In In e Chritus Spohn Hospital Kleberg, 222 S.W.3d 434 (Tex. 2007), the Supreme Court
merely said that ivileged documents that have been accidentally sentto a testifying expert were
discoverable. Neither
of these two cases is on point, and neither provides supportto MUD 400’s
position.
The documents subject to Mid Continent’s objection were communications related to
Brent Cooper's rendering legal advice to Mid Continent regarding its duty to defend and its duty
to reimburse
MUD 400 for its defense costs. They were all created before this litigation existed,
and Mr. Cooper has not reviewed them and is not relying upon them in anticipation of testifying
in this case. Simply because Mr. Cooper has been designated as an expert in this case does not
destroy the privilege protecting the documents from discovery and the objections should be
sustained.
That Mid Continent Deponents Reviewed Unredacted Claim File Notes Does Not
Privilege Material in Those Notes Discoverable.
MUD 400’s second argument for ovemuling Mid Continent’s claim for privilege relates
to the complete claim file notes that Mid Continent maintains. Mid Continent produced the
claim file notes to MUD 400 but redacted those portions of the notes reflecting privileged
communications with Mid Continent’s coverage counsel, Brent Cooper. Two Mid Continent
employees testified that they reviewed the unredacted claim file notes priorto their depositions
being taken. MUD 400 claims that Texas Rule of Evidence 612 requires production of the
unredacted claim file notes. MUD 400 misstates the provisions of Texas Rule of Evidence 612,
and its contention is contrary to established Texas law.
MUD 400’s exact argument was rejected by the court in In Re: John Goin and Hope
Crump (No. 06 00047 CV (Tex. App.Texarkana, July 12, 2017, orig. proceeding)). In this
insurance coverage case, the plaintiff took the deposition of the claims adjuster handling the
underlying claim. Prior to the deposition
the claims adjuster had reviewed the unredacted file
notes for the underlying claim. Just as MUD 400 is claiming here, plaintiff argued that Texas
Rule of Evidence 612 required the production of the unredacted claim file notes. The court
rejected that argument and upheld the insurance company’s claims of privilege. The court
pointed out that Rule 612 only requires production of documents reviewed by a deponent during
the deposition. Because the claims adjuster had reviewed the file notes prior to the deposition,
and not during the deposition, the privileged nature of the attomey client communications was
preserve
That Mid Continent employees reviewed the unredacted claim file notes prior to their
depositions in this case, did not destroy the privilege with respect to communications between
Mid Continent and its coverage counsel, Brent Cooper. Mid Continent’s objections to
producing those communications should be sustained.
Brent Cooper Performed No. Factual Investigation of the Claim. His Work Was Limited
to Providing Legal Opinionsto Mid Continent
MUD 400’s final basis for overruling Mid Continent’s claims of privilege is the
contention that Mid Continent engaged Brent Cooperto perform a factual investigation of MUD
400’s claims. In support of its contention, MUD 400 cites partial and misleading deposition
testimony from claims adjuster, Robert Bryant and claims supervisor, Rod Evans. Although the
deposition excerpts cited by MUD 400, taken out of context, might suggests
Mr. Cooper was
investigating
the facts of the case, elsewhere
in his deposition, Rod Evans made it clear that Mr.
Cooper was not investigating the claim for Mid Continent, but rather simply performing legal
services for the company in its evaluation of the claim.
A. In using the term of understanding regarding the term
investigation of the claim by Mr. Cooper. We did not hire him to
investigate the claim. We hired him to do legal work in reference
to the claim.
Q. Okay. And was any part of the legal work that Mr. Cooper did
associated with investigating the claim?
A. No.
eposition of Rod Evans at p. 33, lines 14
Robert Bryant has also clarified through his affidavit, attached hereto as Exhibit 1 that
Mr. Cooper was only hired to perform
legal services for Mid Continent and was not hired to
actually investigate the claim on Mid Continent’ s behalf.
The communications for which Mid Continent has claimed privilege relate solely to Mr.
Cooper's
work providing legal opinions on the duty to defend and the duty to reimburse MUD
400 for its attomeys’ fees. The documents do not relate to any investigation of the claim
by Mr.
Cooper. Mid Continent’s objections and claims of privilege should be sustained.
Mid Continent’s Consideration of Coverage Counsel’s Legal Opinions in Denying MUD
400’s Claim Does not Destroy thePrivileged Nature of the Communications
MUD 400’s final argument for overuling Mid Continent’s claims of privilege
is that a
coverage committee relied on Mr. Cooper's opinions in making its decision to deny MUD 400’s
claim. Citing no authority whatsoever, MUD 400 makes the unusual argument
that if a party
relies on confidential attomey client communications in taking an action, those communications
Mr. Evans’ deposition excerpt is attached as Exhibit 2.
are no loner privileged and subject to discovery. As stated previously in this response,
confidential communications between an insurance company and coverage counsel are clearly
protected by the attomey client privilege. In re General Agents Ins. Co. of America, Inc., 224
S.W.3d at 818.
MUD 400 claims that because it has asserted a bad faith cause of action, it is entitledto
discover privileged communications between Mid Continent and its attomeys if those
communications relate to a basis for the company’s denial of the claim. MUD 400 is entitled to
ask the bases of what Mid Continent’s decisions were, but that does not mean entitledto
discovery of privileged communications between Mid Continent and its attomeys.
The Court Should Consider Mid Continent’ s Affidavits.
Plaintiff complains that Mid Continent did not provide affidavits supporting its claims of
privilege at least seven days prior to the submission date and asks that the Court ignore the
affidavit submitted with this response and hold that Mid Continent has not sustained its claim of
privilege. Texas Rule of Civil Procedure 193.4 states that the Court may consider affidavits
“served at least seven days before the hearing or at such other reasonable time as the ourt
permits. emphasis added). The local rules of this Court state that responses to motions shall
be filed at least
two working
days before the submission
date (local rule 3.7 (C)). Given that the
local rules provide that responses may be filed two days prior to the submission date, and given
that Plaintiff
will suffer no harm or prejudice if the Court considers the attached affidavit, Mid
Continent respectfully requests the Court consider the affidavits and in making its determination
on Plaintiff’ s Motion to Compel.
Offerto Produce Documents
In Camera
Although MUD 400 has not requested , should the court deem it necessary to review the
documents in camera to determine their privileged nature, Mid Continent
will submit the
contested documents to the court for in camerainspection.
CONCLUSION
For the foregoing reasons, Mid Continent asks the Court to sustain its objections to the
production of the documents referenced
in MUD 400 motion.
Respectfully Submitted,
ARTIN ISIERE EFFERSON ISDOM L.L.P.
By: /s! Mark, Lewis
ChristopherW. Martin
State Bar No. 13057620
martin@mdjwlaw.com
Mark E. Lewis
State Bar No. 12299100
mlewis@mdjwiaw.com
808 Travis Street, Suite 1100
Houston, Texas 77002
Telephone: (713) 632 1700
Facsimile: (713) 222 0101
ATTORNEYS FOR DEFENDANT MID
CONTINENT CASUALTY COMPANY
CERTIFICATE OF SERVICE
I hereby certify that a true copy of Defendant Mid Continent Casualty Company’s
Response to MUD 400’s Motion to Overrule Claims of Privilege and Privilege Objections
has been forwarded via E service on the 27th ay of January , to all counsel of record as
noted below:
James H. Stilwell
TILWELL ARL POSTOLAKIS
1400 Woodloch Forest Drive, Suite 590
The Woodlands, Texas 77380
Email: james@woodlandstxlawfirm.com
ATTORNEY FOR MUD 400
/s[Mark E. Lewis
Mark E. Lewis
CAUSE NO. 19-10-13793
HARRIS COUNTY MUNICIPAL § IN THE DISTRICT COURT
UTILITY DISTRICT NO. 400 §
§
VS. § MONTGOMERY COUNTY, TEXAS
§
MID-CONTINENT CASUALTY 457" JUDICIAL DISTRICT
COMPANY §
AFFIDAVIT OF ROBERT BRYANT
My name is Robert Bryant. I am over eighteen years of age and am competent to make
this affidavit. The matters addressed in this affidavit are within my personal knowledge
and are true and correct.
I am a claims handler for Mid-Continent Casualty Company. Mid-Continent insured
Plaintiff, Harris County Municipal Utility District No. 400 (MUD 400), under a
Directors and Officers Policy. In July of 2018, MUD 400 tendered to Mid-Continent
the defense of a lawsuit (the underlying claim). I was the claim handler for the
underlying claim.
In connection with the underlying claim, Mid-Continent hired attorney, Brent Cooper,
to provide legal opinions regarding Mid-Continent’s duties to defend the insureds. Mid-
Continent did not ask Brent Cooper to conduct any factual investigation of the
underlying claim.
On July 23, 2018, Mid-Continent informed MUD 400 via a telephone call to MUD
400’s attorney that Mid-Continent would provide a defense of the underlying claim to
the insured defendants in that suit. MUD 400 rejected counsel offered by Mid-
Continent and hired counsel of its own choosing to represent MUD 400 as well as
separate counsel to represent the individual defendants.
After the underlying claim was resolved, MUD 400 demanded that Mid-Continent
reimburse it for the attorney’s fees and expenses it incurred in defending all the
defendants in the underlying claim.
Mid-Continent again hired Brent Cooper, this time to provide legal advice regarding
its duty to reimburse MUD 400’s fees given that MUD 400 had rejected counsel offered
by Mid-Continent. Again, Mid-Continent did not ask Brent Cooper to perform any
factual investigation of MUD 400’s demand for reimbursement. Mid-Continent only
asked for a legal opinion.
I have reviewed the privilege log produced by Mid-Continent in this suit. I have also
reviewed the documents referenced on the privilege log. I have also reviewed MUD
EXHIBIT
1
400’s Motion to Overrule Mid-Continent’s Claims of Privilege and Privilege
Objections and the portions of Mid-Continent’s privilege log reproduced therein.
With the exception of one document, each of the documents referenced in MUD 400’s
motion is either (1) a communication between Mid-Continent’s counsel, Brent Cooper,
or his representative and representatives of Mid-Continent, or (2) contains or reveals
the substance of communications between Mid-Continent’s counsel and
representatives of Mid-Continent. The one exception to this is the November 21, 2019
claim file note regarding Mid-Continent’s receipt of this lawsuit.
With the exception of one document, each of the documents referenced on the privilege
log contains or reveals confidential communications between Mid-Continent’s counsel
and Mid-Continent’s representatives that were made to facilitate counsel’s rendering
legal services to Mid-Continent. None of them relate to information provided to,
reviewed by, or prepared by or for Mr. Cooper in anticipation of his testifying as an
expert witness in this case. All of the documents were created before the present
lawsuit was filed and before it was even contemplated that Mr. Cooper would serve as
an expert witness in this case. The one exception to this is the November 21, 2019 claim
file note regarding Mid-Continent’s receipt of this lawsuit.
Further Affiant Sayeth Not.
Robert Bryant
Ag
SWORN TO AND SUBSCRIBED TO BEFORE ME by Robert Bryant on this '. day of
January, 2021.
a
on. Coe
MERCEDES LOPEZ NOTARY PUBL IC, In and for the State of Texas.
Notary Public, State of Texas My Commission Expires: ts”
Commission
Expr (2-15-2023
GI Notary
1D # 124096068
Roderick D. Evans
October 27, 2020
NO. 19-10-13793
HARRIS COUNTY MUNICIPAL ) IN THE DISTRICT COURT
UTILITY DISTRICT NO. 400 )
vs. ) 457TH JUDICIAL DISTRICT
MID-CONTINENT CASUALTY )
COMPANY ) MONTGOMERY COUNTY, TEXAS
* KK K KK KK KK KK KK KK KK KK KK K K OK
ORAL DEPOSITION OF
RODERICK D. EVANS
OCTOBER 27, 2020
Volume No. 1
(REPORTED REMOTELY )
* KK K KK KK KK KK KK KK KK KK KK K K OK
ORAL DEPOSITION of RODERICK D. EVANS, produced as a
witness at the instance of the Plaintiff, and duly
sworn, was taken in the above-styled and numbered cause
on the 27th of October, 2020, from 9:10 a.m. to 1:15
p.m., before Sherry Clark, CSR, in and for the State of
Texas, reported remotely by machine shorthand, pursuant
to the Texas Rules of Civil Procedure.
EXHIBIT
2
SLS Litigation Services, LLC
832.998.0015
Roderick D. Evans
October 27, 2020
33
MR. STILWELL: That is fine with me.
MR. LEWIS: Okay. Thank you.
(Break taken)
(Last question read back)
MR. STILWELL: Back on the record.
Q (BY MR. STILWELL) So, Mr. Evans, I understand
that after talking with your attorney, that the
testimony that you gave, that you swore was the truth,
the whole truth, and nothing but the truth, you now want
10 to change?
11 A Yes.
12 Q And so what about the prior truth that you gave
13 us do you want to change?
14 A In using the term of understanding regarding
15 the term of investigation of the claim by Mr. Cooper.
16 We did not hire him to investigate the claim. We hired
17 him to do legal work in reference to the claim.
18 Q Okay. And was any part of the legal work that
19 Mr. Cooper did associated with investigating the claim?
20 A No.
21 Q ALL right. So let me go back to the question.
22 I asked you what you did to investigate whether or not
23 there might be any conflicts that would preclude having
24 a single attorney represent all three insureds in the
25 Edgar Clayton lawsuit and I think you said you did not
SLS Litigation Services, LLC
832.998.0015
CAUSE NO. 19-10-13793
HARRIS COUNTY MUNICIPAL IN THE DISTRICT COURT
UTILITY DISTRICT NO. 400
vs. MONTGOMERY COUNTY, TEXAS
MID-CONTINENT CASUALTY § 284" JUDICIAL DISTRICT
COMPANY §
DEFENDANT MID-CONTINENT CASUALTY COMPANY’S FIRST AMENDED
RESPONSE TO PLAINTIFF MUDD 400’s REQUESTS FOR DISCLOSURE
TO Plaintiff, MUD 400, by and through its’ attorney of record, James H. Stilwell, 1400
Woodloch Forest Drive, Suite 590, The Woodlands, Texas 77380.
Defendant, Mid-Continent Casualty Company serves its’ First Amended Response to
Plaintiff's Requests for Disclosure.
Respectfully Submitted,
MARTIN, DISIERE, JEFFERSON & WISDOM, L.L.P.
By: /s/ Christopher W. Martin
ChristopherW. Martin
State Bar No. 13057620
martin@ mdjwlaw.com
Mark E. Lewis
State Bar No. 12299100
mlewis@ mdjwlaw.com
808 Travis Street, Suite 1100
Houston, Texas 77002
Telephone: (713) 632-1700
Facsimile: (713) 222-0101
ATTORNEYS FOR DEFENDANT MID-
CONTINENT CASUALTY COMPANY
EXHIBIT
3
CERTIFICATE OF SERVICE
I hereby certify that a true copy Defendant Mid-C ontinent Casualty C ompany’s Responses to
Request for Disclosure has been forwarded via E-service on the 28th day of July 2020,to all
counsel of record as noted below:
James H. Stilwell
STILWELL, EARL & APOSTOLAKIS, LLP
1400 Woodloch Forest Drive, Suite 590
The Woodlands, Texas 77380
Email: james@ woodlandstxlawfirm.com
ATTORNEY FOR MUD 400
‘s/Christopher W. Martin
ChristopherW. Martin
RESPONSES TO REQUEST FOR DISCLOSURE
a. The correct names of the parties to the lawsuit;
RESPONSE:
To the best of Defendant’s knowledge, the parties have been named correctly.
b The name, address, and telephone number of any potential parties;
RESPONSE:
None at this time.
Cc. The legal theories and, in general, the factual bases of the responding party's claims or
defenses;
RESPONSE:
Mid-C ontinent complied with all of its duties to the insured under the terms of the
policy at issue and under Texas law. Mid-C ontinent agreed to provide and offered to
provide a defense to the insured in the underlying lawsuit. Mid-C ontinent was entitled to
control the defense of the insured in the underlying case, including the selection of defense
counsel. There was no conflict of interest between the insured and Mid-C ontinent merely
because Mid-Continent chose to defend under a reservation of rights. The facts to be
adjudicated in the underlying suit (alleged irregularities in the conduct of an election) were
separate and distinct from the possible scenario upon which coverage was reserved (certain
persons potentially receiving an illegal benefit). Furthermore, potential disagreements
among insureds regarding how a defense should be conducted does not create a conflict of
interest that would require the insurer to hire separate counsel for each insured.
Mid-C ontinent had the right to control the defense of the underlying lawsuit. That
right included the right to select counsel to represent the insureds. Mid-Continent’s
defending the insureds under a reservation of rights did not create a conflict of interest that
permitted the insureds to select their own counsel. Only if a conflict of interest actually
exists between the insurer and the insured may the insured reject counsel chosen by the
insurer and select its own lawyer. A reservation of rights, however, does not, by itself,
create a conflict between the insured and insurer; it only recognizes the possibility that
such a conflict may arise in the future. The test to apply is whether the facts to be
adjudicated in the underlying lawsuit are the same facts upon which coverage depends. A
potential conflict of interest raised by the reservation of rights does not destroy or limit the
insurer’s right to select counsel for the insureds. In the underlying suit in this case, Mid-
Continent’s reservation of rights, at most, created a potential conflict of interest between it
and the insureds, not an actual conflict of interest. Consequently, Mid-C ontinent had the
right to select counsel to represent the defendants in the underlying lawsuit and had no
obligation to pay for or reimburse the attorneys’ fees and expenses of counsel chosen by
MUD 400.
The insureds in the underlying lawsuit had no conflicts of interest among themselves
that warranted or required the selection of separate counsel to represent each of them.
Insureds may be entitled to have separate counsel only if actual conflicts of interest exist
between them. Potential conflicts of interest, including different strategies about how to
defend the lawsuit, do not justify the insureds’ demands that Mid-C ontinent provide them
with separate counsel. Mid-C ontinent had no obligation to provide separate counsel for the
defendants in the underlying lawsuit.
Mid-C ontinent had a reasonable basis for denying the claims asserted by the
plaintiff in this suit and that Mid-Continent’s liability for those claims was far from
reasonably clear. Mid-C ontinent reserved rights in the underlying lawsuit on the basis of
the policy’s exclusion concerning claims related to any insured’s gaining an advantage to
which it was not legally entitled. The underlying lawsuit sought to have an election declared
void because of numerous irregularities. For the plaintiff to prevail in the underlying suit,
he did not have to prove that any defendant in that suit actually gained an advantage to
which it was not entitled. He could have prevailed by proving that a sufficient number of
eligible voters who would have voted for him were denied the opportunity to vote or by
proving that the irregularities were so egregious that it is impossible to determine whether
the election truly reflected the will of the voters (i.e., the election may have reached a
perfectly valid result, and the insureds may have gained no advantage to which they were
not entitled, but because of the problems with the way the election was conducted, we
cannot tell). It was neither necessary nor certain that the facts to be adjudicated in the
underlying suit were the same facts upon which coverage was to be determined.
Mid-Continent had no obligation to pay for or reimburse MUD 400 for attorneys’
fees or expenses incurred by the defendants in the underlying suit. Defendants in the
underlying suit rejected the counsel Mid-C ontinent selected to defend them. Mid-C ontinent
was only obligated to pay the fees and expenses of attorneys selected by Mid-C ontinent.
Having paid or incurred obligations to pay legal fees and expenses without first obtaining
Mid-Continent’s written consent to do so, MUD 400 voluntarily took those costs on itself
and has no right to recover those costs from Mid-C ontinent.
By hiring multiple counsel and law firms performing duplicative and unnecessary
work in the defense of the underlying lawsuit, MUD 400 deliberately took action to increase
Mid-Continent’s loss in violation of the policy.
By refusing the counsel chosen by Mid-Continent, MUD 400 failed to cooperate with
Mid-C ontinent in in the defense of the underlying claim.
Mid-C ontinent did not breach its contract with the insureds in the underlying
lawsuit. Rather, the insureds breached the contract by failing to cooperate with Mid-
Continent in defense of the claim and by deliberately taking action to increase Mid-
Continent’s loss.
Mid-Continent responded promptly to Plaintiff’s tender of the defense of the
underlying lawsuit and offered a defense of the claim. Mid-C ontinent responded promptly
to Plaintiff's demand for payment of attorney’s fees Plaintiff incurred in the underlying
suit after Plaintiff rejected the defense offered by Mid-Continent. Mid-Continent’s
response to the demand for attorney’s fees contained detailed factual and legal analyses of
Plaintiff’s demands and a full explanation of why the demands lacked merit. Mid-
Continent had more than a reasonable basis to deny Plaintiff’s demands for attorney’s fees
Plaintiff violated the terms of the insurance policy by refusing to cooperate with
Mid-C ontinent in the defense of the claim. Plaintiff rejected the defense counsel chosen by
Mid-C ontinent. Any legal expenses incurred by Plaintiff in the underlying suit that were
not approved by Mid-Continent in writing are not insured expenses under the contract.
a. The amount and any method of calculating economic damages;
RESPONSE:
Not Applicable.
€. The name, address, and telephone number of persons having knowledge of relevant facts,
and a brief statement of each identified person's connection with the case;
RESPONSE:
Defendant designates all of the persons with knowledge of relevant facts named in
Plaintiff’s Response to Request for Disclosure served on January 15, 2020.
Plaintiff also designates:
Rod Evans
Claims Supervisor, Mid-C ontinent Casualty Company
c/o Martin, Disiere, Wisdom & J efferson
808 Travis Street, Suite 1100
(713) 632-1700
John Thomas Foster
Regina Adams
Radcliffe Bobbit Adams Polley PLLC
2929 Allen Parkway, Suite 3450
Houston, Texas 77019
713-237-1221
Mr. Foster and Ms. Adams represented Edgar Clayton, the plaintiff in the underlying suit.
Britton B. Harris
Harris Hillburn, LLP
1111 Rosalie
Houston, Texas 77004
(713) 223-3936
Mr. Harris was counsel chosen by Mid-C ontinent to defend the insureds in the underlying
case. He will testify, inter alia, that he would have charged a rate of $175.00 and hour for
his services.
f. For any testifying expert:
1 The expert's name, address, and telephone number;
The subject matter on which the expert will testify;
The general substance of the expert's mental impressions and opinions and a brief
summary of the basis for them, or if the expert is not retained by, employed by or
otherwise subject to the control of the responding party, documents reflecting
such information;
4 If the expert is retained by, employed by, or otherwise subject to the control of the
responding party:
all documents, tangible things, reports, models, or data compilations that
have been provided to, reviewed by, or prepared by or for the expert in
anticipation of the expert's testimony; and
the expert's current resume and bibliography.
RESPONSE:
Unretained Experts:
John Thomas Foster
Regina Adams
Radcliffe Bobbit Adams Polley PLLC
2929 Allen Parkway, Suite 3450
Houston, Texas 77019
713-237-1221
Mr. Foster and Ms. Adams were counsel for the plaintiff in the underlying suit
challenging the results of an election contest. They may testify that for the plaintiff to
prevail in litigation contesting the results of an election the plaintiff need not prove that a
defendant in that suit received illegal votes or any illegal advantage. Rather, the plaintiff in
such a suit must allege and prove particularized material irregularities in the conduct of
the election and establish either (1) that a different and correct result should have been
reached by counting or not counting certain specified votes affected by the irregularities, or
(2) that the irregularities were such as to render a determination of the true will of the
majority of the voters impossible. They may testify that in the underlying suit the plaintiff,
Mr. Clayton, was not required to prove that any candidate in the election actually received
illegal votes. He could have prevailed by proving that a sufficient number of qualified
voters were improperly prevented from voting. Likewise, he could have prevailed by
demonstrating that the irregularities in the election contest were so serious that it would be
impossible to determine whether the election results actually reflected the will of the
qualified voters. In neither case would Mr. Clayton have to prove that any defendant
actually received any illegal advantage.
Mr. Foster and Ms. Adams may also testify that a departure from the statutes
regulating the manner of holding an election does not ordinarily invalidate an election
because those statutes are directory in nature. Even if the election at issue in the
underlying case was not conducted in accordance with the statutes regulating elections,
that did not make the election “illegal.” It simply made the election subject to being
declared void.
Mr. Foster and Ms. Adams may also testify that persons declared the winners of
elections that are being challenged have a right to occupy the office and receive the
emoluments of the office until such time as the election may be declared void.
Consequently, even if Anne-Marie Wright’s and Cheryl Smith’s elections had been
declared void in the underlying suit, that would not mean that their occupancy of their
offices would have been illegal. Furthermore, until the election was declared void, MUD
400 had no legal obligation to hold another election. C onsequently, failing to hold another
election was not an advantage to which it was not legally entitled.
Their testimony will be based on their knowledge of the underlying lawsuit, their
education and their experience.
Retained Experts:
Warren Taylor
Taylor, Taylor & Russell LLP
2777Allen Parkway
Suite 1000
Houston, Texas 77019
(713) 615-6060
Mr. Taylor is a lawyer licensed in the state of Texas and practicing in the Houston
area, including Montgomery C ounty. He will testify regarding the reasonableness and
necessity of attorney’s fees incurred by the defendants in the underlying lawsuit and by the
plaintiff in this lawsuit. He is familiar with attorney’s fees charged in Montgomery and
Harris C ounties. He will testify that none of the fees charged by The Tough Law Firm, The
Seiler Law Firm, or the firm of Schwartz, Page & Harding in the underlying lawsuit were
necessary. The work of all of these firms was substantially duplicative of the work done by
the firm of Martin, Earl & Stilwell and did not substantially aid in or contribute to the
defense of the defendants in the underlying suit. Furthermore, much of the work
performed by the firm of Schwartz, Page & Harding was work done in that firm’s capacity
as outside general counsel for MUD 400 and not as litigation counsel. Some of the fees
charged by Martin, Ear] & Stilwell in the underlying suit were excessive and unreasonable.
He will also testify regarding the reasonableness and necessity of the attorney’s fees
incurred by Plaintiff in this suit.
In providing opinions about the fees incurred in both the underlying case and the
current case, Mr. Taylor will testify about the factors to be considered in determining an
award of attorneys’ fees as set out in Rohrmoos Venture v. UTSW DVA Healthcare, LLP,
578 S.W.3d 469 (Tex. 2019) and their application in the cases at issue here.
In addition to the above, Mr. Taylor’s testimony is based on his review of the legal
bills sent to Mid-C ontinent by the Martin, Earl & Stilwell firm, The Schwartz, Page &
Harding firm, The Seiler Firm and the Tough Law Firm, all of which have been produced
to plaintiff previously. He also reviewed certain pleadings from the underlying lawsuit
which are attached to this response as Exhibit A. His testimony will also be based his
education and experience.
His CV can be found at https: //www.taylaw.com/attorney/warren-taylor/.
Jerad Wayne Najvar
Najvar Law Firm
2180 North Loop West
Suite 225
Houston, TX 77018
(281) 404-4696
Mr. Najvar is a lawyer licensed in the state of Texas. He will testify that for the
plaintiff to prevail in litigation contesting the results of an election the plaintiff need not
prove that a defendant in that suit received illegal votes or any illegal advantage. Rather,
the plaintiff in such a suit must allege and prove particularized material irregularities in
the conduct of the election and establish either (1) that a different and correct result should
have been reached by counting or not counting certain specified votes affected by the
irregularities, or (2) that the irregularities were such as to render a determination of the
true will of the majority of the voters impossibl
Preview
CAUSE NO. 19-10-13793 HARRIS COUNTY MUNICIPAL IN THE DISTRICT COURT UTILITY DISTRICT NO. 400 vs. MONTGOMERY COUNTY, TEXAS MID CONTINENT CASUALTY JUDICIAL DISTRICT COMPANY DEFENDANT MID CONTINENT’S RESPONSE TO MUD 400’S MOTION TO OVERRULE CLAIMS OF PRIVILEGE AND PRIVILEGE OBJECTIONS TO THE HONORABLE JUDGE OF THIS COURT: Mid Continent Casualty Company (“Mid-Continent”), submits this Response to Plaintiff's Motion to Ovenule Mid Continent’s Claims of Privilege and Privilege Objections regarding documents reflecting communications between Mid Continent and its coverage attomey, Brent Cooper. BACKGROUND In this case, Plaintiff, MUD 400, seeks to recover attomeys’ fees and expenses it incurred. in defending an underlying lawsuit. Mid Continent was MUD 400’s insurer. MUD 400 tendered the defense of the underlying suit to Mid-Continent. Upon receipt of the tenderof defense, Mid Continent sought legal advice regarding its dutyto defend from attomey, Brent Cooper. Mid Continent offeredto defend the insured defendants in the underlying claim subject to a reservation of rights. MUD 400 rejected the defense offered by Mid Continent and chose instead to hire its own attomeys to defend itself and two other insured defendants in the underlying claim. The underlying claim concluded in January of 2019. In February, 2019, MUD 400 demanded that Mid Continent reimburse it for all attomeys’ fees and expenses it had incurred in defending itself and the two other insured defendants in the claim below. MUD 400 delivered attomeys’ fees from four separate law firms that MUD 400 had allegedly engaged to defend three insured defendants in the underlying suit. With its demand for reimbursement, MUD 400 claimed that Mid Continent’s reservation of rights letter had created a conflict of interest between the insured and the insurer which pennitted MUD 400 to choose its own counsel. MUD 400 also claimed that conflicts between the insured defendants were so significant that separate counsel were required for each and that Mid Continent was responsible for payment of all of the fees. Upon receipt of MUD 400’s demand, Mid Continent again sought legal advice from Brent Cooper regarding whether or not it was obligated to reimburse plaintiff for the fees and costs. In this litigation, Plaintiffs have sent multiple discovery requests (interrogatories and. requests for production) seeking the production of or information regarding the substance of communications between Mid Continent and Brent Cooper, acting as coverage counsel providing advice to the company. Mid Continent has objectedto responding to these discovery requests on the grounds that the information sought is protected by the attomey client privilege. MUD 400 has now filed a motion to ovemule these claims of privilege and privilege objections. MUD 400 says the objections should be overruled for fourreasons: Because Mr. Cooper has been designated as an expert in this case, MUD 400 is entitled to review privileged communications that occurred even before this lawsuit existed and before Brent Cooper ‘was designated as an expert. Mid Continent personnel reviewed privileged communications with Brent Cooper prior to their depositions. Brent Cooper “investigated” MUD 400’s claim on behalf of the insurerand therefore was not acting in the capacity of an attomey. A Mid Continent coverage committee considered Mr. Cooper's advice in making its decision to deny the claim. Mid Continent will address these arguments in order. ARGUMENT The Communications at Issue are Privileged Each of the communications MUD 400 seeks to discover are covered by the attomey client privilege. They arose out of Mid Continent’s hiring Brent Cooper to provide legal opinions and advice first regarding Mid Continent’s duty to defend the insureds in the underlying lawsuit and then regarding Mid Continent’s legal duty to reimburse MUD 400 for the expenses it incurred in defending the underlying claim. Mid Continent did not request that Mr. Cooper perform any factual investigation of the underlying claim. Instead, Mr. Cooper was only asked to perform legal work and provide legal opinions to the company. All of the documents to which Mid Continent objected, were either direct communications or they reflected communications between Mid Continent representatives and Mr. Cooper or his representatives that were confidential and that were made to facilitate Mr. Cooper's rendering legal services to Mid Continent. Each of the documents was created prior to the initiation of a lawsuit and before Mr. Cooper was designated as an expert witness. Without question, communications between the insurance company and coverage counsel are protected from Exhibit 1, Affidavit of Robert Bryant, paragraph 6; Exhibit 2, Depositionof Roderick Evans, page 33, lines 16 20. Exhibit 1, paragraph 9 Exhibit 1, paragraph 9. discovery by the attomey client privilege. In e General Agents Ins. Co. of America, Inc., 224 S.W.3d, 806, 818, (Tex. App.Houston [14 Dist.] 2007, orig. proceeding) (communications from coverage counsel to insurance company “clearly contain confidential communication made for the purpose of facilitating the rendition of professional legal services” and “are covered by the attomey client privilege.”). That Brent Cooper was Designated as an Expert Witness Does Not Destroy the Privilege Citing two mules of civil procedure and two cases that do not apply, MUD 400 contends that because Mr. Cooper has been designated as an expert witness in this case, his privilege communications before the case existed and before he was designated as an expert are fair game for discovery. Conflating the language of Rule 192.3(e) and 194.2(f), MUD 400 says that Mid Continent “must disclose an expert’s mental impressions and opinions, the facts known by the expert that relate to or form the basis of the opinion, and all documents, reports or tangible items prepared by the expert in anticipation of his testimony.” Rule 194 does require that Mid Continent disclose the expert’s name, address and telephone number, the subject matter on which the expert will testify, the general substanceof the expert’s mental impressions and opinions and a brief summary of the basis of them and (for retained experts) all documents, tangible things, reports, models or data compilations that have been provided to, reviewed by, or prepared by, or for the expert in anticipation of the expert’s testimony. Mid Continent has fully complied with this provision by responding to request for disclosure and by submitting its designation of expert witnesses. Attached to Mid Continent’s reply to request for disclosures were the documents that Mr. Cooper has reviewed in anticipation of his testimony. They include the pleadings in the undedying claim, the policy, and See, Exhibit 3 (Mid Continent’ s Amended Response to Plaintiff’ s Request for Disclosure) and Exhibit 4 (Mid Continent’s Expert Designation). correspondence between Mr. Cooper and MUD 400’s attomey relatedto MUD 400’s claim for reimbursement. None of the documents Plaintiff is seeking to discover were attached to Mid Continent’s response because Mr. Cooper has not reviewed those documents in anticipation of testifying in this case. Plaintiff has cited no authority, and Mid Continent has discovered none, suggesting that Rule 194.2 requires production of privileged communications that have not been reviewed by or relied upon by an expert witness. Similarly, Rule 194.3 regarding the scope of discovery does not require the production of privileged communications which are not relied upon or reviewed by the expert in anticipation of his testimony. Rule 192.3 says that with respect to testifying experts, a party may discover the expert's identity, the subject matter on which he is testifying, the facts known by the expert that relate to or form the basis of the expert’s impressions, the expert’s mental impressions and opinions, and the documents or tangible things which he reviewed or upon which he relied. Again, Plaintiff cites no authority, and there is no authority, stating that Rule 192.3 requires the disclosure of privileged communications that the expert did not review and upon which he did not rely in anticipation of his testimony. Mr. Cooper's mental impressions and the basis for them have already been disclosed to MUD 400. MUD 400 is free to depose Mr. Cooper regarding his impressions, what he reviewed. in forming his impressions, and the facts of which he was aware relating to his impressions. MUD 400 is not entitled to privileged attomey client communications created before this lawsuit event existed, before Mr. Cooper was designated as an expert, and which he has not reviewed and upon which he has not relied in forming his opinions in this case. Plaintiff makes a sweeping statement that the Texas Supreme Court has held that privilege is waived with respect to items provided by a testifying expert. The two cases Plaintiff cites for this proposition not only do not say that, but they are inapplicable to the facts of this case. In Re: Nat’] Lloyds Ins. Co., 532 S.W.2d 794 (Tex. 2017), the Supreme Court merely said that if an attomey is designated as an expert to testify about the reasonableness and necessity of his own fees, then his attomey fee bills which would otherwise be privileged. are discoverable. In In e Chritus Spohn Hospital Kleberg, 222 S.W.3d 434 (Tex. 2007), the Supreme Court merely said that ivileged documents that have been accidentally sentto a testifying expert were discoverable. Neither of these two cases is on point, and neither provides supportto MUD 400’s position. The documents subject to Mid Continent’s objection were communications related to Brent Cooper's rendering legal advice to Mid Continent regarding its duty to defend and its duty to reimburse MUD 400 for its defense costs. They were all created before this litigation existed, and Mr. Cooper has not reviewed them and is not relying upon them in anticipation of testifying in this case. Simply because Mr. Cooper has been designated as an expert in this case does not destroy the privilege protecting the documents from discovery and the objections should be sustained. That Mid Continent Deponents Reviewed Unredacted Claim File Notes Does Not Privilege Material in Those Notes Discoverable. MUD 400’s second argument for ovemuling Mid Continent’s claim for privilege relates to the complete claim file notes that Mid Continent maintains. Mid Continent produced the claim file notes to MUD 400 but redacted those portions of the notes reflecting privileged communications with Mid Continent’s coverage counsel, Brent Cooper. Two Mid Continent employees testified that they reviewed the unredacted claim file notes priorto their depositions being taken. MUD 400 claims that Texas Rule of Evidence 612 requires production of the unredacted claim file notes. MUD 400 misstates the provisions of Texas Rule of Evidence 612, and its contention is contrary to established Texas law. MUD 400’s exact argument was rejected by the court in In Re: John Goin and Hope Crump (No. 06 00047 CV (Tex. App.Texarkana, July 12, 2017, orig. proceeding)). In this insurance coverage case, the plaintiff took the deposition of the claims adjuster handling the underlying claim. Prior to the deposition the claims adjuster had reviewed the unredacted file notes for the underlying claim. Just as MUD 400 is claiming here, plaintiff argued that Texas Rule of Evidence 612 required the production of the unredacted claim file notes. The court rejected that argument and upheld the insurance company’s claims of privilege. The court pointed out that Rule 612 only requires production of documents reviewed by a deponent during the deposition. Because the claims adjuster had reviewed the file notes prior to the deposition, and not during the deposition, the privileged nature of the attomey client communications was preserve That Mid Continent employees reviewed the unredacted claim file notes prior to their depositions in this case, did not destroy the privilege with respect to communications between Mid Continent and its coverage counsel, Brent Cooper. Mid Continent’s objections to producing those communications should be sustained. Brent Cooper Performed No. Factual Investigation of the Claim. His Work Was Limited to Providing Legal Opinionsto Mid Continent MUD 400’s final basis for overruling Mid Continent’s claims of privilege is the contention that Mid Continent engaged Brent Cooperto perform a factual investigation of MUD 400’s claims. In support of its contention, MUD 400 cites partial and misleading deposition testimony from claims adjuster, Robert Bryant and claims supervisor, Rod Evans. Although the deposition excerpts cited by MUD 400, taken out of context, might suggests Mr. Cooper was investigating the facts of the case, elsewhere in his deposition, Rod Evans made it clear that Mr. Cooper was not investigating the claim for Mid Continent, but rather simply performing legal services for the company in its evaluation of the claim. A. In using the term of understanding regarding the term investigation of the claim by Mr. Cooper. We did not hire him to investigate the claim. We hired him to do legal work in reference to the claim. Q. Okay. And was any part of the legal work that Mr. Cooper did associated with investigating the claim? A. No. eposition of Rod Evans at p. 33, lines 14 Robert Bryant has also clarified through his affidavit, attached hereto as Exhibit 1 that Mr. Cooper was only hired to perform legal services for Mid Continent and was not hired to actually investigate the claim on Mid Continent’ s behalf. The communications for which Mid Continent has claimed privilege relate solely to Mr. Cooper's work providing legal opinions on the duty to defend and the duty to reimburse MUD 400 for its attomeys’ fees. The documents do not relate to any investigation of the claim by Mr. Cooper. Mid Continent’s objections and claims of privilege should be sustained. Mid Continent’s Consideration of Coverage Counsel’s Legal Opinions in Denying MUD 400’s Claim Does not Destroy thePrivileged Nature of the Communications MUD 400’s final argument for overuling Mid Continent’s claims of privilege is that a coverage committee relied on Mr. Cooper's opinions in making its decision to deny MUD 400’s claim. Citing no authority whatsoever, MUD 400 makes the unusual argument that if a party relies on confidential attomey client communications in taking an action, those communications Mr. Evans’ deposition excerpt is attached as Exhibit 2. are no loner privileged and subject to discovery. As stated previously in this response, confidential communications between an insurance company and coverage counsel are clearly protected by the attomey client privilege. In re General Agents Ins. Co. of America, Inc., 224 S.W.3d at 818. MUD 400 claims that because it has asserted a bad faith cause of action, it is entitledto discover privileged communications between Mid Continent and its attomeys if those communications relate to a basis for the company’s denial of the claim. MUD 400 is entitled to ask the bases of what Mid Continent’s decisions were, but that does not mean entitledto discovery of privileged communications between Mid Continent and its attomeys. The Court Should Consider Mid Continent’ s Affidavits. Plaintiff complains that Mid Continent did not provide affidavits supporting its claims of privilege at least seven days prior to the submission date and asks that the Court ignore the affidavit submitted with this response and hold that Mid Continent has not sustained its claim of privilege. Texas Rule of Civil Procedure 193.4 states that the Court may consider affidavits “served at least seven days before the hearing or at such other reasonable time as the ourt permits. emphasis added). The local rules of this Court state that responses to motions shall be filed at least two working days before the submission date (local rule 3.7 (C)). Given that the local rules provide that responses may be filed two days prior to the submission date, and given that Plaintiff will suffer no harm or prejudice if the Court considers the attached affidavit, Mid Continent respectfully requests the Court consider the affidavits and in making its determination on Plaintiff’ s Motion to Compel. Offerto Produce Documents In Camera Although MUD 400 has not requested , should the court deem it necessary to review the documents in camera to determine their privileged nature, Mid Continent will submit the contested documents to the court for in camerainspection. CONCLUSION For the foregoing reasons, Mid Continent asks the Court to sustain its objections to the production of the documents referenced in MUD 400 motion. Respectfully Submitted, ARTIN ISIERE EFFERSON ISDOM L.L.P. By: /s! Mark, Lewis ChristopherW. Martin State Bar No. 13057620 martin@mdjwlaw.com Mark E. Lewis State Bar No. 12299100 mlewis@mdjwiaw.com 808 Travis Street, Suite 1100 Houston, Texas 77002 Telephone: (713) 632 1700 Facsimile: (713) 222 0101 ATTORNEYS FOR DEFENDANT MID CONTINENT CASUALTY COMPANY CERTIFICATE OF SERVICE I hereby certify that a true copy of Defendant Mid Continent Casualty Company’s Response to MUD 400’s Motion to Overrule Claims of Privilege and Privilege Objections has been forwarded via E service on the 27th ay of January , to all counsel of record as noted below: James H. Stilwell TILWELL ARL POSTOLAKIS 1400 Woodloch Forest Drive, Suite 590 The Woodlands, Texas 77380 Email: james@woodlandstxlawfirm.com ATTORNEY FOR MUD 400 /s[Mark E. Lewis Mark E. Lewis CAUSE NO. 19-10-13793 HARRIS COUNTY MUNICIPAL § IN THE DISTRICT COURT UTILITY DISTRICT NO. 400 § § VS. § MONTGOMERY COUNTY, TEXAS § MID-CONTINENT CASUALTY 457" JUDICIAL DISTRICT COMPANY § AFFIDAVIT OF ROBERT BRYANT My name is Robert Bryant. I am over eighteen years of age and am competent to make this affidavit. The matters addressed in this affidavit are within my personal knowledge and are true and correct. I am a claims handler for Mid-Continent Casualty Company. Mid-Continent insured Plaintiff, Harris County Municipal Utility District No. 400 (MUD 400), under a Directors and Officers Policy. In July of 2018, MUD 400 tendered to Mid-Continent the defense of a lawsuit (the underlying claim). I was the claim handler for the underlying claim. In connection with the underlying claim, Mid-Continent hired attorney, Brent Cooper, to provide legal opinions regarding Mid-Continent’s duties to defend the insureds. Mid- Continent did not ask Brent Cooper to conduct any factual investigation of the underlying claim. On July 23, 2018, Mid-Continent informed MUD 400 via a telephone call to MUD 400’s attorney that Mid-Continent would provide a defense of the underlying claim to the insured defendants in that suit. MUD 400 rejected counsel offered by Mid- Continent and hired counsel of its own choosing to represent MUD 400 as well as separate counsel to represent the individual defendants. After the underlying claim was resolved, MUD 400 demanded that Mid-Continent reimburse it for the attorney’s fees and expenses it incurred in defending all the defendants in the underlying claim. Mid-Continent again hired Brent Cooper, this time to provide legal advice regarding its duty to reimburse MUD 400’s fees given that MUD 400 had rejected counsel offered by Mid-Continent. Again, Mid-Continent did not ask Brent Cooper to perform any factual investigation of MUD 400’s demand for reimbursement. Mid-Continent only asked for a legal opinion. I have reviewed the privilege log produced by Mid-Continent in this suit. I have also reviewed the documents referenced on the privilege log. I have also reviewed MUD EXHIBIT 1 400’s Motion to Overrule Mid-Continent’s Claims of Privilege and Privilege Objections and the portions of Mid-Continent’s privilege log reproduced therein. With the exception of one document, each of the documents referenced in MUD 400’s motion is either (1) a communication between Mid-Continent’s counsel, Brent Cooper, or his representative and representatives of Mid-Continent, or (2) contains or reveals the substance of communications between Mid-Continent’s counsel and representatives of Mid-Continent. The one exception to this is the November 21, 2019 claim file note regarding Mid-Continent’s receipt of this lawsuit. With the exception of one document, each of the documents referenced on the privilege log contains or reveals confidential communications between Mid-Continent’s counsel and Mid-Continent’s representatives that were made to facilitate counsel’s rendering legal services to Mid-Continent. None of them relate to information provided to, reviewed by, or prepared by or for Mr. Cooper in anticipation of his testifying as an expert witness in this case. All of the documents were created before the present lawsuit was filed and before it was even contemplated that Mr. Cooper would serve as an expert witness in this case. The one exception to this is the November 21, 2019 claim file note regarding Mid-Continent’s receipt of this lawsuit. Further Affiant Sayeth Not. Robert Bryant Ag SWORN TO AND SUBSCRIBED TO BEFORE ME by Robert Bryant on this '. day of January, 2021. a on. Coe MERCEDES LOPEZ NOTARY PUBL IC, In and for the State of Texas. Notary Public, State of Texas My Commission Expires: ts” Commission Expr (2-15-2023 GI Notary 1D # 124096068 Roderick D. Evans October 27, 2020 NO. 19-10-13793 HARRIS COUNTY MUNICIPAL ) IN THE DISTRICT COURT UTILITY DISTRICT NO. 400 ) vs. ) 457TH JUDICIAL DISTRICT MID-CONTINENT CASUALTY ) COMPANY ) MONTGOMERY COUNTY, TEXAS * KK K KK KK KK KK KK KK KK KK KK K K OK ORAL DEPOSITION OF RODERICK D. EVANS OCTOBER 27, 2020 Volume No. 1 (REPORTED REMOTELY ) * KK K KK KK KK KK KK KK KK KK KK K K OK ORAL DEPOSITION of RODERICK D. EVANS, produced as a witness at the instance of the Plaintiff, and duly sworn, was taken in the above-styled and numbered cause on the 27th of October, 2020, from 9:10 a.m. to 1:15 p.m., before Sherry Clark, CSR, in and for the State of Texas, reported remotely by machine shorthand, pursuant to the Texas Rules of Civil Procedure. EXHIBIT 2 SLS Litigation Services, LLC 832.998.0015 Roderick D. Evans October 27, 2020 33 MR. STILWELL: That is fine with me. MR. LEWIS: Okay. Thank you. (Break taken) (Last question read back) MR. STILWELL: Back on the record. Q (BY MR. STILWELL) So, Mr. Evans, I understand that after talking with your attorney, that the testimony that you gave, that you swore was the truth, the whole truth, and nothing but the truth, you now want 10 to change? 11 A Yes. 12 Q And so what about the prior truth that you gave 13 us do you want to change? 14 A In using the term of understanding regarding 15 the term of investigation of the claim by Mr. Cooper. 16 We did not hire him to investigate the claim. We hired 17 him to do legal work in reference to the claim. 18 Q Okay. And was any part of the legal work that 19 Mr. Cooper did associated with investigating the claim? 20 A No. 21 Q ALL right. So let me go back to the question. 22 I asked you what you did to investigate whether or not 23 there might be any conflicts that would preclude having 24 a single attorney represent all three insureds in the 25 Edgar Clayton lawsuit and I think you said you did not SLS Litigation Services, LLC 832.998.0015 CAUSE NO. 19-10-13793 HARRIS COUNTY MUNICIPAL IN THE DISTRICT COURT UTILITY DISTRICT NO. 400 vs. MONTGOMERY COUNTY, TEXAS MID-CONTINENT CASUALTY § 284" JUDICIAL DISTRICT COMPANY § DEFENDANT MID-CONTINENT CASUALTY COMPANY’S FIRST AMENDED RESPONSE TO PLAINTIFF MUDD 400’s REQUESTS FOR DISCLOSURE TO Plaintiff, MUD 400, by and through its’ attorney of record, James H. Stilwell, 1400 Woodloch Forest Drive, Suite 590, The Woodlands, Texas 77380. Defendant, Mid-Continent Casualty Company serves its’ First Amended Response to Plaintiff's Requests for Disclosure. Respectfully Submitted, MARTIN, DISIERE, JEFFERSON & WISDOM, L.L.P. By: /s/ Christopher W. Martin ChristopherW. Martin State Bar No. 13057620 martin@ mdjwlaw.com Mark E. Lewis State Bar No. 12299100 mlewis@ mdjwlaw.com 808 Travis Street, Suite 1100 Houston, Texas 77002 Telephone: (713) 632-1700 Facsimile: (713) 222-0101 ATTORNEYS FOR DEFENDANT MID- CONTINENT CASUALTY COMPANY EXHIBIT 3 CERTIFICATE OF SERVICE I hereby certify that a true copy Defendant Mid-C ontinent Casualty C ompany’s Responses to Request for Disclosure has been forwarded via E-service on the 28th day of July 2020,to all counsel of record as noted below: James H. Stilwell STILWELL, EARL & APOSTOLAKIS, LLP 1400 Woodloch Forest Drive, Suite 590 The Woodlands, Texas 77380 Email: james@ woodlandstxlawfirm.com ATTORNEY FOR MUD 400 ‘s/Christopher W. Martin ChristopherW. Martin RESPONSES TO REQUEST FOR DISCLOSURE a. The correct names of the parties to the lawsuit; RESPONSE: To the best of Defendant’s knowledge, the parties have been named correctly. b The name, address, and telephone number of any potential parties; RESPONSE: None at this time. Cc. The legal theories and, in general, the factual bases of the responding party's claims or defenses; RESPONSE: Mid-C ontinent complied with all of its duties to the insured under the terms of the policy at issue and under Texas law. Mid-C ontinent agreed to provide and offered to provide a defense to the insured in the underlying lawsuit. Mid-C ontinent was entitled to control the defense of the insured in the underlying case, including the selection of defense counsel. There was no conflict of interest between the insured and Mid-C ontinent merely because Mid-Continent chose to defend under a reservation of rights. The facts to be adjudicated in the underlying suit (alleged irregularities in the conduct of an election) were separate and distinct from the possible scenario upon which coverage was reserved (certain persons potentially receiving an illegal benefit). Furthermore, potential disagreements among insureds regarding how a defense should be conducted does not create a conflict of interest that would require the insurer to hire separate counsel for each insured. Mid-C ontinent had the right to control the defense of the underlying lawsuit. That right included the right to select counsel to represent the insureds. Mid-Continent’s defending the insureds under a reservation of rights did not create a conflict of interest that permitted the insureds to select their own counsel. Only if a conflict of interest actually exists between the insurer and the insured may the insured reject counsel chosen by the insurer and select its own lawyer. A reservation of rights, however, does not, by itself, create a conflict between the insured and insurer; it only recognizes the possibility that such a conflict may arise in the future. The test to apply is whether the facts to be adjudicated in the underlying lawsuit are the same facts upon which coverage depends. A potential conflict of interest raised by the reservation of rights does not destroy or limit the insurer’s right to select counsel for the insureds. In the underlying suit in this case, Mid- Continent’s reservation of rights, at most, created a potential conflict of interest between it and the insureds, not an actual conflict of interest. Consequently, Mid-C ontinent had the right to select counsel to represent the defendants in the underlying lawsuit and had no obligation to pay for or reimburse the attorneys’ fees and expenses of counsel chosen by MUD 400. The insureds in the underlying lawsuit had no conflicts of interest among themselves that warranted or required the selection of separate counsel to represent each of them. Insureds may be entitled to have separate counsel only if actual conflicts of interest exist between them. Potential conflicts of interest, including different strategies about how to defend the lawsuit, do not justify the insureds’ demands that Mid-C ontinent provide them with separate counsel. Mid-C ontinent had no obligation to provide separate counsel for the defendants in the underlying lawsuit. Mid-C ontinent had a reasonable basis for denying the claims asserted by the plaintiff in this suit and that Mid-Continent’s liability for those claims was far from reasonably clear. Mid-C ontinent reserved rights in the underlying lawsuit on the basis of the policy’s exclusion concerning claims related to any insured’s gaining an advantage to which it was not legally entitled. The underlying lawsuit sought to have an election declared void because of numerous irregularities. For the plaintiff to prevail in the underlying suit, he did not have to prove that any defendant in that suit actually gained an advantage to which it was not entitled. He could have prevailed by proving that a sufficient number of eligible voters who would have voted for him were denied the opportunity to vote or by proving that the irregularities were so egregious that it is impossible to determine whether the election truly reflected the will of the voters (i.e., the election may have reached a perfectly valid result, and the insureds may have gained no advantage to which they were not entitled, but because of the problems with the way the election was conducted, we cannot tell). It was neither necessary nor certain that the facts to be adjudicated in the underlying suit were the same facts upon which coverage was to be determined. Mid-Continent had no obligation to pay for or reimburse MUD 400 for attorneys’ fees or expenses incurred by the defendants in the underlying suit. Defendants in the underlying suit rejected the counsel Mid-C ontinent selected to defend them. Mid-C ontinent was only obligated to pay the fees and expenses of attorneys selected by Mid-C ontinent. Having paid or incurred obligations to pay legal fees and expenses without first obtaining Mid-Continent’s written consent to do so, MUD 400 voluntarily took those costs on itself and has no right to recover those costs from Mid-C ontinent. By hiring multiple counsel and law firms performing duplicative and unnecessary work in the defense of the underlying lawsuit, MUD 400 deliberately took action to increase Mid-Continent’s loss in violation of the policy. By refusing the counsel chosen by Mid-Continent, MUD 400 failed to cooperate with Mid-C ontinent in in the defense of the underlying claim. Mid-C ontinent did not breach its contract with the insureds in the underlying lawsuit. Rather, the insureds breached the contract by failing to cooperate with Mid- Continent in defense of the claim and by deliberately taking action to increase Mid- Continent’s loss. Mid-Continent responded promptly to Plaintiff’s tender of the defense of the underlying lawsuit and offered a defense of the claim. Mid-C ontinent responded promptly to Plaintiff's demand for payment of attorney’s fees Plaintiff incurred in the underlying suit after Plaintiff rejected the defense offered by Mid-Continent. Mid-Continent’s response to the demand for attorney’s fees contained detailed factual and legal analyses of Plaintiff’s demands and a full explanation of why the demands lacked merit. Mid- Continent had more than a reasonable basis to deny Plaintiff’s demands for attorney’s fees Plaintiff violated the terms of the insurance policy by refusing to cooperate with Mid-C ontinent in the defense of the claim. Plaintiff rejected the defense counsel chosen by Mid-C ontinent. Any legal expenses incurred by Plaintiff in the underlying suit that were not approved by Mid-Continent in writing are not insured expenses under the contract. a. The amount and any method of calculating economic damages; RESPONSE: Not Applicable. €. The name, address, and telephone number of persons having knowledge of relevant facts, and a brief statement of each identified person's connection with the case; RESPONSE: Defendant designates all of the persons with knowledge of relevant facts named in Plaintiff’s Response to Request for Disclosure served on January 15, 2020. Plaintiff also designates: Rod Evans Claims Supervisor, Mid-C ontinent Casualty Company c/o Martin, Disiere, Wisdom & J efferson 808 Travis Street, Suite 1100 (713) 632-1700 John Thomas Foster Regina Adams Radcliffe Bobbit Adams Polley PLLC 2929 Allen Parkway, Suite 3450 Houston, Texas 77019 713-237-1221 Mr. Foster and Ms. Adams represented Edgar Clayton, the plaintiff in the underlying suit. Britton B. Harris Harris Hillburn, LLP 1111 Rosalie Houston, Texas 77004 (713) 223-3936 Mr. Harris was counsel chosen by Mid-C ontinent to defend the insureds in the underlying case. He will testify, inter alia, that he would have charged a rate of $175.00 and hour for his services. f. For any testifying expert: 1 The expert's name, address, and telephone number; The subject matter on which the expert will testify; The general substance of the expert's mental impressions and opinions and a brief summary of the basis for them, or if the expert is not retained by, employed by or otherwise subject to the control of the responding party, documents reflecting such information; 4 If the expert is retained by, employed by, or otherwise subject to the control of the responding party: all documents, tangible things, reports, models, or data compilations that have been provided to, reviewed by, or prepared by or for the expert in anticipation of the expert's testimony; and the expert's current resume and bibliography. RESPONSE: Unretained Experts: John Thomas Foster Regina Adams Radcliffe Bobbit Adams Polley PLLC 2929 Allen Parkway, Suite 3450 Houston, Texas 77019 713-237-1221 Mr. Foster and Ms. Adams were counsel for the plaintiff in the underlying suit challenging the results of an election contest. They may testify that for the plaintiff to prevail in litigation contesting the results of an election the plaintiff need not prove that a defendant in that suit received illegal votes or any illegal advantage. Rather, the plaintiff in such a suit must allege and prove particularized material irregularities in the conduct of the election and establish either (1) that a different and correct result should have been reached by counting or not counting certain specified votes affected by the irregularities, or (2) that the irregularities were such as to render a determination of the true will of the majority of the voters impossible. They may testify that in the underlying suit the plaintiff, Mr. Clayton, was not required to prove that any candidate in the election actually received illegal votes. He could have prevailed by proving that a sufficient number of qualified voters were improperly prevented from voting. Likewise, he could have prevailed by demonstrating that the irregularities in the election contest were so serious that it would be impossible to determine whether the election results actually reflected the will of the qualified voters. In neither case would Mr. Clayton have to prove that any defendant actually received any illegal advantage. Mr. Foster and Ms. Adams may also testify that a departure from the statutes regulating the manner of holding an election does not ordinarily invalidate an election because those statutes are directory in nature. Even if the election at issue in the underlying case was not conducted in accordance with the statutes regulating elections, that did not make the election “illegal.” It simply made the election subject to being declared void. Mr. Foster and Ms. Adams may also testify that persons declared the winners of elections that are being challenged have a right to occupy the office and receive the emoluments of the office until such time as the election may be declared void. Consequently, even if Anne-Marie Wright’s and Cheryl Smith’s elections had been declared void in the underlying suit, that would not mean that their occupancy of their offices would have been illegal. Furthermore, until the election was declared void, MUD 400 had no legal obligation to hold another election. C onsequently, failing to hold another election was not an advantage to which it was not legally entitled. Their testimony will be based on their knowledge of the underlying lawsuit, their education and their experience. Retained Experts: Warren Taylor Taylor, Taylor & Russell LLP 2777Allen Parkway Suite 1000 Houston, Texas 77019 (713) 615-6060 Mr. Taylor is a lawyer licensed in the state of Texas and practicing in the Houston area, including Montgomery C ounty. He will testify regarding the reasonableness and necessity of attorney’s fees incurred by the defendants in the underlying lawsuit and by the plaintiff in this lawsuit. He is familiar with attorney’s fees charged in Montgomery and Harris C ounties. He will testify that none of the fees charged by The Tough Law Firm, The Seiler Law Firm, or the firm of Schwartz, Page & Harding in the underlying lawsuit were necessary. The work of all of these firms was substantially duplicative of the work done by the firm of Martin, Earl & Stilwell and did not substantially aid in or contribute to the defense of the defendants in the underlying suit. Furthermore, much of the work performed by the firm of Schwartz, Page & Harding was work done in that firm’s capacity as outside general counsel for MUD 400 and not as litigation counsel. Some of the fees charged by Martin, Ear] & Stilwell in the underlying suit were excessive and unreasonable. He will also testify regarding the reasonableness and necessity of the attorney’s fees incurred by Plaintiff in this suit. In providing opinions about the fees incurred in both the underlying case and the current case, Mr. Taylor will testify about the factors to be considered in determining an award of attorneys’ fees as set out in Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019) and their application in the cases at issue here. In addition to the above, Mr. Taylor’s testimony is based on his review of the legal bills sent to Mid-C ontinent by the Martin, Earl & Stilwell firm, The Schwartz, Page & Harding firm, The Seiler Firm and the Tough Law Firm, all of which have been produced to plaintiff previously. He also reviewed certain pleadings from the underlying lawsuit which are attached to this response as Exhibit A. His testimony will also be based his education and experience. His CV can be found at https: //www.taylaw.com/attorney/warren-taylor/. Jerad Wayne Najvar Najvar Law Firm 2180 North Loop West Suite 225 Houston, TX 77018 (281) 404-4696 Mr. Najvar is a lawyer licensed in the state of Texas. He will testify that for the plaintiff to prevail in litigation contesting the results of an election the plaintiff need not prove that a defendant in that suit received illegal votes or any illegal advantage. Rather, the plaintiff in such a suit must allege and prove particularized material irregularities in the conduct of the election and establish either (1) that a different and correct result should have been reached by counting or not counting certain specified votes affected by the irregularities, or (2) that the irregularities were such as to render a determination of the true will of the majority of the voters impossibl