Moonbeam Capital Investments, LLC v. Integrated Construction Solutions, Inc.

          ORDER GRANTING DEFENDANT'S MOTION TO QUASH THE SUBPOENA ISSUED TO DEFENDANT'S EXPERT CHENARD & OSBORN, INC. [#14]

          Hon. Gershwin A. Drain United States District Court Judge.

         I. Introduction

         Plaintiffs Moonbeam Capital Investments, LLC (“Moonbeam”) and Travelers Indemnity Company (“Travelers”) filed the present complaint against Defendant Integrated Construction Solutions, Inc. (“ICS”) alleging negligence. Before the Court is Defendant's Motion to Quash the subpoena that Plaintiffs issued to Defendant's expert, Chenard and Osborn, Inc. (“Chenard”). Dkt. No. 14. For the reasons discussed below, the Court will grant Defendant's Motion.

         II. Factual Background

         Plaintiff Moonbeam operates a Radisson Hotel in Farmington Hills, Michigan. Dkt. No. 1, pg. 3 (Pg. ID 3). Sometime before February 16, 2017, Travelers issued a property insurance policy to Moonbeam that covered Moonbeam's Radisson Hotel. Id. Prior to February 16, 2017, Moonbeam and ICS entered into an agreement for constructions services where ICS performed various construction services at the Radisson, including renovation of certain bathrooms. Id. On February 16, 2017, a 75-pound mirror installed by ICS fell off of the wall and severed a water line beneath it. Id. This caused severe water damage throughout the hotel. Id. Moonbeam made a claim to Travelers for the loss and damage caused by the incident. Id. at pg. 4 (Pg. ID 4). Travelers made a payment to Moonbeam in the amount of $374, 420.39. Id. Plaintiffs Moonbeam and Travelers then brought suit against ICS for the amount of Travelers' payments to Moonbeam to date. Id.

         ICS asserts that its insurer retained Chenard & Osborn Inc. on ICS's behalf as an expert to investigate the loss in anticipation of litigation. Dkt. No. 14, pg. 5 (Pg. ID 53). ICS disclosed Chenard's initial reports and photos to Moonbeam, subject to a privilege log. Id. After this disclosure, Plaintiffs issued a subpoena to Chenard requesting it to produce its entire investigation file. Id. Defendant ICS then filed the present Motion to Quash on January 24, 2019, seeking to quash Plaintiffs' subpoena. Dkt. No. 14. Plaintiffs opposed the Motion on February 5, 2019. Dkt. No. 16. Defendant replied on February 12, 2019. Dkt. No. 17.

         III. Legal Standard

         Fed. R. Civ. P. 45(3) governs quashing a subpoena. Under the Rule, district courts must quash or modify subpoenas that “(i) fail[] to allow a reasonable time to comply; (ii) require[] a person to comply beyond the geographical limits specified in Rule 45(c); (iii) require[] disclosure of privileged or other protected matter, if no exception or waiver applies; or (iv) subject[] a person to undue burden.”

         IV. Discussion

         1. Standing

         Plaintiffs assert that ICS does not have standing to ask this Court to quash a subpoena directed to third-party Chenard. Dkt. No. 16, pg. 12 (Pg. ID 149). ICS argues that it has standing because it is asserting an interest in maintaining the privileged information contained in the documents. Dkt. No. 17, pg. 2 n.1 (Pg. ID 267).

         A party does not have standing to move to quash a subpoena directed to a third party absent a claim of privilege or interest. See Llanez-Garcia, 735 F.3d 483, 498-99 (6th Cir. 2013). Here, Defendant ICS is claiming a privilege in Chenard's documents because they were allegedly created in anticipation of litigation and are work product. Therefore, this Court finds that Defendant has standing to move this Court to quash Plaintiffs' subpoena.

         2. Discovery Sequence

         Defendant asserts that draft reports and communications are protected by Fed.R.Civ.P. 26(b)(4)(B) and (C). Rule 26(b)(4)(B) states: “[r]ules 26(b)(3)(A) and (B) protect drafts of any report or disclosure required under Rule 26(a)(2), regardless ...