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Elwell v. First Baptist Church of Hammond, Indiana, Inc.

United States District Court, N.D. Indiana, Hammond Division

August 1, 2017

JOSEPH ELWELL, CRYSTAL ELWELL, DEBORAH BALDWIN, Individually and as custodian for her Minor children WM and AM, ROBERT BALDWIN, Plaintiffs,
v.
FIRST BAPTIST CHURCH OF HAMMOND, INDIANA, INC., Defendant.

          OPINION AND ORDER

          Andrew P. Rodovich United States Magistrate Judge.

         This matter is before the court on the Motion to Quash the Subpoena and/or Motion for Protective Order [DE 60] filed by the defendant, First Baptist Church of Hammond, Inc., on June 5, 2017. For the following reasons set forth below, the motion is DENIED.

         Background

         The plaintiffs, Joseph Elwell, Crystal Elwell, Deborah Baldwin, Individually and as custodian for her minor children WM and AM, and Robert Baldwin filed a complaint against the defendant, First Baptist Church of Hammond, Inc., on May 5, 2016. The complaint asserts three causes of action: fraud, constructive fraud, and negligent retention by First Baptist. The plaintiffs have alleged that First Baptist was aware that the non-parties, Thomas Kimmel and Jack Schaap, engaged in misconduct regarding an investment product that was developed and sold by Sure Line Acceptance Corporation. The plaintiffs further alleged that Kimmel solicited and sold the promissory notes made by Sure Line Acceptance Corporation to First Baptist members while he was acting within his scope of employment.

         On May 22, 2017, the plaintiffs served subpoenas on five companies: Illinois National Insurance Company; Princeton Excess and Surplus Lines Insurance Company; The Underwriters Group, Inc.; Swett & Crawford of Illinois, Inc.; and Chartis Claims, Inc. The subpoenas requested the following:

1. Copies of all documents, correspondence, communications and/or notes in your file regarding any applications for insurance submitted on behalf of First Baptist Church of Hammond, Indiana, Inc. (“First Baptist”) or Hyles-Anderson College (“Hyles-Anderson”), from January 1, 2000 to the present;
2. Copies of all correspondence, communications, and/or notes in your file regarding any claims paid under any insurance policies for which First Baptist or Hyles-Anderson are named as insureds, which relate to any claims involving Thomas L. Kimmel, from January 1, 2000 to the present; and
3. Copies of all correspondence, communications, and/or notes in your file between you, William Owens, The Owens Group, Inc., First Baptist, Hyles-Anderson, Rick Sparks, Eddie Lapina, Mirian Garcia, Ross Wonson, Owen Schipplein, John Wilkerson, Jack Schaap, and/or Thomas L. Kimmel, regarding any risk-management audits conducted for or on behalf of First Baptist and/or Hyles-Anderson from January 1, 2000 to the present.

         First Baptist has argued that all of the requested documents are protected by Indiana's insured-insurer privilege. On June 19, 2017, the plaintiffs filed a response in opposition. First Baptist filed a reply on June 26, 2017.

         First Baptist has not filed a certification of good faith as required by N.D. Ind. L.R. 37-1. The plaintiffs have indicated that the parties discussed the application of Indiana's insured-insurer privilege to the subpoena requests on two separate occasions, but did not reach a resolution. In the interest of justice, the court will consider the merits of the parties' arguments notwithstanding First Baptist's failure to comply with the Local Rules.

         Discussion

         Federal Rule of Civil Procedure 45(d)(3)(A)(iii) provides that “[o]n timely motion, the court by which a subpoena was issued shall quash or modify the subpoena if it . . . requires disclosure of privileged or other protected material and no exception or waiver applies.” However, implicit in the rule is the requirement that a subpoena seek relevant information. See Stock v. Integrated Health Plan, Inc., 241 F.R.D. 618, 621-622 (S.D. Ill. 2007); Syposs v. United States, 181 F.R.D. 224, 226 (W.D.N.Y.1998) (“The reach of a subpoena issued pursuant to Fed.R.Civ.P. 45 is subject to the general relevancy standard applicable to discovery under Fed.R.Civ.P. 26(b)(1).”). Relevancy under this rule is construed broadly to encompass “any matter that bears on, or that reasonably could lead to other matter[s] that could bear on, any issue that is or may be in the case.” Chavez v. DaimlerChrysler Corp., 206 F.R.D. 615, 619 (S.D. Ind. 2002) (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 2389, 57 L.Ed.2d 253 (1978)).

         As a general rule, “a party lacks standing to quash a subpoena issued to a nonparty unless the party has a claim of privilege attached to the information sought or unless it implicates a party's privacy interests.” Malibu Media, LLC v. John Does 1-14, 287 F.R.D. 513, 516 (N.D. Ind. 2012); United States v. Raineri, 670 F.2d 702, 712 (7th Cir. 1982). “The party seeking to quash a subpoena under Rule 45(d)(3)(A) has the burden of demonstrating that the information sought is privileged.” Hodgdon v. Northwestern University, 245 F.R.D. 337, 341 (N.D. Ill. 2007). Regardless of how minimal or exceedingly small the interests are, parties need only have some personal right or privilege in the information sought to have standing to challenge a subpoena to a third party. Malibu Media, LLC, 287 F.R.D. at 517. A specific explanation of why the document is privileged must be shown by the party claiming a privilege, such that a court can decide whether the party has met its burden. Allendale Mutual Insurance Company v. Bull Data Systems, Inc., 152 F.R.D. 132, 137 (N.D. Ill. 1993).

         When a federal court sits in a diversity action, it must apply the substantive privilege rules of the forum state, so Indiana law applies here. Federal Rule of Evidence 501; Country Life Ins. Co. v. St. Paul Surplus Lines Ins. Co., 2005 WL 3690565, *4 (C.D. Ill. Jan. 31, 2005) (where the basis of federal jurisdiction is diversity, the court is to apply the state law of attorney client privilege); Lorenz v. Valley Forge Ins. Co.,815 F.2d 1095, 1097 (7th Cir. 1987) (applying the state law of privilege to a diversity claim in federal court). Claims of privilege must be made and sustained on a question-by-question or document-by-document basis. Airgas Mid-America, Inc. v. Long, 812 N.E.2d 842, 845 (Ind.Ct.App. 2004); Brown v. Katz, 868 N.E.2d 1159, 1167 (Ind.Ct.App. 2007). Absent an articulation of specific reasons why the ...


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