Discovery

DISTRICT COURT RULES ON DISCOVERY IN BAD FAITH CASE

April 16, 2015 by Carlton Fields

In a dispute between the excess and primary liability insurance carriers of a common insured based upon the primary insurer’s alleged breach of the duty to defend the common insured, the U.S. District Court for the Eastern District of Louisiana (the “Court”) ordered the production of the complete personnel files for claims adjusters involved in the claims process for the case at issue. The excess carrier, which sought production of the claim adjuster personnel files asserted that the personnel files were relevant because: 1) the primary carrier’s guidelines stated that staff counsel is not able to make decisions regarding the claims without first obtaining authority from the claims department, and 2) the adjusters’ experiences and backgrounds were relevant to determining whether they were able to make prudent decisions regarding the underlying claim. The primary carrier argued that it should not be required to produce personnel files because the files could contain sensitive information, the production request was not narrowly tailored, and the excess insurer could obtain the information it seeks when it deposes its employees. The Court found that the personnel files may contain relevant and highly probative information concerning the experiences and backgrounds of the adjusters that handled the claim with staff counsel during the underlying suit. However, given the potential sensitive nature of such files, the Court ordered an in camera inspection of those files. See RSUI Indemnity Company v. American States Insurance, Case No. 2:12-cv-02820 (U.S.D.C. E.D. La. Feb. 18, 2015).

This post written by Kelly A. Cruz-Brown.

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INSURER NOT REQUIRED TO PRODUCE COVERAGE MEMORANDA OR REINSURANCE INFORMATION IN DISCOVERY

March 18, 2015 by Carlton Fields

A federal district court in New York has held that the attorney-client and work-product privileges apply to coverage memoranda sought by an insured from AIG Specialty Insurance in an ongoing coverage and bad faith litigation where AIG declined coverage for claims brought under a pollution liability policy. The insured first sought production of a memorandum prepared by AIG’s own coverage counsel, which the court found “unquestionably” came within the attorney-client privilege. The insured then sought production of a memorandum prepared by coverage counsel for an additional insured named on the policy, who AIG had covered in the underlying lawsuit. The court found the memorandum was protected by the work-product privilege and because the insured neither demonstrated a “substantial need” for the document nor an “undue hardship” in obtaining equivalent information elsewhere, it was not discoverable. The court further held that certain “executive claim summaries” previously produced by AIG in redacted form were not discoverable. The redacted information concerned only reinsurance calculations and was therefore irrelevant. The court did, however, direct AIG to produce drafts of a coverage letter and any metadata pertaining to that letter, rejecting application of any privilege to that information. Broadrock Gas Services, LLC v. AIG Specialty Insurance Co., Case No. 1:14-cv-03927 (USDC S.D.N.Y. March 2, 2015).

This post written by Renee Schimkat.

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COURT DENIES MOTIONS TO COMPEL PRODUCTION OF DOCUMENTS UNRELATED TO REINSURANCE POLICIES AT ISSUE IN ACTION

February 24, 2015 by Carlton Fields

The dispute continues between Utica Mutual and Clearwater Insurance in the Northern District of New York where the court recently denied, in large part, the parties’ respective motions to compel discovery of insurance and reinsurance documents unrelated to the specific facultative reinsurance policies at issue in the action. In this case, on which we have previously reported, the issue is whether reinsurance is due under contracts between Utica Mutual and Clearwater for a reinsurance claim relating to a settlement with one of Utica Mutual’s insureds. Utica Mutual sought to compel Clearwater to produce unrelated reinsurance contracts, claim notices, claim files, claim billing information, and other documents concerning contractual relationships with non-parties, arguing these documents were relevant to Clearwater’s defenses and counterclaim that it was misled into paying amounts toward that settlement. Clearwater, in turn, sought to compel Utica Mutual to produce information about primary commercial insurance policies issued by Utica Mutual to a number of its commercial insureds, claiming the information was needed, in part, to determine damages relating to the underlying settlement.

The court denied the parties’ motions, finding the documents sought were not relevant and noting that any issues as to the underlying settlement were already litigated and resolved. Discovery of entirely different contracts and documents that are “not germane or are only faintly relevant” would create confusion and diversion. The court did grant that part of Utica Mutual’s motion seeking to compel Clearwater to respond to an interrogatory requesting the factual and legal bases for Clearwater’s assertions that the amounts it paid to Utica Mutual were not due and payable. That single interrogatory, the court found, sought relevant information. Utica Mutual Insurance Co. v. Clearwater Insurance Co., No. 6:13-cv-01178 (USDC N.D.N.Y. Jan. 20, 2015).

This post written by Renee Schimkat.

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COURT COMPELS DISCOVERY OF REINSURANCE AND OTHER INSURANCE DOCUMENTATION FROM INSURER IN GARNISHMENT PROCEEDINGS

February 18, 2015 by Carlton Fields

The judgment was entered in a class action by plaintiffs who lost their tuition payments for computer training programs at schools that abruptly closed in 2009. In attempting to collect on the judgment, plaintiffs served subpoenas on the schools’ insurers. Overruling objections to the relevance of the documents sought by the subpoenas, the magistrate compelled substantial discovery, including reinsurance policies and information, subject to a procedure where the insurer must verify “the accuracy and completeness of all the searches performed” by way of an affidavit and a subsequent deposition. The district court judge affirmed the decision of the magistrate, and rejected argument that the court lacked jurisdiction over garnishment proceedings. Smith v. Computertraining.com, Inc., Case No. 2:10-cv-11490 (USDC E.D. Mich. Sept. 26, 2014 & Dec. 29, 2014).

This post written by Michael Wolgin.

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COURT ORDERS PRODUCTION OF REINSURANCE-RELATED DISCOVERY

February 4, 2015 by Carlton Fields

A federal district court has ordered Westchester Insurance to produce all files and documents in its possession evidencing any reinsurance agreements or related reinsurance communications that pertain to the insured’s policy or to the claim at issue in the litigation. The court ordered the production after the plaintiff insured moved to compel Westchester to produce reinsurance information and several other items of discovery. The court reasoned that where, as here, the insured brings a bad faith action against its insurer, reinsurance documents are relevant and discoverable. Leevac Shipbuilders LLC v. Westchester Surplus Lines Insurance Co., Case No. 2:14-cv-00399 (USDC W.D. La. Jan. 15, 2015).

This post written by Renee Schimkat.

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