Discovery

COURT REBUKES POLICYHOLDER SEEKING DISCOVERY OF REINSURANCE AND SIMILAR CLAIM INFORMATION IN COVERAGE DISPUTE

September 29, 2011 by Carlton Fields

Louisiana Generating LLC faced an action by the U.S. government seeking injunctive relief and civil penalties for its alleged violations of the Clean Air Act. It sought a defense and coverage under a Custom Premises Pollution Liability Insurance Policy issued to it by Illinois Union. Illinois Union denied coverage. Louisiana Generating brought a declaratory judgment action in federal court to establish coverage. The court entered a scheduling order allowing the parties discovery on the dispositive legal issue of Illinois Union’s duty to defend. Louisiana Generating sought information pertaining to Illinois Union’s reinsurance, pursuant to the “any insurance agreement” language of F.R.C.P. 26(a)(1)(iv), as well as information pertaining to prior coverage provided to other policyholders with Clean Air Act liabilities, among other things. Illinois Union objected, contending that the information was irrelevant to the purely legal issue of the duty to defend, to be determined as a matter of law solely by reference to the terms of the policy and the allegations of the underlying complaint. The court agreed with Illinois Union, denied the motion, and ordered Louisiana Generating to pay $2,000 to Illinois Union for its efforts in defending against the motion, which the court found to be “not substantially justified.” Louisiana Generating, LLC v. Illinois Union Ins. Co., No. 10-516 (USDC M.D. La. Aug. 8, 2011).

This post written by John Pitblado.

MOTION TO COMPEL DEPOSITION TESTIMONY ON REINSURANCE TRANSACTION DENIED

August 31, 2011 by Carlton Fields

A federal magistrate judge denied plaintiff’s motion to compel deposition testimony regarding a transaction reinsuring defendant Unum’s individual disability block of business. Plaintiff brought suit alleging that Unum breached the parties’ insurance contract by refusing to pay him total disability benefits. Plaintiff moved to compel Unum’s deposition on, among other topics, Unum’s actuarial analysis of its transaction with Northwind reinsuring its individual disability block. In support of his motion, plaintiff cited a press release by Unum’s president stating that the Northwind reinsurance arrangement created capital for Unum’s business that could be deployed for other uses. Plaintiff argued that discovery of information regarding the deal was relevant because it might show how Unum was using money set aside for claims to create capital rather than to pay claims like plaintiff’s. The court denied plaintiff’s motion, holding that Unum’s capital management strategy was irrelevant to the case. Raab v. Unum Group, Case No. 2:10-cv-00186 (USDC S.D. Ohio Aug. 8, 2011).

This post written by Ben Seessel.

CEDENT ORDERED TO PRODUCE CONSULTANT ANALYSES IN DISCOVERY

July 20, 2011 by Carlton Fields

A federal court granted in part a motion to compel filed by the defendant reinsurer, Clearwater, against the plaintiff cedent, Granite State. Clearwater reinsured Granite State under a facultative reinsurance agreement covering certain losses arising from underlying asbestos bodily injury claims against Granite State’s insured. Granite State made claim for payment under the agreement to Clearwater. Clearwater disputed its obligation to pay under the agreement, claiming that Granite State failed to promptly notify Clearwater of the claims. Granite State sued. In discovery, Clearwater sought information pertaining to Granite State’s reserving, relative to an underlying settlement of certain asbestos claim coverage disputes. Granite State objected to the request. The court, in a summary opinion, ordered Granite State to produce “copies of any final reviews, analyses or studies, conducted by any consultants or other third parties, on the principal subject of the adequacy of Granite State’s reserves for asbestos exposures, claims, and/or losses, during the period from 1980 through 2009.” Granite State Insurance Co. v. Clearwater Insurance Co., No. 09-Civ-10607 (USDC S.D.N.Y. June 27, 2011).

This post written by John Pitblado.

COURT COMPELS DISCOVERY IN REINSURANCE DISPUTE INVOLVING MUNICH RE

May 3, 2011 by Carlton Fields

Recently, the US District Court for the District of New Jersey granted defendant American National Insurance’s motion to compel discovery responses, extend discovery, and for a protective order. The dispute arose out of a reinsurance contract where, according to plaintiff Munich Re, defendant agreed to reinsure certain liabilities arising as a result of Munich Re’s participation in a Workers Comps Excess of Loss Reinsurance Agreement. Granting American National’s motion, the Court ordered that Munich Re produce a 30(b)(6) designee for deposition regarding relating to whether plaintiff will pay certain claims (and thus whether defendant will be liable) and provide substantive responses to interrogatories, rather than merely citing to all documents produced. The Court also extended the discovery period and granted American National’s motion for protective order pending an in camera review of the purported privileged documents. Munich Reinsurance Am., Inc. v. American Nat. Ins. Co., Case No. 09-6435 (D. N.J. Apr. 18, 2011).

This post written by John Black.

CLAIMANT IN UK COURT ENTITLED TO ENGINEERING REPORTS OF DAMAGED HIGHWAY COVERED UNDER REINSURANCE AGREEMENT

April 18, 2011 by Carlton Fields

The UK Commercial Court, Queens Bench Division, recently decided a discovery matter in a reinsurance dispute. The litigation arose out of a dispute under a facultative reinsurance contract, which reinsured claimant Axa Seguros’ participation in an insurance policy covering risks of physical damage to a “Toll Road Network concession” in Mexico. After a hurricane caused damage to a highway, Axa Seguros initiated arbitration and subsequently filed suit against Allianz, seeking indemnity for sums said to be due under the reinsurance contract. Axa sought all reports and associated documents produced by Halcrow, an engineering company hired to inspect the damaged highway. Allianz, for its part, claimed a litigation privilege on the basis that it was obtained and prepared for the purpose of obtaining legal advice in connection with expected litigation. The presiding justice concluded that, although litigation was reasonably expected at the time the reports were made, the reports were not generated for the predominant purpose of anticipated litigation. Rather, they were generated to assess whether the highway had been constructed up to international standards, and to determine what damage had been caused by the hurricane. Accordingly, Axa was entitled to the materials sought. Axa Seguros, S.A. DE C.V. v. Allianz Ins. PLC, 2011 EWHC 268, Case No. 2007 Folio 1396 (Comm. Ct. Q.B. Feb. 3, 2011).

This post written by John Black.