Discovery

MOTION TO COMPEL DISCOVERY OF LOSS RESERVES AND REINSURANCE GRANTED IN PART AND DENIED IN PART

March 20, 2008 by Carlton Fields

A plaintiff seeking to compel a defendant insurance company’s disclosure of loss reserves in connection with the plaintiff’s claims of bad faith, breach of contract, and violation of the Washington consumer protection act was not permitted to discover that information, since the plaintiff failed to assert how loss reserve information would be relevant to its claims. The plaintiff was entitled to the production of a reinsurance treaty, which the court held must be produced as part of the “initial disclosures” required by the Federal Rules of Civil Procedure. However, the plaintiff was not permitted to obtain discovery of communications between the defendant and its reinsurer regarding the treaty. The court determined that such communications were irrelevant to the interpretation of the underlying policy. Heights at Issaquah Ridge Owners Ass’n v. Steadfast Insurance Co., Case No. C07-1045RSM (USDC W.D. Wash. Dec. 13, 2007).

This post written by Brian Perryman.

NEW YORK COURTS ADDRESS DISCOVERY AND VENUE DISPUTES IN CONTRACT RESCISSION CASE INVOLVING ALLEGED FINITE REINSURANCE TRANSACTION

January 22, 2008 by Carlton Fields

In a recent discovery dispute between Udayan Ghose (the former Chairman of the Board of Directors of New Cap Reinsurance Corporation ) and CNA Reinsurance, a New York trial court compelled CNA to produce underwriting manuals and guidelines, claims handling manuals, and documents concerning whether it sold finite reinsurance. Plaintiffs argued that the underwriting manuals and other such documents were necessary to disprove defendants’ defense of rescission of the D&O liability policy at issue in the litigation. CNA argued that its underwriting materials were irrelevant since a third party (Encon Underwriting) was responsible for underwriting the policy. Because the defendants were arguing that they would not have issued the policy if they had known of certain misrepresentations made by New Cap, the court concluded that the requested documents were discoverable as being relevant to the issue of materiality. Ghose v. CNA Reinsurance Co. Ltd, No. 108121/04 (N.Y. Sup. Ct., Aug. 20, 2007).

Just a few weeks later, the New York Supreme Court Appellate Division issued an opinion on defendants’ appeal of an order denying a motion to dismiss on forum non conveniens grounds. In a unanimous decision, the Appellate court reversed and granted the motion to dismiss on the condition that the defendants consent to jurisdiction in either Australia, England, or Bermuda, and to waive any statute of limitations defense. The court noted in dicta that if the case had remained in New York state court, it would have sustained an interim award of defense costs, pending resolution of the insurers’ attempt unilaterally to rescind the underlying policy. Ghose v. CNA Reinsurance Co. Ltd, 2007 NY Slip Op 06572 (NY App. Div. Sept. 6, 2007).

This post written by Lynn Hawkins.

REINSURANCE POLICIES DEEMED DISCOVERABLE IN INSURANCE COVERAGE DISPUTE

December 5, 2007 by Carlton Fields

This case involves an insurance coverage dispute based on Illinois state law that arose when Defendants denied coverage under five Commercial Crime Insurance Policies insuring Plaintiffs. Defendants asserted that the denial of coverage was justified because plaintiffs failed to comply with notice and loss provisions of the policies. Plaintiffs alleged those clauses were ambiguous.

The present matter came before the court on plaintiff’s motion to compel production of certain documents and information pertaining to Defendant’s reinsurance information. Noting the relatively low threshold necessary to make materials discoverable, the court ruled that such information may be used to support the plaintiff’s attempt to prove an ambiguity in the insurance policy. The court also relied on Seventh Circuit precedent holding that reinsurance agreements are discoverable and the fact that the insurers did not raise an objection to the discoverability of the policies in their briefs or at oral argument. Machinery Movers v. Fidelity and Deposit Co., Case No. 06-C-2539 (USDC N.D. Ill. Oct. 19, 2007).

This post written by Lynn Hawkins.

MOTION TO COMPEL PRODUCTION OF REINSURANCE AGREEMENT DENIED, WITHOUT PREJUDICE

November 12, 2007 by Carlton Fields

This discovery dispute arose out of defendant’s failure to answer certain of plaintiffs’ interrogatories and requests for production of documents relating to defendant’s reinsurance. Defendant, United States Fidelity & Guaranty Co. (“USF&G”), acknowledged having reinsurance, but objected to identifying its reinsurer and producing the reinsurance agreement based on relevancy. Plaintiffs filed a motion to compel. The Court denied Plaintiffs’ request, without prejudice, because the defendant had not notified the reinsurer of the claim. However, the court stated that if the defendant did notify the reinsurer of the claim, then it would be required to supplement its initial disclosures and produce a copy of the reinsurance agreement. Turnell Corp. v. United States Fidelity & Guaranty Co., Case No. 4:07-cv-1169 (USDC E.D. Mo. Sept. 10, 2007). Background on this matter is found in the Motion to Compel.

COURT HOLDS REQUEST FOR PRODUCTION OF ALL DOCUMENTS FILED WITH ANY REGULATORY AUTHORITIES FOR TEN YEARS OVERBROAD

October 30, 2007 by Carlton Fields

Excess Insurance Company reinsured H. S. Weavers on more than 500 reinsurance contracts, and entered into a commutation agreement with Weavers. Rochdale Insurance Company partially reinsured one of the reinsurance agreements. Excess sued Rochdale, and sought production of every document filed by Rochdale with regulatory authorities over a ten year period of time. On a motion to compel, the court held that the request was overbroad. Excess did not state a rationale for the breadth of the request. Counsel had failed to meet and confer on the discovery dispute as required by a local rule, prompting a rebuke from the court. Excess Insurance Co. v. Rochdale Insurance Co., Case No. 05-10174 (USDC S.D. N.Y. October 4, 2007). Background on this dispute may be found in a Memorandum of Law filed in opposition to the motion to compel.