B.H.S.Company, LLP, The v. Peerless Indemnity Insurance Company et al
ORDER Denying 20 Motion to Compel, by Judge Richard P. Matsch on 11/4/2014.(jsmit)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Senior District Judge Richard P. Matsch
Civil Action No. 14-cv-01833-RPM
THE B.H.S. COMPANY, LLP,
PEERLESS INDEMNITY INSURANCE COMPANY,
ORDER DENYING PLAINTIFF’S MOTION TO COMPEL
The Defendant’s initial production of documents included four documents having
redactions that shielded information relating to its reserves for the Plaintiff’s claim. The
Defendant provided a privilege log which stated that the redactions were made because reserve
information is “[n]either relevant nor reasonably calculated to lead to the discovery of admissible
evidence,” citing Sunahara v. State Farm Mutual Automobile Insurance Co., 280 P.3d 649
On October 3, 2014, the Plaintiff moved to compel production of the redacted
information, arguing that the Defendant’s reliance on Sunahara is misplaced. The Plaintiff
contends that the Defendant’s reserve information is discoverable in this first-party insurance
dispute because the Plaintiff has alleged claims of insurance bad faith.
“‘Reserves’ are the ‘funds insurance companies set aside to cover future expenses, losses,
claims, or liabilities’ associated with a particular case.” Sunahara, 280 P.3d at 656 (quoting
Silva v. Basin Western, Inc., 47 P.3d 1184, 1189 (Colo.2002) and Black's Law Dictionary 1307
(6th ed. 1990)). As the Colorado Supreme Court has explained, insurance companies maintain
reserves to satisfy statutory obligations, and they are not admissions of liability or necessarily an
accurate reflection of the insurer's valuation of a particular claim. Sunahara, 280 P.3d at 656;
see Silva, 47 P.3d at 1188–91.
For those reasons, the Colorado Supreme Court has held that reserve information is not
discoverable in a third-party personal injury action, Silva, 47 P.3d at 1193, or in a first-party
insurance dispute involving a claim for underinsured motorist benefits, Sunahara, 280 P.3d at
656. In such cases, reserves “are irrelevant to a jury's determination of liability and damages
and are not reasonably calculated to lead to the discovery of admissible evidence.” Id.
In this case, the Plaintiff’s allegations of bad faith do not change that analysis. The
Defendant has not disputed coverage, and – contrary to the Plaintiff’s arguments – reserve
information is not relevant to the determination of whether the Defendant unreasonably delayed
payment by prolonging negotiations over the cost of repairs and attempting to settle for an
amount lower than the full amount of its insurance obligation. The Defendant’s reserve
information is irrelevant to those issues because reserves are not an admission of liability and
cannot be considered an accurate reflection of the Defendant’s valuation of the Plaintiff’s
Accordingly, it is
ORDERED that the Plaintiff’s motion to compel is denied.
Dated: November 4, 2014
BY THE COURT:
s/Richard P. Matsch
Richard P. Matsch, Senior Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?