Lima LS plc v. PHL Variable Insurance Company et al

Filing 157

RULING on Plaintiff's First Requests for Production Nos. 53-55. 8 pages. Signed by Judge Holly B. Fitzsimmons on 10/6/14.(Esposito, A.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

LIMA LS PLC
v.
PHL VARIABLE INSURANCE
COMPANY, ET AL

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: CIV. NO. 3:12CV1122(WWE)
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RULING ON PLAINTIFF’S FIRST REQUESTS FOR PRODUCTION NOS. 53-55
Plaintiff seeks to compel production of documents
responsive to its First Requests for Production Nos. 53-55,
which concern Phoenix’s efforts to rescind policies while
retaining the premiums paid on those policies. Lima contends it
does not seek to re-litigate defendants’ rescission actions.
Rather, it “seeks to obtain facts relating to defendants’
rescission efforts because those facts are unquestionably
relevant to the allegations at issue here.” [Pl. 7/22/14 Let. at
7]. For example, “any effort on the part of defendants to seek
rescission of their own policies, while nonetheless seeking to
retain the premiums paid on those policies, implicates factual
issues concerning Phoenix’s initial underwriting practices,
prior knowledge of alleged misrepresentations in policy
applications and ongoing receipt of premium payments under false

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pretenses.” Id. Further, Lima argues that “Phoenix’s rescission
efforts also calls into question the truth, and accuracy of
Phoenix’s representations to regulators and others about
Phoenix’s underwriting practices and its purported efforts to
eliminate STOLI business.” Id. at 8.
The parties briefed the issue in letters dated July 22 and
29 and September 16, 2014.
Specifically, Lima’s First Requests for Production Nos. 5355, seek the following:
No. 53: All documents concerning Phoenix’s guidelines,
policies, memoranda, training manuals, procedures or
practices relating to efforts to seek rescission of
life insurance policies issued by Phoenix.
No. 54: All documents concerning any contemplated or
actual decision by Phoenix to rescind issued policies,
including without limitation all documents concerning:
(a) the date on which any such policy was issued; (b)
the date on which any rescinded policy was rescinded;
(c) the reasons that Phoenix rescinded the policy; (d)
the amount of premiums paid by the policy holder prior
to Phoenix’s rescinding the policy; and (e) how much
of the premiums paid by the policyholder Phoenix
retained after rescinding the policy.
No. 55: All documents concerning any efforts by
Phoenix to retain premiums with respect to any
rescinded policies.
As a “starting point,” Lima seeks an order compelling
defendants to produce:
1. Phoenix’s guidelines, policies, memoranda, and training
manuals related to rescission efforts;

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2. Documents sufficient to show which Phoenix policies were
subject to rescission attempts; and
3. Documents concerning Phoenix’s efforts to retain premiums
previously paid as to rescinded policies.
Id. at 9. In its letter dated September 16, 2014, Lima stated
that, “having failed to make any headway with defendants with
its compromise proposal, Lima now seeks an order requiring a
full production of all documents responsive to Request Nos. 5355 as propounded.”

[Pl. Let. 9/16/14 at 4].

Defendants argue that Lima’s request should be denied for
three reasons: “(1) Lima’s narrowed” requests are moot because
all responsive, non-privileged documents are publically
available;

(2) Noerr-Pennington doctrine bars Lima from pursing

claims based on Phoenix’s litigation activity; and (3) Phoenix’s
litigation with other parties regarding policies not at issue in
this case is irrelevant to Lima’s claims.” [Def. Let 7/29/14 at
1].
Noerr-Pennington Doctrine
The Noerr-Pennington doctrine is not a bar to discovery.
See Associated Container Transp. Ltd v. U.S., 705 F.2d 53, 59-60
(2d Cir. 1983) (finding that the discovery requests are
“’reasonably calculated to produce admissible evidence’
regardless of possible Noerr-Pennington immunity that may shield
some of appellees’ activity.”); P & B Marina, Ltd. v. Logrande,
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136 F.R.D. 50, 61 (E.D.N.Y. 1991) (“Although the NoerrPennington doctrine may ultimately guide the court to find
Seaview immune from liability under 42 U.S.C. §1983 for the
claimed violations, the doctrine does not apply to discovery.”);
Fox News Network, L.L.C. v. Time Warner, Inc., 962 F. Supp. 339,
346 (E.D.N.Y. 1997) (quoting P & B Marina, Ltd, 136 F.R.D. at
61, n.9); U.S. Football League v. National Football League, No.
84 Civ. 7484 (PKL), 1986 WL 5623, at *7 (S.D.N.Y. May 15, 1986).
The Court has carefully considered defendants’ cases in
support of their position and find them not persuasive and/or
distinguishable.

Bath Petroleum Storage, Inc. v. Market Hub

Partners, L.P., 129 F. Supp. 2d 578, 594 (W.D.N.Y. 2000)
(dismissing without discovery under Noerr-Pennington doctrine on
a motion to dismiss where the Court considered the various
documents from the underlying administrative proceedings,
plaintiff had notice of these proceedings and based its action
upon those proceedings), affirmed, 229 F.3d 1135, at *1 (2d Cir.
2000)l; (properly refusing further discovery “on the underlying
economic circumstance of the underlying copyright litigation”
where a finding of probable cause eliminated any issue regarding
the “objective legal reasonableness of the litigation.”).
Request for Production No. 53
Defendants state that, “[a]s previously represented by
counsel and confirmed by the same testimony cited in plaintiff’s
brief, no non-privileged documents are responsive to the first
request.”

[Def. Let 7/29/14 at 2, 7]. Defendants will provide a
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formal written response to Request for Production No. 53, in
compliance with Fed. R. Civ. P. 26(g). Defendants will provide a
privilege log of documents responsive to this request. Fed. R.
Civ. P. 26(b)(5), D. Conn. L. Civ. P. 26(e) (privilege log).
Requests for Production Nos. 54 and 55
The Court has considered Requests for Production Nos. 54
and 55, and if limited to Lima policies,1 finds they are
“reasonably calculated to lead to the discovery of admissible
evidence.” Fed. R. Civ. P. 26 (b)(1).
The next issue presented is the parties’ disagreement over
whether defendants should produce “rescission related materials”
for policies in which Lima does not hold an interest.
Lima contends that its allegations that “defendants have
induced policy holders to make premium payments while expecting
and intending to seek the rescission of their policies are not
As of July 25, 2013, Lima holds the interest in
181 Phoenix policies currently in force (the “In
Force Policies”). These policies were issued
between 2003 and 2008 and total $1.08 billion
dollars in face amount. Phoenix has collected
approximately $169 million in premiums on the In
Force Policies, and Lima continues to pay Phoenix
approximately $2.6 million each month in premiums
on these policies. As of July 25, 2013, Lima has
lapsed or surrendered (i.e. sold to Phoenix) a
total of 66 policies and received $0 in return
for those policies (the “Lapsed Policies”). The
Lapsed Policies had a total face amount of $303.5
million. Phoenix received a total of $24.1
million in premiums on the Lapsed Policies before
they were lapsed.
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[Amend. Compl. ¶36].
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limited just to policies in which Lima holds interests.” [Pl.
Let. 9/16/14 at 5 (emphasis added)]. Because Lima alleges that
“(i) Phoenix and its executives made a conscious decision to
relax Phoenix’s underwriting standards in order to bring in more
business, particularly high face-amount policies that defendants
knew were destined for the secondary market, but then (ii)
attempted to rescind the same policies, as purportedly being
‘STOLI’ policies, once Phoenix became unable to meet the
substantial liabilities owed on those policies.” Id. at 6,
citing Amend. Compl. ¶¶82-83, 86, 148. Accordingly, plaintiff
contends that, “[i]f the factual record demonstrates . . . that
Phoenix intentionally relaxed its underwriting standards and
actively solicited and embraced policies with similar
characteristics to those it now seeks to rescind as STOLI, then
Phoenix’s rescission efforts will be shown to be pretextual and
in bad faith.” [Pl. Let. 9/16/14 at 6]. Lima seeks information
on “when Phoenix purportedly ‘learned’ that certain policies
were STOLI policies, when Phoenix decided to actually pursue
rescission of those same policies, and when these events
occurred in relation to Phoenix’s representations to regulators
(and others) about its involvement in STOLI business.” [Pl. Let.
9/16/14 at 7 (emphasis added)].

Plaintiff also argues that its

“CUTPA claims relate to defendants’ general business practices,
not just to their treatment of Lima’s policies.” Id. at 5.
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The Court finds that plaintiff’s requests for documents
concerning policies in which Lima does not hold an interest is
too broad on this record.

This ruling is without prejudice to

plaintiff refiling amended requests after defendants have
produced the discovery related to Lima policies and on a showing
that some further but limited targeted discovery is warranted.
Lima has not provided any authority to the Court to support the
proposition that CUTPA discovery into “general business
practices” is broader in scope than Rule 26(b)(1).
Accordingly, defendants will provide responses to Lima’s
First Requests for Production 53, 54, and 55 in accordance with
this ruling and order.
Scheduling Order
Discovery is set to close on May 15, 2015, and dispositive
motions are due by July 15, 2015. [Doc. #126].
The parties will contact the Court if any issues arise that
may delay the progress of this case, before these deadlines
expire.
October 28, 2014, Conference
The next case management/discovery conference will be held
on October 28, 2014 at 11:00 AM. The parties will provide a
joint agenda by the close of business October 24, 2014. The
agenda may be submitted to the law clerk at:
[e-mail]

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This is not a recommended ruling.

This is a discovery

ruling and order which is reviewable pursuant to the "clearly
erroneous" statutory standard of review.

28 U.S.C. '636

(b)(1)(A); Fed. R. Civ. P. 6(a), 6(e) and 72(a); and Rule 2 of
the Local Rules for United States Magistrate Judges.

As such,

it is an order of the Court unless reversed or modified by the
district judge upon motion timely made.

ENTERED at Bridgeport this 6th day of October 2014.

___/s/_______________________
HOLLY B. FITZSIMMONS
UNITED STATES MAGISTRATE JUDGE

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