Thompson et al v. National Union Fire Insurance Company of Pittsburgh, PA

Filing 44

RULING granting in part and denying in part 41 Motion for Protective Order, denying defendant's alternative request to stay discovery. See attached ruling for details. Signed by Judge Holly B. Fitzsimmons on 2/23/2015. (Katz, Samantha)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
JAMES THOMPSON, et. al.
Plaintiff,

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v.
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA.,
Defendant,

CIVIL ACTION NO:
3:14-CV-00259-WWE

RULING ON DEFENDANT’S MOTION FOR PROTECTIVE ORDER OR IN THE
ALTERNATIVE TO STAY DISCOVERY [DOC. #41]
Pending before the Court is the motion of defendant
National Union Fire Insurance Company of Pittsburgh, PA.
(“defendant”) for protective order, or in the alternative to
stay discovery. [Doc. #41]. The Court held a telephone
conference on February 17, 2015, addressing the issues raised in
the motion for protective order, as well as other discovery
concerns. Counsel for defendant and the seventy-seven plaintiffs
participated. For the reasons articulated below, the Court
GRANTS in part and DENIES in part defendant‟s motion for
protective order, and DENIES defendant‟s alternative request to
stay discovery. [Doc. #41].
A.

BACKGROUND
Plaintiffs bring this breach of contract action after

obtaining stipulated judgments in ten lawsuits stemming from a
February 7, 2010 explosion at the construction site of the Kleen
Energy Systems, LLC power plant in Middletown, Connecticut
(“Kleen Energy Project”). Plaintiffs sue defendant under
Connecticut‟s direct action statute as assignees of Bluewater
Energy Solutions, Inc. (“Bluewater”), one of the parties against
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whom plaintiffs obtained the February 7, 2010 stipulated
judgments. Plaintiffs seek to recover under a Commercial
Umbrella Liability Policy (No. BE080779049) issued by defendant
to Bluewater for the policy period of February 3, 2010 to
February 2, 2011.

(“National Union Policy”).

Defendant has filed a motion for summary judgment arguing
that as a matter of law, the National Union Policy does not
provide liability coverage arising out of the Kleen Energy
Project. [Doc. #36]. Specifically, defendant contends that the
policy excludes coverage for any liability arising from a
project insured under a “wrap-up” or similar plan, and that the
Kleen Energy Project was insured by a wrap-up plan.
B.

LEGAL STANDARD
Parties may obtain discovery regarding any non-privileged

matter that is relevant to the subject matter involved in the
pending litigation. Fed. R. Civ. P. 26(b)(1). The information
sought need not be admissible at trial as long as the discovery
appears reasonably calculated to lead to the discovery of
admissible evidence. Fed. R. Civ. P. 26(b)(1). Notwithstanding
the breadth of the discovery rules, the district courts are
afforded discretion under Rule 26(c) to issue protective orders
limiting the scope of discovery. Dove v. Atlantic Capital Corp.,
963 F.2d 15, 19 (2d Cir. 1992) (“[t]he grant and nature of
protection is singularly within the discretion of the district
court[…]”). When the party seeking the protective order
demonstrates good cause, the court “may make any order which
justice requires to protect a party or person from annoyance,
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embarrassment, oppression, or undue burden or expense, including
[…] that the disclosure or discovery not be had.” Fed. R. Civ.
P. 26(c)(1). “The party resisting discovery bears the burden of
showing why discovery should be denied.” Chamberlain v.
Farmington Sav. Bank, 247 F.R.D. 288, 289 (D. Conn. Nov. 30,
2007) (citing Blankenship v. Hearst Corp., 519 F.2d 418, 429
(9th Cir. 1975)).
C.

DISCUSSION
The present dispute involves plaintiffs‟ discovery requests

dated August 22, 2014, which generally seek information
concerning the meaning of the term “wrap-up.” Defendant argues
that the majority of these requests are generally irrelevant and
not reasonably calculated to lead to the discovery of admissible
evidence. During the Court‟s February 17, 2015 telephone
conference, plaintiffs‟ counsel represented that plaintiffs have
revised their requests as reflected in his letter dated December
11, 2014, and only seek the information requested therein. [Doc.
341-6]. Plaintiffs‟ counsel further argued that the information
sought falls within the ambit of Rule 26 in light of the amended
complaint‟s allegations.1
During the February 17, 2015 telephone conference,
plaintiffs conceded that Georgia law will apply to the
interpretation of the National Union Policy. The law of Georgia
dictates that:

1

For example, the Amended Complaint alleges that defendant‟s “arbitrary
interpretation of its ambiguous, unclear, and undefined policy exclusion
language in Endorsement 7 [i.e., language implicating the wrap-up or similar
rating plan] constitutes a breach of its contract to provide coverage to
Bluewater for covered occurrences.” [Doc. #25, ¶10 (brackets added)].
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Construction of an insurance policy is governed by the
ordinary rules of contract construction, and when the terms
of a written contract are clear and unambiguous, the court
is to look to the contract alone to find the parties'
intent. However, if a provision of an insurance contract is
susceptible of two or more constructions, even when the
multiple constructions are all logical and reasonable, it
is ambiguous, and the statutory rules of contract
construction will be applied. The proper construction of a
contract, and whether the contract is ambiguous, are
questions of law for the court to decide.

MedAssets, Inc. v. Federal Insurance. Co., 705 F. Supp. 2d 1368,
1373-74 (N.D. Ga. 2010) (quoting Ins. Co. of Penn. v. APAC-Se.,
Inc., 297 Ga. App. 553, 557, 677 S.E.2d 734, 738 (2009)).
Bearing this in mind, and the parties‟ positions as further
argued during the February 17, 2015 telephone conference, the
Court turns to the present dispute.2
1. Interrogatories and Document Requests 1-4
Plaintiffs‟ first four interrogatories request defendant
to:
Identify all “policy forms” and “endorsements” comprising
“umbrella liability insurance”, within the meaning given
those terms by the International Risk and Insurance
Institute‟s glossary of terms, that would furnish coverage
for the same or similar losses as the Policy, and which
include provisions relating to, making reference to,
defining, or otherwise giving meaning to terms: “wrap-up”;
“rating plan”; “CCIP”; or “OCIP” that You have submitted to
any Insurance Commission in the State of Georgia[,
Connecticut, New York, or Pennsylvania]3 during the period
beginning January 1, 2000 until the present time.

[Doc. #41-6]. Requests for production 1 through 4 seek the
documents identified in interrogatories 1 through 4. [Id.].
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The Court further notes that the present dispute implicates a classic
“chicken and egg” scenario. Defendant argues that interpretation of the
policy will come from the clear and unambiguous terms of the contract itself,
and therefore no extrinsic discovery is warranted before resolution of the
summary judgment motion. On the other hand, plaintiffs argue that they
require discovery to further argue that the policy language at issue is
ambiguous.
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Interrogatories 1 through 4 request information for each separate state
listed.
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Defendants object to these requests because they “seek documents
that have no bearing on coverage under the specific National
Union Policy here.” [Doc. #41-2, 7]. Defendant also argues that
the information sought is already accessible to plaintiffs, as
demonstrated by the documents purportedly submitted to the
Georgia Insurance Commission attached to the amended complaint.
[Id. at 6].
In light of the allegations in the Amended Complaint4 and
the law applicable to the interpretation of the National Union
Policy, at this time the Court will only require defendant to
answer interrogatories 1 and 4 and produce documents responsive
to document requests 1 and 4. However, the Court finds that the
requested timeframe is over broad and will therefore limit
responses to the time period of January 1, 2005 through December
31, 2013. On the record before it, the Court does not see the
relevance of documents submitted to the insurance commissions of
Connecticut or New York. Therefore, defendant‟s motion for
protective order is GRANTED in part and DENIED in part as to
interrogatories and document requests 1-4.
2. Interrogatory and Document Request 6
Plaintiffs‟ sixth interrogatory requests defendant to,
“Identify all Underwriters‟ Files in Your possession on or
before the date of the Claim, that pertain to Policy coverage or
Policy endorsement number 7.” [Doc. #41-6]. Request for
production 6 seeks the documents identified in response to
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Defendant is a corporation organized under the law of the State of
Pennsylvania. Although it operates as a subsidiary of AIG, which transacts
business in Connecticut and maintains an address in New York, the Court is
not compelled to order production of documents relating to these states. The
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interrogatory 6. [Id.]. Defendant argues that the documents and
information sought are not relevant or likely to lead to the
discovery of admissible evidence on the claims and defenses in
this matter. Defendant also argues that the documents sought
contain sensitive information and documents and communications
protected by the attorney-client privilege and/or work product
doctrine.
Defendant cites to a string of district court cases for the
position that underwriting files are not relevant to policy
disputes. For example, defendant quotes the case of Milinazzo v.
State Farm Ins. Co., 247 F.R.D. 691 (S.D. Fla. 2007), for the
proposition that, “Although such documents [underwriting files]
are not privileged, they are irrelevant to the determination of
coverage and Plaintiff‟s breach of contract claim.” However,
defendant fails to recognize that this case explicitly notes
that in breach of contract claims, underwriting files are “only
discoverable when the contract terms are ambiguous.” Id. at 702
(citing Champion Int‟l Corp. v. Liberty Mut. Ins. Co., 129
F.R.D. 63 (S.D.N.Y. 1990)). The Milinazzo court ultimately found
that plaintiff‟s request for the complete underwriting files was
irrelevant, in part because plaintiff did not allege an
ambiguity in the contract language. Milinazzo, 647 F.R.D. at
702-03. Similarly, Defendants also cite to National Union Fire
Ins. Co. v. Mead Johnson & Co., No. 3:11-CV00015-RLY-WGH, 2014
WL 931947, at *3 (S.D. Ind. March 10, 2014) as “finding that the
entire underwriting file is not relevant to the meaning of
„personal and advertising injury‟ and would not lead to the
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discovery of admissible evidence.” Again, however, defendant
fails to acknowledge that this ruling was premised on the
district court‟s finding that the policy language setting forth
coverage for advertising injury was unambiguous. Id. Here, by
contrast, plaintiffs have alleged ambiguity in the National
Union Policy language and there has been no determination
concerning whether the language at issue is unambiguous.
“Although the interpretation of an insurance policy is a
legal question, an insured is entitled to explore what risks the
insurer expects to cover in the policy.” Silgan Containers v.
National Union Fire Ins., No. C 09-05971 RS (LB), 2010 WL
5387748, at *4 (N.D. Cal. Dec. 21, 2010) (citing Pentair Water
Treatment (OH) Co. v. Continental Ins. Co., No. C 08-6304, 2009
WL 3817600, at *4 (S.D.N.Y. Nov. 16, 2009) (internal citation
omitted)). In that regard, “The underwriting file is relevant to
determining the risks that National Union expected to cover in
the policy, how it interpreted the various policy terms, and
whether the terms of the policy are ambiguous in the first
instance.”

Id.; see also Hartford Roman Catholic Diocesan Corp.

v. Interstate Fire & Cas. Co., 297 F.R.D. 22, 29-30 (D. Conn.
2014) (ordering defendant to respond to discovery requests
regarding underwriting and contract term construction).
Therefore, in light of the claims and defenses at issue in
this case, the Court will require defendant to answer
interrogatory 6, as modified by the Court: Identify all
Underwriters‟ Files in Your possession from January 1, 2005
through the date of the Claim (as defined in plaintiffs‟
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interrogatories), that relate to the interpretation of the
policy exclusion language in Endorsement 7. The Court will also
require defendant to produce any non-privileged documents
responsive to document request 6. Finally, the Court notes “that
defendant‟s argument, that extrinsic evidence of the unambiguous
insurance contract language is not admissible - does not change
this result.” Seligan Containers, 2010 WL 5387748, at *8.
Indeed, “whether or not the contract is ambiguous is not the
inquiry at the discovery stage. National Union may be right that
extrinsic evidence would be inadmissible at trial, but that is
not the standard that the court uses to evaluate relevancy for
discovery.” Id. at *9 (citing Nestle Foods Corp. v. Aetna
Casualty and Surety Co., 135 F.R.D. 101, 104-05 (D. N.J. 1990)).
To the extent defendant seeks the entry of a protective
order limiting the use of its underwriting files because they
contain confidential and proprietary information, the parties
shall endeavor to agree on a proposed protective order. If the
parties agree, they may submit a proposed protective order for
the Court‟s consideration. If the parties are unable to agree,
then they may contact the Court for a telephone conference.
Accordingly, for the reasons stated, defendant‟s motion for
protective order is GRANTED in part and DENIED in part as to
interrogatory and document request 6.
3. Interrogatory 12 and Document Requests 7-10
Plaintiffs‟ twelfth interrogatory requests defendant to,
“Identify Your managers, underwriters, executives, officers,
directors [or] other persons in Your organization that oversee,
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supervise, or have communicated with Chartis Claims, Inc. or any
other person in relation to the Claim or denial of coverage
under the policy.” [Doc. #41-6]. Defendant objects to this
interrogatory on the grounds that it is extremely broad and not
reasonably limited in scope. The Court agrees that this
interrogatory as phrased is over broad in both temporal and
substantive scope, and GRANTS defendant‟s motion for protective
order as to Interrogatory 12 in its current form.
Document requests 7 through 9 request defendant to,
“Produce the name, job title, current address, telephone number
and email address of each person identified in Your Response to
Interrogatory” 10, 11, and 12, respectively. Defendant argues
that these requests impermissibly seek a narrative response. The
Court agrees that document requests 7 through 9 does not call
for identification or production of documents, but rather a
narrative response consistent with an interrogatory.
Accordingly, the Court GRANTS defendant‟s motion for protective
order with respect to document requests 7 through 9 in their
current form.
Document request 10 seeks the production of “all documents
in your possession relating to: (i) coverage under the policy;
or (ii) the Claim that were produced, received or transmitted by
the persons identified in Interrogatory 12.” Defendant again
asserts that this request is “extremely broad” and seeks all
such documents without regard to the claims or defenses in this
case. Again, the Court agrees that request 10 is overbroad in
both temporal and substantive scope. Indeed, not only does the
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request as phrased implicate the production of a broad swath of
documents, but it undoubtedly encompasses material protected by
the attorney-client privilege and/or work product doctrine.
Rather than requiring a response to this document request, the
Court will order defendant to produce for the time period of
January 1, 2005 through December 31, 2013, any non-privileged
documents that relate to the interpretation of the policy
exclusion language in Endorsement 7 and how this language was
applied to the claim at issue. Accordingly, on the record before
it, the Court GRANTS in part and DENIES in part defendant‟s
motion for protective order as to document request 10.
D.

CONCLUSION
Accordingly, defendant‟s motion for protective order [Doc.

#41] is GRANTED in part and DENIED in part. Defendant‟s motion
to stay discovery is DENIED. Defendant will provide the
discovery ordered within thirty (30) days of this ruling.
This is not a Recommended Ruling. This is a discovery
ruling or 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. 72(a); and D. Conn. L. Civ. R.
72.2. 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 23rd day of February 2015.

_____/s/______________________
HOLLY B. FITZSIMMONS
UNITED STATES MAGISTRATE JUDGE

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