Mills, Potoczak & Company v. Landmark American Insurance Company
Filing
66
ORDER granting in part and denying in part 56 Plaintiff's Motion to Compel discovery. Signed by Magistrate Judge Philip R. Lammens on 5/20/2016. (CAB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION
DONALD KOSTER, YVONNE
KOSTER, JUDITH HULSANDER,
RICHARD VERMILLION and
PATRICIA VERMILLION,
Plaintiffs,
v.
Case No: 5:14-cv-689-Oc-37PRL
LANDMARK AMERICAN INSURANCE
COMPANY
Defendant.
ORDER
Before the Court is Plaintiffs’ renewed motion to compel. (Doc. 56). On July 17, 2015,
Plaintiffs filed a motion to compel Defendant’s response to Plaintiffs’ outstanding discovery
requests. (Doc. 21). Two months later, I denied the motion to compel without prejudice pending
the resolution of this Court’s jurisdiction. (Doc. 33). On January 25, 2016, the Plaintiffs filed
their second amended complaint, resolving the jurisdictional issue. (Doc. 39). On March 10,
2016, Plaintiffs filed their renewed motion to compel (Doc. 56). Then, Defendant timely filed its
memorandum opposing the motion to compel (Doc. 58) and Plaintiffs have filed a reply to
Defendant’s memorandum (Doc. 65). Upon due consideration, Plaintiffs’ motion (Doc. 56) is
due to be denied in large part and granted in part as set forth below.
I.
BACKGROUND
This 28 U.S.C. § 1332 diversity jurisdiction case is a breach of contract action brought by
Plaintiffs Donald Koster, Yvonne Koster, Donald Hulslander, Judith Hulslander, Richard
Vermillion, and Patricia Vermillion (the “Plaintiffs) against Defendant Landmark American
Insurance Company (the “Defendant”). In early 2010, Defendant issued a Professional Liability
Insurance Policy (the “Policy”) to Mills, Potoczak & Company (“MPC”), an Ohio accounting firm.
The Plaintiffs then brought two state-court actions against, inter alia, MPC, alleging claims for the
sale of unregistered securities, breach of fiduciary duty, and unjust enrichment (the “Koster and
Hulslander actions”).
Based on the Policy, MPC asserted that Defendant had a duty to defend and indemnify
MPC against the Koster and Hulslander actions. However, Defendant declined to do so. MPC
subsequently entered a settlement agreement with the Plaintiffs and assigned its purported breach
of Policy claim against Defendant to Plaintiffs. Plaintiffs now seek damages for breach of
contract based on that assigned right, and Defendant has answered.
II.
LEGAL STANDARD
Motions to compel discovery under Rule 37(a) of the Federal Rules of Civil Procedure are
committed to the sound discretion of the trial court. See Commercial Union Ins. Co. v. Westrope,
730 F.2d 729, 731 (11th Cir. 1984). Pursuant to Rule 26(b), “[p]arties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional
to the needs of the case, considering the importance of the issues at stake in the action, the amount
in controversy, the parties’ relative access to relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and whether the burden or expense of the
proposed discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1).
“The overall purpose of discovery under the Federal Rules is to require the disclosure of
all relevant information so that the ultimate resolution of disputed issues in any civil action may
be based on a full and accurate understanding of the true facts, and therefore embody a fair and
just result.” Oliver v. City of Orlando, No. 6:06-cv-1671-Orl-31DAB, 2007 WL 3232227, * 2
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(M.D. Fla. Oct. 31, 2007) (citing United States v. Proctor & Gamble Co., 356 U.S. 677, 682
(1958)). The moving party ‘“bears the initial burden of proving that the information sought is
relevant.”’
Douglas v. Kohl’s Dep’t Stores, Inc., No. 615CV1185ORL22TBS, 2016 WL
1637277, at *2 (M.D. Fla. Apr. 25, 2016) (quoting Moore v. Lender Processing Servs. Inc., No.
3:12-CV-205-J, 2013 WL 2447948, at *2 (M.D. Fla. June 5, 2013)). “Relevancy is determined
based on the ‘tendency to make a fact more or less probable than it would be without the evidence,
and the fact is of consequence in determining the action.’ Fed. R. Evid. 401” Hankinson v.
R.T.G. Furniture Corp., No. 15-81139-civ-Cohn/Seltzer, 2016 WL 1182768, at *1 (S.D. Fla. Mar.
28, 2016) (quoting Garcia v. Padilla, No. 2:15-cv-735-FtM-29CM, 2016 WL 881143, at *2 (M.D.
Fla. Mar. 8, 2016)).
Proportionality requires counsel and the court to consider whether relevant information is
discoverable in view of the needs of the case. In making this determination, the court is guided
by the non-exclusive list of factors in Rule 26(b)(1). Graham & Co., LLC v. Liberty Mut. Fire
Ins. Co., No. 2:14-cv-2148-JHH, 2016 WL 1319697, at *3 (N.D. Ala. April 5, 2016). “Any
application of the proportionality factors must start with the actual claims and defenses in the case,
and a consideration of how and to what degree the requested discovery bears on those claims and
defenses.” Id. (quoting Witt v. GC Servs. Ltd. P'ship, 307 F.R.D. 554, 569 (D. Colo. 2014)).
When objecting to a discovery request, the “[p]arties are not permitted to assert . . .
conclusory, boilerplate objections that fail to explain the precise grounds that make the request
objectionable.” Martin v. Zale Delaware, Inc., No. 8:08-CV-47-T-27EAJ, 2008 WL 5255555, at
*1 (M.D. Fla. Dec. 15, 2008). Indeed, an objecting party “must explain its reasoning in a specific
and particularized way” and “an objection that a discovery request is irrelevant . . . must include a
specific explanation describing why.” Id. at *1–2. Finally, “[o]bjections based on privilege or
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work product protection must be made expressly.” Nationwide Mut. Fire Ins. Co. v. Kelt, Inc.,
No. 6:14-CV-749-ORL-41, 2015 WL 1470971, at *4 (M.D. Fla. Mar. 31, 2015) (noting that “[a]
party cannot assert a privilege by saying that responsive documents might be privileged”).
III.
DISCUSSION
A. Requests For Production
Under Rule 34, a party may serve, on any other party, a document request seeking
information within the scope of Rule 26(b). Fed. R. Civ. P. 34(a). Any objection to a request
must “state with specificity the grounds for objecting to the request, including the reasons” and
state “whether any responsive materials are being withheld on the basis of that objection.” Fed.
R. Civ. P. 34(b)(2)(B–C). At issue here are eleven requests for production in which Plaintiffs
seek, among other things, Defendant’s claims file, underwriting file, and claims handling
protocols.
At the most basic level, the parties dispute whether the requested documents are relevant
to this breach of contract action. Defendant argues that the requested documents are irrelevant to
whether it breached the Policy, which is the sole issue in this lawsuit. Defendant further states
that the documents sought are only relevant to how it handled MPC’s claims for defense and
indemnification and, thus, these requests are premature until (and if) Plaintiffs allege that
Defendant denied coverage in bad faith.
In contrast, Plaintiffs argue that the requested documents are relevant, as the documents
will help clarify two Policy exclusions that Defendant relies upon as affirmative defenses—
namely, the “prior litigation” and “professional services” exclusions.
(Doc. 65, pp. 4–5).
According to Plaintiffs, given the parties differing yet reasonable interpretations of these undefined
exclusions, they are ambiguous. However, a mere dispute over the applicability of policy terms
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“does not, in and of itself, make the term[s] ambiguous,” Milinazzo v. State Farm Ins. Co., 247
F.R.D. 691, 703 (S.D. Fla. 2007).
Further, upon review of Plaintiffs’ argument, they fail to explain how the requested
documents would clarify these purported ambiguities; instead, they simply conclude that the
documents will help explain why Defendant denied coverage. (Doc. 65, pp. 4–5). Yet, to the
extent Plaintiffs argue the documents at issue will elucidate Defendant’s interpretation of the “prior
litigation” and “professional services” exclusions, this argument is unpersuasive as Defendant has
already produced several documents that describe the legal and factual basis for why it believes
the exclusions apply.
(Doc. 65, Exs. 2–4).
Absent a further showing that the requested
documents are relevant to this lawsuit, the Court sustains, to the extent set forth below, Defendant’s
relevancy objections.
Plaintiffs’ requests for documents regarding how Defendant handled the claims at issue
(Production Request No. 1), as well as Defendant’s underwriting decisions (Production Request
No. 4), are not discoverable at this time. See Gavin’s Ace Hardware, Inc. v. Federated Mut. Ins.
Co., No. 2:11-CV-162-FTM-36, 2011 WL 5104476, at *3 (M.D. Fla. Oct. 27, 2011) (finding that
a claims file was not relevant to the breach of contract claim at issue); Milinazzo, 247 F.R.D. at
702–03 (stating that in order to discovery into an underwriting file, in a breach of contract action,
the movant must either allege an underwriting issue or “make a prima fascia showing that material
provisions of the policy are ambiguous”).
Similarly, in Production Requests Nos. 5, 7, 8, and 10, Plaintiffs seek Defendant’s claims
handling standards, protocols, and procedures; claims handling incentive or performance program
materials; personnel performance files; and marketing materials. (Doc. 56, pp. 8–10). Without
a further showing of relevancy, documents responsive to these requests would be “irrelevant to the
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determination of coverage, (i.e. whether Defendant breached the insurance contract).” Milinazzo,
247 F.R.D. at 703 (stating that the “[d]efendant’s failure to comply with internal guidelines . . . is
irrelevant to the determination of coverage”); Royal Bahamian Ass’n, Inc. v. QBE Ins. Corp., 268
F.R.D. 692, 694–95 (S.D. Fla. 2010).
Further, in Production Request No. 20, Plaintiffs request that Defendant produce “any and
all documents, records, communications, memoranda or otherwise, in any format, pertaining to
MPC, maintained separately from Landmark’s claims file, not otherwise produced.” (Doc. 21).
Yet, Plaintiffs do not show how this obviously broad request seeks information relevant to the
claims and defenses at issue here.
Accordingly, Defendant’s relevancy objection to Production Requests Nos. 1, 4, 5, 7, 8,
10, and 20 is sustained. Thus the motion to compel is DENIED as to those requests.
The same cannot be said for Production Request No. 2, which seeks “MPC’s premium
payment record.”
(Doc. 56, p. 7).
Defendant objects that whether MPC paid the Policy
premiums is not at issue in this case and is thus irrelevant.
(Doc. 58, p. 6).
However,
Defendant’s Sixteenth Affirmative Defense states that MPC has not performed all of its obligations
under the Policy (Doc. 45, p. 11), and it appears that Defendant does not admit that MPC paid the
Policy premiums. Accordingly, this relevancy objection is overruled. Defendant also objects
that this request is not “limited in terms of policy period or the policy itself.” (Doc. 58, p. 6).
That objection is sustained. Thus, Production Request No. 2 is GRANTED to the extent that
Plaintiffs seek premium payment records as to the Policy.
In Production Request No. 17, Plaintiffs request that Defendant produce information
regarding the duty to defend and in Production Request No. 18 they make a similar request for
“any other documents which you might use in support of a claim or defense, or which are relevant
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to a claim or defense of any party.” (Doc. 56, p. 11). Documents supporting a party’s affirmative
defenses are, of course, within the scope of discovery. Fed. R. Civ. P. 26(b)(1). Defendant
objects that these requests improperly seek its legal opinion. Yet, “[w]hile counsel’s thoughtprocess is protected by either attorney client, or work product privilege, general facts to support
an affirmative defense do not invade counsel’s thought-process.” Heffron v. Citrus HMA, LLC,
No. 5:13-CV-453-OC-22PRL, 2014 WL 1378815, at *3 (M.D. Fla. Apr. 8, 2014). Importantly,
though, Defendant objects that these requests are moot as the responsive documents were produced
in connection with its Rule 26 disclosures.
(Doc. 58, p. 14).
Accordingly, Defendant’s
objections are overruled to the extent state above and Production Requests Nos. 17 and 18 are
GRANTED to the extent that Defendant has not already produced the responsive documents.
Finally, in Production Request No. 21, Plaintiffs request that Defendant produce “any and
all documents relied upon or referred to in Landmark’s responses to [Plaintiffs’] First Set of
Interrogatories.” (Doc. 56, p. 12). Defendant states that it has already produced the responsive
documents. (Doc. 58, p. 16). To the extent that Defendant has not produced the responsive
documents, the objection is overruled and Production Request No. 21 is GRANTED.
B. Interrogatories
Unless otherwise provided by stipulation or court order, “a party may serve on any other
party no more than 25 written interrogatories, including all discrete subparts.” Fed. R. Civ. P.
33(a)(1). “An interrogatory may relate to any matter that may be inquired into under Rule 26(b)”
and “is not objectionable merely because it asks for an opinion or contention that relates to fact or
the application of law to fact.” Fed. R. Civ. P. 33(a)(2). Any objection “must be stated with
specificity.” Fed. R. Civ. P. 33(b)(4).
In interrogatory No. 4, Plaintiffs request that Defendant state: “What information do you
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have for each of your denials, affirmative defenses, counterclaims, and cross claims?” (Doc. 56,
p. 13). This District’s Discovery Handbook (which offers guidance, but is not controlling)
provides that contention interrogatories, like this one, “should be used sparingly and, if used,
should be designed (1) to target claims, defenses, or contentions that the propounding attorney
reasonably suspects may be the proper subject of early dismissal or resolution or (2) to identify
and narrow the scope of unclear claims, defenses, and contentions.”
MIDDLE DISTRICT
DISCOVERY (2015) at 17. Further, “[i]nterrogatories that purport to require a detailed narrative of
the opposing parties’ case are generally improper because they are overbroad and oppressive.”
Id. Accordingly, Defendant’s objection that this interrogatory—as written—seeks a detailed
narrative of Defendant’s entire case and does not target defenses subject to an early dismissal or
narrow the scope of unclear defenses is sustained. See, e.g., Oliver v. City of Orlando, No.
606CV-1671-ORL-31DAB, 2007 WL 3232227, at *3–4 (M.D. Fla. Oct. 31, 2007) (denying a
motion to compel answers to contention interrogatories where the movant had made no showing
as to how the requested responses would either target issues subject to early dismissal or identify
and narrow unclear claims or defenses); Freedman v. Lincoln Nat. Life Ins. Co., No. 3:05CV81-J12HTS, 2005 WL 2850307, at *2 (M.D. Fla. Oct. 31, 2005) (denying a motion to compel responses
to broad contention interrogatories, except for two which dealt with specific defenses). Thus the
motion to compel a response to Interrogatory No. 4 is DENIED.
In Interrogatories Nos. 7 and 14, Plaintiffs request that Defendant state the steps taken to
“fully investigate the claim(s) submitted to Landmark by MPC for defense and/or indemnification”
and the steps Defendant took “to investigate the facts pertinent to its coverage decisions with
regard to the Koster and Hulslander lawsuits.” (Doc. 56, pp. 14–15). Defendant’s objection that
these interrogatories seek irrelevant information is sustained.
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The disclosures in Plaintiffs’
possession (Doc. 65, Exs. 2–4) reveal Defendant’s position on why the Policy doesn’t apply.
Whether it should or not is to ask whether failing to provide coverage was in breach. What steps
Defendant took to arrive at the “why” appears to be irrelevant. That is, how Defendant went about
researching or otherwise investigating “facts” pertinent to the coverage issue and who spoke to
who about it all seems to go to how the claim was handled—that is to say whether there was any
bad faith. But bad faith is not the issue. The issue is whether the contract applies or not, and
Defendant has produced documents revealing why it says it doesn’t. (See Doc. 65, Exs. 2–4).
Therefore, Defendant’s objection is sustained and the motion to compel responses to
Interrogatories Nos. 7 and 14 is DENIED.
In Interrogatories Nos. 10 and 13, Plaintiffs request that Defendant state why it denied
“MPC a defense and indemnification” and “what legal authorities did Landmark rely” in the Koster
and Hulslander lawsuits. (Doc. 56, pp. 14–15). Defendant objects that these interrogatories seek
irrelevant information. Yet, why Defendant denied coverage is clearly relevant to Plaintiffs’
breach of contract claim. Defendant also objects that, under Rule 33(d), these interrogatories are
moot as “the legal bases demonstrating the lack of coverage are set forth in the correspondence
produced in connection with Landmark’s initial Rule 26 disclosures.”1 (Doc. 58, pp. 20–21).
Accordingly, Defendant’s objections are overruled and the motion to compel responses to
Interrogatories Nos. 10 and 13 is GRANTED to the extent Defendant has not otherwise answered
or produced responsive business records.
1
Under Rule 33(d), “[i]f the answer to an interrogatory may be determined by examining, auditing,
compiling, abstracting, or summarizing a party’s business records (including electronically stored
information), and if the burden of obtaining the answer will be substantially the same for either party,” the
responding party may answer by specifying certain records and giving the interrogating party a reasonable
opportunity to examine and copy them. Fed. R. Civ. P. 33(d).
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IV.
CONCLUSION
Accordingly, it is now ORDERED:
(1) Plaintiffs’ renewed Motion to Compel (Doc. 56) is DENIED IN PART and
GRANTED IN PART as set forth herein.
(2) Under Fed. R. Civ. P. 37(a)(5)(C), each party shall bear its own attorney’s fees and
costs.
DONE and ORDERED in Ocala, Florida on May 20, 2016.
Copies furnished to:
Counsel of Record
Unrepresented Parties
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