Maronda Homes, Inc. of Florida v. Progressive Express Insurance Company

Filing 71

ORDER granting 65 Motion to Compel deposition of Jeffrey T. Gagat. Signed by Magistrate Judge Thomas B. Smith on 4/8/2015. (Smith, Thomas)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
MARONDA HOMES, INC. OF FLORIDA,
Plaintiff,
v.

Case No. 6:14-cv-1287-Orl-31TBS

PROGRESSIVE EXPRESS INSURANCE
COMPANY,
Defendant.
______________________________________
ORDER
This case comes before the Court on Defendant Progressive Express
Insurance Company’s motion to compel the deposition of witness Jeffrey T. Gagat on
April 16, 2015 (Doc. 65). Plaintiff Maronda Homes, Inc. of Florida has filed a response
in opposition to the motion (Doc. 68).
Maronda is a privately-owned homebuilding company that has thirty
subsidiaries and operates in five states (Doc. 68-1, ¶ 3). Progressive is an insurance
company which issued a commercial auto insurance policy to Maronda (Doc. 2, ¶ 12).
In 2013, a motor vehicle accident resulted in the filing of a negligence lawsuit against
Maronda and three other defendants (Doc. 2, ¶ 6; Doc. 65-3 at 7). Maronda gave
Progressive notice of the lawsuit and requested that it provide a defense (Id., ¶¶ 1113). Apparently, Progressive insured more than one defendant because it directed a
staff attorney member of its in-house law firm to appear and defend all four defendants
(Id. ¶ 14). Maronda objected that conflicts of interest prevented a single attorney from

representing all the defendants (Id., ¶¶ 14–21). Progressive responded by hiring a
different lawyer to only represent Maronda (Id., ¶ 24). The new lawyer told Maronda
“he would be reluctant to take positions in litigation that were adverse to Progressive
because he did not want to jeopardize his business relationship with Progressive.”
(Id., ¶ 29). This caused Maronda to conclude that the lawyer’s true allegiances were
to Progressive and that it “had no choice but to conditionally decline the defense
provided by Progressive as being legally insufficient.” (Id.). In the absence of an
acceptable lawyer supplied by Progressive, Maronda was represented in the motor
vehicle accident case by its privately retained attorney, Steven M. Brady (Id., ¶¶ 11,
51).
Maronda filed this lawsuit seeking a declaration that Progressive breached the
terms of the insurance policy it issued to Maronda, and for damages consisting of the
attorney’s fees and costs Maronda paid Brady’s firm to defend the motor vehicle
accident case (Doc. 2). Progressive noticed a Fed.R.Civ.P. 30(b)(6) deposition of
Maronda in this case and Maronda produced Robert Sellers as its designated
corporate representative to testify on its behalf (Doc. 66, Page 7, Lines 14-19). Sellers
is the general manager of Maronda Integrated Production Systems, a “d/b/a” for
Maronda’s manufacturing arm (Id., Lines 20-23).
During the deposition, Sellers identified Jeffrey T. Gagat as Maronda’s primary
or point person on the motor vehicle accident case (Doc. 66, Page 14, Lines 20-23;
Page 111, Lines 14-19). Gagat is the vice-president and controller of Maronda, Inc.
and its subsidiaries (Doc. 68-1). At various points in the deposition, Sellers deferred to

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Gagat as the person who did, or might have the knowledge to answer certain
questions (Doc. 65, ¶ 14). Progressive has subpoenaed Gagat for deposition on April
16, 2015. Maronda and Gagat have not filed a motion for protective order to prevent
the taking of the deposition but, Maronda’s attorney told Progressive he will not allow
the deposition to occur because Gagat does not have “unique or superior knowledge
of the facts” compared to Sellers (Doc. 65, ¶¶ 5, 16).
Parties are generally permitted to discover relevant evidence, but the court
may limit a request if “the discovery ... can be obtained from some other source that is
more convenient, less burdensome, or less expensive;” if “the party seeking discovery
has had ample opportunity to obtain the information by discovery in the action;” or if
“the burden or expense of the proposed discovery outweighs its likely benefit....”
Fed.R.Civ.P. 26(b)(2). When discovery appears relevant on its face, the party
opposing the discovery has the burden to establish facts justifying its objections by
demonstrating that the requested discovery is not relevant, or is of such marginal
relevance that the potential harm occasioned by the discovery outweighs the ordinary
presumption in favor of broad disclosure. Stelor Productions, Inc. v. Google, Inc., No.
05-80387-CIV, 2008 WL 4218107 at *2 (S.D.Fla. Sept. 15, 2008) (citing Scott v.
Leavenworth Unified School Dist. No. 453, 190 F.R.D. 583, 585 (D.Kan. 1999)).
Maronda argues that by subpoenaing Gagat, Progressive is attempting to take
what is known as an apex deposition, meaning the deposition of a high ranking
executive or principal in an organization. Case law recognizes the need to protect
these individuals from numerous, repeated and abusive depositions. Brown v. Branch

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Banking and Trust Co., No. 13-81192-CIV, 2014 WL 235455 at *2 (S.D.Fla. Jan. 22,
2014). “Virtually every court that has addressed deposition notices directed at an
official at the highest level or ‘apex’ of corporate management has observed that such
discovery creates a tremendous potential for abuse and harassment.” Id. (quoting
Celebrity v. Ultra Clean Holding, Inc., No. C 05-4374 MMC (JL), 2007 WL 205067, at
*3 (N.D.Cal. Jan. 25, 2007)). While there is no per se rule prohibiting depositions of
top corporate executives, “courts frequently restrict efforts to depose senior executives
where the party seeking the deposition can obtain the same information through a less
intrusive means, or where the party has not established that the executive has some
unique knowledge pertinent to the issues in the case.” Simon v. Pronational Ins. Co.,
No. 07–60757, 2007 WL 4893478, at *1 (S.D.Fla. Dec. 13, 2007) (quoting Cardenas v.
Prudential Ins. Co. of America, 2003 WL 21293757 at *1 (D.Minn. May 16, 2003)).
“[W]hen a high-ranking official of a corporation does not have any direct knowledge of
the facts, it is inappropriate to compel his deposition without first deposing lesserranking employees who have more direct knowledge of the facts at issue.” Little
League Baseball, Inc. v. Kaplan, No. 08-60554-CIV, 2009 WL 426277 at *2 (S.D.Fla.
Feb. 20, 2009) (quoting Stelor Prods., Inc. v. Google, Inc., No. 05-80387, 2008 WL
4218107 at *4 (S.D.Fla. Sept. 15, 2008)); McMahon v. Presidential Airways, Inc., No.
6:05-cv-1002-Orl-22JGG, 2006 WL 5359797 at *2 (M.D.Fla. 2006) (“A protective order
precluding the deposition of a high-ranking executive officer will be granted where the
officer possesses no unique knowledge regarding the underlying facts of the action
and files a declaration stating his or her lack of knowledge.”).

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The Court doesn’t know where Gagat’s roles as controller and vice-president
places him in the hierarchy at Maronda, and without this information, it is impossible to
say whether Gagat is sufficiently senior in the company to be considered an apex
witness. Therefore, Maronda has not met its burden to prove the facts to support its
objection. Assuming arguendo, that Gagat is a senior executive of Maronda, the
Court would still overrule the objection. Even if Gagat is a high-ranking person in the
company who is generally focused on the big picture, with little or no knowledge of
day-to-day occurrences that was not his role in this case. Maronda has identified him
as its point person for the motor vehicle accident litigation, with knowledge Sellers did
possess at the Rule 30(b)(6) deposition. Additionally, Progressive has attempted to
discover information by less intrusive means, including the deposition where Gagat
was identified.
Maronda argues that the motion to compel should be denied because Gagat
did not have any direct communications with Progressive concerning the motor vehicle
accident or Progressive’s handling of the claim. This is borne out by Gagat’s
declaration filed in opposition to the motion to compel (Doc. 68-1). There, he states
that all of his communications concerning the motor vehicle case were with Brady in
his capacity as Maronda’s attorney; he had no direct communications with anyone at
Progressive or any other company regarding the case; and the only knowledge he has
about Maronda’s communications with Progressive is what he was told by Maronda’s
attorneys (Id., ¶¶ 6-7). Based in part on this evidence, Maronda argues that all of
Gagat’s communications with Brady and other members of his firm are protected from

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disclosure by the attorney-client and/or work product privileges (Id., ¶¶ 4, 14). If all of
Gagat’s communications’ with Maronda’s attorneys are in fact privileged, that does not
foreclose the possibility that Gagat discussed the accident and Progressive’s handling
of the claim with other Maronda employees. It also does not address Gagat’s possible
knowledge and role in the making of decisions by Maronda concerning these matters.
The Court will not assume that everything Gagat knows about the matters in dispute is
privileged. To the extent privilege is an issue it is best handled by the making of
appropriate objections at Gagat’s deposition.
One of the areas about which Progressive intends to question Gagat is the
amount of fees and costs Maronda is seeking as damages for the defense of the
accident case; the factual basis for each component of those damages; and who paid
the fees and costs (Doc. 65, ¶¶ 30, 34). The Court accepts Maronda’s representation
that Progressive already knows this information (Doc. 68, ¶ 3). Maronda has
produced a complete list of the Brady firm’s hourly rates, time, charges, and costs for
the motor vehicle accident case (Id.). These records show how much Brady’s firm
was paid, and that the payments were received from Maronda (Id., ¶¶ 3, 5). Although
Progressive does not need to depose Gagat to learn this information, that is not
reason enough to prohibit the taking of the deposition.
Sellers testified that Maronda had a general liability policy but he did not know
the name of the carrier (Doc. 66, Page 13, Lines 16-20). And, he was not certain if
Maronda had a business owner’s policy (Id., Lines 21-23). But, he said Gagat should
be able to answer these questions (Doc. 66, Page 13, Line 24-Page 14, Line 1).

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Whether there are any collateral sources to pay Maronda’s damages is a matter
Progressive is entitled to discover.
Progressive also seeks to depose Gagat concerning the allegedly inadequate
defense it provided Maronda in the accident case 1 (Id., ¶¶ 30, 34). “To satisfy its
obligation to defend, an insurer must provide an adequate defense.” Allstate Ins. Co.
v. Levesque, No. 8:08-cv-2253-T-33EAJ, 263 F.R.D. 663, 668 (M.D.Fla. 2010) (citing
Carrousel Concessions, Inc. v. Fla. Ins. Guar. Ass’n., 483 S.2d 513, 516 (Fla. 3d DCA
1986)). “Florida courts have not explicitly defined the parameters of what constitutes
an ‘adequate’ defense.” Doe v. OneBeacon America Ins. Co., No. 1:11-cv-275-MPGRJ, 2014 WL 5092258, at * 18 (N.D.Fla. Oct. 9, 2014). However, the Florida
Supreme Court has held that “[a]n insurer’s duty to defend arises solely from the
language of the insurance contract.” Carrousel, at *1. “Where the insurer acts
negligently in performing its duty to defend on behalf of the insured, its conduct
constitutes a breach of contract.” Id. “Such a breach can be determined objectively
from the insurance contract itself without inquiry into whether the insurer acted in good
faith or bad faith.” Id. If the policy in this case is ambiguous then under Florida law it
will be strictly construed against the drafter, and in a plurality opinion, three justices of
the Florida Supreme Court said resort to extrinsic evidence to resolve ambiguities in
insurance contracts is usually inappropriate. Washington Nat’l Ins. Corp. v.

1 According to its motion to compel, Progressive also wants to know about the “existence or non
existence [sic] of communications that took place about the defense and claims for which Maronda
Homes is now critical of Progressive.” (Doc. 65, ¶ 34). The Court will not speculate about what this is
supposed to mean.

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Ruderman, 117 So.3d 943, 945, 949-51 (Fla. 2013) (plurality opinion). 2 Therefore, the
Court does not know what Progressive hopes to accomplish by asking Gagat for his
opinion of the adequacy of the defense it provided Maronda, but that is not a reason to
preclude Progressive from taking the deposition.
For these reasons, Defendant’s Motion to Compel Deposition of Witness
Jeffrey Gagat on April 16, 2015 (Doc. 65) is GRANTED. Progressive may depose
Gagat.
DONE and ORDERED in Orlando, Florida, on April 8, 2015.

Copies to all Counsel of Record

2

Justice Lewis concurred in the result without authoring a separate opinion.

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