Gulf Production Company, Inc. v. Hoover Oilfield Supply, Inc. et al

Filing 442

ORDER granting in part and denying in part First Financial Insurance Company's 418 Motion to Quash Notices of Deposition as set forth herein. Signed by Magistrate Judge Karen Wells Roby on 5/6/2011. (Reference: All cases)(rll, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GULF PRODUCTION COMPANY, INC.

CIVIL ACTION

VERSUS

NO:
C/W

HOOVER OILFIELD SUPPLY, INC., ET
AL.

SECTION: “B” (4)

08-5016
09-2779
09-0104

ORDER
Before the Court is a Motion to Quash Notice of Deposition (R. Doc. 418) filed by First
Financial Insurance Company, seeking an Order from this Court quashing the Notice of Rule
30(b)(6) deposition issued by Polyflow, Inc. ("Polyflow"). Polyflow opposes the motion. (R. Doc.
430). This motion was heard with oral argument on April 27, 2011.
I.

Background
Gulf Production Company, Inc. (“Gulf Production”) filed the underlying diversity action on

November 26, 2008. Gulf Production is the operator and working interest partner of a joint
operating agreement whose purpose is the exploration and development of leased and/or oil and gas
interest for the production of oil and gas in St. Bernard Parish, Louisiana. (R. Doc. 20, p. 2.) The
other working interest partners are Gulf Explorer, Kaiser, and Ralco. Each working interest partner
receives a percentage of ownership based on the percentage invested in the project. (R. Doc. 20, p.
3.) Through the joint operating agreement, Gulf Production and the other working interest partners

held mineral leases which enabled them to operate, develop, and produce oil and gas from the leased
land. At issue in the present case are two wells located on the leased land which were found to be
capable of producing natural gas to be transmitted to a point of sale. (Case No. 09-104, R. Doc. 5-1,
p. 1.)
As the operator, Gulf contracted with Hoover, a distributor, for a Thermoflex Pipe that would
be installed in the well heads of two different wells to transport natural gas to a production facility
for eventual sale. (R. Doc. 20, p. 3.) Polyflow, the manufacturer of the Thermoflex Pipe, had a
distributorship agreement with Hoover. (R. Doc. 20, p. 3.) Allegedly, Hoover and Polyflow
represented that the pipes could withstand the amount of pressure necessary to transport the gas.
The flow line was installed and construction was completed on June 27, 2008. The flow line was
tested on the same day and the test results indicated that the pipes failed to perform to the expected
standards. On July 1, 2008, the pipes were re-tested and failed. (R. Doc. 20, p. 4.) Due to the gas
line failure, there was no extraction of natural gas from the two wells. The length of time that the
failure of the pipes prevent oil and gas extractions is disputed.
The Plaintiffs filed suit against the Defendants alleging redhibition, negligence,
misrepresentation, and violation of the Louisiana Unfair Trade Practices Act and the Louisiana
Products Liability Act. (R Doc. 1, ¶¶ 16-17.) The Plaintiffs seek damages, including loss of revenue
resulting from the failure of the flow lines.
Polyflow contends that it is a named insured on First Financial Comprehensive General
Liability policy number HGL0018169. (R. Doc. 265, ¶ 3.) Polyflow asserts that it has paid over
$37,000 in annual premiums. (R. Doc. 265, ¶ 4.) According to Polyflow, the policy requires First
Financial to defend and indemnify Polyflow for the claims asserted by the Plaintiffs in the above

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captioned matter. Id. Polyflow contends that it made a demand for such defense and indemnity
from First Financial but its requests were denied arbitrarily and without reasonable basis. (R. Doc.
265, ¶ 5.) Polyflow contends that First Financial’s actions and inactions constitute a bad faith breach
of its duty of good faith and fair dealing, and its duty to defend and indemnify Polyflow. Id.
Polyflow filed a Motion for Leave to Amend Answer to Include Cross-Claim on February
22, 2011, which sought to assert a cross claim against First Financial. (R. Doc. 194.) On March 4,
2011, the presiding Judge granted the Order and required First Financial to file its Answer no later
than March 17, 2011. (R. Doc. 264.) On March 16, 2011, First Financial filed its Answer. (R. Doc.
339.)
On March 7, 2011, Polyflow issued a Notice of 30(b)(6) deposition seeking to conduct a
corporate deposition of First Financial. On March 9, 2011, First Financial Insurance Company
moved to quash a Notice of 30(b)(6) deposition issued by Polyflow. First Financial Insurance
Company contended that the Notice should be quashed because it did not provide reasonable notice
to comply. Further, First Financial argued that the topics of deposition were not discoverable under
the Federal Rules. On March 11, 2011, the undersigned granted the Motion to Quash finding that
Polyflow has unreasonably noticed the deposition to occur four days after service of the notice. (R.
Doc. 294.)
Subsequently, on March 11, 2011, Polyflow re-issued its Notice of 30(b)(6) Deposition,
seeking to conduct a corporate deposition of First Financial on March 22, 2011. On March 16, 2011,
First Financial filed a Motion to Quash Notice of Deposition contending that the discovery deadline
expired on March 11, 2011. As a result, First Financial contended that the Notice of Deposition was
untimely, and therefore should be quashed. The Court agreed, and on March 21, 2011, the

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undersigned quashed the Notice of Deposition because the notice sought to conduct a deposition
eleven days after the discovery deadline and six days before the trial, which was scheduled for
March 28, 2011.
On March 22, 2011, the presiding Judge continued the trial on the above captioned matter.
(R. Doc. 381.) In his Order continuing the trial, the presiding Judge noted that the “continuance is
issued to allow completion of remaining depositions.” (R. Doc. 381, p. 1.) Subsequently, on April
5, 2011, Polyflow noticed a Rule 30(b)(6) deposition of First Financial to occur on May 12, 2011.
(R. Doc. 418-2, p. 1.)
As to the instant motion, First Financial Insurance Company seeks, for the third time, an
Order quashing Polyflow’s Notice of 30(b)(6) deposition which seeks a corporate deposition of First
Financial Insurance Company. First Financial contends that the notice does not give reasonable
notice of the deposition. It further contends that the discovery deadline has passed, and therefore
Polyflow is precluded from taking the deposition. Finally, it contends that the topics listed in the
Notice of Deposition are overly vague and irrelevant, seek work product and legal opinion, or are
otherwise not discoverable. Polyflow opposes the motion.
II.

Standard of Review
Rule 26(b)(1) provides that “[p]arties may obtain discovery regarding any non-privileged

matter that is relevant to any party’s claim or defense.” Fed.R.Civ.P. 26(b)(1). The Rule specifies
that “[r]elevant information need not be admissible at the trial if the discovery appears reasonably
calculated to lead to the discovery of admissible evidence.” Id. The discovery rules are accorded
a broad and liberal treatment to achieve their purpose of adequately informing litigants in civil trials.
Hebert v. Lando, 441 U.S. 153, 176 (1979). Nevertheless, discovery does have “ultimate and

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necessary boundaries.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978) (quoting
Hickman v. Taylor, 329 U.S. 495, 507 (1947)). Furthermore, “it is well established that the scope
of discovery is within the sound discretion of the trial court.” Coleman v. Amer. Red Cross, 23 F.3d
1091, 1096 (6th Cir.1994).
Under Rule 26(b)(2)(c), discovery may be limited if: (1) the discovery sought is
unreasonably cumulative or duplicative, or is obtainable from another, more convenient, less
burdensome, or less expensive source; (2) the party seeking discovery has had ample opportunity
to obtain the information sought; or (3) the burden or expense of the proposed discovery outweighs
its likely benefit. Fed.R.Civ.P. 26(b)(2)(c). In assessing whether the burden of the discovery
outweighs the benefit, a court must account for: (1) the needs of the case; (2) the amount in
controversy; (3) the parties’ resources; (4) the importance of the issues at stake in the litigation; and
(5) the importance of the proposed discovery in resolving the issues. Id.
III.

Analysis
A.

Timeliness of Requests

First Financial was not added as a party to above captioned matter until Friday, March 4,
2011. On Monday, March 7, 2011, Polyflow filed its first notice in an attempt to secure First
Financial’s Rule 30(b)(6) deposition which was quashed because it did not provide a reasonable
amount of time in which to comply. After the notice was quashed, Polyflow filed a second notice
of deposition which sought a deposition after the March 11, 2011, discovery deadline. For that
reason, the Court quashed the notice. The day after the Court quashed the notice, the presiding
Judge continued the trial in order to permit the parties to conduct their remaining depositions.
In light of the fact that First Financial was not a party to this litigation until March 4, 2011,

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and the fact that the presiding Judge gave First Financial until March 17, 2011, to file its Answer,
the Court finds that Polyflow should be permitted to conduct discovery with First Financial because
the presiding Judge provided that the issues on this claim could be joined after the March 11, 2011,
discovery deadline. Further, Polyflow made multiple attempts to secure First Financial’s deposition
prior to the presiding Judge’s Order which continued trial to permit the completion of deposition.
As a result, the Court finds that Polyflow can appropriately seek the 30(b)(6) deposition of First
Financial after the discovery deadline. As such, the notice is timely.
B.

Topics

First Financial contends that the topics of discussion included in the corporate notice are
beyond the scope of discoverable information. First Financial contends that the topics are over
broad. Further, it avers that the topics seek to obtain legal strategy and opinion information because
it requires the corporate representative to argue the substance of their motion for summary judgment
and various defenses raised in this litigation.
Polyflow disagrees and contends that its topics are neither irrelevant or overly vague. It
further contends that the responses do not seek legal opinions. At the hearing, Polyflow asserted that
its topics are tailored to obtain information from First Financial relating to its coverage defenses and
Polyflow’s bad faith claims.
Although the Court agrees that Polyflow should be permitted to take the corporate deposition
of First Financial, the topics of discussion included in the notice are over broad and run a substantial
risk of encompassing and encroaching on privilege issues. For example, Topic 5 seeks “the factual
basis for First Financial’s coverage defenses related to Polyflow’s insurance claim and the litigation,
including but not limited to, the exclusions referenced in First Financial’s Motion for Summary

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Judgment and supporting documents.” (R. Doc. 418-2, p. 4.) This topic requires a corporate
representative to obtain the Motion for Summary Judgment and interpret it. It further requires the
representative to testify as to his or her interpretation of the pleading. This clearly seeks a legal
opinion, and is therefore inappropriate.
Although Polyflow contends that it seeks information to address the various defenses raised
by First Financial, many of the topics relate more to trial strategy. For example, Polyflow seeks to
depose a corporate representative as to the identity of witnesses who might be called at trial and all
exhibits that First Financial may use at trial. (See R. Doc. 418-2, p. 4, Topics 8, 9.) The Court first
notes that these determinations would not be made by a corporate representative. Instead, these are
determinations which are made by counsel. As such, the topics seek to obtain information as to
counsel’s strategy. Further, these requests are more reminiscent of interrogatory and request for
production requests which have been asked by Polyflow in the form of a notice of deposition. This
is improper.
Although the Court finds that Polyflow is certainly entitled to depose First Financial in this
matter, the topics of discussion as written are improper. As such, Polyflow must modify their notice
to include narrowly tailored topics of discussion.
IV.

Conclusion
Accordingly,
IT IS ORDERED that the Motion to Quash Notice of Deposition (R. Doc. 418) is hereby

GRANTED IN PART AND DENIED IN PART.
•

First Financial’s request to quash the deposition because it was untimely noticed is
hereby DENIED. The Court finds that Polyflow is entitled to a corporate deposition
of First Financial.

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•

First Financial’s request to quash the deposition because the topics are over broad
and seek privileged information is hereby GRANTED.

IT IS FURTHER ORDERED that Polyflow shall re-notice the Rule 30(b)(6) deposition
of First Financial with narrowly tailored topics of discussion which do not encroach upon privileged
issues or lawyer strategy.
New Orleans, Louisiana, this 6th day of May 2011

KAREN WELLS ROBY
UNITED STATES MAGISTRATE JUDGE

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