Louisiana Generating LLC et al v. Illinois Union Insurance Company

Filing 86

RULING: Defts 62 Motion to Compel Discovery Responses and Document Production is denied, without prejudice to renewing its manner-of-production argument after the court rules on the duty to defend issue. Pursuant to Rule 37(a)(5)(B), the deft shall pay to the pltfs, within 14 days, reasonable expenses in the amount of $2,000.00. Signed by Magistrate Judge Stephen C. Riedlinger on 8/12/2011. (JDL)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

LOUISIANA GENERATING, L.L.C. AND
NRG ENERGY, INC.

CIVIL ACTION

VERSUS

NUMBER 10-516-RET-SCR

ILLINOIS UNION INSURANCE COMPANY
RULING ON MOTION TO COMPEL DISCOVERY
Before the court is a Motion to Compel Discovery Responses and
Document Production filed by defendant Illinois Union Insurance
Company.

Record document number 62.

Plaintiffs

Louisiana

The motion is opposed.1

Generating,

L.L.C.

and

its

parent

corporation NRG Energy, Inc. filed this declaratory judgment action
seeking

a

determination

of

coverage

under

a

Custom

Premises

Pollution Liability Insurance Policy issued by Illinois Union
Insurance Company.

Plaintiffs requested defense and coverage for

damages resulting from a separate action, in which the U.S.
government sought injunctive relief and civil penalties against
Louisiana Generating for certain alleged violations of the Clean
Air Act. United States of America, Environmental Protection Agency
v. Louisiana Generating LLC, CV 09-100-RET-CN (the “Underlying
Action”).

Defendant denied coverage under the policy and refused

to defend the plaintiffs.

1

Record document number 66.
Plaintiffs
memorandum. Record document number 76.

filed

a

reply

On November 18, 2010, a scheduling order was issued as to
discovery and dispositive motions relevant of the defendant’s duty
to defend, but “it does not prohibit the parties from conducting
such other discovery as they may agree on.”2

Defendant propounded

its first set of discovery requests on the plaintiffs on February
11, 2011.

Plaintiffs served their responses on March 25, 2011 and

produced

a

hard

drive

containing

production on March 29, 2011.

the

plaintiffs’

document

Plaintiffs’ responses included over

298,000 electronically produced documents.

Load file information,

which was supposed to allow the defendant to read and navigate the
hard drive material, was provided by the plaintiffs on March 30,
2011.

Plaintiffs subsequently produced several supplemental CDs

containing thousands of documents in response to the defendant’s
discovery requests.
Between

March

and

May

of

2011,

the

parties

engaged

in

extensive correspondence in a effort to resolve various issues the
defendant had with the plaintiffs’ responses.

The parties were

unable to reach an agreement regarding the form of the document
production and certain alleged insufficiencies with the plaintiffs’
responses, which are now at issue in this motion.
Defendant initially argued that the plaintiffs failed to
produce documents in manner permitted under Rule 34(b)(2)(E)(I),
Fed.R.Civ.P., which requires that documents be produced either (1)

2

Record document number 32.
2

as they are kept in the usual course of business or (2) organized
and labeled to correspond to categories in the request.
argued

that

the

plaintiffs

dumped

hundreds

of

Defendant

thousands

of

documents produced in the Underlying Action rather than producing
the documents in a way they were ordinarily maintained in the
course of the plaintiffs’ respective businesses.
there

is

no

evidence to

suggest

that

the

Defendant argued

discovery requests

exchanged in the Underlying Action correspond in any manner to the
discovery requests it propounded.

Defendant also argued that the

documents were produced without indicating which documents, or even
a

range

of

documents,

respond

to

which

discovery

request.

Defendant argued further that the plaintiffs made baseless and
inconsistent

objections

which

suggest

that

their

document

production was incomplete.
Plaintiffs argued that the defendants failed to show that any
of its discovery requests are relevant to the issue of the duty to
defend.

As discussed in this Court’s August 9, 2011 Ruling on

Motion to Compel Discovery,3 an insurer has a duty to defend its
insured

unless

exclude

coverage.4

3

the

allegations
The

in

allegations

the
of

petition
the

unambiguously

petition

must

be

Record document number 80.

4

United Fire and Casualty Co. v. Hixon Brothers, Inc., 453
F.3d 283, 286 (5th Cir. 2006); Hardy v. Hartford Ins. Co., 236 F.3d
287, 290 (5th Cir. 2001).
It may be that New York substantive law applies in this case.
(continued...)
3

liberally interpreted in determining whether the claim falls within
the scope of the insurer’s duty to defend, and ambiguous provisions
in insurance policies are strictly construed against the insurer in
favor of coverage.5

The issue of whether or not an insurer has a

duty to defend is determined by the application of the eight
corners rule, where the insurer must compare the allegations in the
complaint against the terms of the policy.6
All

of

the

defendant’s

discovery

requests

clearly

seek

information and documents far beyond what would be relevant to
determining whether the defendant has a duty to defend.

Defendant

has not shown that the plaintiffs agreed to such discovery.
Defendant’s attempt to infer an agreement is unpersuasive.

It is

apparent from even a cursory review of the pleadings and other
papers

filed

in

the

record

experienced litigators.

that

counsel

on

both

sides

are

They surely know how to memorialize an

unambiguous agreement to conduct coverage discovery if that is what

4

(...continued)
Plaintiffs noted in their opposition memorandum that the Policy
contains a choice-of-law clause making New York law applicable.
Record document number 66, p. 8, n. 8.
Plaintiffs and the
defendant cited both New York and Louisiana law in their respective
memoranda. It is not necessary to determine whether New York or
Louisiana law applies to resolve the issues raised by this motion.
5

Hardy, 236 F.3d at 290, citing, Yount v. Maisano, 627 So.2d
148, 153 (La. 1993) and Louisiana Ins. Guar. Ass'n v. Interstate
Fire & Cas. Co., 630 So.2d 759, 764 (La. 1994).
6

Martco Ltd. Partnership v. Wellons, Inc., 588 F.3d 864, 87277 (5th Cir. 2009); Lamar Advertising Co. v. Continental Casualty
Co., 396 F.3d 654, 660 (5th Cir. 2005).
4

the parties agreed to do.

There should be no need to ask the court

to infer such an agreement from the plaintiffs’ willingness to
provide substantive discovery responses - all the while repeatedly
stating they do not concede that the defendant’s discovery requests
fall within the scope of discovery allowed at this time.
Acknowledging that generally facts extrinsic to the complaint
in the underlying action are not considered for duty to defend
purposes, the defendant argued that there is an exception when the
extrinsic facts are unrelated to the merits of the underlying
action.

Defendant then argued that the plaintiffs’ “reluctance to

provide an explanation as to how the Underlying Action constitutes
a ‘claim’ that is distinct from the NOVs, and thus falling within
the Policy’s coverage” entitles the defendant “to broad discovery
into the connection between the NOVs and the Underlying Action.”7
Defendant specifically cited Request for Production Nos. 7, 8, 42,
44, 45 and 46 and Interrogatory No. 8.
Defendant’s

argument,

requests, is unpersuasive.
not

ask

for

an

based

on

these

specific

discovery

These document production requests do

explanation

of

anything.

They

ask

for

communications and pollution policy applications. Plaintiffs noted
in their opposition memorandum that the defendants already have
copies of the NOVs, there is no dispute when they were issued, and
whether the NOVs constitute the same “claim” as the Underlying

7

Record document number 62-3, p. 16-19.
5

Action is a legal issue.

Moreover, plaintiffs noted that the

defendant’s Interrogatory No. 8 asked them to “[i]dentify the
factual bases and Policy provisions on which you rely to support
your contention that the NOVs and the Underlying Action are not the
same ‘Claim.’”

Although objecting to the interrogatory, the

plaintiffs provided a substantive response by identifying specific
Policy provisions and the complaints in the Underlying Action, as
well as the allegations in this case.
ask for an “explanation.”

Interrogatory No. 8 did not

Plaintiffs’ substantive response is

sufficient.8
It is not necessary, at this time, to address the defendants’
argument that the plaintiffs’ document production did not comply
with Rule 34(b)(2)(E)(I).
defendant

has

a

duty

to

If the court determines that the
defend

the

defendant

can

renew

its

argument.9
Under Rule 37(a)(5)(B), if a motion to compel discovery is
denied, the court must require the moving party or its attorney or
both to pay the party who opposed the motion its reasonable
expenses incurred in opposing the motion unless the motion was

8

In response to several other similar interrogatories the
plaintiffs reiterated their objection to the scope of the
interrogatory, but nonetheless provided a substantive response.
Record document number 62-5, Exhibit B, Answers to Interrogatory
Nos. 5, 6, 7, 9 and 10. Those responses are also sufficient.
9

Plaintiffs filed a motion for partial summary judgment on
the duty to defend issue. Record document number 81.
6

substantially justified or other circumstances make an award of
expenses unjust.
Defendant’s motion was not substantially justified.
discovery

requests

at

issue

sought

information

and

The

documents

primarily, if not exclusively, relevant to coverage rather than the
defendant’s duty to defend.

To the extent that a few of them

sought information and documents arguably relevant to the duty to
defend, the plaintiffs provided sufficient answers and responses.
And

there

is

no

agreement

to

conduct

discovery

relevant

to

coverage.
Plaintiffs did not submit anything to establish a specific
amount of expenses incurred in opposing motion.
motion

papers

supports

finding

that

an

A review of the

award

of

$2,000

is

reasonable.
Accordingly,

the

defendant’s

Motion

to

Compel

Discovery

Responses and Document Production is denied, without prejudice to
renewing its manner-of-production argument after the court rules on
the duty to defend issue.

Pursuant to Rule 37(a)(5)(B), the

defendant shall pay to the plaintiffs, within 14 days, reasonable
expenses in the amount of $2,000.00.
Baton Rouge, Louisiana, August 12, 2011.

STEPHEN C. RIEDLINGER
UNITED STATES MAGISTRATE JUDGE

7