Argonaut Great Central Insurance Company v. Audrain County Joint Communications

Filing 74

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that the motion of non-party Q Security Solutions, LLC, to quash the subpoena served on it by Defendant is DENIED. (Doc. No. 70.) IT IS FURTHER ORDERED that the parties are directed to cooperate with one another to agree to the terms of a protective order along the lines of the terms suggested by Q Security Solutions, LLC, and to submit a joint proposed protective order on or before January 11, 2013. (Response to Court due by 1/11/2013.) Signed by District Judge Audrey G. Fleissig on 1/2/2013. (NCL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NORTHERN DIVISION

ARGONAUT GREAT CENTRAL
INSURANCE COMPANY,
Plaintiff,
vs.
AUDRAIN COUNTY JOINT
COMMUNICATIONS,
Defendant.

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Case No. 2:11CV00034 AGF

MEMORANDUM AND ORDER
This matter is before the Court on the motion of non-party Q Security Solutions,
LLC, (“Q Security”) to quash the subpoena served on it by Defendant Audrain County
Joint Communications (“ACJC”) requiring Q Security to produce and provide testimony
about a Mutual Settlement Agreement entered into in 2010 between Q Security and
Plaintiff Argonaut Great Central Insurance Co.’s insured, Hickman Foods, Inc.
(“Hickman”). For the reasons set forth below, the motion to quash shall be denied, but
the Court shall grant Q Security’s alternative request for a protective order to ensure that
the document, which Q Security maintains includes confidential business matters, is only
used in connection with this case.
BACKGROUND
For purposes of the motion before the Court, the record establishes the following.
Hickman owned a grocery store in Audrain County, Missouri. Q Security installed a

security system at the store. ACJC is a commission that dispatches emergency services in
Audrain County. A security alarm panel that was located at ACJC’s premises and
monitored directly by ACJC employees, was connected to the Hickman store. On July 24,
2006, individuals broke into the store and set a fire to avoid detection. ACJC never
reported an alarm to Hickman. Prior to that time, ACJC was aware that the alarm
monitoring panel was broken, yet had taken no steps to repair it.
Hickman sued Q Security in state court, and Q Security brought in ACJC as a third
party defendant. ACJC was dismissed out upon its motion to dismiss, and Hickman
eventually settled the suit with Q Security. Plaintiff, Hickman’s general liability insurer,
filed the present action as Hickman’s assignee, asserting claims against ACJC for
negligence and reckless misconduct resulting in the July 24, 2006 fire that damaged the
store. Plaintiff seeks actual damages, lost business income, and punitive damages.
ACJC argues that it is entitled to a copy of the settlement agreement between Q
Security and Hickman, because under Missouri law the amount of a settlement paid or
promised by a joint tortfeasor is relevant and discoverable, and further because the
settlement agreement may contain statements of fact that are potentially admissible.
Plaintiff objects to the production of this document not on relevancy grounds, but rather
based on the argument that the settlement agreement is confidential. Alternatively,
Plaintiff seeks a protective order to ensure that the settlement agreement only be used in
connection with this litigation.

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DISCUSSION
Federal Rule of Civil Procedure 26(b) provides that “[p]arties may obtain
discovery regarding any matter, not privileged, which is relevant to the subject matter
involved in the pending action” Federal Rule of Evidence 401 defines “relevant
evidence” as “evidence having any tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or less probable than it
would be without the evidence.” For materials to be discoverable they must be
“reasonably calculated to lead to the discovery of admissible evidence,” but need not
actually be admissible at trial. Fed. R. Civ. P. 26(b)(1).
Federal Rule of Evidence 408 promotes a public policy favoring settlement by
establishing that evidence of a settlement agreement is not admissible “to prove or
disprove the validity or amount of a disputed claim . . . . Fed. R. Evid. 408. In deference
to this policy, some courts have required the requesting party to meet a “heightened
standard” when the discoverability of a confidential settlement agreement is involved.
Young v. State Farm Mut. Auto. Ins. Co., 169 F.R.D. 72, 76 (D. W. Va. 1996) (collecting
cases). In Auto-Owners Insurance Co. v. Mid-America Piping, Inc., No. 4:07CV00394
DJS, 2008 WL 2570820, at *2 (E.D. Mo. June 26, 2008), a court in this district noted
Young, but employed the normal standard of relevance under Rule 26(b) in granting a
motion to quash production of the settlement amounts for which settling defendants
settled the claims against them.

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Here the Court concludes that ACJC has shown that the settlement agreement
between Q Security and Hickman is relevant to this case and is reasonably calculated to
lead to the discovery of admissible evidence. The Court is mindful of Q Security’s
confidentiality concerns, and accordingly will enter an appropriate protective order
regarding the settlement agreement, along the lines of the terms suggested by Q Security.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that the motion of non-party Q Security Solutions,
LLC, to quash the subpoena served on it by Defendant is DENIED. (Doc. No. 70.)
IT IS FURTHER ORDERED that the parties are directed to cooperate with one
another to agree to the terms of a protective order along the lines of the terms suggested
by Q Security Solutions, LLC, and to submit a joint proposed protective order on or
before January 11, 2013.

Audrey G. Fleissig
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 2nd day of January, 2013.

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