Barnard Pipeline, Inc. v. Travelers Property Casualty Corp.
Filing
141
ORDER granting 68 Motion to Compel. Signed by Chief Judge Dana L. Christensen on 5/2/2014. (dle)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BUTTE DIVISION
BARNARD PIPELINE, INC.,
a Montana Corporation,
CV 13–07–BU–DLC
Plaintiff,
ORDER
vs.
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA,
Defendant.
Before the Court is Defendant’s motion to compel testimony under Rule
30(b)(6) of the Federal Rules of Civil Procedure. For the reasons explained
below, the motion is granted as specifically described below.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Barnard Pipeline, Inc., (“Barnard”) brings this action against its
insurer, Defendant Travelers Property Casualty Company of America
(“Travelers”), for a declaratory judgment that Travelers is obligated to provide
coverage. Barnard also asserts a claim of insurance bad faith against Travelers.
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Barnard tendered a claim to Travelers for alleged covered losses associated
with Barnard’s construction of a pipeline project in Utah. Barnard allegedly
tendered the claim for coverage on December 6, 2011. Travelers allegedly had
over a year to complete its investigation into Barnard’s claim, but had not
provided a decision concerning coverage when Barnard filed its complaint against
Travelers on January 2, 2013. Barnard alleges that Travelers acted in bad faith in
conducting its investigation and loss adjustment.
On December 12, 2013, Travelers served Barnard with an amended Rule
30(b)(6) designee deposition notice. The notice requested that the designee be
prepared to discuss twenty-four different topic areas at the deposition. Barnard
designated Marty Jorgensen to testify, and the deposition took place on December
20, 2013. Dissatisfied with a number of Jorgensen’s responses during the
deposition, Travelers’ counsel noted that the proceeding would remain open for
purposes of clarifying any of Jorgensen’s responses.
Then, on January 10, 2014, Travelers emailed Barnard counsel a “nonexhaustive list” of twenty-two questions which it sought to ask Jorgensen at a
follow-up deposition. (Doc. 69-3 at 2-3.) Barnard proposed to provide written
answers to those questions, but Travelers again noted that a continuation
deposition might nevertheless be necessary if it deemed the written responses
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inadequate. After receiving Barnard’s written responses, Travelers contended that
Barnard answered some, but not all, of its questions, and the parties momentarily
agreed to a February 12, 2014 telephone deposition to resolve the inadequacies.
When Barnard refused to participate in the February 12th telephone deposition,
Travelers agreed to narrow the scope of questioning to five topics it believed
“were within the scope of the original Notice, on which the designated witness
could not answer without further investigation, and on which the follow-up written
answers did not fully resolve the question or raised new questions.” (Doc. 69 at
7).
Barnard declined to provide further information on any of the five topic
areas identified by Travelers, citing attorney-client privilege as to one topic area
and sufficient previous responses as to the others. Travelers filed the instant
motion to compel Rule 30(b)(6) testimony on March 7, 2014.
APPLICABLE LAW
In discovery, when a party “name[s] as [a] deponent a public or private
corporation,” the corporation “must then designate one or more officers, directors,
or managing agents, or designate other persons who consent to testify on its
behalf.” Fed. R. Civ. P. 30(b)(6). The party seeking discovery “must describe
with reasonable particularity the matters for examination.” Id. Pursuant to the
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rule, the corporate designee “must testify about information known or reasonably
available to the organization.” Id. “This duty requires a Rule 30(b)(6) designee to
testify to more than just what he or she personally knows . . . [t]he designee speaks
for the organization as a whole and must make efforts to be able to do so.”
Pioneer Drive, LLC v. Nissan Diesel Am., Inc., 262 F.R.D. 552, 558 (D. Mont.
2009). “The corporate party . . . has an affirmative duty to educate and to prepare
the designated representative for the deposition.” Id.
A party seeking discovery under Rule 30 may move to compel answers to
questions which a deponent fails to answer. Fed. R. Civ. P. 37(a)(3)(B)(i). The
“liberal discovery principles of the Federal Rules . . . require[] [a party opposing
discovery] to carry a heavy burden of showing why discovery [should be] denied.”
Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975). “The party who
resists discovery has the burden to show that discovery should not be allowed, and
has the burden of clarifying, explaining, and supporting its objections.” Parrick v.
FedEx Grounds Package System, Inc., 2010 WL 2854314 at *1 (D. Mont. 2010)
(citations omitted). “Broad discretion is vested in the trial court to permit or deny
discovery.” Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002).
ANALYSIS
The Court will address in turn each of the five topics about which Travelers
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seeks additional information.
A. Date when Barnard engaged outside counsel.
Travelers seeks disclosure of the date on which Barnard retained outside
legal counsel with regard to its claim. Barnard refuses to provide that date, citing
the protections of the attorney-client privilege and also arguing that Travelers
failed to identify the topic in its deposition notice.
Rule 501 of the Federal Rules of Evidence provides that “in a civil case,
state law governs privilege regarding a claim or defense for which state law
supplies the rule of decision.” In Montana, a “client cannot, except voluntarily, be
examined as to any communication made by the client to the client's attorney or
the advice given to the client by the attorney in the course of the attorney's
professional employment.” Mont. Code Ann. § 26-1-803(2) (2013) (emphasis
added); see Upjohn Co. v. United States, 449 U.S. 383, 395 (1981) (“the privilege
extends only to communications and not to facts”). The attorney-client privilege
“must be construed narrowly because it obstructs the truth-finding process.” Am.
Zurich Ins. Co. v. Thirteenth Jud. Dist. Ct., 280 P.3d 240, 245 (Mont. 2012)
(citations omitted). “The privilege protects only those disclosures – necessary to
obtain informed legal advice – which might not have been made absent the
privilege.” Id. (citing Fisher v. United States, 425 U.S. 391, 403 (1976)).
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The date upon which Barnard retained outside counsel in this case is not
protected by the attorney-client privilege. The retention date is purely factual,
would not itself have influenced or informed any advice Barnard received from
counsel, and is not a communication “which might not have been made absent the
privilege.” Id.
Nor is Travelers’ request outside the topical bounds Travelers identified in
its December 12, 2013 deposition notice. Travelers’ notice requested, in part, that
Jorgensen be prepared to discuss: (1) the facts supporting Barnard’s decision to
make a claim, (2) all interactions between Barnard and Travelers related to the
claim, (3) the facts supporting Barnard’s letter to the Travelers Office of
Consumer Affairs, and (4) Barnard’s reasoning behind producing certain
documents in support of its claim.
As part of a discussion about Barnard’s letter to the Travelers Office of
Consumer Affairs in which Barnard alleged that Travelers had engaged in a “onesided investigation,” the following exchange occurred:
Q: Before we move on, is there any other way, other than what you
have mentioned, which you believe demonstrates a one-sided
investigation by Travelers?
A: Yes, I do – I guess I would like to comment on the fact that, once
conversation started with Luoma, they turned it over to counsel right
away. We are not having conversations or investigations with
anybody from Travelers as an adjuster. We are dealing with Mr.
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Clark as an attorney.
Q: And –
A: So they have taken a defensive position from the very beginning.
Q: And is that different than the way Barnard reacted on its
presentation of the claim?
A: I believe so, yes.
Q: How so?
A: I just – I think we were proactive on how we approached it. I
think we were fair. I think we wanted individuals to participate from
Travelers to justify where we were at.
Q: When did Barnard first engage outside counsel to assist with
development of its claim?
A: Right after Luoma told us to provide the proof of loss and we
realized there was going to be no help from Travelers’ claim adjuster.
Q: Are you referring to the January 17, 2012 phone call?
A: I am not sure what the date – what the date was. If you want
specific dates of those things, I will get them for you.
Q: I think I do want a date, then, at your – since you offered, a date
that Barnard first engaged outside counsel with respect to this claim.
A: Okay. Are you making a note of that?
[Mr. Nygren]: I am.
A: Okay. Thank you.
Q: [Mr. Clark] Because I am understanding you to say that you
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believe Travelers’ engagement of outside counsel to assist with the
claim evaluation was evidence in your mind of a one-sided
investigation.
A: Yes.
(Doc 79 at 4-5.) The question as to the date Barnard first retained outside counsel,
especially when viewed in its context, falls within the scope of the topics related to
claim presentation and discussion of Barnard’s letter to the Travelers Office of
Consumer Affairs. The requirement that the notice identify topics with
“reasonable particularity” relieves a deposing party from having to include a
complete list of precise questions therein. See Detoy v. City & Co. of San
Francisco, 196 F.R.D. 362, 366 (N.D. Cal. 2000) (“the ‘reasonable particularity’
requirement . . . renders the description of the scope of the deposition in the notice
as the minimum about which the witness must be prepared to testify, not the
maximum”). Notably, Barnard did not object to the question at the time of the
deposition, and only now asserts that it exceeds the scope of the deposition notice.
Indeed, at the time of the deposition, Barnard’s representative and attorney agreed
to provide the information.
In sum, Travelers motion to compel Rule 30(b)(6) testimony is granted to
the extent Barnard must disclose the date on which it retained outside counsel on
this case. The fact of the date is neither protected by the attorney-client privilege
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nor outside the scope of Travelers’ December 12, 2013 deposition notice.
B. Pipe installation on pre-existing roads.
Travelers seeks clarification regarding pre-existing access roads along
which Barnard claims to have installed pipe. At deposition, Jorgensen confirmed
that Barnard had installed pipe adjacent to such roads, but could not specifically
identify which ones. After the deposition, Barnard provided additional
information on the topic in the form of a spreadsheet listing “[a]lignment[s] where
36" pipe was installed in Access Roads.” (Doc. 69-5 at 7.) Barnard contends that
the document lists mile marker designations which correspond to a project map it
previously provided to Travelers. Travelers contends that “the exhibit itself needs
to be explained because it is not inherently clear what is being demonstrated by the
exhibit.” (Doc. 69 at 9.) Travelers does not dispute that Barnard provided a
project map showing the pipeline and mile markers.
Barnard must supplement its response to the question of whether and to
what extent the company has installed pipe along pre-existing access roads. “The
fact that [Barnard] provided relevant documents after the deposition does not
rectify its failure to produce a representative to testify on the substance of those
documents.” Educ. Logistics, Inc. v. Laidlaw Transit, Inc., 2012 WL 73189 at *6
(D. Mont. January 20, 2012). Regardless of whether Travelers possesses a project
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map to which the mile marker figures relate, how they relate is not self-evident and
requires further explanation from Barnard. Additionally, Travelers may wish to
ask follow-up questions on this issue, and should not be prevented from doing so
simply because Barnard provided information that it feels adequately responds to
Travelers’ initial question. Travelers’ motion to compel is granted in this respect.
C. “Bending” activities related to right-of-way repair.1
Travelers seeks further explanation of which project expenses allocated to
pipe “bending”2 actually describe work performed to repair the damaged right-ofway. Jorgensen noted at deposition that some of those costs were likely properly
attributed to right-of-way repair, but could not estimate the total amount. After the
deposition, Barnard indicated to Travelers in writing that “approximately 26% [of
all 2-11 expenses] and in the amount of $82,000 was spent in attempts to repair
and/or mitigate” right-of-way damage. (Doc. 69-5 at 4.) Barnard also provided a
fifteen-page list of all 2-11 expenses charged between October 22, 2010 and
August 7, 2011, totaling $576,480.87. (Id. at 8-22.) Travelers contends Barnard’s
1. This issue may be largely mooted due to the Court’s order granting summary judgment in
favor of Travelers with respect to this claimed expense. Nonetheless, consistent with the
principle of a broad right of discovery and to the extent the parties continue to regard this issue as
relevant, the Court will rule on this issue.
2. Barnard identifies “bending” work in its cost detail reports under the reference code “2-11,"
and the parties generally refer to those costs as “2-11 expenses.”
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response is insufficient. Barnard contends the opposite.
Similar to above, Barnard must supplement its response to Travelers’
question regarding the 2-11 expenses. The spreadsheet Barnard provided makes
no distinction between 2-11 expenses incurred for bending pipe and 2-11 expenses
actually incurred for repairing the right-of-way. Further, Barnard’s estimate that
26% of all 2-11 expenses, or $82,000, were related to right-of-way repair does not
comport with the total listed in the document – 26% of $576,480.87 does not equal
$82,000, as Barnard estimated. Barnard is not relieved of its obligation to respond
to this question simply because it provided raw relevant data. Educ. Logistics,
Inc., 2012 WL 73189 at *6. Clearly, additional Rule 30(b)(6) testimony is needed
to translate the contents of the spreadsheet, and Travelers’ motion to compel is
granted in this respect.
D. Barnard’s requests for mediation and Travelers’ responses to those
requests.
Finally, Travelers seeks Barnard’s identification of the specific instances
when Barnard requested mediation regarding the claim, as well as instances when
Travelers allegedly refused to participate. Though Jorgensen could not identify
any of those instances at deposition, Barnard contends that it provided responsive
information during the deposition of its in-house counsel on February 14, 2014
and in written responses dated February 19, 2014.
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Barnard must supplement its response to this request. At deposition on
December 20, 2013, Travelers’ counsel initially asked Jorgensen to identify “one
time when Barnard has repeatedly requested Travelers to engage in mediation.”
(Doc 69-2 at 7.) Jorgensen responded that he would have to confer with in-house
counsel before providing an answer. Barnard’s eventual responses – references to
letters allegedly containing mediation requests, reliance on in-house counsel’s
deposition testimony, and a passing reference to a “white waiver” – do not
adequately address Travelers’ request given the company’s view that “it is not at
all evident . . . what language . . . constitutes a request on Barnard’s part to
mediate.” (Doc. 79 at 10.) The essence of Barnard’s bad faith claim is, in part,
that Travelers failed to reasonably investigate and work to settle its claim, and
Barnard will undoubtedly attempt to proffer evidence of Travelers’ refusal to
mediate at trial. Permitting Barnard to do so without giving Travelers the fullest
opportunity to ascertain the basis for that contention would frustrate a central
purpose of modern discovery: avoidance of surprise. See Ruiz v. HamburgAmerican Line, 478 F.2d 29, 32 (9th Cir. 1973). Barnard must make Jorgensen
available to answer any additional questioning Travelers might have as to the
portions of the referenced correspondence, or any other documentation, which
support Barnard’s contentions regarding mediation in this case.
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Accordingly, IT IS ORDERED that Travelers motion to compel 30(b)(6)
testimony (Doc. 68) is GRANTED.
DATED this 13th day of May, 2014.
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