Walden et al v. Maryland Casualty Company

Filing 63

ORDER granting in part and denying in part 19 Motion to Compel; granting 32 Motion in Limine; granting 39 Motion for Protective Order; granting 58 Motion in Limine; granting 60 Motion for Hearing. Signed by Chief Judge Dana L. Christensen on 2/17/2015. (dle)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION

BREANNE WALDEN, DANIELLE
DESCHENES AZURE, JESSICA
BLACKWEASEL, SABRINA REMUS
COYNE, BRITTANY DEAN, JENNIFER
DEMENT, DANIELLE DUNCAN,
JACKIE GREAVU, BETH HAYES,
JANA HEILIG, KEALLIE LIETZ,
JACKIE MULLENNAX, SARA
ONSAGER, ANNA RADFORD,
BARBARA SLOAN, MOLLY STILSON,
and KYRA TILSON, Individually and as
Assignees of DB&D, LLC (d/b/a
DAHL’S COLLEGE OF BEAUTY),

CV 13–222–M–DLC

ORDER

Plaintiffs,
vs.
MARYLAND CASUALTY COMPANY,
and DOES 1-5, inclusive,
Defendants.
Before the Court are five discovery and evidentiary motions: (1) Defendant
Maryland Casualty Company’s (“Maryland”) motion to compel discovery
responses (Doc. 19); (2) Plaintiffs’ motion in limine to exclude improper expert
opinions (Doc. 32); (3) Maryland’s motion for a protective order (Doc. 39); (4)

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Maryland’s motion in limine to exclude Plaintiffs’ insurance bad faith expert
(Doc. 58); and (5) Maryland’s unopposed motion to set a status conference (Doc.
60).
Through a series of substantive motions, the Court has narrowed this case
down to the issues of coverage for Plaintiffs’ bodily injury claims under the
Maryland commercial general liability (“CGL”) insurance policy and the extent of
damages, if any, resulting from those claims. The issues of bad faith and punitive
damages, the propriety of Maryland’s claims handling procedures, its duty to
defend, and its duty indemnify are simply no longer in play. Plaintiffs therefore
have no need for and are not entitled to information regarding Maryland’s
financial standing. Likewise, neither party will be permitted to put on evidence
related to the above foreclosed issues. Consequently, the Court grants Maryland’s
motion for a protective order precluding discovery into the matters contained in
Plaintiffs’ third set of discovery requests to Maryland. (Doc. 40-1.) Furthermore,
the Court grants the parties’ cross-motions in limine to exclude expert testimony
regarding bad faith and claims handling. Maryland’s unopposed motion for a
status conference is also granted; the details of that conference are explained
below.
This leaves Maryland’s motion to compel Plaintiffs’ discovery responses,
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which, for the following reasons, the Court grants.
BACKGROUND
This is an insurance coverage action arising out of a dispute between Dahl’s
College of Beauty (“Dahl’s”), a cosmetology school in Great Falls, Montana, and
a number of its former students. Maryland insured Dahl’s under a CGL insurance
policy during the time Plaintiffs allege Dahl’s staff committed a number of
inappropriate, wrongful acts. Maryland initially denied coverage and a defense for
Dahl’s, but changed its position and accepted Dahl’s tender of a defense after
Plaintiffs alleged physical manifestations of the emotional distress Dahl’s staff
caused them. Shortly after Maryland accepted the tender, Dahl’s and Plaintiffs
entered a consent judgment, and Dahl’s assigned its rights under the policy to
Plaintiffs. When Maryland refused to pay the value of the consent judgment,
Plaintiffs filed this suit. The Court has ruled to date that: (a) Maryland did not
breach its duty to defend or indemnify under the policy, (b) Maryland did not
violate the Montana Unfair Trade Practices Act (“UTPA”), Montana Code
Annotated § 33-18-101 et seq., (c) Maryland is not liable for the consent
judgment, and (d) by implication, Maryland is not liable for punitive damages.
The Court entered a scheduling order in this case on March 13, 2014. The
order set a discovery deadline of December 15, 2014, a motions deadline of
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January 30, 2015, and a motions in limine deadline of February 19, 2015. The
order set a jury trial in this matter for March 23, 2015.
ANALYSIS
Maryland moves the Court for an order compelling Plaintiffs to respond to
its first set of interrogatories and requests for production, served on Plaintiffs on
June 24, 2014, which generally seek information related to potential coverage for
Plaintiffs’ claims under the CGL policy. Maryland also seeks its costs and
attorney fees incurred for bringing the motion. Plaintiffs respond that, because
Maryland breached its duties under the policy, Maryland is not entitled to
challenge coverage for Plaintiffs’ injuries and therefore not entitled to information
supporting that challenge. Maryland filed this motion in September 2014, prior to
the Court’s various orders narrowing the scope of this lawsuit. Considering that
the sole remaining issue in this case is the coverage question, Maryland is entitled
to discover information responsive to the issue.
Rule 26(b)(1) of the Federal Rules of Civil Procedure provides that “parties
may obtain discovery regarding any non-privileged matter that is relevant to any
party’s claim or defense,” and that a “court may order discovery of any matter
relevant to the subject matter involved in the action.” The information sought
need not be admissible, so long as it “appears reasonably calculated to lead to the
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discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1). “[P]re-trial discovery
is ordinarily accorded a broad and liberal treatment[,] . . . based on the general
principle that litigants have a right to every man’s evidence . . . and that wide
access to relevant facts serves the integrity and fairness of the judicial process by
promoting the search for the truth.” Shoen v. Shoen, 5 F.3d 1289, 1292 (9th Cir.
1993) (citations and internal quotation marks omitted).
Pursuant to Rule 37(a)(3)(B), “a party seeking discovery may move for an
order compelling an answer, designation, production, or inspection” if the
opposing party fails to respond to an interrogatory or to produce documents or
materials for inspection. “The party who resists discovery has the burden to show
discovery should not be allowed, and has the burden of clarifying, explaining, and
supporting its objections.” DLJ Mortg. Capital, Inc., v. Lemon Creek Ranch, LLC,
CV 12-55-BU-DLC, slip op. at 2-3 (D. Mont. 2012) (citations omitted).
“Generally, if the responding party objects to a discovery request, the party
moving to compel bears the burden of demonstrating why the objections are not
justified.” Id. at 3 (citations omitted).
Plaintiffs’ objections to Maryland’s coverage and damage-based
interrogatories sound in the posture of the case prior to the Court’s rulings, do not
reflect the current state of this litigation, and therefore do not carry Plaintiffs’
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burden in resisting Maryland’s motion to compel. Maryland’s interrogatories seek
information regarding Plaintiffs’ enrollment and course of study at Dahl’s, the
instructors with whom Plaintiffs made contact, the nature and extent of the injuries
suffered due to Dahl’s staff conduct, any treatment Plaintiffs have received or
providers they have seen regarding those injuries, as well as other commonlysought, basic information about Plaintiffs’ and their life histories. (Doc. 20-1.)
Plaintiffs, with slight exception, respond as follows to nearly every interrogatory:
Objection. The present action implicates the following
issues: whether insurance coverage exists under the
Maryland Casualty Company policy for Plaintiffs’
underlying claims, whether Maryland Casualty Company
breached its duties to defend and indemnify Dahl’s
against Plaintiffs’ underlying claims, whether Maryland
Casualty violated Montana’s Unfair Trade Practices Act
in the manner in which it handling the underlying claims,
and whether Plaintiffs are entitled to recover punitive
damages as a result of Maryland Casualty Company’s
conduct. This Interrogatory seeks information which is
not relevant to any of the issues implicated in the present
action. Maryland Casualty Company had an opportunity
to litigate the underlying claims and, instead, denied
coverage and a defense to its insured.
(Doc. 20-2, passim.) In their brief opposing Maryland’s motion to compel,
Plaintiffs justify the above response by claiming that “[n]o third-party bad faith
claim is pled” and that they “stand in the shoes of Dahl’s and make no individual
damage claims.” (Doc. 24 at 2.) This is no longer an accurate statement – this
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case more closely resembles a third-party coverage action than a first-party bad
faith claim, at this point, and, notwithstanding the coverage question itself,
Plaintiffs’ potential damages are squarely at issue. As Maryland notes in its more
recent motion for a status conference, “[i]f this case is to proceed on the issue of
the nature and extent of [Plaintiffs’ damages, if any, resulting from their bodily
injury claim, Maryland . . . is entitled to pursue discovery regarding those claims,
which it has heretofore been prevented from doing.” (Doc. 61 at 4.) The Court
agrees, and accordingly grants Maryland’s motion to compel.
However, the Court also recognizes that Plaintiffs’ may object to
Maryland’s propounded discovery on other grounds, which may or may not have
been asserted in their initial responses.1 The Court anticipates that, during the
upcoming status conference, the parties may request additional time in which to
complete discovery, and to file additional motions. If so, the parties will have the
opportunity to confront any remaining discovery appropriately.
As to Maryland’s request for costs and attorney fees incurred for bringing
the motion to compel, the Court finds that Plaintiffs’ objections and responses to

1. Indeed, the Court notes that Plaintiffs’ asserted, albeit broadly, privilege and work product
objections in several of their initial responses, in addition to the blanket objection excerpted
above. Maryland does not seek such protected information, and the Court’s order here in no way
compels Plaintiffs to produce such information or precludes a good faith assertion of privilege
going forward.
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Maryland’s discovery requests were “substantially justified” under Rule
37(a)(5)(A)(ii) to preclude such a sanction. Discovery conduct may be
“substantially justified” if there exists a “genuine dispute” as to the propriety of
the discovery requested, or if “reasonable people could differ as to the
appropriateness of the contested action.” Pierce v. Underwood, 487 U.S. 552, 565
(1988) (citing Reygo Pacific Corp. v. Johnston Pump Co., 680 F.2d 647, 649 (9th
Cir. 1982) and Charles Alan Wright et al., Federal Practice and Procedure vol.
8B, § 2288 (3d ed., West 2014)). Given the nature of the case at the time
Maryland filed the motion, reasonable people could differ as to the extent to which
a similarly situated plaintiff would need to respond to the propounded discovery
requests.
Accordingly, IT IS ORDERED that:
(1)

Defendant’s motion to compel discovery responses (Doc. 19) is
GRANTED. Defendant’s associated motion for costs and attorney’s
fees is DENIED.

(2)

Plaintiffs’ motion in limine to exclude improper expert opinions
(Doc. 32) is GRANTED.

(3)

Maryland’s motion for a protective order (Doc. 39) is GRANTED.

(4)

Maryland’s motion in limine to exclude Plaintiffs’ insurance bad faith
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expert (Doc. 58) is GRANTED.
(5)

Maryland’s unopposed motion to set a status conference (Doc. 60) is
GRANTED.

(6)

The current scheduling order (Doc. 9) is VACATED.

IT IS FURTHER ORDERED that the Court will conduct a telephonic status
conference in this matter on March 3, 2015 at 11:00 a.m. for the purpose of
issuing a new scheduling order. The Court will contact the parties regarding callin procedures prior to the conference. The parties shall confer and, on or before
February 26, 2015, jointly propose specific dates to complete discovery and file
additional motions, and general dates when the parties would be prepared to try
this case. In this connection, the undersigned is desirous that this case be
completed within 6 months from the date of this order.
DATED this 17th day of February, 2015.

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