Northfield Insurance Company v. Queen's Palace, Inc. et al

Filing 37

ORDER denying 31 Motion for Reconsideration. See attached Order. Ordered by Magistrate Judge Steven M. Gold on 9/8/2016. (Gold, Steven)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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NORTHFIELD INSURANCE CO.,
Plaintiff,
-against-

ORDER
16-CV-471(SMG)

QUEEN’S PALACE, INC.; ROSEWOOD REALTY,
LLC; NYC KAZI OFFICE INC.; AND VICENTA
MORAN, as Administratrix of the Estate of Eduardo
Rojas,
Defendants.
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GOLD, S., Magistrate Judge:
By letter dated August 4, 2016, Docket Entry 31, Defendant Rosewood Realty, LLC
(“Rosewood”) moves for reconsideration of a discovery ruling I made during a telephone
conference held on July 29, 2016 (the “discovery conference”). Plaintiff Northfield Insurance
Company (“Northfield”) opposes the motion by letter dated August 8, 2016. Docket Entry 32.
Plaintiff Northfield brings this action seeking a declaration that it has no duty to
defend or indemnify the defendants named in an underlying action pending in New York
Supreme Court for Kings County. Complaint (“Compl.”), Docket Entry 1. The underlying state
court action involves a claim for wrongful death resulting from an assault that took place outside
of a night club. The night club was owned and operated by Northfield’s insured, Queen’s
Palace, Inc. (“Queen’s Palace”), a defendant in both the state court case and this declaratory
judgment action. Compl. ¶¶ 16, 22. The premises where the assault took place was owned by
movant Rosewood, also a defendant in both the state court case and this action. There is no
allegation that the fatal assault was committed by an employee or agent of Queen’s Palace or
Rosewood.

Northfield’s complaint alleges that the insurance policy at issue contains an exclusion for
assault and battery, and that the exclusion’s unambiguous language precludes coverage for the
underlying state court wrongful death claim. Compl. ¶¶ 26-28. Northfield had indicated its
intention to move for summary judgment based upon the exclusion even before the discovery
conference was held, and has since filed its motion. Docket Entry 36.
During the conference, I denied Rosewood’s application for discovery of the amount
reserved by Northfield in connection with the underlying state court action. Counsel for
Rosewood argued, “I would like to know what [the] reserve was because I think its material as to
the coverage thought process at a given point in time.” Tr. of July 29, 2016, Docket Entry 35, at
12. I denied Rosewood’s motion, questioning whether any facts other than the policy language
would be relevant to determining whether the exclusion is unambiguous and plainly precludes
coverage. Id. at 11. However, I afforded Rosewood the opportunity to submit case law
“hold[ing] that the amount of a reserve is an appropriate consideration for the Court in
construing what is otherwise unambiguous contract language in a policy.” Id. at 12-13.
Taking up my invitation, Rosewood’s letter motion argues that disclosure of reserve
information is supported by the holding in Fireman’s Fund Ins. Co. v. Great American Ins. Co.
of New York, 284 F.R.D. 132 (S.D.N.Y. 2012). The Court in Fireman’s Fund began its analysis
by noting the “wide latitude” courts have to determine the scope of discovery. 284 F.R.D. at
135. The Court then observed that cases evaluating demands for reserve information do so “on a
case-by-case basis.” 284 F.R.D. at 139. As Rosewood correctly points out, the Court in
Fireman’s Fund went on to order disclosure of reserve information. However, it did so only
after determining that the information could be relevant to whether the insurer was acting in bad
faith or whether the insured had engaged in fraud.

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There are no allegations of bad faith or fraud at issue in this case. Northfield’s summary
judgment motion rests exclusively on the plain language of the policy, and raises no issues about
the state of mind or intent of the insurer or insured. Moreover, defendant Rosewood’s letter
motion does not explain in any further detail why the reserve information it seeks is relevant to
its defenses or its anticipated opposition to plaintiff’s motion. I therefore conclude, as I did
during the conference, that the reserve information sought by Rosewood is, at least at this stage
of the litigation, not relevant to Northfield’s claim or Rosewood’s defense and that, even if it
were, the burdens of disclosure would outweigh the importance of the information to resolving
the issues in dispute. See Fed. R. Civ. P. 26(b)(1).
For all these reasons, Rosewood’s motion for reconsideration is denied.

SO ORDERED.
/s/
STEVEN M. GOLD
U.S. MAGISTRATE JUDGE
Brooklyn, New York
September 8, 2016
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