Lane v. Endurance American Specialty Insurance Company
Filing
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ORDER granting in part and denying in part 41 Motion to Compel Discovery. ORDER TO SHOW CAUSE why a report on the results of mediation has not been filed. Show Cause Response due by 5/16/2011. Signed by Magistrate Judge David Keesler on 5/9/2011. (tmg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:10-CV-401-MOC-DCK
EARL KELLEY LANE, Executor of the
Estate of Lucile H. Lane,
)
)
)
Plaintiff,
)
)
v.
)
)
ENDURANCE AMERICAN SPECIALTY
)
INSURANCE COMPANY,
)
)
Defendant.
)
________________________________________ )
ORDER
THIS MATTER IS BEFORE THE COURT on “Plaintiff’s Motion To Compel
Discovery” (Document No. 41). This motion has been referred to the undersigned Magistrate Judge
pursuant to 28 U.S.C. § 636(b), and is now ripe for review. Having carefully considered the motion,
the record, applicable authority, and the arguments of the parties, the undersigned will grant the
motion in part and deny the motion in part.
I. BACKGROUND
Plaintiff Earl Kelley Lane (“Plaintiff”), as Executor of the Estate of Lucille H. Lane, initiated
this action on July 26, 2010, with the filing of a “Complaint” (Document No. 1-1) in the Superior
Court of Mecklenburg County, North Carolina. The original complaint asserted a claim for breach
of contract against Defendant Endurance American Specialty Insurance Company (“Defendant”)
and sought relief in the amount of $900,267.74. (Document No. 1-1, p.3). Defendant filed a
“Notice Of Removal” (Document No. 1) to this Court on August 25, 2010.
On February 8, 2011, the undersigned allowed “Plaintiff’s Motion To Amend Complaint.”
(Document No. 28). Plaintiff’s “First Amended Complaint” (Document No. 32) was filed February
9, 2011. The First Amended Complaint (“Complaint”) added claims for: (1) tortious breach of
contract – bad-faith refusal to settle; and (2) unfair and deceptive trade practices; as well as
additional relief including punitive or trebled damages. (Document No. 32).
The crux of the Complaint is Plaintiff’s contention that Defendant is liable for the judgment
Plaintiff received in Chase Bank USA, N.A. v. Earl Kelley Lane, 3:09-CV-47-FDW-DCK
(W.D.N.C. Jan. 24, 2011) (“Underlying Action”), against Nations Title Agency of the Carolinas,
Inc. (“NTA-C”). (Document No. 32). Plaintiff alleges that NTA-C and its corporate affiliates,
including its parent company Nations Holding Co. (“NHC”), are insured under a policy of insurance
issued by Defendant, and that the judgment in the Underlying Action is within the coverage terms
of either a 2008-2009, or a 2009-2010 policy. (Document No. 32, p.2). Plaintiff argues that
Defendant refused to settle or pay the judgment in the Underlying Action “without any just cause
either in law or equity.” (Document No. 32, p.5).
The Plaintiff filed the instant motion (Document No. 41) on March 15, 2011. “Defendant
Endurance American Specialty Insurance Company’s Memorandum In Opposition To Plaintiff’s
Motion To Compel Discovery” (Document No. 50) was filed on April 8, 2011. On April 20, 2011,
a “Reply Memorandum In Support Of Plaintiff’s Motion To Compel Discovery” was filed. As such,
the pending motion to compel is now ripe for disposition.
II. DISCUSSION
Rule 26(b)(1) of the Federal Rules of Civil Procedure provides that:
Parties may obtain discovery regarding any nonprivileged matter that
is relevant to any party's claim or defense--including the existence,
description, nature, custody, condition, and location of any documents
or other tangible things and the identity and location of persons who
know of any discoverable matter. For good cause, the court may order
discovery of any matter relevant to the subject matter involved in the
action. Relevant information need not be admissible at the trial if the
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discovery appears reasonably calculated to lead to the discovery of
admissible evidence.
The rules of discovery are to be accorded broad and liberal construction. See Herbert v. Lando, 441
U.S. 153, 177 (1979); and Hickman v. Taylor, 329 U.S. 495, 507 (1947). However, courts may issue
orders protecting parties or persons from harassment, annoyance, embarrassment, oppression, or
undue burden or expense. See Fed.R.Civ.P. 26(c).
Whether to grant or deny a motion to compel is generally left within the District Court’s broad
discretion. See, Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 929 (4th Cir.
1995) (denial of motions to compel reviewed on appeal for abuse of discretion); Erdmann v.
Preferred Research Inc., 852 F.2d 788, 792 (4th Cir. 1988) (noting District Court’s substantial
discretion in resolving motions to compel); and LaRouche v. National Broadcasting Co., 780 F.2d
1134, 1139 (4th Cir. 1986) (same).
The pending motion to compel concerns “Plaintiff’s First Set Of Interrogatories And Requests
For Documents” (Document No. 41-2) served on January 10, 2011, and responded to by Defendant
on February 28, 2011 (Document Nos. 41-3; 41-4). By the instant motion, Plaintiff challenges
Defendant’s refusal to fully comply with Interrogatory Nos. 6, 7, 8, 10 and 11, as well as Document
Request No. 9. (Document No. 41-1, p.3). Plaintiff also contends that Defendant has improperly
withheld 119 pages of documents pursuant to assertions of privilege. (Document No. 41-1, p.6).
Plaintiff moves the Court for an order compelling Plaintiff to respond fully to its discovery requests,
and for an award of reasonable attorneys’ fees. Defendant contends that the motion to compel should
be denied because it seeks information that is not relevant to Plaintiff’s claims in this action, the
requested disclosures would be unduly burdensome, and/or the requested disclosures would require
revealing confidential and/or proprietary business information. (Document No. 50, p.1). The motion
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to compel will be granted in part and denied in part, as described below.
A. Interrogatories
The following is a list of each interrogatory subject to the motion to compel, along with
Defendant’s answer and a brief update and/or analysis of the status of the request.
1. Interrogatory No. 6:
6. Identify all claims under the 2008-09 Policy or 2009-10 Policy, setting
forth each such claim by (a) date of claim, (b) date of notice, (c) source of notice, (d)
name of Insured(s) against whom claim was made, (e) whether you provided a
defense for the claim, (f) whether you denied or admitted coverage, (g) status or
resolution of the claim, and (h) if you refused to provide a defense or denied
coverage, the reason for such action.
ANSWER:
Objection. This request is vague, ambiguous, overly
broad, unduly burdensome, seeks irrelevant
information, and is not reasonably calculated to lead
to the discovery of admissible evidence in that it does
not relate in any way to the issue of whether coverage
exists under the policy for the default judgment.
(Document No. 41-3, p.6).
In response to the pending motion, Defendant further contends that Interrogatory No. 6 seeks
the production of “information pertaining to other claims that Nations Title has submitted to
Endurance that do not relate to the Underlying Action.” (Document No. 50, p.10). Defendant argues
that other claims Nations Title may have made under the policies at issue in this litigation are not
relevant to Plaintiff’s claims in this action. (Document No. 50, pp.10-11). Defendant also argues that
the production of information responsive to this interrogatory would disclose confidential information
of Nations Title that is unrelated to the Underlying Action. (Document No. 50, p.11).
Plaintiff contends that “Interrogatory No. 6 requests sufficient information to show whether
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Endurance more indulgently regarded late notice issues for policy claims against NHC’s solvent
subsidiaries.” (Document No. 51, p.6). Specifically, Plaintiff asserts that “[a]n evidentiary
foundation thus exists to warrant discovery whether Endurance treated the insolvent NTA-C different
from the solvent NHC subsidiaries in claims handling and/or made a business practice of abandoning
insolvent insureds, to the detriment of their tort creditors.” (Document No. 51, p.8).
After careful consideration, the undersigned finds that the information requested by this
interrogatory is relevant to the claims in the Complaint and may lead to the discovery of admissible
evidence. Moreover, the undersigned observes that Interrogatory No. 6 is specifically tailored to seek
information related to Defendant’s conduct regarding the policies of insurance it issued that are the
subject of this litigation. Plaintiff’s motion will be granted as to this interrogatory; Defendant shall
provide Plaintiff with a full response to Interrogatory No. 6 on or before May 31, 2006.1
2. Interrogatory No. 7:
7. Identify all liability insurance claims for which you have withheld a
defense, denied coverage or facilitated or acquiesced in a waiver or forfeiture of
coverage on the basis, in part or in whole, of an express desire by an insolvent or
defunct insured or the owner of such an insured to forfeit the insured’s coverage,
setting forth (a) the name of the insured; (b) the name of the party requesting to
forfeit a defense or coverage; (c) the insurance policy type and number; and (d) the
date of the claim.
ANSWER:
Objection.
This discovery request is vague,
ambiguous, overly broad, unduly burdensome,
oppressive, and not reasonably calculated to lead to
the discovery of admissible evidence and seeks
information not relevant to Plaintiff’s claims against
Endurance. Endurance further objects to this request
because it is not limited to a timeframe relevant to
1
The parties may, of course, seek entry of an appropriate protective order.
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Plaintiff's claims against Endurance. Endurance
further objects to the extent that this document
request seeks information pertaining to Endurance’[s]
internal policies or practices (as such information is
neither relevant to the issues in this case nor
reasonably calculated to lead to the discovery of
admissible evidence) and is confidential and
proprietary business information, as is information
regarding Endurance’s other insureds.
(Document No. 41-3, p.7).
Plaintiff asserts that this interrogatory “seeks to determine whether Endurance’s apparently
unlawful collusion with NHC to divest the insolvent NTA-C of coverage is a general business
practice.” (Document No. 41-1, p.4). Defendant contends that the information requested is not
relevant to this action, and that a response “to this interrogatory would be unduly burdensome and
would require the disclosure of Endurance’s insureds’ confidential information.” (Document No. 50,
p.6).
Regarding Interrogatory No. 7, the undersigned is not persuaded that the requested
information is relevant to this lawsuit and reasonably calculated to lead to the discovery of admissible
information. In short, this interrogatory appears to be overly broad, and therefore, the motion to
compel will be denied as to this discovery request.
3. Interrogatory No. 8:
8. Identify all post-policy-period loss analyses or quantifications of the
2008-09 Policy and the dates of their preparation.
ANSWER:
Objection. This request is unintelligible, vague, and
ambiguous and appears to be overly broad and unduly
burdensome, to seek irrelevant information, and to be
not reasonably calculated to lead to the discovery of
admissible evidence in that it does not relate in any
way to the issue of whether coverage exists under the
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policy for the default judgment.
(Document No. 41-3, p.7).
In spite of its original objection, Defendant’s response to the pending motion states that it “has
produced all non-privileged information and/or documents that are responsive to interrogatory
number 8 to Plaintiff, including its entire underwriting file relating to the 2008-2009 Policy.”
(Document No. 50, p.12). In reply, Plaintiff does not refute that Defendant has provided the
information requested, but now seeks to require Defendant “to clarify whether it produced the latest
loss run.” (Document No. 51, p.9)
Where a party declares that it “has produced all non-privileged information....” the
undersigned interprets such a statement as indicating that the party has also included the latest nonprivileged information that is responsive to the interrogatory. If Defendant is aware of additional
non-privileged information or documents that are responsive to this interrogatory, that have not been
produced thus far, it should immediately supplement its response.
4. Interrogatory No. 10:
10. Identify the origin and/or derivation, any draftsman (or draftsmen) of,
and any communications or negotiations with any insured (under the 2008-09 Policy)
concerning any of the policy forms comprising the 2008-09 Policy, including
specifically but without limitation:
a)
b)
c)
d)
e)
the Declarations;
the Forms and Endorsements Schedule;
each General Change Endorsement, including specifically
General Change Endorsement (Claim Reporting Threshold
and Knowledge of Claim), Section VI.A., the clause
beginning “but in no event later than” and concluding “if
elected hereunder;”
the Named Insured Amendment Endorsement, PL 0101 0407;
the Premier Professional Liability Insurance Policy form, any
clause thereof on which you rely in any defense to coverage,
and the following Sections:
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i)
ii)
iii)
iv)
Section V.D.
Section VI.A.
Section VII.A.
Section VIII.B., including specifically the final
sentence thereof.
ANSWER:
Objection.
This discovery request is vague,
ambiguous, overly broad, unduly burdensome,
oppressive, and not reasonably calculated to lead to
the discovery of admissible evidence and seeks
information not relevant to Plaintiff’s claims against
Endurance. Endurance further objects to this request
because it is not limited to a timeframe relevant to
Plaintiff's claims against Endurance. Endurance
further objects to the extent that this document
request seeks information pertaining to Endurance’[s]
internal policies or practices (as such information is
neither relevant to the issues in this case nor
reasonably calculated to lead to the discovery of
admissible evidence) and is confidential and
proprietary business information.
(Document No. 41-3, pp.8-9).
Again, in spite of its original objections Defendant states in its response that it has “already
provided to Plaintiff all non-privileged information and/or documents that are responsive to”
interrogatories 10 and 11, and that it will separately provide Plaintiff the last known address for the
underwriter involved in underwriting the policies. (Document No. 50, p.12). In its reply, Plaintiff
does not appear to refute that Defendant has provided adequate responses to interrogatories 10 and
11, with the exception of information it still seeks regarding the underwriter. (Document No. 51,
p.2). Plaintiff points out that Defendant has offered no explanation for why it objected to these
requests and then later asserted that it had already produced and/or had no responsive information.
Id.
Based on the foregoing, the undersigned finds that Defendant should be compelled to provide
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the requested information regarding the underwriter, as previously promised. Defendant shall
supplement it responses to Interrogatory Nos. 10 and 11 on or before May 31, 2011.
5. Interrogatory No. 11:
11. Identify the origin and/or derivation, any draftsman (or draftsmen) of,
and any communications or negotiations with any insured (under the 2009-10 Policy)
concerning any changes in the policy forms comprising the 2009-10 Policy, as
compared to the 2008-09 Policy, including without limitation changes to the Named
Insured Amendment Endorsement.
ANSWER:
Objection.
This discovery request is vague,
ambiguous, overly broad, unduly burdensome,
oppressive, and not reasonably calculated to lead to
the discovery of admissible evidence and seeks
information not relevant to Plaintiff’s claims against
Endurance. Endurance further objects to this request
because it is not limited to a timeframe relevant to
Plaintiff's claims against Endurance. Endurance
further objects to the extent that this document
request seeks information pertaining to Endurance’[s]
internal policies or practices (as such information is
neither relevant to the issues in this case nor
reasonably calculated to lead to the discovery of
admissible evidence) and is confidential and
proprietary business information.
(Document No. 41-3, p.9).
See the discussion above regarding Interrogatory No. 10.
B. Document Production
There appears to be one remaining specific document request in dispute.
1. Document Request No. 9:
9. All company policies or procedures concerning claims adjustment and:
a)
enforcement or waiver of policy provisions prescribing the
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form, source, content or timing of notice of claim; or
b)
insolvent insureds.
ANSWER:
Objection.
This discovery request is vague,
ambiguous, overly broad, unduly burdensome,
oppressive, and not reasonably calculated to lead to
the discovery of admissible evidence and seeks
information not relevant to Plaintiff’s claims against
Endurance. Endurance further objects to this request
because it is not limited to a timeframe relevant to
Plaintiff's claims against Endurance. Endurance
further objects to the extent that this document
request seeks information pertaining to Endurance’[s]
internal policies or practices (as such information is
neither relevant to the issues in this case nor
reasonably calculated to lead to the discovery of
admissible evidence) and is confidential and
proprietary business information.
(Document No. 41-4, p.4).
Similar to its response to Interrogatory Nos. 10 and 11, Defendant now contends that it “does
not have any documents that are responsive to this category within its possession, custody, or
control.” (Document No. 50, p.13). Defendant offers no explanation reconciling its original
strenuous objection to this request, with its current position that it simply does not have any
documents responsive to this request.
2. Other Documents
Plaintiff’s pending motion also sought an order from the Court compelling the production of
119 pages of documents for which Defendant has furnished a privilege log and declined to make
available based on assertions of: (1) joint-defense and common-interest doctrines; (2) mediation
privilege; (3) proprietary reserve information and relevance; and (4) confidential and proprietary
information. (Document No. 41, p.1-2; Document No. 41-1, p.6). In response to the motion to
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compel, Defendant contends that it has withdrawn its assertions of privilege as to certain documents,
but that it continues to withhold certain other documents based on attorney-client privilege and/or
work-product doctrine. (Document No. 50, p.13). Defendant further states that it is willing to submit
these documents for in camera review. (Document No. 50, p.15).
Plaintiff now requests that the Court review in camera 15 specific pages that Defendant has
thus far withheld pursuant to attorney-client or work-product privilege. (Document No. 51, pp.911).2 The undersigned will respectfully request that Defendant have the aforementioned documents
delivered to the undersigned’s chambers as soon as possible for inspection, but not later than May
20, 2011. Defendant shall include a brief explanation of the privilege asserted for each of the 15
pages submitted.
C. Attorney’s Fees
Finally, Plaintiff also seeks leave to prove by affidavit appropriate fees and expenses that it
contends should be awarded pursuant to Fed.R.Civ.P. 37. (Document No. 41; Document No. 51,
p.11). Regarding a motion to compel, Rule 37 provides in pertinent part that
If the motion is granted--or if the disclosure or requested discovery
is provided after the motion was filed--the court must, after giving an
opportunity to be heard, require the party or deponent whose conduct
necessitated the motion, the party or attorney advising that conduct,
or both to pay the movant's reasonable expenses incurred in making
the motion, including attorney's fees. But the court must not order
this payment if:
(i) the movant filed the motion before attempting in good
faith to obtain the disclosure or discovery without court
action;
(ii) the opposing party's nondisclosure, response, or objection
2
These documents are: EASIC-UF09-000065-68, 70; EASIC-UF09-000500; EASIC01000-003,
1008; and EASIC-UF09-000061-64.
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was substantially justified; or
(iii) other circumstances make an award of expenses unjust.
Fed.R.Civ.P. 37(a)(5)(A).
In this case, it appears that the parties consulted regarding the discovery issues subject to the
motion and that Defendant made and then held firm to specific objections to the production of a
significant amount of information and/or documents requested. Since the motion to compel was
filed, Defendant seems to have withdrawn certain privilege assertions, stated that it has produced all
responsive information, and/or announced that it does not have information responsive to certain
discovery requests that it had originally objected to. Had Defendant clarified its position as to this
information prior to the filing of the pending motion, the expenditure of significant time and
resources of both parties, and the Court, might have been avoided.
As such, Plaintiff will be granted leave to prepare and file a motion and supporting affidavit,
that details appropriate and reasonable fees and expenses Plaintiff incurred in making its “...Motion
To Compel Discovery” (Document No. 41), on or before May 20, 2011. Defendant may file a timely
response and show cause why the requested fees and expenses should not be allowed.
III. CONCLUSION
IT IS, THEREFORE, ORDERED that “Plaintiff’s Motion To Compel Discovery”
(Document No. 41) is GRANTED in part and DENIED in part, as fully described herein.
IT IS FURTHER ORDERED that the parties shall SHOW CAUSE, on or before May 16,
2011, why a report on the results of mediation has not been filed pursuant to the “Pretrial Order And
Case Management Plan” (Document No. 8) and the undersigned’s more recent “Order” (Document
No. 43) granting the parties’ joint motion to extend case deadlines.
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Signed: May 9, 2011
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