Morrison v. Chartis Property and Casualty Company

Filing 49

OPINION AND ORDER by Magistrate Judge Paul J Cleary ; granting in part and denying in part 23 Motion to Compel (kjp, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
NANCY MORRISON,
Plaintiff,
v.
CHARTIS PROPERTY CASUALTY CO.,
Defendant.

)
)
)
)
)
)
)
)
)

Case No. 13-CV-116-JED-PJC

OPINION AND ORDER
Plaintiff, Nancy Morrison, filed this breach of contract and bad faith action
against her insurer, Chartis Property Casualty Co., alleging she is owed benefits
pursuant to her uninsured/underinsured motorist (“UIM”) coverage policy. [Dkt. No.
1]. Now before the Court is the Motion to Compel filed by Plaintiff, seeking
discovery of information and documents related to the handling of her UIM claim,
personnel files of employees involved in the handling of her claim, and policies and
procedures used by Defendant in assessing claims. [Dkt. No. 23].

I. Applicable Legal Principles
It is generally understood that discovery under the Federal Rules is
limited by relevance and burdensomeness. Rich v. Martin Marietta Corp., 522
F.2d 333, 343 (10th Cir. 1975); Littlebear v. Advanced Bionics, LLC, 2012 WL
2979023, *1 (N.D. Okla. July 20, 2012). Following the 2000 amendment of Fed.
R. Civ. P. 26, the Tenth Circuit Court of Appeals noted:

This change implemented a two-tiered discovery process; the first
tier being attorney-managed discovery of information relevant to
any claim or defense of a party, and the second being courtmanaged discovery that can include information relevant to the
subject matter of the action. Accordingly, when a party objects that
discovery goes beyond that relevant to the claims or defenses, “the
court would become involved to determine whether the discovery
is relevant to the claims or defenses and, if not, whether good cause
exists for authorizing it so long as it is relevant to the subject
matter of the action.” Fed. R. Civ. P. 26 advisory committee's note
(2000). This good-cause standard is intended to be flexible. Id.
When the district court does intervene in discovery, it has
discretion in determining what the scope of discovery should be.
In re Cooper Tire & Rubber Co., 568 F.3d 1180, 1188 -1189 (10th Cir. 2009)
(citations omitted).
While Rule 26 still contemplates liberal discovery and broad concept of
relevance, the Rule also recognizes that discovery must be proportionate to the
case and issues at hand. Fed. R. Civ. P. 26(b)(2). Trial courts have broad
discretion in managing discovery matters and are subject to review only for
abuse of discretion. Smith v. Sentinel Inc. Co., Ltd., 2011 WL 2883433, *1 (N.D.
Okla. July 15, 2011).
Rule 26(b)(1) provides that parties may obtain discovery “regarding any
matter, not privileged, that is relevant to the claim or defense of any party….
Relevant information need not be admissible at the trial if the discovery appears
reasonably calculated to lead to the discovery of admissible evidence.”
Fed.R.Civ.P. 26(b)(1). At the discovery phase of litigation “relevancy” is broadly
construed.
2

When the requested discovery appears relevant, the party opposing
discovery has the burden of establishing the lack of relevance by demonstrating
that the requested discovery does not come within the scope of relevance set
forth in Rule 26(b)(1), or that it is of such marginal relevance that the potential
harm occasioned by discovery would outweigh the ordinary presumption in
favor of broad disclosure. Barton v. Tomacek, 2012 WL 4735927, *4 (N.D. Okla.
Oct. 3, 2012; Smith, supra. Document requests must describe what is being
sought with “reasonable particularity.” Fed. R. Civ. P. 34b)(1)(A). See, Howard v.
Segway, Inc., 2013 WL 869955, *2 (N.D. Okla. March 7, 2013). Objections to
discovery requests must be stated with specificity. Mere boilerplate objections
or the familiar litany of “overly broad, vague or burdensome,” without more, is
not sufficient. Howard, supra, at *3; Leisure Hospitality, Inc. v. Hunt Properties, Inc.,
2010 WL 3522444, * 3 (N.D. Okla. Sept. 8, 2010); Wyatt v. ADT Sec. Services, Inc.,
2011 WL 1990473, *2 n.1 (N.D. Okla. May 23, 2011).

II. Discussion
The discovery disputes at issue can be broken down into the following
categories: 1) Plaintiff’s UIM claim file, 2) loss reserve information, 3) personnel
files, and 4) training and claims handling guidelines and materials. After
reading the briefs, the Court finds that Plaintiff’s Motion to Compel is
GRANTED in part and DENIED in part as detailed below.

3

A. Plaintiff’s UIM Claim File
Request for Production No. 2 seeks Plaintiff’s “entire” UIM claim file.
Defendant has produced what it contends are the relevant and non-privileged
portions of the claim file. Specifically, Defendant asserts: 1) that it denied
Plaintiff’s UIM claim on August 31, 2012, and that all material created after that
date is irrelevant; 2) post-litigation claim file materials are beyond the scope of
discovery; and 3) the remaining portions of the claim file are protected by the
attorney-client and work-product privileges.
Ordinarily, an insurer’s conduct after it made a decision to deny proceeds
under a policy would be irrelevant to a bad faith claim. Butterfly-Biles v. State
Farm Life Ins. Co., 2010 WL 346838, *3 (N.D. Okla. Jan. 21, 2010) (citations
omitted). However, in this case, there is ample evidence that suggests Defendant
was continuing to investigate Plaintiff’s claim and that a final decision had not
been made. For purposes of responding to the Motion to Compel, Defendant
claims that it denied Plaintiff’s claim in correspondence dated August 31, 2012,
where it stated “we do not believe that this is an ‘underinsured’ motorist claim
at this time.” [Dkt. No. 31 at p.9, Dkt. No. 23-3] (emphasis added). Not only did
the correspondence indicate coverage was not implicated “at this time,”
Defendant proceeded to indicate that it would “be more than happy to review”
additional documentation as part of its “continuing obligation to investigate and

4

evaluate” the claim. [Dkt. No. 23-3]. Indeed, Defendant did continue to
investigate and ask for additional records so that it could further evaluate
Plaintiff’s claim. [See e.g. Dkt. No. 38-2 at pp. 2, 4, 9 and 15]. Based on the record
before the Court, there is evidence that the claim review process was ongoing
and the ongoing investigatory conduct, after August 31, 2012, may be relevant to
Plaintiff’s bad faith claim. Butterfly-Biles, supra at *3. As this Court has previously
recognized, the fact that an insurer involves an attorney in investigating a claim
is insufficient “to make a routine business investigation suddenly privileged.” Id.
Relying on Andres v. Okla. Farm Bureau Mut. Ins. Co., 290 P.3d 15 (Okla.
Civ. App. 2012), Defendant similarly urges that all post-litigation claim file
materials are non-discoverable. However, that is not what the court in Andres
held. In Andres, the alleged bad faith “occurred completely within the context of
the parties’ appropriate exercise of their rights in litigation” after being
remanded back to the trial court; it was undisputed that the initial denial of the
claim was reasonable under the circumstances. 290 P. 3d at 18. Andres simply
does not stand for the proposition that the commencement of litigation is the
cut-off date for discovery of claim file material in all instances. See Higgins v.
State Auto Property & Cas. Ins. Co., 2012 WL 2571278, *5 (N.D. Okla. July 2, 2012)
(citing Barnes v. Okla. Farm Bureau. Mut. Ins. Co., 11 P.3d 162 (Okla. 2000)
(“Oklahoma courts would likely hold that the duty of good faith and fair dealing

5

extends into litigation until a claim has either been paid or denied.”). As
discussed above and in Butterfly-Biles, the ongoing investigation of Plaintiff’s claim
did not become privileged simply because a lawsuit was filed. Supra, at *3. This
is not to say that all post-litigation conduct would be relevant and not
privileged. As recognized in Higgins, there is no bright-line rule, but there is an
important distinction between the post-litigation continuing investigation of a
claim and true litigation conduct. Supra, at **6-7. In the instant case, discovery
of post-litigation conduct related to the ongoing investigation, evaluation and
processing of the claim, as well as payment or non-payment of the claim will be
allowed. Id.
B. Loss Reserves
Request for Production No. 8 seeks production of all documents relating
to loss reserves set for Plaintiff’s UIM claim. Defendant objects that this
information is not relevant as it is not probative of Defendant’s perceived “range
of value” of the claim. In support of this argument, Defendant cites to Higgins v.
State Auto Prop. & Cas. Ins. Co., 2012 WL 2571278, **11-12 (N.D. Okla. July 2,
2012) (unpublished). The undersigned notes however, that the motion before
the Court in Higgins concerned whether or not the evidence was admissible at
trial, not whether it was discoverable.

6

Discovery of information pertaining to loss reserves has been allowed by
this Court based on the reasoning that a claim for bad faith can be difficult to
prove without circumstantial evidence of the insurer’s intent. Porter v. Farmers
Ins. Co., Inc., 2011 WL 1566018 at *2 (N.D. Okla. Apr. 25, 2011) (unpublished),
ONEOK, Inc. v. Nat. Union Fire Ins. Co., 2007 WL 2891519 (N.D. Okla. Sept. 28,
2007) (unpublished). Although the Tenth Circuit has rejected the use of loss
reserves as evidence establishing bad faith, it has not held that loss reserves are
never relevant to the issue. Signature Dev. Cos. v. Royal Ins. Co. of Am., 230 F.3d
1215, 1223-24 (10th Cir. 2000). The undersigned reiterates this Court’s previous
finding “that loss reserve information is discoverable in bad faith cases.” Porter,
2011 WL 1566018 at *2. Defendant is ordered to fully respond to this request.
C. Personnel Files
Request for Production No. 11 seeks the entire personnel file for each
employee who was involved with Plaintiff’s UIM claim, specifically three
employees identified by Plaintiff, Brittan Reed, Jeff Caroll, and Brian Applebee.
Defendant argues that neither Jeff Carrol nor Brian Applebee handled Plaintiff’s
claim and that the request is overly broad and burdensome, requests irrelevant
information and implicates privacy and confidentiality rights.1
Both the form and content of Plaintiff’s request and Defendant’s answer
set the stage for a dispute to arise. Parties are directed to review this Court’s
discussion in Howard v. Segway, Inc., 2013 WL 869955 (N.D. Okla. March 7,
2013).
1

7

This Court has generally permitted discovery of relevant personnel files in
insurance bad faith cases, but not without limitation. Porter, 2011 WL 1566018
at *2; Waters v. Cont. Gen. Ins. Co., 2008 WL 2510039 (N.D. Okla. June 19 2008)
(unpublished). Personnel files often contain sensitive personal or medical
information that is irrelevant to the issues involved. Id. Here, Plaintiff has
requested entire personnel files, which the Court finds overly broad. Defendant
is required to produce information from the personnel files pertaining to
background, qualifications, training, and job performance, subject to the
protection of a protective order. Waters, 2008 WL 2510039 at *1.
Defendant argues that Mr. Carrol and Mr. Applebee did not “handle”
Plaintiff’s claim and therefore their personnel files should be exempt from
production. [Dkt. No. 31 at pp. 20-21]. However, in response to Interrogatory
No. 2, Defendant specifically identified Messrs. Carrol and Applebee as
employees “who participated in the decision(s) whether to pay” Plaintiff’s
claim. [Dkt. No. 23-1] (emphasis added). Participating in the decision on whether
Plaintiff’s claim should be paid is sufficient “handling” of the claim that their
personnel files are fair ground for discovery in this case. See Waters, 2008 WL
2510039.
D. Training and Claims Handling Guidelines and Manuals

8

In Interrogatory Nos. 8-9 and Requests for Production Nos. 3 and 9,
Plaintiff seeks information and documents pertaining to claims agent training as
well as claims handling guidelines and manuals. Defendant asserted that it has
fully answered and produced responsive materials and that this issue is moot.
Plaintiff disagrees that the Interrogatories were fully answered and also urges
that Defendant needs to supplement its formal discovery responses to the
requests for production and affirmatively state whether all responsive
documents have been produced.
Interrogatories 8 and 9 and Defendant’s responses are as follows:
INTERROGATORY NO. 8: Describe in detail Defendant
CHARTIS’s procedure for training its claims agents in handling
Oklahoma UIM claims. If Defendant CHARTIS utilizes instructional
manuals or other education material in this process, identify all
such material, give a brief description of each document and attach
all documenters hereto.
RESPONSE: Objection. This interrogatory is overbroad, irrelevant
and not reasonably calculated to lead to the discovery of admissible
evidence. With regard to Brittan Reed, he did not receive any
training that was specific to handling Oklahoma UIM claims.
INTERROGATORY NO. 9: If Defendant CHARTIS requires that its
employees be certified or have some type of training prerequisite
prior to being allowed to handle Oklahoma UIM claims, describe in
detail the process, prerequisites and requirements prior to handling
Oklahoma UIM claims.
RESPONSE: Objection. This interrogatory is overbroad. With
regard to Brittan Reed, he was required to have an Oklahoma
property and casualty adjuster license.

9

[Dkt No. 23-1]. The Court finds that information regarding training procedures
and materials for its employees in handling Oklahoma UIM claims is relevant
for discovery purposes and that all information on this topic be produced, and
not limited to training received by Brittan Reed.
In regards to Requests for Production Nos. 3 and 9, seeking training
materials and claim manuals used in handling Oklahoma UIM claims, the Court
finds that these are relevant and discoverable and Defendant is directed to
supplement its discovery responses to affirmatively state whether all responsive
materials have been produced.
Plaintiff’s Motion to Compel [Dkt. No. 23] is GRANTED IN PART AND
DENIED IN PART as set forth above. Defendant is hereby given thirty (30 days
from the date of this Order to supplement its discovery responses as discussed
herein. Each party will bear its own attorney fees associated with this motion.
IT IS SO ORDERED, this 4th day of March, 2014.

10