Dziadek v. The Charter Oak Fire Insurance Company
Filing
218
ORDER granting 161 Motion to Quash to the extent that Charter Oak's subpoena to Farmers Insurance Exchange is hereby quashed; denying 167 Motion for Reconsideration; denying 170 Motion for Reconsideration ; denying 172 Motion for Reconsideration ; denying 174 Motion for Reconsideration ; denying 170 Motion o certify question to South Dakota Supreme Court. Signed by U.S. District Judge Roberto A. Lange on 4/22/16. (DJP)
FILED
UNITED STATES DISTRICT COURT
APR 2 2 2016
DISTRICT OF SOUTH DAKOTA
~~
SOUTHERN DIVISION
LAURA DZIADEK,
4:11-CV-04134-RAL
Plaintiff,
OPINION AND ORDER
QUASHING SUBPOENA AND DENYING
DEFENDANT'S MOTIONS FOR
RECONSIDERATION
vs.
THE CHARTER OAK FIRE INSURANCE
COMP ANY, d/b/a TRAVELERS,
Defendant.
I. INTRODUCTION
Plaintiff, Laura Dziadek ("Dziadek"), sued Defendant, Charter Oak Fire Insurance
Company, doing business as Travelers ("Charter Oak"), making claims sounding in contract and
tort relating to a commercial insurance policy issued by Charter Oak ("Policy").
Doc. 15.
Dziadek's Amended Complaint asserts that she is entitled to declaratory judgments that she is an
insured under the underinsured ("UIM") endorsement with Charter Oak owing her a duty of
good faith and fair dealing, that $1,000,000 of UIM coverage exists, and that she is an insured
under the medical payments endorsement. Doc. 15 at iii! 15-51. Dziadek further alleges Charter
Oak breached the insurance contract and engaged in unfair trade practices, fraud and deceit, and
bad faith in its dealings with Dziadek. Doc. 15 at iii! 52-95. Dziadek seeks relief in the form of
compensatory damages, punitive damages, and attorney's fees. Doc. 15 at iii! 96--102; Doc. 15 at
13-14. After the lawsuit was filed, Charter Oak acknowledged coverage, paid $900,000 under
1
the UIM coverage, 1 and paid its $5,000 medical payments coverage limit. Charter Oak then
moved for summary judgment on all claims. Doc. 118. On December 1, 2015, this Court issued
an Opinion and Order Granting in Part and Denying in Part Defendant's Motion for Summary
Judgment ("Opinion and Order"), granting summary judgment on the unfair trade practices claim
only and otherwise denying the remainder of the motion. Doc. 153 at 28. Thereafter, this Court
issued an Order Setting Jury Trial and Pretrial Deadlines, setting the pretrial conference for April
29, 2016 at 9:00 a.m. and the jury trial to begin May 16, 2016 at 9:00 a.m. Doc. 156 at 1-2.
Various motions are currently pending before this Court, including Plaintiffs Motion to
Quash Subpoena Issued by Travelers to Farmers Insurance, Doc. 161, and four reconsideration
motions filed by Charter Oak regarding this Court's Opinion and Order on Charter Oak's Motion
for Summary Judgment, Docs. 167, 170, 172, 174. Charter Oak's reconsideration motions focus
on coverage under the medical payments endorsement and prior determinations made by this
Court regarding Dziadek's breach of contract, bad faith, and fraud and deceit claims. Docs. 167,
170, 172, 174. For the reasons explained below, this Court quashes Charter Oak's subpoena and
denies Charter Oak's motions for reconsideration.
II. DISCUSSION
A. Dziadek's Motion To Quash Subpoena
On March 23, 2016, Charter Oak issued a subpoena to Farmers Insurance Exchange
under Federal Rule of Civil Procedure 45 seeking the employments records of Dziadek's expert
Rob Dietz, who worked for Farmers from 1987 to 2001. Doc. 161. Dziadek moved to quash the
subpoena, arguing that Charter Oak had violated the discovery deadline and had failed to
1
Charter Oak under South Dakota law was entitled to an offset from the $1,000,000 UIM limits
for the $100,000 received from Progressive Insurance Company, the tortfeasor's insurer. See
S.D. Codified Laws ("SDCL") § 58-11-9.5; Kirchoff v. Am. Cas. Co., 997 F.2d 401, 402 n.2
(8th Cir. 1993).
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establish good cause for doing so. Doc. 161. Charter Oak replied that Dziadek does not have
standing to oppose a subpoena to a third party that is not a witness for her. Doc. 163.
A party typically lacks standing to challenge a subpoena issued to a non-party absent a
personal right or privilege in the documents requested. Coffeyyille Res. Ref. & Mktg. v. Liberty
Sumlus Ins., No. 4:08MC00017 JLH, 2008 WL 4853620, at *1 (E.D. Ark. Nov. 6, 2008); 9A
Charles Alan Wright et al., Federal Practice and Procedure§ 2459 (3d ed. 2010). Nevertheless,
at least some courts have concluded that a plaintiff has standing to challenge a subpoena issued
to a non-party on the ground that the subpoena was beyond the discovery deadline. Phipps v.
Adams, No. 3:11-cv-147-GPM-DGW, 2012 WL 3074047, at *3 (S.D. Ill. July 30, 2012); Hartz
Mountain Com. v. Chanelle Pharm. Veterinary Prods. Mfg., 235 F.R.D. 535, 536 (D. Me. 2006).
Regardless of Dziadek's standing to file her motion, this Court has the inherent power to quash
an untimely subpoena. Dedmon v. Cont'l Airlines, Inc., No. 13-cv-0005-WJM-NYW, 2015 WL
1740095, at *2 (D. Colo. Apr. 14, 2015); Morrison v. Chartis Prop. Cas. Co., No. 13-CV-116JED-PJC, 2014 WL 5341785, at *1 (N.D. Okla. Oct. 20, 2014); Peterbilt of Great Bend, LLC v.
Doonan, No. 05-1281-JTM, 2006 WL 3193371, at *1-2 (D. Kan. Nov. 1, 2006) (concluding that
defendants did not have standing to move to quash subpoena duces tecum to third party but
quashing the subpoena because it was beyond the discovery deadline).
Thus, the relevant
question here is not whether Dziadek has standing to challenge the subpoena but whether the
subpoena violates the discovery deadline.
The sixth and final scheduling order in this case provides that "[a]ll discovery, including
expert discovery, shall be commenced in time to be completed by March 2, 2015." Doc. 101 at
1. The majority of courts agree that Rule 45 subpoenas constitute discovery and are therefore
governed by the discovery deadlines set forth in a scheduling order. See Dhaliwal v. Singh, No.
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1:13-cv-00484-LJO-SKO, 2014 WL 3401384, at *2 (E.D. Cal. July 11, 2014) ("In a majority of
jurisdictions, ... Federal Rule of Civil Procedure 45 subpoenas constitute pretrial discovery that
must be served within the specified discovery period."); Dag Enters., Inc. v. Exxon Mobil Corp.,
226 F.R.D. 95, 104 (D.D.C. 2005) ("Rule 45 subpoenas are 'discovery' under Rules 16 and 26 of
the Federal Rules of Civil Procedure, and are subject to the same deadlines as other forms of
discovery."); 9 James Wm. Moore et al., Moore's Federal Practice § 45.03[2] (3d ed. 2015)
("[O]nce the discovery deadline established by a scheduling order has passed, a party may not
employ a [Rule 45] subpoena to obtain materials from a third party that could have been
procured during the discovery period."). The requirement that Rule 45 subpoenas must be issued
before the discovery deadline is not absolute, however. "Rule 45 subpoenas may be employed in
advance of trial and outside of a discovery deadline for the limited purposes of memory
refreshment, trial preparation, or to secure for the use at trial original documents previously
disclosed by discovery." Circle Grp., LLC v. Se. Carpenters Reg'l Council, 836 F. Supp. 2d
1327, 1352 (N.D. Ga. 2011).
Although Charter Oak does not specifically argue that its subpoena to Farmers Insurance
Exchange is a "trial subpoena" not subject to the discovery deadline, Charter Oak does contend
that the documents it seeks from Farmers will be relevant for "potential impeachment" of Dietz.
Doc. 163 at 1. Under certain circumstances, courts have allowed Rule 45 subpoenas issued after
the discovery deadline when the subpoenas were narrowly tailored and sought documents only
for purposes of cross-examination and impeachment. See, e.g., Joseph P. Carroll Ltd. v. Baker,
No. 09 Civ. 3174(SHS), 2012 WL 1232957, at *2-3 (S.D.N.Y. Apr. 12, 2012); Malmberg v.
United States, No. 5:06-cv-1042 (FJS/GHL), 2010 WL 1186573, at *3 (N.D.N.Y. Mar. 24,
2010). In Carroll, for instance, the defendant issued a belated subpoena seeking depositions of
4
the plaintiffs principal in two related cases. Carroll, 2012 WL 1232957, at *1. The defendant's
attorney averred that he did not learn of the depositions until several months after the discovery
deadline expired. Id. The district court in Carroll concluded that because the defendant intended
to use the depositions solely for cross-examination and impeachment, the subpoena constituted a
trial subpoena and could therefore be issued after the discovery deadline. Id. at *2-3 (relying on
Malmberg, 2010 WL 1186573, at *3).
The district court in Malmberg reached a similar
conclusion. In Malmberg, the defendant issued tardy subpoenas requesting documents that it had
learned of while deposing the plaintiffs expert witness less than a week before the discovery
deadline. 2010 WL 1186573, at *3. The district court held that the subpoenas were "properly
classified as trial subpoenas" because they were "very limited in scope" and would only be used
for cross-examination and impeachment. Id.
Carroll and Malmberg do not stand for the proposition that parties may always issue
subpoenas outside the discovery deadline as long they assert that the requested documents will
be used for impeachment. When the party issuing the belated subpoena could have obtained the
requested documents during discovery, courts will quash the subpoena as untimely
notwithstanding the party's contention that the documents are for impeachment. See Nickerson
v. State Farm Ins., No. 5:10CV105, 2011 WL 5119542, at *2-3 (N.D.W. Va. Oct. 27, 2011)
(declining to allow plaintiffs belated subpoena that sought documents for the purpose of
showing expert's bias during cross-examination where there was no reason why the plaintiff
could not have obtained the documents during discovery); Abrams v. Ciba Specialty Chems.
Com., 265 F.R.D. 585, 588-89 (S.D. Ala. 2010) (quashing belated subpoena seeking expert
witness's educational records despite defendant's contention that it needed the records for trial
preparation where defendants should have anticipated this need during the discovery period);
5
Rice v. United States, 164 F.R.D. 556, 557-58 (N.D. Okla. 1995) (quashing belated subpoena
seeking impeachment material where materials could have been produced during discovery).
Courts will also quash a belated subpoena despite the issuing party's contention that the
requested documents will be used for impeachment when the subpoena is overly broad.
Revander v. Denman, No. 00 Civ. 1810(RJH), 2004 WL 97693, at *1-2 (S.D.N.Y. Jan. 21,
2004) (rejecting argument that subpoenas were trial subpoenas to be used for cross-examination
where subpoenas employed "shotgun" approach by requesting "any and all records regarding"
the plaintiffs incarceration).
Applying the case law discussed above to the facts of this case makes clear that Charter
Oak's subpoena should be quashed.
Charter Oak could have obtained Dietz's employment
records during discovery. Dziadek's expert disclosure, which was required to include a report
detailing Dietz's qualifications as a witness, was due by November 19, 2014, which is well
before the discovery deadline. Doc. 101 at 2. Even ifthe expert disclosure had neglected2 to list
Dietz's fourteen years working at an insurance company as one of his qualifications, Charter Oak
had an opportunity to depose Dietz and could have learned of his employment history then.
Charter Oak long ago could have anticipated any need for such impeaching evidence from
Dietz's prior employers before the discovery deadline expired. Charter Oak tellingly has made
no argument in briefing that it had good cause for waiting until now to seek Dietz's employment
records. Moreover, Charter Oak's subpoena is not of a very limited nature for documents truly
necessary for trial. Rather than issuing a narrowly-tailored subpoena like the parties in Carroll
and Malmberg, Charter Oak seeks, among other things, "[a]ll documents relating to the
employment of Rob Dietz by Farmers Insurance Exchange (or any affiliated company thereof)
2
Tuere is nothing of record suggesting that there was any such omission here.
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('FIE'), from 1987 to 2001." Doc. 161 at 2. Charter Oak's "shotgun" request for all documents
relating to Dietz's employment undermines any contention that the subpoena is a narrow trial
subpoena. Revander, 2004 WL 97693, at *2. Charter Oak's broadly-worded subpoena seeking
documents it could have obtained during the discovery period constitutes a discovery, rather than
a trial, subpoena. Because Charter Oak issued the subpoena after the discovery period expired,
this Court quashes the subpoena for being untimely.
B. Charter Oak's Motions to Reconsider & Request to Certify Breach of Contract
Question to the State Court
Charter Oak moves this Court to reconsider determinations it made on Charter Oak's
motion for summary judgment under Federal Rule of Civil Procedure 54(b). Docs. 167, 170,
172, 174.
Rule 54(b) provides that "any order or other decision, however designated, that
adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does
not end the action as to any of the claims or parties and may be revised at any time before the
entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R.
Civ. P. 54(b); see also Julianello v. K-V Pharm. Co., 791 F.3d 915, 923 n.3 (8th Cir. 2015)
(noting that Rule 54(b ), rather than Rule 60(b), is the appropriate rule under which to consider a
reconsideration motion when final judgment has not yet entered on any of plaintiffs claims).
A district court's decision to reconsider a motion for summary judgment is reviewed
under the abuse of discretion standard because "[t]he district court has the inherent power to
reconsider and modify an interlocutory order any time prior to the entry of judgment." K.C.1986
Ltd. P'ship v. Reade Mfg., 472 F.3d 1009, 1017 (8th Cir. 2007) (quoting Murr Plumbing, Inc. v.
Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1070 (8th Cir.1995)). Courts generally should not
reopen issues decided in prior stages of the same litigation unless the court is "convinced that [its
7
prior decision] is clearly erroneous and would work a manifest injustice." Agostini v. Felton,
521 U.S. 203, 236 (1997) (alteration in original) (quoting Arizona v. California, 460 U.S. 605,
618 n.8 (1983)).
None of the arguments contained in Charter Oak's motions for reconsideration warrant
modification of this Court's Opinion and Order on Charter Oak's motion for summary judgment.
See id. Many of Charter Oak's arguments include reiteration of the same arguments made in its
initial briefing, which were previously considered by this Court, and do not advance new and
controlling authority. Charter Oak also supports many of its arguments by arguing the facts in
the light most favorable to Charter Oak and not taking the facts and reasonable inferences in the
light most favorable to Dziadek as the non-movant. Such a view of the facts is inappropriate on
a motion for summary judgment. See, e.g., Ferguson v. Cape Girardeau Cty., 88 F.3d 647, 650
(8th Cir. 1996) (stating that on summary judgment, courts must "take all facts and reasonable
inferences in the light most favorable to the nonmoving party"). As for those arguments that
Charter Oak raises for the first time in its reconsideration motions and briefing, the United States
Court of Appeals for the Eighth Circuit has stated that "[a] motion for reconsideration is not a
vehicle to identify facts or legal arguments that could have been, but were not, raised at the time
the relevant motion was pending." Julianello, 791 F.3d at 923; see also Macawber Eng'g, Inc. v.
Robson & Miller, 47 F.3d 256, 257 n.4 (8th Cir. 1995) (stating that district courts have "wide
discretion in determining whether to consider additional evidence after a motion for summary
judgment has been granted"). This Court set forth in a rather lengthy Opinion and Order why
summary judgment was not proper for Charter Oak and need not explain anew why certain
causes of action survive Charter Oak's summary judgment motion.
8
Two of Charter Oak's arguments, however, merit brief discussion.
First, this Court
refused to grant summary judgment on certain of Dziadek's tort claims based on legal duties
independent of Charter Oak's obligations under the Policy, including that Charter Oak owed
Dziadek the duty to "respect her rights of property and refrain from invading them by fraud."
Doc. 153 at 22. In its motion to reconsider the denial of summary judgment on the fraud and
deceit claims, Charter Oak argues that that Dziadek's fraud claim is not "separate and distinct
from the breach of contract" and "could not have existed but for" the Policy. Doc. 173 at 7
(quotation omitted). Charter Oak maintains that Dziadek's fraud claim must fail because she
"had no relationship or communication with Charter Oak until after she was injured in an
accident, and the obligations she seeks to enforce are those 'specifically included in the terms of
the contract."' Doc. 173 at 8. In Champion v. United States Fidelity & Guaranty Co., 399
N.W.2d 320, 323-24 (S.D. 1987), however, the South Dakota Supreme Court recognized that a
separate tort exists in the case of an insurer who unreasonably denies or delays in its performance
under an insurance contract with an insured. The independent tort doctrine-precluding such
things as negligent performance of contract claims-does not foreclose first-party bad faith
claims under South Dakota law. See Stene v. State Farm Mut. Auto. Ins., 1998 SD 95, if 19, 583
N.W.2d 399, 403 (citing Champion, 399 N.W.2d at 322). Similarly, the mere existence of a
contractual relationship does not insulate a party from a fraud claim; a contractual relationship
does not give rise to a license to commit fraud upon and against another party to the contract.
See Doc. 153 at 20-24; Karas v. Am. Family Ins., 33 F.3d 995, 998 (8th Cir. 1994) (applying
South Dakota law and quoting Smith v. Weber, 16 N.W.2d 537, 539 (S.D. 1944)). Charter Oak
had an obligation to refrain from making statements intended to defraud or deceive Dziadek
9
about the existence of coverage for her, separate and apart from its duties under the Policy, and
there exists a genuine dispute of material fact on whether Charter Oak did so.
Second, Charter Oak asserts that this Court's basis for its decision denying summary
judgment on the medical payments coverage breach-of-contract claim is erroneous based on a
recent decision by the Honorable Lawrence L. Piersol, Peterson v. Travelers Indemnity Co., No.
CIV 14-4145, 2015 WL 5841888, *6 (D.S.D. Oct. 6, 2015), appeal docketed, No. 16-1146 (8th
Cir. Jan. 19, 2016). Charter Oak argues that in Peterson "Judge Piersol analyzed exactly the
same policy language and the same September 22, 2008 accident in which Dziadek was
injured and held as a matter of law that the [medical payments endorsement] provided no
coverage for that accident." Doc. 168 at 2-3. 3 Thus, Charter Oak submits that the medical
payment endorsement similarly does not apply in this case.
Doc. 168 at 3.
Charter Oak,
however, is judicially estopped to argue that the medical payments endorsement does not cover
Dziadek, because Charter Oak admitted the following in its Answer and Amended Answer:
Laura Dziadek, therefore, is an "insured" under the Auto Medical Payments
Coverage because she was occupying a covered auto at the time she received her
injuries; and she seeks a declaration of this right under 28 U.S.C. § 2201(a).
Doc. 1 at ~ 51; Doc. 8 at ~ 51; Doc. 15 at ~ 51; Doc. 16 at ~ 51. That prior admission by Charter
Oak is binding for purposes of this case. Mo. Hous. Dev. Comm'n v. Brice, 919 F.2d 1306,
1314-15 (8th Cir. 1990) (finding party's admission in answer binding where admitting party
later proffered evidence contrary to earlier admission); see also Scott v. Comm'r of Internal
3
In Peterson, Judge Piersol found that Peterson did not qualify as an insured under the third
definition of "Who Is An Insured" in the medical payments endorsement. 2015 WL 5841888,
*6. Judge Piersol subsequently denied Peterson's motion to reconsider. Docs. 169-4, 169-5.
That decision is on appeal and for good reason. Because ofthe doctrine of judicial estoppel, this
Court need not address the issue, but has reservations about whether that decision is a correct
interpretation of the medical payments policy provisions when properly read in their entirety.
10
Revenue, 117 F.2d 36, 40 (8th Cir. 1941) ("Admissions in the pleadings ... are in the nature of
judicial admissions binding upon the parties, unless withdrawn or amended.").
Alternatively, Charter Oak asks this Court to certify a question regarding breach of
contract to the Supreme Court of South Dakota. Doc. 171 at 12-13. In South Dakota, a district
court may certify a question of law to the Supreme Court of South Dakota under South Dakota
Codified Laws ("SDCL") § 15-24A-1 "if there are questions of law . . . which may be
determinative of the cause pending in the certifying court and it appears to the certifying court
and to the Supreme Court that there is no controlling precedent in the decisions of the Supreme
Court of this state." SDCL § 15-24A-1. "Whether a federal district court should certify a
question of state law to the state's highest court is a matter 'committed to the discretion of the
district court."' First Dakota Nat'l Bank v. Banclnsure, Inc., No. CIV. 12-4061-KES, 2013 WL
6901237,
* 2 (D.S.D. Dec. 31, 2013) (quoting Allstate Ins.
Co. v. Steele, 74 F.3d 878, 881-82
(8th Cir. 1996)). Charter Oak chose to wait until after this Court's Opinion and Order denying
Charter Oak's motion for summary judgement (and approximately five weeks before trial) to ask
for certification of the breach of contract issue to the Supreme Court of South Dakota. The
Eighth Circuit has stated that "[t]he practice of requesting certification after an adverse judgment
has been entered should be discouraged." Perkins v. Clark Equip. Co., 823 F.2d 207, 210 (8th
Cir. 1987); see also Rural Water Sys. No. 1 v. City of Sioux Ctr., 202 F.3d 1035, 1037 n.6 (8th
Cir. 2000). Charter Oak's request for certification at this stage in the litigation is denied.
III. CONCLUSION
For the reasons explained above, it is hereby
11
ORDERED that Plaintiffs Motion to Quash Subpoena Issued to Farmers Insurance, Doc.
161, is granted to the extent that Charter Oak's subpoena to Farmers Insurance Exchange is
hereby quashed. It is further
ORDERED that Charter Oak's motions for reconsideration and request for certification,
Docs. 167, 170, 172, and 174, are denied.
DATED this
ai'~dayof April, 2016.
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