Brown et al v. Nationwide Affinity Insurance Company of America
Filing
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ORDER granting 32 Motion for Attorney Fees. Signed by US Magistrate Judge Veronica L. Duffy on 8/7/2018. (CG)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
TOMMY BROWN, HEATHER
MCDOUGALL,
4:17-CV-04176-LLP
Plaintiffs,
ORDER GRANTING PLAINTIFFS’
MOTION FOR ATTORNEY’S FEES
vs.
Docket No. 32
NATIONWIDE AFFINITY INSURANCE
COMPANY OF AMERICA,
Defendant.
INTRODUCTION
This matter is before the court on plaintiffs Tommy Brown and Heather
McDougall’s complaint based on the court’s diversity jurisdiction. See Docket
No. 1. Plaintiffs assert claims of breach of contract, fraudulent
misrepresentation and deceit, unfair trade practices, and vexatious refusal to
pay insurance benefits against defendant Nationwide Affinity Insurance
Company of America (“Nationwide”), arising out of a claim plaintiffs submitted
on their homeowner’s insurance policy. Plaintiffs previously prevailed on a
motion to compel. See Docket Nos. 18 & 29. Plaintiffs now move the court for
an award of attorney’s fees in connection with their earlier motion in the
amount of $3,775.43. See Docket No. 32. Nationwide resists the motion. See
Docket No. 34. The district court, the Honorable Lawrence L. Piersol, referred
plaintiffs’ motion to this magistrate judge for resolution pursuant to 28 U.S.C.
§ 636(b)(1)(A). See Docket No. 37.
FACTS
The following facts are pertinent to the instant motion. On August 1,
2017, plaintiffs owned a house insured by Nationwide when a hailstorm came
through their Sioux Falls, South Dakota, neighborhood, causing significant
damage. Plaintiffs timely submitted a claim under their insurance policy to
Nationwide. Nationwide offered to pay plaintiffs $3,850.89, an amount
plaintiffs maintain was well below what Nationwide’s own agents and internal
documents indicate their loss was worth.
Plaintiffs filed the instant lawsuit on December 26, 2017. Plaintiffs’
previously-granted motion to compel presented two issues. First, they sought
to compel Nationwide to disclose what reserves it had set for their claim.
Second, because Nationwide would not voluntarily share with them information
pertinent to electronic discovery, plaintiffs sought an increase in the number of
interrogatories they are allowed to propound from 25 to 40 so that they can
query Nationwide about how it stores electronic information.
The court granted both requests, though it limited the additional
interrogatories to 10 and specified they could be used only to find out the
nature of Nationwide’s electronic document system and those agents of
Nationwide’s who were most knowledgeable about them.
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DISCUSSION
Rule 37 of the Federal Rules of Civil Procedure provides that if a court
grants a party’s motion to compel, the court “must” award the moving party its
costs and attorney’s fees unless the resisting party’s position was, inter alia,
“substantially justified.” See Fed. R. Civ. P. 37(a)(5)(A). Nationwide resists the
award of attorney’s fees to plaintiffs on this basis. Nationwide has not objected
to the amount of hours requested, the hourly rate requested, or any other
matter touching on plaintiffs’ calculation of the amount of their award.
With regard to the reserves information, Nationwide initially objected to
providing the requested documents to plaintiffs on the basis that the
information was not relevant. See Docket No. 24-2 (Nationwide’s Vaughn
index). During plaintiffs’ attempts to engage in a good faith effort to resolve
the discovery dispute without court involvement, Nationwide hinted that there
may be a lurking claim of work product doctrine, but did not affirmatively
assert the claim until the motion to compel was actually filed. Even then,
Nationwide—whose burden it was to establish the predicate necessary for the
court to conclude work product doctrine applied to the documents—did not do
more than assert the bare-bones allegation of work product. Nationwide
provided no details about who, what, when, where or why the documents in
question had been created. The court, accordingly, granted plaintiffs’ motion to
compel in this regard because Nationwide failed to carry its burden of an
assertion of privilege/protection.
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With regard to the instant motion for attorney’s fees, Nationwide argues
that, because there is a split of authority on whether individual claims reserves
are discoverable, its position in resisting the discovery was substantially
justified. Because Nationwide initially resisted the discovery on grounds of
relevance, and later did no more than simply mouth the words of a protective
doctrine without shoring that assertion up with any facts, plaintiffs argue
Nationwide’s position was not substantially justified.
The Supreme Court has held that “substantially justified” in the arena of
discovery disputes means whether there was a “ ‘genuine dispute’ or ‘[that]
reasonable people could differ as to [the appropriateness of the contested
action], . . .’ ” Pierce v. Underwood, 487 U.S. 552, 565 (1988).
A party asserting a privilege has a duty to do the following:
(5) Claiming Privilege or Protecting Trial-Preparation
Materials.
(A) Information Withheld. When a party withholds information
otherwise discoverable by claiming that the information is . . .
subject to protection as trial-preparation material, the party must:
(i) expressly make the claim; and
(ii) describe the nature of the documents, communications,
or tangible things not produced or disclosed—and do so in a
manner that, without revealing information itself privileged
or protected, will enable other parties to assess the claim.
See FED. R. CIV. P. 26(b)(5)(A).
Nationwide has had no fewer than four opportunities to fulfill its duty
under Rule 26(b)(5)(A). It could have (and should have) done so (1) when
submitting its Vaughn index to plaintiffs, (2) when responding to plaintiffs’
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motion to compel, (3) in an objection pursuant to 28 U.S.C. § 636(b)(1)(A) to
this court’s order granting plaintiffs’ motion to compel, or (4) in its current brief
in opposition to plaintiffs’ motion for attorney’s fees.
Despite having had four opportunities to supply the necessary facts to
show that work product doctrine applied to the individual reserve information
requested by plaintiffs’ discovery requests, Nationwide has never supplied the
necessary facts. From this failure to assert the foundational facts, the court
surmises that the facts do not favor Nationwide’s assertion of work product
doctrine. Under these unique circumstances, the court concludes Nationwide’s
resistance to the requested discovery of individual reserve information was not
substantially justified. Yes, there is a split of authority on discoverability of
this information. Yes, the court granted plaintiffs’ motion to compel because of
an insufficient factual showing by Nationwide that would have supported the
work product doctrine. But, as Thoreau said, sometimes circumstantial
evidence is very strong, as when you discover a trout in the milk.
Here, the sequence of events convinces this court that Nationwide’s loss
of the motion to compel was not for mere factual inadequacy. Rather, the court
finds very strong circumstantial evidence that there were insufficient facts to
support the application of the doctrine to the individual reserve information
requested herein by plaintiffs. Were it otherwise, the court believes Nationwide
would have asserted the predicate facts supporting application of the doctrine
at some point in the sequence of events described above. Accordingly, as to the
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individual reserve information, the court finds Nationwide’s position was not
substantially justified.
Regarding plaintiffs’ motion to compel regarding the details of
Nationwide’s electronic document system, plaintiffs’ position was that the
information requested was required to be volunteered by Nationwide at the
parties’ discovery planning meeting. In the alternative, plaintiffs sought an
increase in the total number of interrogatories it could propound to Nationwide
so that plaintiffs could query Nationwide about its electronic document system.
Nationwide did not contest plaintiffs’ right to seek the information requested,
but it maintained it had no obligation to volunteer such information as an
initial disclosure under Rule 26(a)(1) and it sought to retain the 25interrogatory limit on plaintiffs.
Rule 26 provides in pertinent part as follows:
(f) Conference of the Parties; Planning for Discovery.
***
(3) Discovery Plan. A discovery plan must state the parties’
views and proposals on:
***
(C) any issues about disclosure, discovery, or
preservation of electronically stored information, including the
form or forms in which it should be produced.
See FED. R. CIV. P. 26(f)(3)(C).
This provision was added to Rule 26 in 2006. The Advisory Committee
Notes for this amendment indicate that early discussion of electronic discovery
“may avoid later difficulties or ease their resolution.” See FED. R. CIV. P. 26,
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advisory committee’s note to 2006 amendment. The committee did not specify
specific topics that must be addressed at the parties’ initial planning
conference. Id. Rather, the committee suggested that the issues to be
addressed will depend upon the nature and extent of the parties’ contemplated
discovery. Id. Various topics that might be fruitful for discussion include the
time period for which discovery will be sought, the topics of discovery, whether
the electronic information is reasonably accessible, the form in which
electronically stored information might be produced, and preservation of
electronically stored information. Id.
It is clear that in an insurance bad faith case in 2018, much if not most
discovery will be stored by the insurance company in an electronic format. The
purpose of the Federal Rules of Civil Procedure, including Rule 26(f), is to
secure the just, speedy and inexpensive determination of every action and
proceeding. FED. R. CIV. P. 1. Given Nationwide’s concession that the
information sought by plaintiffs is discoverable, the refusal to volunteer this
information at the initial parties’ planning meeting, particularly when plaintiffs’
counsel alerted Nationwide to its desire to address this issue at that meeting, is
clearly in derogation of the spirit and purpose of the Rules of Civil Procedure.
Nonetheless, the court agrees that the Rules do not specify that the information
must be provided voluntarily as part of a party’s initial disclosures.
Nationwide’s resistance to providing the discovery without a formal discovery
request cannot be characterized as a violation of any specific provision of the
Rules of Civil Procedure. Nevertheless, the court cannot conclude Nationwide’s
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position was substantially justified, especially given Nationwide’s concession as
to the discoverability of the information and plaintiffs’ prior alert that they were
asking for the information. That plaintiffs were also seeking other information
is beside the point. The issue before the court is whether Nationwide’s refusal
to provide the information about the electronic document system was
substantially justified. The court decides that particular issue in plaintiffs’
favor.
CONCLUSION
Based on the foregoing facts, law and analysis, the court concludes
Nationwide’s resistance to plaintiffs’ discovery requests was not substantially
justified. Accordingly, Rule 37 directs that this court “must” award attorney’s
fees and costs against Nationwide. Therefore, the court hereby
ORDERS that plaintiffs’ motion for attorney’s fees [Docket No. 32] is
granted. Nationwide shall pay to plaintiffs the sum of $3,775.43 within 30
days of the date of this order.
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NOTICE OF RIGHT TO APPEAL
Pursuant to 28 U.S.C. § 636(b)(1)(A), any party may seek reconsideration
of this order before the district court upon a showing that the order is clearly
erroneous or contrary to law. The parties have fourteen (14) days after service
of this order to file written objections pursuant to 28 U.S.C. § 636(b)(1)(A),
unless an extension of time for good cause is obtained. See FED. R. CIV. P.
72(a); 28 U.S.C. § 636(b)(1)(A). Failure to file timely objections will result in
the waiver of the right to appeal questions of fact. Id. Objections must be
timely and specific in order to require review by the district court. Thompson
v. Nix, 897 F.2d 356 (8th Cir. 1990); Nash v. Black, 781 F.2d 665 (8th Cir.
1986).
DATED August 7, 2018.
BY THE COURT:
VERONICA L. DUFFY
United States Magistrate Judge
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