Lujan v. State Farm Lloyds

Filing 19

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART 16 Motion for Protective Order Signed by Judge Robert F. Castaneda. (dt)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
LEONEL LUJAN,

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Plaintiff,
v.
STATE FARM LLOYDS,
Defendant.

EP-24-CV-00028-KC

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant State Farm Lloyds’ “Opposed Motion for Protective Order
and Objections to Subpoena Duces Tecum” (“Motion”) (ECF No. 16), filed on April 11, 2024.
United States District Judge Kathleen Cardone referred the motion to the undersigned for
determination pursuant to 28 U.S.C. § 636(b)(1)(A) and Rule 1(c) of Appendix C to the Local
Rules. For the reasons set forth below, the Motion is GRANTED in part and DENIED in part.
I.

BACKGROUND

Plaintiff Leonel Lujan is insured under a homeowner’s policy with Defendant for his
property at 1380 Emerald Gate Lane, El Paso, Texas 79936. Pl.’s Original Pet. ¶¶ 2, 7, ECF No.
1-2. On July 16, 2021, a hailstorm caused damage to Plaintiff’s property. Id. at ¶¶ 8, 9. Plaintiff
notified Defendant and submitted a claim against his insurance policy. Id. at ¶ 11. Defendant sent
an agent and adjustor, Cedric Johnson, to inspect the property. Id. at ¶ 13. As a result of this
inspection, Defendant determined that Plaintiff’s damages were below the deductible amount, and
no payment would be issued. Mot. 2, ECF No. 16.
Plaintiff disagreed with Defendant’s assessment of his claim. Id.; Pl.’s Resp. Def.’s Mot.
Protection & Objs. Subpoena Duces Tecum 2 [hereinafter “Resp.”], ECF No. 17. Plaintiff

submitted an appraisal demand; Defendant responded by stating that the appraisal demand was
premature and requesting an inspection of the property. Mot. 2. In February 2023, Defendant
hired an inspector, Kenneth Turner, from MKA International, Inc. to inspect the property again.
Id.; Resp. 2–3. Based on the report from MKA, Defendant maintained its coverage position. Mot.
2; Resp. 3. Plaintiff then invoked the appraisal provision of his policy and designated his own
independent appraiser. Mot. 2; Resp. 3. Defendant chose its own appraiser, Clay Williams of Well
Adjusted Appraisal, LLC (“WA”). Mot. 2; Resp. 3. A state court judge selected Carlos Gomez as
the umpire for the appraisal. Resp. 3.
The three appraisers, as a panel, determined the total amount of damages Plaintiff suffered
to be $118,457.73. Mot. 2–3; Resp. 3. Defendant asserts that it did not issue payment for this total
amount “due to its inclusion of non-covered items,” Mot. 3; Plaintiff asserts that Williams
communicated with Defendant and disclaimed the conclusions reached by the panel, Resp. 3. As
a result, Defendant issued a check for only $13,402.35 to Plaintiff. Id.
Plaintiff filed his original petition in state court on December 19, 2023. Resp. 4; see Pl.’s
Original Pet. Defendant answered on January 22, 2024, and removed the action to federal court,
based upon diversity jurisdiction, on January 25. See Def.’s Original Answer & Affirmative
Defenses, ECF No. 1-2; Def.’s Notice of Removal, ECF No. 1.
Plaintiff asserts that he submitted advance copies of the two subpoenas duces tecum—
directed to WA and MKA—to Defendant on January 29, 2024. Resp. 4; see Ex. 5 (email from
Plaintiff’s counsel to Defendant’s counsel providing a copy of a draft subpoena duces tecum to be
sent to WA), ECF No. 17-5. The subpoenas duces tecum on WA and MKA were issued on March
20, 2024. See Pl.’s Notice of Subpoena Duces Tecum for Non-Party Well Adjusted Appraisal, LLC
Ex. 1 [hereinafter “WA Subpoena”], ECF No. 16-1; Pl.’s Notice of Subpoena Duces Tecum for
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Non-Party MKA International, Inc. Ex. 2 [hereinafter “MKA Subpoena”], ECF No. 16-2. Both
subpoenas had objection and response deadlines of April 12, 2024, at 5:00 p.m. Mot. 3; WA
Subpoena 4; MKA Subpoena 4. WA was served with its subpoena on April 2, 2024. Proof of
Service Ex. 6, ECF No. 17-6. Plaintiff asserts that MKA “appears to be attempting to avoid service
of process.” Resp. 5. WA failed to respond or object to Plaintiff’s subpoena by the April 12
deadline. Id. at 6.
Defendant filed the instant motion asking for a protective order and objecting to some of
the subpoena requests on April 11, 2024. See Mot. Plaintiff responded on April 17, 2024. See
Resp. Defendant filed its reply on April 24, 2024. See Def.’s Reply Supp. Mot. Protective Order
& Objs. Subpoena Duces Tecum [hereinafter “Reply”], ECF No. 18.
II.

LEGAL STANDARD

A party “may obtain discovery regarding any nonprivileged matter that is relevant to any
party’s claim or defense.” Fed. R. Civ. P. 26(b)(1). The discovery request must be proportional to
the case’s needs, “considering the importance of the issues at stake in the action, the amount in
controversy, the parties’ relative access to relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and whether the burden or expense of the
proposed discovery outweighs its likely benefit.” Id. Additionally, “[i]nformation within this
scope of discovery need not be admissible in evidence to be discoverable.” Id.
The Rules also allow the use of subpoenas “to produce documents, electronically stored
information, or tangible things or to permit the inspection of premises.” Fed. R. Civ. P. 45(a)(1)(C).
The party serving the subpoena “must take reasonable steps to avoid imposing undue burden or
expense on a person subject to the subpoena.” Id. 45(d)(1). “A person commanded to produce
documents . . . may serve on the party or attorney designated in the subpoena a written objection
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to inspecting, copying, testing, or sampling any or all of the materials . . . .” Id. 45(d)(2)(B). On
a “timely” motion, a court can quash or modify a subpoena that “requires disclosure of privileged
or protected matter, if no exception or waiver applies” or “subjects a person to undue burden.” Id.
45(d)(3)(A)(iii), (iv). “Generally, modification of a subpoena is preferable to quashing it outright.”
Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812, 818 (5th Cir. 2004).
Protective orders are governed by Federal Rule of Civil Procedure 26(c). The rule allows
“[a] party or any person from whom discovery is sought” to move for a protective order. Fed. R.
Civ. P. 26(c)(1). “The court may, for good cause, issue an order to protect a party or person from
annoyance, embarrassment, oppression, or undue burden or expense. . . .” Id. A protective order
can “forbid[] the disclosure or discovery,” “forbid[] inquiry into certain matters, or limit[] the scope
of disclosure or discovery to certain matters,” or “require[e] that a trade secret or other confidential
research, development, or commercial information not be revealed or be revealed only in a
specified way,” among other possible actions. Id.
The party seeking the protective order “must establish good cause and a specific need for
protection.” Ferko v. Nat'l Ass'n for Stock Car Auto Racing, Inc., 218 F.R.D. 125, 133 (E.D. Tex.
2003). “‘Good cause’ exists when justice requires the protection of ‘a party or person from
annoyance, embarrassment, oppression, or undue burden or expense.’” Id. (quoting Fed. R. Civ.
P. 26(c)).

To demonstrate a specific need, a party must make “a particular and specific

demonstration of fact as distinguished from stereotyped and conclusory statements.” Equal Emp.
Opportunity Comm'n v. BDO USA, L.L.P., 876 F.3d 690, 698 (5th Cir. 2017) (citation omitted).
III.

DISCUSSION

Defendant phrases its motion as a request for a protective order to protect the
confidentiality of the documents produced by the subpoenas and as objections to specific requests
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in the subpoenas. Mot. 1–2. Plaintiff interprets Defendant’s objections to specific requests as
objections under Federal Rule of Civil Procedure 45(d)(2)(B). 1 Resp. 7–8. Plaintiff points out
that Defendant does not have standing to bring objections under this Rule. Id.
A party seeking to modify or quash a subpoena directed to a non-party has no standing
unless the objecting party either has “possession of the materials subpoenaed” or has a “personal
right or privilege with respect to the materials subpoenaed.” Jez v. Dow Chem. Co., 402 F. Supp.
2d 783, 784–85 (S.D. Tex. 2005) (quoting Brown v. Braddick, 595 F.2d 961, 967 (5th Cir.1979)).
The party also has to “make a showing that there is a personal right to be protected.” Cenac v.
Orkin, L.L.C., No. CV 15-4521, 2020 WL 13888745, at *3 (E.D. La. Sept. 11, 2020).
In this case, Defendant does not assert that it has possession of the materials Plaintiff asked
for in the subpoenas. Further, Defendant does not make a showing that it has a personal right or
privilege in the materials. Defendant merely asserts at multiple points that the documents
“potentially contain the confidential and propriety information of [Defendant].” Mot. 1 (emphasis
added); see also id. at 6, 8–14 (repeating that the requests “have the potential to seek information
that is confidential and proprietary”).
Thus, Defendant does not have standing to bring a motion to quash or modify the
subpoenas. However, Defendant clarifies in its reply that it is actually seeking a protective order
under Federal Rule of Civil Procedure 26(c) when it requested that certain subpoena requests be
limited or stricken. Reply 2–3. “[A] party has standing to move for a protective order pursuant to
Rule 26(c) seeking to limit the scope of discovery, even if the party does not have standing pursuant
to Rule 45(d) to bring a motion to quash a third-party subpoena.” Bounds v. Cap. Area Fam.

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Plaintiff states that it will only address WA’s subpoena, because MKA has not been served yet. Resp. 8 n.15.

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Violence Intervention Ctr., 314 F.R.D. 214, 218 (M.D. La. 2016). Thus, the Court will analyze
Defendant’s motion under Rule 26(c).
“Rule 26(c)'s requirement of a showing of good cause to support the issuance of a
protective order indicates that ‘[t]he burden is upon the movant to show the necessity of its
issuance, which contemplates a particular and specific demonstration of fact as distinguished from
stereotyped and conclusory statements.’” In re Terra Int’l, Inc., 134 F.3d 302, 306 (5th Cir. 1998)
(citation omitted). A district court abuses its discretion if it enters a protective order that is
unsupported by such a demonstration of fact. See id. (“The district court's entry of the protective
order requested by [the defendant in the underlying suit] was therefore unsupported by a ‘particular
and specific demonstration of fact’ and therefore constituted a clear abuse of discretion.” (citation
omitted)).
With respect to Defendant’s general request for a protective order to protect the
confidentiality of documents, the Court finds that Defendant has not demonstrated a specific need.
Defendant argues that “the requests have the potential to seek information that is confidential and
proprietary and these privileges are asserted” and that “[t]he requests may seek information
pertaining to the methods by which [Defendant] conducts its business and public disclosure thereof
could result in economic harm to the company.” Mot. 6 (emphasis added). These are conclusory
assertions, not backed up by any evidence.
When discussing specific requests that Defendant wants to limit or strike, Defendant makes
the same conclusory statements regarding potentially confidential information without any
evidence to support them. See Mot. 8–14. Thus, the requests cannot be limited or stricken on
those grounds. However, Defendant also asserts other grounds for limiting or striking the requests.

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Further, “non-party subpoenas are also subject to the parameters of Rule 26.” Crescent
City Remodeling, LLC v. CMR Constr. & Roofing, LLC, 643 F. Supp. 3d 613, 617 (E.D. La. 2022).
Rule 26 “authorize[s] the court to modify a subpoena duces tecum when its scope exceeds the
boundaries of permissible discovery.” Id. This means that the Court still has the obligation to
limit discovery if it determines that “the discovery sought is unreasonably cumulative or
duplicative, or can be obtained from some other source that is more convenient, less burdensome,
or less expensive”; the requesting party has already had “ample opportunity” to obtain the
information through discovery; or “the proposed discovery is outside the scope of” Federal Rule
of Civil Procedure 26(b)(1), meaning that the proposed discovery is not relevant or not
proportional to the needs of the case. Fed. R. Civ. P. 26(b)(2)(C).
A. Request Number 2
Request 2 asks for “[c]opies of any and all of the documents, photographs, e-mails,
communications or writings furnished or supplied to you by Defendant State Farm Insurance
Company and/or State Farm Lloyds, since your initial contract with it or its adjusters and/or claims
representatives, including but not limited to Ms. Meredith Dumble.” WA Subpoena 8; MKA
Subpoena 8.
Defendant argues that this is “vague and overly broad” and “not limited by reasonable
restrictions on time.” Mot. 7. The Court agrees. This request is phrased in such a way that WA
and MKA would have to produce documents about all of their dealings with Defendant, regardless
of whether they are relevant to this case or not. Plaintiff acknowledges this and states that he
“agrees to limit [the request’s] application to the underlying claim only, which would naturally
limit its time period to approximately May 10, 2023 to present.” Resp. 8. The Court will accept
this limitation to Request 2 as to both subpoenas and will limit the request to copies of any and all

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of the documents, photographs, e-mails, communications or writings furnished or supplied to
MKA/WA by Defendant State Farm Insurance Company and/or State Farm Lloyds that relate to
Plaintiff’s insurance claim that forms the basis of this suit and date from May 10, 2023, to the
present.
B. Request Number 3
For Request 3, which asks for the retention agreements between Defendant and WA and
MKA, Defendant again states that the information is neither relevant nor proportional. Mot. 8;
WA Subpoena 8; MKA Subpoena 8. For support, Defendant cites In re National Lloyds Insurance
Company, 449 S.W.3d 486 (Tex. 2014). In that case, the plaintiff sought the discovery of thirdparty claims files in order to compare the insurance company’s evaluation of the damage to her
property with its evaluation of damage to other properties. Id. at 488–89.
Plaintiff in this case argues that the retention agreement will let him evaluate whether WA
or MKA had a financial interest in the outcome of the appraisal, which is relevant information.
Resp. 9. Plaintiff references a case where the appraisal agreement between the defendant and its
appraiser showed that the appraiser received greater reimbursement if the defendant received a
greater insurance payout. Gen. Star Indem. Co. v. Spring Creek Vill. Apartments Phase V, Inc.,
152 S.W.3d 733, 737 (Tex. App. 2004). The court there noted that “[a]n appraiser with a financial
interest in the outcome of the appraisal is not impartial,” and the impartiality of the appraiser
directly impacted whether the appraisal award was in compliance with the insurance policy and
therefore binding. Id. Thus, the appraisal or retention agreement is relevant information in a case
where a party invokes the appraisal clause in an insurance policy. Since this request is for relevant
information, it will not be stricken.

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C. Request Number 6
Request 6 seeks “[a]ny and all documents, e-mails, communications or writings reviewed
by you with respect to this claim, regardless of the source of the documents or writings.” WA
Subpoena 8; MKA Subpoena 8. Again, Defendant states that this request is overly broad and will
require the production of irrelevant information. Mot. 9. Plaintiff agrees to limit the request to
apply only to the underlying insurance claim and limit the time period to May 10, 2023, to the
present. Resp. 9–10. The Court will accept this limitation to Request 6 and will limit the request
to only documents, e-mails, communications, or writings reviewed by MKA/WA with respect to
Plaintiff’s insurance claim that forms the basis of this suit and date from May 10, 2023, to the
present.
D. Requests 15, 16, 17, and 18
Request 15 seeks “[a]ny and all notes and/or documents referencing the total number of
claim evaluations that [MKA/WA] has performed on behalf of Defendant State Farm Insurance
Company and/or State Farm Lloyds, in the preceding ten (10) years.” WA Subpoena 9; MKA
Subpoena 9.
Request 16 seeks “[a]ny and all notes and/or documents referencing the total number of
claim evaluations that [MKA/WA] has performed on behalf of Ms. Meredith Dumble, in the
preceding ten (10) years.” WA Subpoena 9; MKA Subpoena 9.
Request 17 seeks “[a]ny and all notes and/or documents referencing the total number of
claim evaluations that [MKA/WA] has performed on behalf of any insurance company (including
Lloyds plans) in the preceding ten (10) years.” WA Subpoena 9; MKA Subpoena 9.

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Request 18 seeks “[a]ny and all notes and/or documents referencing the total number of
revenue paid to [MKA/WA] by Defendant State Farm Insurance Company and/or State Farm
Lloyds in the preceding ten (10) years.” WA Subpoena 9; MKA Subpoena 9.
Defendant argues that these documents are unrelated to the circumstances surrounding
Plaintiff’s individual insurance claim and that the request is not reasonably limited in time or by a
description of the kind of documents Plaintiff seeks. Mot. 10–14. Plaintiff argues that the
requested documents are relevant and material for cross-examination and impeachment. Resp.
10–13.
Plaintiff cites to Russell v. Young, 452 S.W.2d 434 (Tex. 1970) and Texas Rule of Civil
Procedure 192.3(e)(5) for support. Id. However, Plaintiff fails to address the fact that once a case
has been removed from a state court to federal court, the Federal Rules of Civil Procedure, not
state procedural rules, apply. Fed. R. Civ. P. 81(c)(1).
A request for documents in a subpoena duces tecum is impermissibly broad if it is “not
confined to communications that are related to a claim or defense in th[e] case.” Equal Emp.
Opportunity Comm'n v. Skywest Airlines, Inc., No. 3:22-CV-1807-D, 2024 WL 84211, at *2 (N.D.
Tex. Jan. 8, 2024; see also Dizdar v. State Farm Lloyds, No. 7:14-CV-523, 2015 WL 12781020, at
*9 (S.D. Tex. Jan. 7, 2015) (“Claims trends, patterns, and common concerns not solely related to
the claim at hand are outside the scope of discovery because they cannot speak to what happened
in this individual case.”). The Court concludes that these requests are impermissibly broad for
these reasons.
Modification of a subpoena is generally preferable to quashing it. Williams v. City of
Dallas, 178 F.R.D. 103, 110 (N.D. Tex. 1998). However, narrowing the scope of Requests 15
through 17 to only notes and documents related to Plaintiff’s insurance claim would make the
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requests duplicative of other requests in the subpoenas, especially Requests 2 and 6 as they have
now been limited.

The Court will modify Request 18 to cover only any and all notes and/or

documents referencing the amount of revenue paid to MKA/WA by Defendant State Farm
Insurance Company and/or State Farm Lloyds for Plaintiff’s insurance claim that forms the basis
of this suit.
IV.

CONCLUSION

For the foregoing reasons, Defendant State Farm Lloyds’ Opposed Motion for Protective
Order and Objections to Subpoena Duces Tecum (ECF No. 16) is GRANTED in part and
DENIED in part.
Requests 2, 6, and 18 in the subpoenas duces tecum to MKA International, Inc. and Well
Adjusted Appraisal, LLC will be limited in the manner described above. MKA International, Inc.
and Well Adjusted Appraisal, LLC will not be required to respond to Requests 15, 16, and 17 in
the subpoenas duces tecum.
SIGNED this 9th day of May, 2024.

ROBERT F. CASTAÑEDA
UNITED STATES MAGISTRATE JUDGE

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