Claims And Issues

CURRENT CASES SEALING COURT RECORDS INCLUDING INSURANCE CASES.

    This set of cases is illustrated by the decision of a Federal Court in North Carolina in a case in which the Federal Deposit Insurance Corporation sued former executives of one Cooperative Bank for making bad loans.  In that case, the Court sealed the evidence against the executives.  This prompted much commentary on the Court’s actions in that case, including this observation:

The F.D.I.C. complaint made accusations that certainly sounded as if there were some bad faith.  It said officers of the bank regularly ignored the bank’s own lending rules and ignored repeated warnings from state and federal bank examiners.  It said the board made no effort to force the bank officers to abide by the bank’s own rules, let alone comply with the examiner’s recommendations.

So what facts indicated there was no bad faith?  That is hard to tell.  The judge sealed many documents, including the F.D.I.C.’s arguments against the summary judgment.[1]

    The Court in this case based its secrecy order, first, on the fact that the several motions under consideration filed by the parties requesting that the records be sealed, were each and all unopposed in that case and, second, on “the May 21, 2013 Amended Stipulated Protective Order and Non-Waiver Agreement [DE 71].”[2]  Remarkably, the order does not refer to Federal Rule of Civil Procedure 26 which governs requests for a protective order including requests to seal things on file from disclosure to non-parties.

    Although the amended stipulation referenced in the order does refer to Rule 26,[3] the Rule contains no provision for parties to a lawsuit to alter its requirements.  The record of this case reveals that the procedures of Rule 26 were simply not followed in this case when it came time to seal the evidence.  The available record does not reflect “good cause” shown by any party “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.”[4]  Rule 26 does not provide that a party or person who might be annoyed, embarrassed, oppressed, or burdened by discovery or disclosure in Federal civil litigation is entitled to a protective order sealing the proceedings just because the party or person says so.  They have to prove it.  That is their burden.[5]

    Except in cases involving secrecy stipulations, it appears.

---

 

[1] Floyd Norris, “High & Low Finance / Failed Bank’s Broken Vows Mean Little” p. B1, col. 1 (New York Times Nat’l ed., “Business Day” Section, Friday, September 19, 2014).  The order of the Federal Court in North Carolina can be found in FDIC v. Rippy, Order of September 10, 2014 granting defendants’ summary judgment motion, Dkt. No. 124 (E.D.N.C. Case No. 7-11-cv-00165-BO).

 [2] FDIC v. Rippy, Dkt. No. 124, Order of September 10, 2014 granting defendants’ summary judgment motion, at p. 3 (E.D.N.C. Case No. 7-11-cv-00165-BO).

[3] FDIC v. Rippy, Dkt. No. 71, May 21, 2013 Amended Stipulated Protected Order and Non-Waiver Agreement, at p. 2 (E.D.N.C. Case No. 7-11-cv-00165-BO).

[4] Fed. R. Civ. P. 26.

[5] In addition to the clear language of Rule 26, the Advisory Committee Notes to the present enactment of Rule 26(c) in 1970, provide:

The new reference to trade secrets and other confidential commercial information reflects existing law.  The courts have not given trade secrets automatic and complete immunity against disclosure, but have in each case weighed their claim to privacy against the need for disclosure.

An alternative to secrecy stipulations pursued in the cases, is to settle the class action case and provide for secrecy in the settlement agreement which the Court is then requested to approve.  This method of obtaining secrecy is at work in the class action lawsuit filed against the high-profile corporations of Silicon Valley who allegedly conspired to limit their workers’ “mobility and incomes.”  David Streitfeld, “New Accord is Expected in Hiring Ban,” p. B1, col. 5 (New York Times Nat’l ed., “Business Day” Section, Thursday, January 15, 2015).  As explained in this Times report, a second settlement agreement was reached in the case and presented to the Court for approval “[t]o head off a trial and the exposure of reams of incriminating emails.”   The Federal District Judge already rejected one settlement because the amount was too low to be “’within the range of reasonableness,’” i.e., the original settlement amount presented for the Court’s approval was unreasonably low.   Although the second attempt at a settlement agreement contains more money, “[t]he settlement money is pocket change to the companies, which include some of the world’s wealthiest.  If they let the case go to trial, however, it might corrode their image as forward-thinking, worker-friendly benevolent empires.”  David Streitfeld, “New Accord is Expected in Hiring Ban,” p. B1, col. 5 (New York Times Nat’l ed., “Business Day” Section, Thursday, January 15, 2015). 

 More to Come....

Reprinted with the permission of Thomson Reuters West from the manuscript of the author's 2015 Supplement chapters in “Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters” ©2015 by Thomson Reuters West.

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THEY WERE AGAINST IT BEFORE THEY WERE FOR IT: Fladell, THE FIRST PART.

THEY WERE AGAINST IT BEFORE THEY WERE FOR IT: Fladell, THE THIRD PART.

ADJUSTING SANDY SANCTIONS IN NEW YORK.

    A United States District Judge has affirmed a Magistrate Judge's imposition of sanctions for conduct in the course of adjusting and litigating Sandy claims.  The Magistrate Judge's decision was commented on here.  "Federal Court in New York Investigates Sandy Adjusting," November 12, 2014.

    The District Judge laid out the entire situation concisely at the beginning of a longer opinion.  The Judge's opening is well worth reading in full:

Pending before the Court is defendant's appeal of an order issued by Magistrate Judge Gary R. Brown on November 7, 2014, In re Hurricane Sandy Cases, ___ F.R.D. ___, 2014 WL 5801540 (E.D.N.Y. Nov. 7, 2014)(the “November 7 Order”), addressing the disclosure of draft engineering reports on insured properties allegedly affected by Hurricane Sandy, and imposing evidentiary sanctions on defendant Wright and monetary sanctions on its counsel for failing to obey discovery orders and causing undue delay to these proceedings. The sanctions arose from (1) a failure by defendant and its counsel to disclose an initial written report (dated December 9, 2012) by George Hernemar, an engineer from U.S. Forensic (“USF”), who had inspected the home at issue and concluded that it had been damaged beyond repair by Hurricane Sandy, and (2) the conduct by defendant's counsel at a subsequent evidentiary hearing before Magistrate Judge Brown to determine how the undisclosed initial report was modified into a second subsequent report, dated January 7, 2013 (disclosed to plaintiffs), which eliminated certain observations by the engineer and reached the exact opposite conclusions—namely, that the defects in the home had not been caused by the storm, but rather were due to long-term deterioration. In particular, following the evidentiary hearing, Magistrate Judge Brown found, inter alia, the following: (1) defendant and its counsel violated their obligations to comply with this Court's discovery orders by failing to produce the initial engineering report; (2) the process, in this particular case, that led to the alterations of Hernemar's observations in the initial report and the reversal of the report's conclusions was “flawed,” “unprincipled,” “reprehensible,” and “highly improper”; (3) the failure to disclose the initial report resulted, in this case, in “unreasonably prolonging this litigation, imposing unnecessary costs upon plaintiffs and further contributing to the unwarranted delays in resolving this claim”; and (4) “given the discovery failures by defendant's counsel, the unreasonable response by defendant to the allegations, and counsel's shocking attempt to curtail inquiry during the hearing, it is reasonable to charge the costs associated with the hearing to defendant's counsel.” (November 7 Order, at 13, 15–25.)

For the reasons set forth in detail below, the Court affirms Magistrate Judge Brown's November 7 Order in its entirety. More specifically, there is no basis for this Court to conclude that Magistrate Judge Brown's findings or his sanctions were clearly erroneous or contrary to law, as would be required for a reversal. Having carefully reviewed the record, it is absolutely clear to this Court that the process that led to the modification of the initial engineering report (including the removal of observations that were inconsistent with the new conclusions) was flawed, and the concealment of that initial report and the process that led to the new report (including conduct at the evidentiary hearing) has prejudiced plaintiffs in terms of delay and costs in this litigation, such that the sanctions were warranted.

 

In re Hurricane Sandy Cases (Raimey v. Wright Nat'l Flood Ins. Co.), ___ F. Supp. 3d ___, 2014 WL 7399179, *1 (E.D.N.Y. December 31, 2014)(Bianco, United States District Judge).  [Emphasis added.]

 

Please Read The Disclaimer.  Copyright 2015 by Dennis J. Wall.  All rights reserved.  No claim to Original U.S. Government Works.

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A “CLAIM” IS JUST A CLAIM, THAT NO-ONE CAN DENY …

Especially Not After They Have Admitted it Countless Times Before Now.

               In a Federal Court case in California, Millenium Labs, Inc. v. Allied World Assur. Co., 2014 WL 6632765 (S.D. Cal. Filed November 21, 2014), a United States Magistrate Judge refused to permit the defendant to amend several responses to requests for admission to which it responded 10 months beforehand.

              The reason that the U.S. Magistrate Judge refused to allow the withdrawal and amendment of previous responses by the defendant (which the Judge called “AWAC” in her opinion) had little to do with apparent tardiness in filing the motion, however.  Instead, the Court emphatically stated that AWAC previously admitted multiple times that when its policyholder was served with subpoenas by the U.S. Department of Justice, “the DOJ investigation was a ‘claim’”:

1. “Even before the complaint was filed, AWAC admitted the DOJ investigation was a ‘claim.’”  AWAC’s claim representative allegedly called the policyholder and said so.
2. Depositions of the claim rep and of the policyholder’s general counsel seemed to support this fact, “and AWAC does not deny it.”
3. “After hiring outside coverage counsel, AWAC admitted that the DOJ investigation was a ‘claim.’”  AWAC’s lawyer wrote a letter referring to one of the subpoenas as a potential “’Claim under the Policy.’”
4. At the beginning of discovery after the policyholder filed a lawsuit to obtain payment as quickly as possible of its defense costs, the policyholder served the requests for admission to which AWAC served its responses in question, admitting that the subpoenas and investigation by the DOJ were a “’claim.’”
5. Thereafter, AWAC litigated “dispositive pre-trial motions”.  AWAC opposed its policyholder’s motion for summary judgment, for example, by admitting that it was admitting “’only that the DOJ Investigation constitutes a Claim under the Policy.’”
6. AWAC also served requests for production on its plaintiff policyholder in that case.  In response, the policyholder “produced at least 1.1 million documents (and likely more)”.  Three months or more after the policyholder’s production, AWAC’s claim rep was deposed and referred to the DOJ subpoenas as a “’claim.’”
7. “For two years, AWAC repeatedly asserted that the DOJ investigation was a ‘claim.’  Now, for the first time, AWAC seeks to reverse its position, withdraw its admissions, and assert that the DOJ investigation was, in fact, not a ‘claim.’”

 

        “Accordingly, AWAC’s request to amend its RFA responses is         DENIED.”

 

        And that’s all we’re going to say about that.  Or need to.

Please Read The Disclaimer.  Copyright 2014 by Dennis J. Wall.  All rights reserved.  No claim to Original U.S. Government Works.

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FEDERAL COURT IN NEW YORK INVESTIGATES SANDY ADJUSTING.

    Mr. George Hernemar is a licensed engineer.  His employer, an engineering firm, sent Mr. Hernemar to inspect approximately 50 homes for damage Sandy may have caused to them in 2012.

    The engineering firm that Mr. Hernemar worked for was retained by the policyholders' insurance company to investigate their claim of damage.  The policyholders owned a rental house adjacent to their own home.  Upon inspection of the rental house, Mr. Herneman affirmatively wrote that he observed among other things that Sandy structurally damaged the building.

    "However, plaintiffs never received this report from their insurance carrier."  Instead, the policyholders received a report written afterward, which contained the conclusion that, among other things, "the subject building was not structurally damaged".  In re Hurricane Sandy Cases (Raimey v. Wright National Flood Insurance Co.), 2014 WL 5801540 *3 (E.D.N.Y. November 7, 2014)(Brown, U.S.M.J.).  [Emphasis by the Court.] 

    Although Mr. Hernemar took responsibility for both reports and contended that the first one was only a draft and not a real report, the Court noted Mr. Hernemar's testimony that the "'rewrote my report'" and that the second report did not exist until after Mr. Hernemar had a telephone conversation with a representative of his employer.

    The first Hernemar report surfaced in the case only by "happenstance," the Court said.  It was apparently not produced in discovery.  The second Hernemar report was produced in discovery and, as noted, the policyholders received the second Hernemar report, but not the first one.

      "Based upon this [second] report, defendant refused to pay for any structural damage to the home."  In re Hurricane Sandy Cases (Raimey v. Wright National Flood Insurance Co.), 2014 WL 5801540 *3 (E.D.N.Y. November 7, 2014)(Brown, U.S.M.J.).

    Under all the evidence before it in this case, the Court concluded that adjustment of Sandy claims is apparently ripe for investigation:

   Against this backdrop arises the instant dispute, which has exposed reprehensible gamesmanship by a professional engineering company that unjustly frustrated efforts by two homeowners to get fair consideration of their claims. Worse yet, evidence suggests that these unprincipled practices may be widespread.

 In re Hurricane Sandy Cases (Raimey v. Wright National Flood Insurance Co.), 2014 WL 5801540 *1 (E.D.N.Y. November 7, 2014)(Brown, U.S.M.J.).

    In addition to adjusting practices in all of the consolidated Sandy-claim-cases, the Court considered the case before it, concluding that in the case at bar (1) the defendant insurance company "is prohibited from supporting its defenses or opposing plaintiffs' claims with any expert testimony other than that of George Hernemar," and (2) the plaintiffs' counsel may file a motion "for reimbursement from defendant's counsel for all reasonable costs associated with this motion, the hearing and all related briefing, including attorneys' fees, travel costs and transcription costs".

    With respect to this case and all of the other pending consolidated Sandy cases, the Court further ruled: 

3. Within thirty days of this Order, defendants in all Hurricane Sandy cases shall provide plaintiffs with copies of all reports described in CMO 1 not previously produced—plus any drafts, redlines, markups, reports, notes, measurements, photographs and written communications related thereto—prepared, collected or taken by any engineer, adjustor or other agent or contractor affiliated with any defendant, relating to the properties and damage at issue in each and every case, whether such documents are in the possession of defendant or any third party.

In re Hurricane Sandy Cases (Raimey v. Wright National Flood Insurance Co.), 2014 WL 5801540 *15 (E.D.N.Y. November 7, 2014)(Brown, U.S.M.J.).

    Clearly, the Court in this case was not pleased.  Yet no-one who reads this opinion and considers this ruling on the evidence can reasonably second-guess the decision.  The ruling, like the unpleasant taste left by the apparent conduct at issue here, was a result of the evidence in the record.

Please Read The Disclaimer.  Copyright 2014 by Dennis J. Wall.  All rights reserved.  No claim to Original U.S. Government Works.

DEPOSING INSURANCE COMPANIES AND ATTORNEYS.

    A couple of rulings about deposing insurance companies and attorneys are remarkable enough to warrant their own article here, from the recent decision in Bank of America, N.A. v. Georgia Farm Bureau Mut. Ins. Co., 2014 WL 4851853 (M.D. Ga. September 29, 2014).  This case involved unique bad faith claims which I intend to address separaately in a future article on Insurance Claims and Bad Faith Law Blog.

    Here, I want to address the Court's rulings in this case imposing conditions on and sustaining objections to depositions of insurance companies and attorneys.  The insurance company's corporate representative was already deposed in that case when BofA sought to take the depositions of two of the insurance company's attorneys.  The insurance company raised various objections including attorney-client privilege, work product immunity from discovery, and "asked and answered" (although there is absolutely no indication that either attorney was previously deposed in that case or in any other; more on this below).

    "The Court granted a hearing on the present Motions and ordered BANA [Bank of America] to submit a list of intended deposition questions."   Bank of America, N.A. v. Georgia Farm Bureau Mut. Ins. Co., 2014 WL 4851853 *1 (M.D. Ga. September 29, 2014).  Was this a Court-ordered deposition upon written questions?  What would happen if the bank's attorneys asked questions that went beyond the list?  Upon what authority did the Court rely in ordering the bank's attorneys to submit a list in the first place, other than the bailiff?  Why did the Court not order or ask the bank instead what the bank's attorneys intended to go into, what the subject matters would be, which is perhaps the far more usual course in such a case?

    We don't know.  The Court did not address any of these issues in this decision.

    Second, there is the issue of the insurance company's mysterious "asked and answered" objections to the questions on the list submitted to the Court that the bank's attorneys would ask the insurance company's attorneys -- witnesses who had never been deposed in the case or in any related case apparently.  "In its extensive objections to BANA's submitted questions, GFB [Georgia Farm Bureau] asserted that many of the questions were asked and answered."  Answered by whom?  "The Court agrees with GFB that various questions have been asked and answered."  Again, answered by whom since the witnesses in question had never been asked?  "Therefore the Court finds it proper to limit the scope of this deposition to questions that have not already been asked and answered by GFB."   Bank of America, N.A. v. Georgia Farm Bureau Mut. Ins. Co., 2014 WL 4851853 *6 (M.D. Ga. September 29, 2014).  [Italics by the Court; boldface added.]

    I wish this decision had been issued a few years earlier.  I can think of a few past cases when it might have come in handy.  So, if your client is the company, and it has already been asked questions at its corporate representative's deposition, and if an opposing party wants to depose other people, you can file a motion for protective order on behalf of your client the company objecting to the new deposition questions on the ground that somehow they were already "asked and answered"?

    Wow.  Amazing.

    More to come in a future article on Insurance Claims and Bad Faith Law Blog.

Please Read The Disclaimer.  Copyright 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government Works. 

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HELD: NO PRIVILEGE, NO WORK PRODUCT OVER REPORTS TO REINSURER.

          Two requests for production to a Director's and Officer's Liability Insurance Company, Progressive, were at issue in a recent decision by a U.S. Magistrate Judge, Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).  They were requests for production of:

 

12.  All documents relating to the purchase, placement or ceding of any reinsurance by you [the liability insurance carrier] that relate to the Policy, including all status reports provided by you to such reinsurance companies and memoranda relating to meetings with reinsurers.

 

23.  All documents relating to any communications with any reinsurer about the Claims.

The discovery pleading defined "Policy" as the liability insurance policy at issue in the case, and "Claims" as "'any and all demands for insurance coverage and/or payment made by the FDIC and/or any officers or directors of Vantus Bank."  Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 *1 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).

          The liability insurance company that received these requests contended that it could redact (black out) parts of reinsurance communications on the grounds of either attorney-client privilege or work product immunity or both, after a previous Order directing production of  the requested documents.

          The Court overruled objections based on work product immunity from discovery.  First, the Court agreed with FDIC, the plaintiff in this case and the party that propounded the requests, "because the information was created in the ordinary course of Progressive's business":

 The documents were prepared and distributed to the reinsurance companies and broker for business purposes. Progressive itself admits that the documents were provided for case updates pursuant to the reinsurance agreements, or in response to specific requests, and included the matter's history, its present posture, current activity, assessments of coverage and liability issues, amounts paid and reserve, and plans for future handling. Doc No. 75 at 10. Those are all typical business purposes for the reinsurance industry. Progressive has not met its burden of showing that these documents were “prepared or obtained because of the prospect of litigation.” [Citation omitted.]  Therefore, they are not subject to protection under the work product doctrine.

          The Court further overruled objections based on the attorney-client privilege, for two reasons.  First, "Progressive waived any applicable attorney-client privilege when it distributed the communications to its reinsurers and broker."  Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 *4 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).

          Second, even assuming that the so-called "common interest doctrine" applied under the circumstances, still that doctrine as defined by the Court requires an identity of legal interests, not commercial interests.  "The relationship between Progressive and its reinsurers and broker is commercial and financial in nature, not legal."  Progressive Casualty Insurance Co. v. Federal Deposit Insurance Corp., 2014 WL 4168477 *4 (N.D. Iowa August 22, 2014)(Strand, U.S.M.J.).

          Based on the record before it, the Court granted the plaintiff's motion to compel production of the requested documents without redaction in this case.

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

 

PRIVATIZING PRISONS FOR PROFIT? REPORTS ....

Who has the Coverage?

 

          Reports of despicable conditions in for-profit prisons contain opinions.  These reports also contain evidence of facts.  Photographs and eyewitnesses have recorded these conditions in a private prison in Mississippi recently:

• "Dirt, feces and, occasionally, blood are caked on the walls of cells."
• Prisoners with treatable medical conditions, like glaucoma, do  not receive medical treatment.  When these individuals are released, their condition has deteriorated to the point where the condition is untreatable.
• Guards, who are paid a small hourly wage, spend little time in the solitary-confinement block.  Prisoners in solitary confinement sometimes set fires to their bedding in order to get the guards' attention and, even then, the guards sometimes do not respond.

These eyewitness accounts and photographic evidence and more are reported for example by Erica Goode, "Seeing Squalor and Unconcern in Southern Jail," p. 1, col. 1 (New York Times Nat'l ed., Sunday, June 8, 2014).  The Mississippi prison in question is run by Management and Training Corporation from Utah.

           Management and Training Corporation made one comment for publication.  They blamed these problems on the corporation they replaced in 2012, one GEO Group.  Otherwise, they declined to comment, saying they would not comment because they have been sued.  This is unusual.  Even aside from the fact that due diligence probably revealed these conditions before Management and Training Corporation took over the running of this Mississippi prison, this is 2014.  It has now been two years since CEO Group was in charge, and this is still unusual.  Many large corporations stage large press campaigns to "push back" against lawsuits.

           Management and Training Corporation is entitled to a defense.  Questions abound about how they will defend themselves.  Which of their carriers will fund their defense?  What sort of insurance coverage will provide them indemnity if their defense fails?  Who will cover these people against such reports?  And what sort of exclusions could apply, intentional damages exclusions for example?  So much depends on what Management and Training Corporation has to say about its prison-keeping.  When they start talking we will know more.  Until then, questions continue to pile up.

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

Please Read The Disclaimer.

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Discovery From Your Experts.

            In my experience as an Expert Witness, interrogating attorneys frequently demand that expert witnesses produce their books and articles by a demand written something like this:

           All the publications you have ever written.

           For a frequently published author, such as myself, that can be a boatload of stuff if I kept any of it.   (I pdf my recent articles and publish them on my website at www.dennisjwall.com.  I also insert hyperlinks to my books there.  If anyone wants to put their hands on those materials, there they are.)

          It is also my experience that retaining attorneys are usually very good about protecting their experts from harassing discovery demands, but there is sometimes a rare case as I understand it when the retaining attorney does not oppose such discovery and the expert is expected to protect herself or himself, and even more rarely, that in a very few cases the retaining attorney tells the experts to produce all the publications they have.

 

          In those situations, I commend the following approaches to fellow expert witnesses and to fellow attorneys who retain expert witnesses, as well.  One possible line of response is based on the applicable Rules of Civil Procedure.  The rules are generally explicit about what affirmatively can be demanded from expert witnesses in litigation, and all the publications you have ever written -- in fact, any publications you have ever written that you did not rely on in the case at bar -- are simply not written there.  In the Federal Court system, that is Rule of Civil Procedure 26(a)(2) and 26(b)(4), for example, and in Florida that is Rule 1.280(b)(5).  In particular, the Federal Rules require only a list of publications, not the publications themselves.  Fed. R. Civ. P. 26(a)(2)(B)(iv) (disclosures required of a testifying expert witness include disclosure of "the witness's qualifications, including a list of all publications authored in the previous 10 years").

          A second or possible 'fallback' position in jurisdictions in which the civil rules do not specifically address the question, might involve reference to the time limitations on revealing previous expert witness testimony.  In general terms, the time period for a party which has retained an expert witness expected to testify at trial, is to disclose the identity of cases in which she or he has previously testified within a reasonable time period, for example.  See Fla. R. Civ. P. 1.280(b)(5).  There should arguably be no good reason not to impose at most similar limitations on production of publications authored by the expert witness, as the limitations imposed by the Rules themselves on disclosure of testimony previously given by the expert witness in litigation.

 © 2013 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

 Please Read The Disclaimer.

Opposing Counsel Was Fire Loss Lawyer Too: Work Product.

    In Memory Bowl v. North Pointe Insurance Co., 2012 WL 845928 (D.N.J. March 13, 2012)(USMJ), Download Memory Bowl v. North Pointe Ins. Co. (D.N.J. USMJ Memo and Order Filed March 13, 2012) PUBLIC ACCESS, an Insurance Company retained an attorney in its investigation of a fire loss claim.  The Policyholder, dissatisfied with the handling of its claim, sued its Insurance Company for allegedly wrongfully denying part or all of the Coverage in Bad Faith.  The Policyholder sought to take the Deposition of Opposing Counsel, which is the individual who was the Insurance Company's fire loss lawyer too.

    The Insurance Company showed that it hired the lawyer as a lawyer, during its investigation of the fire loss.  It convinced the U.S. Magistrate Judge in this case that "most, if not all," of the documents and things about which the lawyer would testify in this case were protected by the Work Product qualified immunity and that the Plaintiff-Policyholder could obtain the substantial equivalent by other means.  Id. at *4.

    This decision sits squarely in the line of cases deciding Work Product and Attorney-Client Privilege issues in similar cases:  When a lawyer is acting like a claim adjuster in the investigation of an Insurance claim, then the Courts ordinarily hold that any and all facts learned and observed by the lawyer are a part of the Insurance Company's ordinary business; the Work Product qualified immunity simply does not apply that far in the ordinary Insurance claim.  When, on the other hand, the attorney is acting as an attorney even though she or he has been retained to provide legal advice and impressions during the course of an Insurance claim investigation, the immunity like the Privilege will be applied in the ordinary case.   See Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 12:8, "Insurance Counsel's Files" [Discovery in First-Party Cases] (Third Edition West 2011).

Please Read The Disclaimer.

DJA Discovery of Other Lawsuits Involving Same Policy Language.

   If your client is at a loss in Declaratory Judgment litigation over the opposing party's involvement in other lawsuits involving the same Insurance Policy language, ask the opposing party.  You may be able to compel an answer to your question, at least if the opposing party actually has such information in the first place.

   An answer to the following Interrogatory was compelled in Clean Earth of Maryland, Inc. v. Total Safety, Inc., 2011 WL 4832381 *5 (N.D.W. Va. October 12, 2011)(Seibert, USMJ), Download Clean Earth of Maryland, Inc. v. Total Safety, Inc. (N.D.W. Va. Case No. 2.10.cv.119, Oct. 12, 2011)(Seibert, USMJ):

With respect to any policy language relied upon by you in your coverage counsel's letter dates [sic] April 14, 2010 to Total Safety, please list any and all suits filed by or against you in the last ten years involving a dispute over that same language.

   In practice, of course, getting an answer to such a question means that the opposing party is capable of answering it.  In other words, there can only be an answer to such a question where the opposing party in fact has been a party to lawsuits "filed by or against you in the last ten years involving a dispute over that same language."  Compelling an answer to a question of this kind is in practice limited to Insurance Companies, or perhaps large Corporate Policyholders.  It is not for everyone.

   The online docket of this lawsuit on PACER reflects that Westchester Surplus Lines Insurance Co., "Total Safety's liability insurer," has filed objections to the U.S. Magistrate Judge's decision.  Westchester's objections are pending at the time of this post.

Please Read The Disclaimer.

Three Cases For The Experts: Disclosure, Deadlines and "Fit" Testimony.

   Rules requiring disclosure of Expert Testimony are important.  Compliance with them can be crucial.  In Federal Court, Federal Rule of Civil Procedure 26(a) provides for certain requirements and deadlines governing disclosure concerning Expert Witnesses and their testimony expected to be offered at Trial.  Failure to comply with Rule 26(a) can result in the imposition of a number of sanctions under Federal Rule 37.  If the failure to comply is "neither substantially justified nor harmless," the party offering the Expert Testimony may be barred from using them in the Federal Court action "as an expert witness to supply evidence on a motion, at a hearing, or at trial," as happened to the Plaintiff Condominium Association in the case of La Gorce Palace Condominium Ass'n v. QBE Insurance Corp., 2011 WL 1522566 *4 (S.D. Fla. February 28, 2011)(authorized subscription required).

   Even where disclosure is arguably "late," it may nonetheless be substantially justified or the Court's resolution of the opposing party's challenge to the Expert disclosure may render the "lateness" of the disclosure harmless, as in Perez v. First American Title Insurance Co., 2011 WL 3861677 *1 (D. Ariz. September 1, 2011)(authorized password required to access Westlaw).  In the First American Title Insurance case, a District Judge held that a supplemental Expert report was "substantially justified" because the Court itself had previously held that electronic discovery would be allowed after the original deadlines had passed for disclosure concerning Experts, including deadlines for Rebuttal Reports.

   When timely or substantially justified, or harmless, even allowable Expert Testimony depends on the issue for which the Expert Testimony is offered.  Further, Expert 'qualifications' do not require an academic degree; experience is often the appropriate answer as to whether the proffered Expert Testimony is a good fit for the issue on hand, as  a third U.S. District Judge ruled in Metlife Auto & Home v. Broan-Nutone, LLC, 2011 WL 3736550 *3-*4 (N.D.N.Y. August 24, 2011)(authorized Westlaw password required).

Issues surrounding Expert Witnesses in Insurance Cases are addressed in Sections 8.17 (Third-Party) and 12.18 (First-Party) by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (West Publishing Co. Third Edition 2011).

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Experts' Reports Do Not Answer Interrogatories in Property Insurance Case.

   Production of an incomplete Expert Report does not answer Interrogatories.  This holding came in a Property Insurance Case for Hurricane Wilma Damages:  Download 2000 Island Blvd. Condo. Ass'n v. QBE Insurance Corp. (S.D. Fla. Case No. 11.20247, Order Filed July 25, 2011) PUBLIC ACCESS, also published as 2011 WL 3441621 *1 (S.D. Fla. July 25, 2011)(Altonaga, United States District Judge).

   The following is a paraphrasing of the Interrogatories at issue in that case, while retaining the numbering used in a set of Interrogatories propounded by the Property Insurance Company to the Plaintiff Condominium Association:

   2.  Provide detailed information about each building component included in Plaintiff's claim, including whether the damaged components were repaired or replaced, who repaired or replaced them, the dates and costs of such repair or replacement, the ages or conditions of the components before the Hurricane, and whether there were discussions concerning repairing or replacing these components before the Hurricane struck.

   5.  Provide names and addresses of unit owners, management, and maintenance personnel.

   7.  Provide names and addresses of the persons who inspected and evaluated the property for damage.

The Plaintiff Condominium Association was ordered to answer each of these Interrogatories in this case.  The Plaintiff's response included the assertion that its Experts were still putting their Reports together and that the Plaintiff would provide the Expert Reports which, the Plaintiff submitted, would provide the Defendant Insurance Company with the information it was seeking through these Interrogatories.  The Federal District Judge specifically held that "Plaintiff cannot hide behind an incomplete expert report to deny QBE the information it seeks."  2000 Island Boulevard Condominium Ass'n v. QBE Insurance Corp., 2011 WL 3441621 at *1. 

    The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  As a result, the ACI will offer you a large discount if you choose to register for the Conference.  In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI on or before September 15, 2011.  Her direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at [email protected].  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or anyone you know would like to attend.

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Competing Notices of Corporate Rep Depostions: CONTINUED.

This continues a post begun here on Monday, April 25, 2011.

   In Diamond State Insurance Co. v. His House, Inc., Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Discovery Order, Filed Jan. 18, 2011) PUBLIC ACCESS also published as 2011 WL 146837 (S.D. Fla. January 18, 2011), a United States Magistrate Judge was confronted with competing Rule 30(b)(6) Notice of Deposition of Corporate Representatives. One Notice was served on behalf of a Policyholder-Defendant.  The other Notice was served on behalf of a Liability Insurance Company-Plaintiff which had already denied all coverage for defense and for indemnity of an underlying lawsuit filed against the Policyholder.

 The Nature of the Case:  A Declaratory Judgment Action With No Claim For Bad Faith Alleged.

(For more specific facts of the case, please see the beginning post here of Monday, April 25, 2011.)

 Diamond State's Motion to Compel Another Rule 30(b)(6) Deposition of His House, and to Take the Deposition of Ms. Kristen Glaspy, is Granted -- Kind Of.

    As was noted in Monday's post, His House's Corporate Representative was already deposed in the Declaratory Judgment Action by Diamond State. She was already deposed in the underlying case as well.  Ms. Glaspy was also deposed previously in the underlying case.  Further, the Court agreed that the Rule 30(b)(6) Notice was "overly broad".  Nonetheless, the Court granted Diamond State's Motion to Compel.  Somewhat.

   The Court allowed Diamond State to take the depositions, but "on a limited basis" and "severely limited in duration".  Id. at *7.  Each deposition would be completed within one hour.  The Rule 30(b)(6) topics of inquiry for the corporate representative deposition were prescribed in the Court's Order.  So were the limited areas of inquiry which Diamond State was allowed to make while deposing Ms. Glaspy.  Id. at *8.  "If Diamond believes that additional time is needed in either scheduling the depositions and or in completing the depositions," its counsel could get together with His House's counsel and ask for a Hearing.  Id. (The Online Docket of this case on Pacer reveals that no such Hearing was requested.)

   This was the ruling of the Magistrate Judge after she reviewed "the record as a whole".  The reasons given for ruling are not based on "the record as a whole," however.  They have implications for other Declaratory Judgment Actions concerning future insurance coverage disputes.  The Court ruled in this case as it did for three announced reasons which provide questionable support for these rulings, whether taken alone or together.

   "First, it is indisputable" that material can be discovered, said the Court.  "Therefore information which may shed light on the nature or the services provided by His House are particularly germane ...."  Id. at *7.  That may certainly be the case, but the Court did not offer any explanation as to why these "particularly germane" questions were not asked in the first Rule 30(b)(6) deposition of His House in this case, nor as to why "the nature or the services provided by His House" went seemingly undiscovered in the underlying case in which His House was sued for wrongful death.

   Second, the Court added that "[i]n addition, ... in the 'duty to indemnify' context, the facts of the underlying tort action adduced at trial or developed in discovery are central to the resolution of that claim....  Thus, facts related to the underlying tort action, and specifically the circumstances surrounding the death of the infant, are also relevant to resolving the 'duty to indemnify' claim and are discoverable in this action."  Id.  Facts relating to the underlying tort action are ordinarily available in the discovery taken in the underlying tort action.  A coverage action is not generally an appropriate forum in which to try the issue of the insured's underlying liability.  This is particularly true when, as here, such a determination of the insured's liability would be before any determination of the insured's liability in the underlying case.

   Specifically in this case, the circumstances surrounding the death of the infant are precisely the circumstances that prompted the filing of the underlying wrongful death lawsuit and discovery in it, yet the Court in this case made no reference to the discovery already taken in the underlying case in this regard.

   Third and finally, "the Court notes that Plaintiff Diamond is not a party in the underlying state action ... and thus was not present for the depositions of either Kristen Glaspy or His House's corporate representative taken in that matter."  As a result, said the Court, it would allow His House's deposition to be taken again in this Declaratory Judgment Action because Diamond State was not present to ask questions in the underlying action.  That Ms. Glaspy and His House were also previously deposed in the underlying actions did not occasion inquiry into what was asked in those earlier depositions, but instead became a reason to allow them to be deposed again in the Declaratory Judgment Action, "albeit on a limited basis."  Id. at *7.

   Anyone who has tried a Declaratory Judgment Action arising out of an earlier-filed tort action has experienced the requirements imposed by Judges to show them why the discovery taken in the underlying case is not adequate to provide the answers to the interrogations that are proposed for new depositions of the same persons in the Declaratory Judgment Action.  No such inquiry appears from the opinion in this Declaratory Judgment Action concerning Diamond's "limited" depositions of His House and Ms. Kristen Glaspy.  The rulings would perhaps be more readily applied by Courts and counsel in other Declaratory Relief Actions if that inquiry had been made in this one.

The Online Docket of this case on Pacer, the Online Docket for Federal Courts, reflects that the District Judge granted the Plaintiff Liability Insurance Company's Motion for Summary Judgment on January 31, 2011 or within two weeks after the U.S. Magistrate Judge entered the Discovery Order which is the subject of this post.  Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Order Granting Summary Judgment, Filed Jan. 31, 2011) PUBLIC ACCESS. To be continued ......

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Competing Deposition Notices of Rule 30(b)(6) Corporate Representatives.

   In Diamond State Insurance Co. v. His House, Inc., Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Discovery Order, Filed Jan. 18, 2011) PUBLIC ACCESS also published as 2011 WL 146837 (S.D. Fla. January 18, 2011), a United States Magistrate Judge was confronted with competing Rule 30(b)(6) Notice of Deposition of Corporate Representatives. One Notice was served on behalf of a Policyholder-Defendant.  The other Notice was served on behalf of a Liability Insurance Company-Plaintiff which had already denied all coverage for defense and for indemnity of an underlying lawsuit filed against the Policyholder.

 The Nature of the Case:  A Declaratory Judgment Action With No Claim For Bad Faith Alleged.

    The case began when Diamond State filed suit for declaratory relief against His House and others.  His House was a nonprofit corporation engaged in the business of caring for foster care children placed with His House by the State of Florida.

   Having already denied all coverage to His House for defense or indemnity with respect to an underlying wrongful death suit, in this case Diamond State sought declarations that (1) a Professional Liability Policy and (2) a Commercial General Liability Policy which it issued to His House did not provide coverage for the wrongful death lawsuit against His House.  Id. at *1.

     In addition to requesting judicial declarations that the two Policies did not provide coverage under their clear language, Diamond State also alleged that His House's coverage if any under the Professional Liability Policy at issue was voided because His House allegedly "knew of the death of the infant prior to ... the application for the professional liability policy".  As to the CGL Policy, Diamond State also alleged that the "occurrence" that caused the child's death "occurred prior to the policy period and thus no coverage is available under that policy either".  Id. at *1.

   The wrongful death lawsuit or underlying case was filed against His House as the result of the death of an infant, "M.C.," after the child was placed in the care of His House's employee, Ms. Kristen Glaspy, a "foster care mother who was employed by His House".  Id. at *1.

 The Competing Rule 30(b)(6) Deposition Notices and Motions to Compel:  First, His House's Motion to Compel the Deposition of Diamond State's Corporate Representative.

    The Policyholder, His House, wanted to depose Diamond State Insurance Company's Corporate Representative on five (5) designated areas, four of them concerning interpretation of the "policies at issue in this case" in one respect or another, and the fifth area concerning the Insurance Company's handling and denial of His House's claim to coverage under the Diamond State Policies.  Id. at *3.

   Diamond State wanted to re-depose His House's Corporate Representative after His House's Rule 30(b)(6) Deposition had already been taken once in the Declaratory Judgment Action, and once in the underlying case.  In addition, Diamond State wanted to depose Ms. Glaspy, who again was an employee of His House, and who had already been deposed in the underlying case as well.  The Magistrate Judge resolved the issues surrounding a Rule 30(b)(6) Deposition of the Insurance Company first.

   Florida substantive law "governs the substantive portions of this declaratory action," she pointed out.  Under Florida law, "the construction of an insurance policy is a question of law to be determined by the court."  If the insurance policies were held to be unambiguous, they should be interpreted in accordance with their clear terms.  If the Court found the insurance contracts ambiguous, then the Court would be required to construe the wording most strictly against the Insurance Company.  Id. at *2.

   Florida substantive law therefore made interrogation about the Policies at issue "irrelevant to the resolution of this declaratory action."  Id. at *4.  If the Policy provisions at issue were unambiguous, there would be no need for testimony about them.  If the Court held the policy provisions ambiguous instead, then in this case, at least, "Defendants will automatically prevail in the instant declaratory action."  Id.  "Thus, under either scenario, the testimony of Diamond's corporate representative is irrelevant."  Id.

   As to the claim handling inquiry, it might be appropriate in a bad faith case, the Court suggested, see id. at *4-*5, but it was not relevant to this action for declaratory relief concerning the wording used in two insurance policies.  As to the allegations made by Diamond State to the effect that His House knew of the infant's death before applying for the Professional Liability Policy, the prospective testimony was again irrelevant.  In this case, His House did not dispute the date of the infant's death or the date of its Professional Liability Insurance application.  Under the circumstances of this peculiar case, the Court denied His House's Motion to Compel the deposition of Diamond's corporate representative.  Id. at *6.

The Online Docket of this case on Pacer, the Online Docket for Federal Courts, reflects that the District Judge granted the Plaintiff Liability Insurance Company's Motion for Summary Judgment on January 31, 2011 or within two weeks after the U.S. Magistrate Judge entered the Discovery Order which is the subject of this post.  Download Diamond State Insurance Co. v. His House Inc. (S.D. Fla. Case No. 10.20039.CIV, Order Granting Summary Judgment, Filed Jan. 31, 2011) PUBLIC ACCESS. To be continued ......

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Florida First-Party Bad Faith Work Product, Attorney Client Privilege ...

... Again.

   Joining a cascade of cases, Florida's Third District Court of Appeal issued an opinion in a Hurricane Wilma case that contains twin holdings of great interest for First-Party Bad Faith Policyholders, lawyers, and Courts, in Download State Farm Florida Insurance Co. v. Puig (Fla. 3d DCA Case No. 3D10.2104, Opinion Filed March 23, 2011)(PUBLIC ACCESS, STATED NOT FINAL), also published as 2011 WL 1008266 (Fla. 3d DCA Opinion Filed March 23, 2011)(authorized password required to access Westlaw).  The appellate panel unanimously quashed those parts of a Trial Court's Order that (1) essentially ignored the requirements of Work Product and (2) refused to entertain any Attorney Client Privilege objections, at all, in a First-Party Bad Faith Case.

   Therein lies a tale from Florida's Third District.

   First, the Trial Court's Order was quashed concerning production of State Farm's Claims File prepared after an underlying Insurance Coverage proceeding concluded:

   Notably, over State Farm's assertions of work product protection, the trial court's order compelled the production of documents prepared subsequent to February 25, 2008, after the underlying litigation over the [Policyholders'] claim had concluded.

State Farm Fla. Ins. Co. v. Puig, 2011 WL 1008266 at *1.  The Trial Court erred, said the Appellate Court, because although Work Product immunity can be overcome even as to post-Coverage resolution in a First-Party case, the Trial Court did not require and the Policyholders did not meet their burden to make the required showing to actually defeat Work Product immunity.  State Farm Fla. Ins. Co. v. Puig, 2011 WL 1008266 at *2.

   Second, the tale that lies therein.  The Third District panel in this case also quashed the Trial Court's Order to the extent that the Trial Court refused to consider Attorney-Client Privilege objections to production of the "entire" State Farm Claims File in this First-Party Bad Faith Case.  State Farm Fla. Ins. Co. v. Puig, 2011 WL 1008266 at *2-*3.  In making this ruling, the panel rejected an invitation from the Policyholders on appeal to "revive" a 1987 Third District holding which barred Insurance Companies from ever successfully asserting Attorney-Client Privilege in Bad Faith Cases.  State Farm Fla. Ins. Co. v. Puig, 2011 WL 1008266 at *3 n.2.  Instead, the 2011 Third District panel held:

   The instant petition [for certiorari] must be granted in large part because the essential requirements of law provide that the attorney-client privilege exists and is available to an insurer that is faced with a bad faith claim.

State Farm Fla. Ins. Co. v. Puig, 2011 WL 1008266 at *3.

   What a difference a day makes, the old song says.  What a difference 24 years make, this new decision says.

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Pushing the Limits of Providing Detailed Damages Computation.

   In Download Smith v. State Farm Mut. Auto. Ins. Co. (E.D. Mich. Case No. 10.11016, Memorandum and Order Filed March 4, 2011) PUBLIC ACCESS, Ms. Trinity Smith filed suit for no-fault benefits for injuries arising from a motorcycle accident.  Nationwide, the Defendant, filed a motion to dismiss her Complaint "for Smith's failure to comply with discovery."  Id. at *1.

   In the Federal Judge's opinion, "Smith has pushed the limits in her failure to cooperate".  However, the Court denied the motion to dismiss for failure to provide discovery, i.e., for failure to provide a detailed computation of damages which every Plaintiff seeking damages in Federal Court is automatically required to provide to a Defendant.  Under Federal Rule of Civil Procedure 26, there is no need of any request to produce it.  In fact, under many Local Rules, discovery is postponed in the case until the Rule-required time period for exchanging required information is over.  In this case, "under the present set of facts, dismissal is premature," in the Federal Court's opinion, because of "a breakdown in communications between Smith's counsel and Smith," in basic and simple terms.  Id. at *2.

   The most interesting and significant aspect of this Insurance Claim, among many interesting and significant aspects particularly to the parties, is that the required disclosure of a detailed computation of damages under Federal Rule of Civil Procedure 26 was considered under a motion to dismiss for "failure to provide discovery." Failure to provide "discovery" can lead to a motion under Federal Rule of Civil Procedure 37   Rule 37 motions ordinarily involve requests for discovery rather than failure to obey the Federal Rules, although Rule 37(a)(3)(A) makes provision for enforcement of required disclosure under Rule 26..  In this case, the parties based their arguments and the Federal Judge based the Court's decision on the ground of a failure to provide discovery.  There is an aggressive, perhaps "robust" argument available here, however, that the issue in this peculiar case involved instead an asserted failure of a party to obey the Federal Rules which required disclosure.  Here, that party was the Plaintiff who invoked the Federal Rules when she filed her Complaint in Federal Court.

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Payment for Preparation: Taking Expert Witness Depositions.

   In a case involving the issue of pre-payment charges by Expert Witnesses for taking their depositions, a Federal Magistrate-Judge also had something to say about "preparation time" charges by Expert Witnesses.  Most Courts hold that an Expert Witness is entitled to payment by the interrogating attorneys for the Expert's time spent in preparing for a deposition.  Download Bartram, LLC v. Landmark American Insurance Co. (N.D. Fla. Case No. 1.10.28, Order of USMJ Filed February 16, 2011) PUBLIC ACCESS, at n.2.  (This case involves substantive issues of builder's risk Insurance Coverage for construction defects, under Florida substantive law.)

   While the Rule [Federal Rule of Civil Procedure 26(b)(4)(E), which has many State Court counterparts] does not expressly state whether an expert's time preparing for a deposition is "time spent in responding to discovery" the clear trend is that expert witnesses may be entitled to at least some compensation for time spent in preparation for a deposition, particularly if the expert is testifying in a complex case.

Id.

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Prepayment for Expert Witnesses Not Required Before Deposing Them.

   In a First-Party Insurance Coverage case, a universal holding was rendered under the Federal Rules of Civil Procedure.  Plainly stated, a party does not have to pay in advance for the privilege, as it were, of deposing another party's Expert Witness.  Download Bartram, LLC v. Landmark American Insurance Co. (N.D. Fla. Case No. 1.10.28, Order of USMJ Filed February 16, 2011) PUBLIC ACCESS.

   The U.S. Magistrate-Judge's holding in this case came under Federal Rule of Civil Procedure 26(b)(4)(E), a Rule of Civil Procedure which deals with Experts and which has many counterparts in State Court Rules of Civil Procedure.  Despite very little case law addressing the issue, this Court announced that it was following the holdings reached in every other case found by the Court:

The Rule provides that the party deposing the expert must reimburse the expert for the "time spent" in responding to discovery.  The Rule thus contemplates payment for services that have occurred and not for services that will take place -- absent of course a situation which would result in manifest injustice.  As such, the Rule contemplates payment after the services have been incurred.  Indeed, that is the only way the Rule would make sense.

Id. at unnumbered third paragraph of attached opinion.

   While this holding was reached in a First-Party Insurance Coverage case, it is clearly not confined to that category of cases.  It arguably applies to all cases in which one party's Experts impermissibly [or, illegally] attempt to condition their deposition testimony on advance payment.

Discovery from Expert Witnesses in First-Party Insurance Cases, including both Coverage and Bad Faith Cases, is the subject of §12:18 in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement, Third Edition in progress for publication in Spring, 2011).

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Investigation, Evaluation "Standard Protocol" Held Irrelevant in Action for First-Party ...

... Insurance Coverage for Construction Defects, Because the Only Claims in that Case are for Coverage, Not for Alleged Bad Faith.

    The case of Download Bartram, LLC v. Landmark American Insurance Co. (N.D. Fla. Case No. 1.10.28, Order of USMJ Filed February 4, 2011) PUBLIC ACCESS also published as 2011 WL 528206 (N.D. Fla. February 4, 2011)(authorized password required to access Westlaw) involves high stakes.  "This case is a first-party insurance coverage dispute in which Plaintiff seeks a declaration that the damage to its apartment project was covered by each of the builder's risk policies issued by Defendants."  Id. at *3.  The Plaintiff also claimed Damages for alleged Breach of Contract.  Id.  The Plaintiff has not alleged any First-Party Bad Faith Claims under Florida substantive law.  That is crucial to the outcome of one piece of the parties' discovery disputes addressed by a U.S. Magistrate-Judge in this decision.

   The Plaintiffs requested production of each of the Defendants' "standard protocol and time frame" in which they investigate and evaluate builder's risk claims, and following which they ultimately make a decision whether to accept coverage, reserve rights, or deny all coverage, in basic and simple terms.  The Court held that this particular request for production is "irrelevant in this action because the claims and defenses in this case depend upon the language of the individual policies issued by Defendants and whether these policies cover Plaintiff's losses.  Whether Defendants' failure to pay the claims constitutes bad faith is simply not an issue at this stage."  Id. at *4.

   This significant ruling was an achievement for the defense in a decision which otherwise recorded holdings and stipulations that allow discovery on every other contested request for production and interrogatory in the case, which involves four collective layers of builder's risk insurance totaling $25,000,000.00.  See id. at *1 - *3.

Discovery issues addressed in reported decisions in First-Party Bad Faith Cases, and in First-Party Coverage Cases, are analyzed in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" Chapter 12 (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement; Third Edition in progress for publication in Spring, 2011).

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Work Product, EMails, Construction Defects: Insurance Consultant, Fact Witness or Expert?

   In Download Bartram, LLC v. Landmark American Insurance Co. (N.D. Fla. Case No. 1.10.28, Order of USMJ Filed January 24, 2011) PUBLIC ACCESS,  also published as 2011 WL 284448 (N.D. Fla. Order of Magistrate Judge January 24, 2011)(authorized password required to access Westlaw), a Policyholder under Builder's Risk Insurance Policies claimed Coverage for Damages which resulted from Construction Defects.  "This case is a first-party insurance coverage dispute in which Plaintiff seeks a declaration that the damages suffered to its apartment project are covered by each of the builder's risk policies issued by Defendants."  Id. at *2.

   The Policyholder-Plaintiff was apparently the Builder-Owner of the apartment complex.  It engaged the Foram Group, Inc. to manage the apartment project, and it consulted with one Margaret Spence of Douglas Claims & Risk Consultants, Inc. about its Coverage Questions and Claims, eventually retaining Ms. Spence for her services.

   Ms. Spence was "formally retained" by the Plaintiff in September, 2009.  The Federal Magistrate Judge wrote the outlines of Work Product Qualified Immunity for certain EMails she wrote to, and received from Foram, between August 29, 2009 and September, 2009:

 During the time period prior to her retention Ms. Spence was assisting Plaintiff with understanding its rights under the insurance policies issued by the Defendants. Ms. Spence's involvement prior to her retention as an expert in the claims submission process on Plaintiff's behalf was in her role of assisting Plaintiff in its business of submitting claims and not in the role of a retained expert assisting in preparing for litigation. Once Ms. Spence was formally retained, she became a non-testifying expert and her communications with Plaintiff after that date were protected.

Id. at *3.

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Tennessee Bad Faith Statutory Failure to Pay Claims, Federal Seals.

  Tennessee Statutory "Bad Faith Refusal to Pay" Claims were recently asserted for alleged failures to settle underlying liability claims, under Section 56-7.105 (now entitled "Additional Liability Upon Insurers and Bonding Companies for Bad-Faith Failure to Pay Promptly").  (TO ACCESS THIS Michie LINK BEGIN WITH TITLE 56 "Insurance," GO TO CHAPTER 7 "Policies and Policyholders," THEN TO PART 1 "General Provisions," AND THEN TO THE STATUTORY SECTION).  These Statutory Bad Faith Claims were effectively held barred in a recent Federal case because of an Exclusion of Insurance Coverage in the first place:

    For the reasons set forth below, the Court concludes that Defendant's motion for summary judgment should be granted because the allegations and claims in the underlying action did not state claims covered under the Defendant's policy. The claims in the prior action were excluded under the failure to conform exclusion in the Defendant's policy.

Clarcor, Inc. v. Columbia Casualty Co.,  Download Clarcor, Inc. v. Columbia Casualty Co. (M.D. Tenn. Case No. 3.10.00336, Memorandum [Opinion] Filed December 16, 2010) PUBLIC ACCESS, also published as 2010 WL 5211607 *1 (M.D. Tenn. December 16, 2010).

   In addition, the Online Pacer Docket of this Federal case reflects a growing trend in many cases in Courts across the nation, namely, a willingness to shield materials filed by the parties, from public view.  This is a disturbing trend which is not limited to Bad Faith Cases nor to Federal Courts.  It appears to be difficult to reconcile the routine course of regularly granted judicial seals of materials and information, with a democracy.

Additional features of the Clarcor case are posted on Insurance Bad Faith Law Blog.

Statutory Claims based on alleged Bad Faith Failure to Settle or Pay are analyzed in § 3:25 (Third-Party or Liability Insurance) and §§ 9:14 - 9:16, by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement).  "'Bad Faith' Liability Without Coverage:  Third Party" Claims are addressed in id.,  § 3:100, and "'Bad Faith' Liability Without Coverage:  First Party" Claims are addressed in id., § 9:25.

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Deposition Costs or Sanctions: Errata and Corporate Rep. on Underwriting.

   A U.S. Magistrate Judge faced unique issues concerning Depositions, Errata Sheets and a proper Corporate Representative, in AIG Centennial Insurance Co. v. O'Neill, Download AIG Centennial Insurance co. v. O'Neill (S.D. Fla. Case No. 09.60551, U.S.M.J. Order Filed October 22, 2010) PUBLIC ACCESS, also published as 2010 WL 4363176 (S.D. Fla. U.S.M.J. Order October 22, 2010)(authorized password required to access Westlaw).

   The Insurance Coverages at issue in that case did not at first present themselves in what seemed to be a universally appealing way, it is fair to say.  "This matter arises out of an insurance dispute over a luxury yacht."  The Marine Insurance Policy at issue provided contested Property Damage Coverage "for an agreed value of $2,350,000.00, with a deductible of $47,000.00 for hull damage claims."  AIG Centennial Insurance Co. v. O'Neill, 2010 WL 4363176 at *1.

   The Policyholder retained several Experts to present the cause of loss.  AIG Centennial issued a Reservation of Rights letter and filed suit for Declaratory Judgment that there was no Coverage under its Policy, according to the Court.  Id. at *2-*3.  

   In the DJA, the Policyholder noticed the Deposition of a Corporate Representative of the Defendant to address specified Underwriting Issues.  The Defendant produced one Roethke as its Corporate Representative.  After the Corporate Rep Deposition concluded, Mr. Roethke filed an Errata Sheet which may or may not have changed his substantive testimony.  In addition, it did not appear that he was the appropriate person to testify about at least some of the specified Underwriting Issues; he said so himself.  See id. at *3.

The Issue of the Errata Sheet.  In reaching a holding on this issue, the Magistrate Judge first pointed out that there is a conflict in the case law.  Some Federal Courts allow substantive changes to be made in Deposition Errata Sheets; others do not.  The Federal Courts that do allow substantive changes to be made in Deposition Errata Sheets are reportedly of the view that there is nothing in Federal Rule of Civil Procedure 30(e)(1)(B) which prohibits them.  The Federal Courts that do not allow substantive changes to be made in Deposition Errata Sheets construe the same Rule, "narrowly," and allow "changes in substance only when the transcript evidences 'obvious confusion' ...."  Id. at *4.

   Noting that the Eleventh Circuit Court of Appeals "has not ruled directly on this issue in a binding decision," the Court in this case allowed substantive changes to be made in the Corporate Representative's Deposition Errata Sheet "[w]here, as here, the deponent timely submits changes to his deposition testimony and an opportunity remains for the court to allow the reopening of the deposition should the court deem it necessary ...."  However, the Magistrate Judge coupled costs and fees to this holding as well.  "[T]o the extent that this Court finds that a party deponent materially altered his testimony in a substantive way, this Court will require the deponent to pay the costs and fees associated with re-opening the deposition."  Id. at *5.

The issue of Costs and Fees for the Rule 30(b)(6) Underwriting Corporate Representative.   Working under a different Rule of Federal Civil Procedure, i.e., Rule 30(b)(6), the Magistrate Judge declined to assess fees and costs as sanctions in this Case.  It appears that, in this Case, the deponent was finished testifying at the end of the day anyway.  There would not likely have been much time left to also depose another Corporate Representative who might be able to address the Underwriting Issues.  Under the circumstances of this peculiar Case, the Magistrate Judge denied a Motion for Sanctions "with the understanding that [the Defendant Insurance Company] will ensure the immediate availability of ... some other suitable corporate representative prepared to testify regarding the underwriting issues."  Id. at *12.

  Dennis Wall is the Author of the leading book on Insurance Bad Faith, "Litigation and Prevention of Insurance Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement), and he has handled many Insurance Coverage and Bad Faith Cases and Catastrophe Claims.  Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010.  The author has been advised by the American Conference Institute that the ACI is continuing to offer its discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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Discovery in Bad Faith Case From Injured Claimant's Attorney.

EVERY DAY, WE HAVE MUCH FOR WHICH WE OUGHT TO GIVE THANKS!  TOMMORROW, HAVE A HAPPY THANKSGIVING!

   For various reasons, the following post is based strictly on the language of the Order at issue.

   In a Third-Party Bad Faith failure-to-settle case, the Defendant Insurance Company served a subpoena for documents upon the injured claimant's attorney.  (The attorney in question actually represented the personal representative of the estate in a wrongful death case, apparently, and all references in this post to "the injured claimant" will mean the estate in the underlying case as well).  The subpoena apparently contained five paragraphs of requests for documents, but ...

[o]nly the first request is in dispute here, that is, [the Defendant's] request that [the injured claimant's attorney] produce "all calendars, planners, appointment books and similar documents that reflect the date(s) and time(s) of meetings, conferences and/or telephone calls with [the personal representative of the wrongful death estate, i.e., the client of the subpoenaed lawyer] between [certain dates].

Thompson v. Cincinnati Insurance Co., Download Thompson v. Cincinnati Insurance Co. (N.D. Fla. Case No. 3.10cv318, Order of Magistrate Judge Filed November 9, 2010) PUBLIC ACCESS, also published as 2010 WL 4667100 *1 (N.D. Fla. November 9, 2010)(authorized password required to access Westlaw).  Note that the Federal Court online docket of this case ("Pacer") reflects that the attorney for the injured claimant filed an appeal of this Order on November 23, 2010. 

   The subpoenaed lawyer, a nonparty, objected.  In part here pertinent, the lawyer raised the Attorney-Client Privilege as a reason to reject the Insurance Company's subpoena.  Id. at *3.  The United States Magistrate Judge in this case disagreed.  The information which the Insurance Company subpoenaed, "that is, information relating to the dates and times [the injured claimant's lawyer] met, conferred, or otherwise communicated with" his client, "is clearly not protected by the attorney-client privilege, as such information does not disclose the substance of any communications" between the client and the attorney.  Id. at *5.  In addition, the Court held that the information was reasonably calculated in that case to lead to the discovery of admissible evidence.  "Thus," the injured claimant's attorney's "motion to quash will be denied."  Id.

   That was not all, however.  The Magistrate Judge further held that the injured claimant's attorney could if he chooses, but need not, comply with the Insurance Company's subpoena in this regard by producing the documentation demanded, "with appropriate redactions".  The Magistrate Judge in this case also provided an alternative way to comply with the subpoena in this regard.  The injured claimant's attorney "may provide the same information in another form, such as a typed list or other document that accurately reflects the information contained on his appointment books, calendars, and the like."  Id. 

  Dennis Wall is Author of the leading book on Insurance Bad Faith, "Litigation and Prevention of Insurance Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement), and he has handled many Bad Faith Cases and Catastrophe Claims.  Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010.  The author has been advised by the American Conference Institute that the ACI is continuing to offer its discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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In Camera Inspection by U.S. Magistrate Judge: Held, All Documents Privileged.

   The case of Carter v. Ozoeneh, Download Carter v. Ozoeneh (W.D.N.C. Case No. 3.2008cv614, Memorandum and Opinion Filed July 22, 2010) FREE ACCESS TO THIS OFFICIAL REPORT also published as 2010 WL 2889582 (W.D.N.C. July 22, 2010)(Westlaw subscription required to access Westlaw) is unique.  At least, it is not in the garden variety of most Federal Cases that is certain.

   Plaintiff Ronald Carter sued over a patent.  He claimed to be the sole inventor of certain technology involved in the patent.  He and his corporation sued his lawyers, the Clements Walker Law Firm, and various persons (apparently almost all but not quite all of whom are lawyers who represented him regarding the patent), for alleged malpractice in connection with the patent.  It is confusing, but apparently there is another Defendant, one Emmanuel Ozoeneh, who may have been "either the sole inventor or co-inventor of the invention."  It is clear, however, that Lawyers Mutual Liability Insurance Company of North Carolina issued a Professional Liability Insurance Policy to the Defendant Law Firm and a separate such Policy to one of the individual Defendants (not Mr. Ozoeneh).  Carter v. Ozoeneh, 2010 WL 2889582 at *1.

   Mr. Ozoeneh had a difficult time obtaining defense counsel.  Lawyers Mutual undertook to pay Mr. Ozoeneh's legal fees "through summary judgment".  Id.  When Plaintiffs found out about this arrangement, they filed an Amended Complaint "asserting state law claims against Lawyers Mutual for tortious interference with contract, maintenance, and unfair and deceptive trade practices.  Plaintiffs also allege bad faith, malice, and officious intermeddling by Lawyers Mutual."  Id. at *2.

   Thereafter, the Plaintiffs propounded Interrogatories and Requests for Production, the nature of which is not entirely clear from the Magistrate Judge's Opinion, and the Defendant Lawyers Mutual responded and produced privilege logs as to certain withheld materials, the identity or description of which is not entirely clear, either.  However, it is clear that at least some of the withheld materials were delivered to the Magistrate Judge for an In Camera Inspection.   Id. at *2-*3.  The Magistrate Judge held that all of the materials inspected In Camera are privileged from discovery and do not need to be made available to the Plaintiffs.  Some of the items are protected by the Attorney-Client Privilege, and two items -- one an attached Memorandum and the other an Expert Witness's Invoice -- are protected from discovery as Work Product, the Court held.  Id. at *3.

The results in decided cases with reported In Camera Inspections of contested discovery materials are addressed by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" throughout Chapter 8, "Discovery From Insurers Concerning Their Handling of Third-Party Claims," and Chapter 12 concerning "Discovery From Insurers" in First Party Cases (Shepard's/McGraw-Hill First Edition, West Publishing Company Second Edition and 2010 Supplement).

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Privileged EMail? Court Decides How to Determine For Discovery.

   The Courts face some problems with discovery of "EMail Strings".  Everyone is familiar with them.  They are strings of EMail upon EMail text, each repeated with each "Reply" in the same string.  One of the problems Courts face with EMail Strings is how to determine which if any texts are privileged and which are not.

   Specifically, suppose one EMail text is privileged.  When a person clicks on "Reply To All" and sends the Reply EMail to other people besides the author of the privileged EMail, can the original EMail still be privileged, or not?

  One Court recently supplied its answer to this question, in an Order entered by a Magistrate Judge:  Look at who sent and received the most recent EMail in the string.  "Thus, whether the text repeated in an email string remains privileged is determined by analysis of the most recent email."  Continental Casualty Co. v. St. Paul Surplus Lines Insurance Co., Download Continental Casualty Co. v. St. Paul Surplus Lines Insurance Co. (E.D. Cal. Case No. 2-07-1744, Magistrate Judge Opinion Filed March 30, 2010) also published as 265 F.R.D. 510, 517 n.9, 2010 WL 1266926 *4 n.9 (E.D. Cal. March 30, 2010).

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Subpoenas Gone Wild? Not.

    A subpoena must be tailored to the issues or the subject-matter of the litigation.  Thus, in Nicholas v. Oklahoma Farm Bureau Mutual Insurance Co., Download Nicholas v. Oklahoma Farm Bureau Mutual Insurance Co. (W.D. Okla. Case No. CIV 09.10, Opinion Filed March 10, 2010) also published as 2010 WL 916001 *4 (W.D. Okla. March 10, 2010)(Westlaw subscription required to access Westlaw), a Homeowner's Insurance Company's subpoena served upon another Homeowner's Insurance Company was quashed where the subpoena duces tecum was not limited to other claims involving the subject-matter of the Bad Faith litigation at bar, i.e., the subpoena duces tecum was overbroad and quashed because it was not limited to claims for damages to the roof which was the subject of the pending litigation.

   The Online Docket of this case reflects that a Joint Stipulation For Dismissal With Prejudice was filed on May 19, 2010 and that an Order of Dismissal With Prejudice was filed the next day, May 20, 2010.

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Discovery Request by Insurance Company Compelled in Hurricane Damages Case.

  In the case of Abdin v. American Security Insurance Co., Download Abdin v. American Security Insurance Co. (S.D. Fla. Case No. 09.81456, Opinion Filed March 29, 2010) also published as 2010 WL 1257702 *2 (S.D. Fla. March 29, 2010), the Federal Court was confronted with an Insurance Coverage Claim for Hurricane Damage under a Homeowner's or other Property Insurance Policy (it is not clear which type of Policy was at issue, nor does that fact make any difference really to the holding mentioned in this post at this time).  The Federal Court ordered that the Policyholder-Plaintiff had to respond to the following Request for Production of documents and tangible things which was served by the Insurance Company in that case:

All original documents, including but not limited to receipts, cancelled checks or any other documents which evidence any repairs to the insured property at any time since you have owned it.  This request includes, but is not limited to, all documents and records evidencing the repairs to the insured property subsequent to the September 4, 2004, and July 18, 2008 losses.  This request contemplates the original invoices from contractor.

   The requested documentation, in the view of the Court in this case, "are necessary for Defendant to understand the scope of the damages claimed and to aid in the determination of whether the repairs and damages claimed are related to Hurricane Frances.  Plaintiff is instructed to respond to this discovery request." 

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AIG - Federal Reserve New York Discovery and Decision UPDATE.

   We have been told repeatedly that current U.S. Treasury Secretary Timothy Geithner recused himself from all discussions about the New York Branch of the Federal Reserve bailing out AIG with Federal Taxpayer Money.  At the time, Mr. Geithner was the head of the Federal Reserve Branch in New York and he had just been nominated to become the new Treasury Secretary.

   EMails and other documents have recently been released by the New York Fed to the House Oversight and Government Reform Committee in response to a subpoena.  The discovery apparently shows that  Mr. Geithner made the final decision to bail out AIG in the way in which AIG was bailed.  Specifically, it was Mr. Geithner who decided to make AIG's trading partners "whole" by paying them 100 cents on the Dollar on AIG's Credit Default Swaps and other securitized obligations which amounted to unregulated Credit Insurance issued by AIG.  At the time, AIG's CDS's and similar securities contracts "were being settled at heavy discounts in other deals where the government was not involved."   See Louise Story and Gretchen Morgenson, "A Rift at the Fed Over the Bailout of A.I.G." p. B1, col. 2 (New York Times Nat'l ed., "Business Day" Section, Saturday, January 23, 2010).  See also Hugh Son, "Fed E-Mail to Geithner Cites Bank Benefit From AIG (Update 1)" (Bloomberg.com, Monday, January 25, 2010).

   It is of interest to note another report that "on the day of the bailout of American International Group Inc.," Mr. Geithner's telephone logs show that he spoke with Warren Buffett of Berkshire Hathaway, Jamie Dimon of JP Morgan Chase, and Lloyd Blankfein of Goldman Sachs.  Hugh Son and Jamie McGee, "Geithner Spoke to Buffett, Blankfein on AIG Aid Day (Update 2)" (Bloomberg.com, Friday, January 22, 2009).

   It is also worth noting that, while there were others unknown--unknown at least partly because Mr. Geithner decided to keep their identities a secret, it is known that Goldman Sachs was one of the partners of AIG which received 100 cents of every dollar insured under the securities contracts issued to it by AIG.

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Disclosure of Insurance Policy in Discovery: Non-disclosure Draws Sanctions.

   In a recent Bad Faith case, a Louisiana Appellate Court affirmed a Trial Judge's assessment of sanctions against an Insurance Company which failed to provide an Insurance Policies in discovery in one lawsuit, which it had issued to a Policyholder-Defendant in what was apparently a separate lawsuit.  The Trial Judge found that the Insurance Company was aware of the Policies it had issued to the Policyholder which was sued in the separate lawsuit, if only because the Insurance Company was defending that Policyholder in the separate lawsuit.  Download Dufrene v. Gauthreau Family LLC (La. Ct. App. Opinion Filed November 10, 2009), at *3:

Based on our review of the record, we cannot say that the trial court was manifestly erroneous in its determination that Lafayette's conduct in failing to reveal the insurance policies it issued to Gulf South in response to discovery warranted sanctions.

 

Possible consequences of not producing Liability Insurance Policies are discussed in Dennis J. Wall, "Litigation and Prevention of  Insurer Bad Faith" § 8.03 (Second Edition, Shepard's/McGraw-Hill, 2009 Supplement West Publishing Company).

 

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Expert Witness Protected From Discovery Intimidation in Insurance Case.

   "This case presents issues of first impression regarding the proper scope of discovery into an expert witness's purported bias."  Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), attached official Slipsheet Opinion Paragraph 1.  In that case, a Policyholder-Insured sued her UM/UIM Carrier for breach of contract and alleged Bad Faith.  She caused a subpoena duces tecum to be issued on the Defendant Insurance Company's physician-Expert Witness.  She also claimed that the doctor was biased in favor of the Insurance Company and against her.  The subpoena served upon the Expert Witness in that case demanded that the doctor "produce extensive documentation."  Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), Paragraph 6.

   The Plaintiff-Policyholder had not yet deposed the Expert in that case.  The Arizona Appellate Court also pointed out that in that case, the Plaintiff had not made an attempt to obtain "bias-related information" from the Expert other than by serving him with the Subpoena Duces Tecum at issue.  The Plaintiff's announced purpose of this discovery, the Appellate Court recalled, was in fact to obtain "bias-related information".  Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), paragraph 19.  The Trial Court ordered the Expert to provide the "extensive documentation" demanded by the Plaintiff's Subpoena.  It included financial information and other documentation that went far beyond the discovery and reporting requirements imposed on Expert Witnesses under the Rules of Civil Procedure.

   In fact, the Trial Court's Order greatly expanded the timeframe for which the Plaintiff-Policyholder's Subpoena demanded that the Expert produce documents.  "For reasons not explained by the record, the court instead ordered Dr. Zoltan to produce documentation 'for the period of five years preceding the date of the accident to the present," or for the period of nine (9) years before the appellate decision.  Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), paragraph 17.

   In addition, the Expert Witness in that case acknowledged that he was subject to being deposed, that he would be filing a Report, and that in short he had to meet the discovery and reporting burdens imposed on Experts under the  Rules of Civil Procedure.  Nothing in the record indicated that the Expert was reluctant to meet or resistant to these burdens.  Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), Paragraph 27.

   The Arizona Court of Appeals vacated the Trial Court's Order compelling the subpoenaed production from this Witness, and remanded after stating this holding:

   We vacate the challenged portions of the superior court's discovery order and remand this matter for further proceedings consistent with this opinion, including an assessment of whether Allo [the Policyholder-insured] has explored less intrusive discovery and, if so, whether she can demonstrate good cause for more expanded inquiries.  The [trial] court shall also impose a more reasonable time frame for any disclosures ordered on remand.

Download American Family Mut. Ins. Co. v. Hon. Larry Grant (Ariz. Ct. App., Div. One, Opinion Filed October 8, 2009), Paragraph 30.

Expert Witnesses in Insurance Cases are examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Second Edition Shepard's/McGraw-Hill, 2009 Supplement West Publishing Company), particularly §§ 8:17, 9:6, and 12:18 among many others.  A related post concerning this new decision was published yesterday on Insurance Claims and Bad Faith Law Blog.

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