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Homeland Insurance Company of New York v. Goldstein

United States District Court, District of Wyoming

April 4, 2019

HOMELAND INSURANCE COMPANY OF NEW YORK, Plaintiff,
v.
SCOTT J. GOLDSTEIN, on behalf of Powell Valley Healthcare Inc, Defendant, AND SCOTT J. GOLDSTEIN, on behalf of Powell Valley Healthcare Inc, Counter-Claimant,
v.
HOMELAND INSURANCE COMPANY OF NEW YORK and LEXINGTON INSURANCE COMPANY, Counter-Defendants.

          ORDER ON DEFENDANT'S MOTION TO COMPEL

          Mark L.Carman United States Magistrate Judge.

         This matter comes before this Court upon Defendant's Motion to Compel [Doc. 121]. Plaintiff Homeland Insurance Company of New York ("Homeland") brought the underlying case seeking a declaratory judgment as to its obligations under the insurance policy it issued to Defendant Powell Valley Healthcare ("Powell")[1] [Doc. 1 p. 2]. During the period in which Homeland insured Powell, Powell was sued multiple times for negligent care provided by its Dr. Jeffrey Hansen ("Dr. Hansen"). Id. In January 2016, the case was bifurcated, with the first phase addressing the insurance coverage's scope and the second phase, if necessary, addressing bad faith [Doc. 57]. The facts of this case are complex and extensive and will not be set out herein. For purposes of this motion it is only significant that a dispute exists as to the applicability of the Homeland policy to certain malpractice claims related to Dr. Hansen which arose during the period of coverage for the Homeland policy.

         Powell now moves to compel all underwriting files related to Homeland's Powell policy and the identity of those who drafted and underwrote it [Doc. 122]. In addition, Powell seeks the production of a privilege log identifying what specific underwriting documents Homeland is withholding. Id. The disputed requests are contained in Interrogatories 4 and 11, and Requests for Production 3, 9, 14, 16, and 22 [Doc. 123-1]. Homeland has refused to produce these documents and information, arguing Powell's requests are irrelevant to the first phase claims and that some of Powell's requests are not properly before the Court [Doc. 123].

         A. Standard of Review

The Federal Rules of Civil Procedure allow parties to
obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, 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

Fed.R.Civ.P. 26(b)(1).

         Whether to permit discovery is "entrusted to the sound discretion of the trial courts." Punt v. Kelly Servs., 862 F.3d 1040, 1047 (10th Cir. 2017) (internal quotation marks omitted). If a discovery request appears facially relevant, the burden is on the "resisting party to establish the request is not relevant by showing the request (1) does not come within the scope of relevance as defined under Fed.R.Civ.P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad discovery." Sinclair Wyoming Ref. Co. v. A&B Builders, Ltd., 2017 WL 10309306, at *5 (D. Wyo. Oct. 31, 2017) (internal quotation marks omitted). Because this Court has diversity jurisdiction, Wyoming law applies to the underlying substantive issues. Sanchez v. Home Depot, Inc., 2014 WL 2986672, at *2(D. Wyo. July 2, 2014).

         B. Meet & Confer Requirements

         Homeland claims Powell never conferred with them on their objections regarding Requests for Production ("RFPs") 14, 16 and 22 [Doc. 123 pp. 2-3]. According to Homeland, those RFPs were contained in Powell's second set of requests and were not discussed before filing this motion. Id. Powell has not challenged Homeland's characterization that the parties never conferred on Powell's objections to RFPs 14, 16, and 22.

         This Court "will not entertain any motions relating to discovery disputes unless counsel for the moving party has first conferred." U.S.D.C.L.R. 37.1(b). Thus, the issue is not yet properly before this Court, and the Court will only consider Interrogatories 4 and 11, and Requests for Production 3 and 9. Should a dispute remain as to RFPs 14, 16 and 22, the parties are welcome to raise the issue at a telephonic status conference to the degree the objections are not resolved by this order.

         C. Discovery

         In determining the appropriate scope of discovery under the current Rule 26(b)(1) the court must determine: (1) is the information privileged; (2) is it relevant to a claim or defense; and (3) is it proportional to the needs of the case. Gordon v. T.G.R. Logistics, Inc., 321 F.R.D. 401, 402 (D. Wyo. 2017). Powell seeks the underwriting files related to Homeland's Powell policy and the identify of those who drafted and underwrote it [Doc. 122]. This information, which would elucidate the process by which Homeland prepared its Powell policy, is characterized by Powell as "critical to the coverage determinations and policy provisions at issue." Id. at 8. Homeland further claims these requests "may also be relevant to equitable considerations, such as estoppel" and "may support reformation of the policy to reflect the parties' intent pre-inception.,, Id. Finally, Powell believes that identifying the employees directly involved in formulating the Homeland policy, and identifying their notes and communications "may assist in determining whether there is an ambiguity... may also contain information regarding the interpretation and constructions of the policy... may bear on ambiguity of the policy, the parties* intent for coverage, and may support equitable relief." Id. at 8-10.

         Powell cites numerous cases in which courts ordered the production of underwriting files in similar circumstances [Doc. 122 pp. 9-10]. However, every case cited relies on a previous version of Rule 26 that allowed for an arguably broader definition of relevancy - that requested discovery was "reasonably calculated to lead to the discovery of admissible evidence." In 2015, Rule 26.1 was amended, dropping the "reasonably calculated" language in favor of "relevant to any party's claim or defense and proportional to the needs of the case." Fed.R.Civ.P. 26, Adv. Comm. Notes, 2015 ...


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