Med. Protective Co. of Fort Wayne v. Am. Int'l Specialty Lines Ins. Co.

THE MEDICAL PROTECTIVE COMPANY OF FORT WAYNE, INDIANA, Plaintiff, v. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY, Defendant.

CAUSE NO. 1:13-CV-00357

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA FORT WAYNE DIVISION

October 6, 2014

OPINION AND ORDER

Before the Court in this breach of contract action are two motions to compel: one filed by Defendant American International Speciality Lines Insurance Company ("AISLIC") (Docket # 24), and the other by Plaintiff The Medical Protective Company of Fort Wayne, Indiana ("MedPro") (Docket # 29). The motions are now fully briefed and ripe for ruling. (Docket 25, 30-36.)

For the following reasons, AISLIC's motion will be GRANTED, and MedPro's motion will be DENIED.

A. Factual and Procedural Background

On December 23, 2013, MedPro, a healthcare and dental malpractice insurance provider, filed this action against AISLIC, an insurer who issued MedPro a professional liability policy,¹ alleging that AISLIC breached the policy when it refused to cover a bad faith claim broughtagainst MedPro in Texas.² (Docket # 1.)

The Court held a preliminary pretrial conference in this matter on March 28, 2014, and set a discovery deadline of October 31, 2014. (Docket # 21.) This deadline was later extended to December 31, 2014. (Docket # 27.)

As to the instant discovery dispute, AISLIC asked in its first set of requests for production of documents that MedPro produce all documents relating to MedPro's handling of both the malpractice claim against its insured doctor and the later bad faith claim asserted against it directly by the Bramletts. (Hafner Decl. Ex. A.) MedPro, however, objects to producing any documents in its claim file for the malpractice claim generated after June 30, 2005-when the AISLIC professional liability insurance coverage commenced-claiming they are not relevant to AISLIC's coverage defenses and as such, their production would be unduly burdensome. (Id. at Ex. B; Pl.'s Resp. Br. 5, 9.)

Turning to MedPro's motion, it asked in its first set of discovery requests that AISLIC produce its "entire claim file (subject only to claims of privilege) and to produce a corporate designee to testify about the contents of that file." (Pl.'s Mem. in Supp. 1.) MedPro explains that the claim file is "where AISLIC in the ordinary course of business recorded the factual investigation and decision-making behind its denial of coverage." (Id.) AISLIC objects to thisdiscovery request, asserting that because the sole matter in this dispute is whether MedPro is entitled to coverage under the professional liability insurance policy, AISLIC's knowledge and conduct are irrelevant. (AISLIC's Mem. in Opp'n 1-2.)

B. Standard on a Motion to Compel Discovery

Federal Rule of Civil Procedure 26(b)(1) permits discovery into "any nonprivileged matter that is relevant to any party's claim or defense . . . ." For the purpose of discovery, relevancy will be construed broadly to encompass "any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case." Chavez v. DaimlerChrysler, 206 F.R.D. 615, 619 (S.D. Ind. 2002) (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)); see Fed. R. Civ. P. 26(b)(1) ("Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence."). "When the discovery sought appears relevant, the party resisting the discovery has the burden to establish the lack of relevance by demonstrating that the requested discovery is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure." Chavez, 206 F.R.D. at 619.

C. Discussion

1. AISLIC's Motion to Compel

MedPro argues that AISLIC's request for all documents relating to MedPro's handling of both the malpractice claim and the bad faith claim is overly broad. More pointedly, MedPro points to the affirmative defenses pled by AISLIC, asserting that "the coverage issues in this case turn on the facts and circumstances existing, and known, to MedPro as of June 30, 2005,"making documents generated after that date irrelevant. (Pl.'s Resp. Br. 2.)

AISLIC is asserting the following affirmative defenses: (1) the Bramlett malpractice claim was made against MedPro prior to the July 1, 2006, to July 1, 2007, policy period; (2) MedPro knew or could have reasonably foreseen before June 30, 2005, that MedPro had committed a wrongful act (i.e., that it failed to settle the Bramlett malpractice claim within the policy limits) that would lead to a claim or suit; and (3) the "known loss" doctrine precludes coverage, as MedPro was "substantially certain" on or before July 1, 2006, that there would be a claim made against it for its handling of the Bramlett malpractice claim. (AISLIC's Mem. in Supp. 3-4.)

In light of AISLIC's affirmative defenses, the start date of MedPro's professional liability policy, June 30, 2005, does appear significant to this litigation.³ But MedPro's blanket assertion-that all documents generated after that date are irrelevant-is untenable. "The relevant time period for which a party may be required to search for and produce documents depends on the facts and circumstances of the particular case. The date by which a [party's] allegedly wrongful conduct was complete does not necessarily preclude discovery of information or documents created after that date." Soffer v. Five Mile Capital Partners, LLC, No. 2:12-cv-01407, 2013 WL 4499011, at *3 (D. Nev. Aug. 19, 2013). "Documents that post-date the transactions may nevertheless relate back to the state of affairs as it existed at the crucial time." Assured Guar. Mun. Corp. v. UBS Real Estate Sec., Inc., No. 12 Civ. 1579, 2012 WL 5927379, at *1 (S.D.N.Y. Nov. 21, 2012).

Here, MedPro's complaint puts at issue documents generated after June 30, 2005. That is, MedPro is seeking coverage under the AISLIC renewal policy period of July 1, 2006 to July 1, 2007. And AISLIC's "known loss" defense places MedPro's knowledge as of July 1, 2006, the policy renewal date, at issue. Also, the Bramlett settlement for which MedPro seeks indemnification was the result of the bad faith claim litigated from 2009 to 2013; documents relating to that action would presumably speak to MedPro's conduct and knowledge during its handling of the malpractice claim in 2003 and 2004. See Kidder, Peabody & Co. v. IAG Int'l Acceptance Grp., N.V., No. 94 Civ. 4725, 1997 WL 272405, at *5 (S.D.N.Y. May 21, 1997) ("The relevant question with respect to documents prepared or communications occurring after August 10, 1994 is not the date thereof, but whether or not that document or communication contains information that is relevant to the actions [plaintiff] took prior thereto." (emphasis in original)). Accordingly, MedPro's objections based on relevancy are overruled, as documents generated after June 30, 2005, that are responsive to AISLIC's discovery requests appear "reasonably calculated to lead to the discovery of admissible evidence." Fed. R. Civ. P. 26(b)(1).

MedPro's objections on grounds of undue burden fare no better. In that regard, MedPro urges that the burden of producing this "voluminous amount" of documents, which would need to be reviewed for privilege, outweighs their "neglible relevance. " (Pl.'s Resp. Br. 9.) But "[g]eneral and conclusory objections as to . . . burden are insufficient to exclude discovery of requested information." Assured Guar. Mun. Corp., 2012 WL 5927379, at *2 (alternation in original). "[I]f a party is to resist discovery as unduly burdensome, it must adequately demonstrate the nature and extent of the claimed burden by making a specific showing as to how disclosure of the requested documents and information would be particularly burdensome."Boyer v. Gildea, No. 1:05-cv-129, 2008 WL 4911267, at *4 (N.D. Ind. Nov. 13, 2008) (citations and internal quotation marks omitted). Here, MedPro fails to make a specific showing of undue burden, instead advancing merely a conclusory objection.

Nor is MedPro's argument that many of these documents are already in AISLIC's (or its coverage counsel's) possession effective. "[I]t is not a proper objection to discovery to suggest that the other party already has the information or that it is available elsewhere." Jones v. Chase Manhattan Bank USA, NA, No 1:07-cv-58, 2007 WL 3286854, at *2 (N.D. Ind. Nov. 5, 2007); see Ragan v. Jeffboat, LLC, 149 F. Supp. 2d 1053, 1061 (S.D. Ind. 2001) (finding the fact that defendant produced the document to the EEOC and that plaintiff could have gotten the document from the EEOC irrelevant to plaintiff's discovery request for the document).

To reiterate, MedPro's responsive documents dated after June 30, 2005 are reasonably calculated to lead to the discovery of admissible evidence, and MedPro has failed to show that the burden of producing them outweighs their relevancy. Consequently, "it is clear that the truthseeking function will best be served by granting the motion." Boyer, 2008 WL 4911267, at *6 (citation omitted). Accordingly, AISLIC's motion to compel will be GRANTED.

2. MedPro's Motion to Compel

MedPro asks in its motion that the Court compel AISLIC to produce its entire "'claim file,' where AISLIC in the ordinary course of business recorded the factual investigation and decision-making behind its denial of coverage," and also produce a Rule 30(b)(6) representative to testify about the contents of the file. (Pl.'s Mem. in Supp. 1.) In making this request, MedPro explains that it seeks to discover "the factual basis for AISLIC's decision to deny coverage" of the bad faith claim brought against MedPro by the Bramletts. (Id.)

AISLIC, however, argues that its claim file is not relevant because this dispute solely involves whether MedPro is entitled to coverage under the policy. AISLIC asserts that its affirmative defenses place MedPro's knowledge and...