Youell v. Grimes

Full title: JOHN RICHARD LUDBROOKE YOUELL, Plaintiff, v. CYNTHIA GRIMES, et al.…

Court: United States District Court, D. Kansas

Date published: Apr 13, 2001

CIVIL ACTION No. 00-2207-JWL (D. Kan. Apr. 13, 2001)

Opinion

CIVIL ACTION No. 00-2207-JWL

April 13, 2001

MEMORANDUM AND ORDER

WAXSE DAVID J., Magistrate Judge

This matter is before the Court on the following motions filed by Defendants: (1) Motion for I Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Counterclaim (doc. 66); (2) Motion for Order Fixing Cash Deposit of Unauthorized Insurer (doc. 53); and (3) Motion Requesting Clarification of Withdrawal of Reference and Consolidation (doc. 54).

I. Defendants' Motion for Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Counterclaim (Doc. 66)

A. Background Information

This action arises out of a controversy between the parties regarding the availability of insurance coverage under a Certificate of Insurance ("Certificate") issued by certain underwriters ("Underwriters") at Lloyd's, London ("Lloyd's) to Defendant Stoico Restaurant Group, Inc. ("SRG") and its officers and directors. Plaintiff Richard Ludbrooke Youell ("Youell") brings this action seeking declaratory relief on behalf of himself and the other Underwriters.

Before further explaining the instant lawsuit, the Court finds its would be helpful to describe the rather unique structure of Lloyd's. The Third Circuit in Chemical Leaman Tank Lines v. Aetna Cas. and Sur. Co., 177 F.3d 210 (3d Cir. 1999) describes Lloyd's as follows. Lloyd's is an association that provides the physical premises and the administrative services and staff to enable insurance underwriters to carry on their business. Id. Lloyd's is not an insurance company but rather an insurance market, where various individuals or groups bid on the right to insure a given risk. Id. Lloyd's takes no part in the business of underwriting; policies are underwritten at Lloyd's and not by Lloyd's." Id (emphasis added).

Individuals who meet certain requirements are allowed to join the market and allowed to underwrite risks in the market. Id. The individuals are referred to as members, underwriters, or "Names." Id. The various members, underwriters, or Names form groups called "Syndicates." Id. See also Declaration of David Shears, ¶ 5, Ex. A. to Plaintiff's Objection to Defendants' Motion for Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Defendants' Counterclaim (doc. 70) ("Shears Declaration"). Certain Names become liable on a given risk. Id., ¶ 4. The individual Names, and not the Syndicates, assume the liability underlying each risk underwritten. Id., ¶ 5. Each individual Name subscribing to a particular risk is personally liable to the extent of the percentage share I of the risk he/she has assumed. Id., ¶ 6.

Youell is a Name belonging to Syndicate No. 79 and is the "Active Underwriter" for that Syndicate. Id., ¶ 11. Syndicate No. 79 is the "Lead Underwriter" to the Certificate. Id. As "Active Underwriter," Youell is authorized to underwrite risks on behalf of himself and the other Names within his Syndicate. Id., ¶ 9. In addition, he has the power to sue for and bind the other Names subscribing to the Certificate. Id., ¶ 16.

The Certificate is a Directors and Officers and Company Reimbursement Indemnity Certificate ("Certificate"). See Exhibit A to Shears Declaration. The Certificate contains a "Cooperation Clause" that requires the "Assureds" (SRG and its officers and directors) to provide the Underwriters with information, assistance, and cooperation as reasonably requested by the Underwriters. Id.; Clause IX of the Certificate. The Cooperation Clause also requires the Assureds to refrain from taking any action that would increase the Underwriters' exposure under the Certificate. Id.

In 1997, a lawsuit was filed against SRG and its officers and directors by Billy and Grace Balee and Ashok Shah (the "Balee Lawsuit"),¹ on behalf of themselves and a class of shareholders who purchased SRG common stock in an initial public offering in 1996. The Balee Lawsuit alleged that SRG and its officers and directors had committed securities fraud in connection with the initial public offering. Prior to resolving the Balee Lawsuit, SRG filed for relief under Chapter 11 of the Bankruptcy Code. Defendant Cynthia Grimes was appointed as Designated Representative of SRG, and the Bankruptcy Court issued an order confirming SRG's Amended Plan of Reorganization.

1 The Balee Lawsuit, which was originally filed in state court, was removed to this Court and is presently pending. See Case No. 00-1186-MLB.

In the instant lawsuit, Youell alleges that Defendants breached the requirements of the Cooperation Clause by filing an answer in the Balee Lawsuit admitting all of the essential allegations of the Balee complaint and by failing to assert any defenses. Amended Complaint for Declaratory Relief (doc. 43), ¶ l. Youell claims that as a result of Defendants' actions, the Balee plaintiffs increased their settlement demand. This in turn caused Defendants to demand that the Underwriters consent to settling the Balee Lawsuit for $1.7 million. Id., ¶¶ 39-40.

Youell seeks declaratory relief on behalf of himself and the other Underwriters on the Certificate. Id., Introductory Paragraph at p. 1 and ¶ 2. He seeks a judicial declaration that SRG, through its Designated Representative, Defendant Cynthia Grimes, breached the Cooperation Clause of the Certificate, thereby precluding any coverage for, or monetary payment to, Grimes and SRG in connection with the Balee Lawsuit, including payment of any defense costs, any judgment to be entered in the Balee Lawsuit, and any settlement of the Balee Lawsuit. Id., ¶ 44. Alternatively, Youell seeks a judicial declaration that the Certificate's "Assured vs. Assured" exclusion excludes coverage for that part of the Balee Lawsuit which was brought on behalf of, or at the direction of, SRG against its own directors and officers. Id., ¶ l.

On November 12, 2000, Defendants filed an answer to Plaintiff's Amended Complaint for Declaratory Relief (doc. 50) and, for the first time, asserted a counterclaim against "Syndicate No. 79 of Lloyd's, London and each of its Participating Members."² Doc. 50 at p. 20. Neither Syndicate No. 79 nor its Participating Members (with the exception of Youell) were parties to the lawsuit at the time the Counterclaim was filed. Defendants have yet to serve the Counterclaim on the Syndicate or any of its Participating Members (with the exception of Youell).

2 While Defendants use the term "Participating Members" to refer to the individual Underwriters in Syndicate No. 79 who have subscribed to the Certificate, Youell uses the term "Names" to describe I these individuals. Youell does not indicate that the "Participating Members" are any different from the "Names," and, thus, the Court will use the terms synonymously.

At a hearing before the undersigned Magistrate Judge on November 8, 2000, Youell brought to the Court's attention the fact that Defendants had filed a counterclaim against new parties without

obtaining leave of court to do so. The Court ordered Defendants to file a motion for leave to add parties within seven days. Defendants subsequently filed the instant Motion for Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Counterclaim.

Defendants' Counterclaim seeks declaratory relief. Among, other things, it seeks a declaration that (1) the Certificate affords coverage to SRG for the claims asserted in the Balee Lawsuit; (2) no exclusion bars coverage for the claims asserted in the Bale Lawsuit; and (3) Defendants have not breached any provision of the Certificate. Counterclaim (doc. 50), ¶ 12. Defendants also seek their attorney fees pursuant to K.S. A. 40-256. Id.

B. The Parties' Arguments

Defendants have filed no supporting memorandum and only a short motion.³ In their motion, Defendants argue, without any legal support, that Syndicate No. 79 and its Participating Members are "opposing parties" within the meaning of Fed.R.Civ.P. 13, and, thus, leave of court should not be required to assert a counterclaim against them. They argue alternatively that if the Syndicate and its Participating Members are not deemed opposing parties. Defendants should be granted leave to name them as parties to the Counterclaim. Defendants do not explain why they should be granted leave to join the Syndicate or its Members nor do they provide any legal analysis of these issues. They do assert that the Certificate is an agreement between Syndicate No. 79 and SRG, but do not support that contention with any evidence.

3 Defendants fail to attach to their motion either an original or copy of their proposed counterclaim. The Court will overlook this failure to do so given that Defendants have actually filed the Counterclaim, which gives the Court notice of the claims they wish to assert against Syndicate No. 79 and the Participating Members. The Court does not, however, condone Defendants' filing of the Counterclaim against new parties without first filing a motion to obtain leave to add new parties, as required by Paragraph "g" of the Court's August 23, 2000 Scheduling Order (doc. 20).

Youell opposes Defendants' motion,⁴ arguing that Syndicate No. 79 and its Participating Members are not "opposing parties" under Rule 13 because they are not already parties to this lawsuit. i.e., not named plaintiffs. Furthermore, Youell argues that there is no justifiable reason for adding hundreds of Participating Members or "Names" on the Certificate to this lawsuit. He explains that under Clause XII of the Certificate, when a lawsuit is instituted against any one Name on the Certificate, all of the Names are bound by the final decision of the Court. Specifically, Clause XII states: "[I]n such suit instituted against any one of the Underwriters upon this Certificate Underwriters will abide by the final decision of such court or of any appellate court in the event of an appeal." Clause XII, Certificate. See also Shears Declaration, ¶ 16 ("[I]n his capacity as a Name belonging to Syndicate No. 79 . . . Youell has the power . . . to bind the other Names subscribing to the Certificate.").

4 Youell does not at this time oppose the filing of the Counterclaim against himself. He only opposes the motion to the extent it seeks to add the other Participating Members of Syndicate No. 79 and the Syndicate. The Court notes, however, that Youell did file a Rule 12(b)(6) motion to dismiss the Counterclaim, but on grounds unrelated to the present motion. Judge Lungstrum denied the motion to dismiss on February 19, 2001 (sec doc. 100), and Youell has filed an individual answer to the Counterclaim

Youell also argues that Defendants should not be allowed to assert a counterclaim against Syndicate No. 79 because it is the Names subscribing to the Certificate and not the Syndicates that assume the legal liability underlying each risk underwritten. See id., ¶ 5 ("THE INDIVIDUAL Names, I not the syndicates, assume the liability underlying each risk underwritten."). Additionally, Youell states that Syndicate No. 79 is not even a party to the Certificate, and Defendants are simply wrong when they assert that the insurance agreement is between the Syndicate and SRG. See id., ¶ 6 (the holders of the policies "enter into contractual relations with each specific Name who has been subscribed to the policy"); Certificate at p. 1 (`THIS INSURANCE is effected with certain Underwriters at Lloyd's, London. . . .); Id. at p. 4 ("In consideration of the payment of the premium, in reliance on the statements in the Application and subject to all of the provisions of this Certificate, Underwriters and the Assureds agree as follows:") (emphasis added).

Finally, Youell asserts that Defendants are prohibited from suing Syndicate No. 79 because it is not a legal entity.

C. Analysis

1. Are Syndicate No. 79 and its Participating Members "opposing parties" for purposes or Rule 13?

The Court agrees with Youell that Syndicate No. 79 and its Participating Members are not "opposing parties" for purposes of either Fed.R.Civ.P. 13(a) or (b), as they are not already parties to the lawsuit. Subsections (a) and (b) of Rule 13 allow a party to state as a counterclaim "any claim which at the time of serving the pleading the pleader has against any opposing party" Fed.R.Civ.P. 13(a) and (b) (emphasis added). The term "opposing party" refers only to a person or entity that is already a party in the action when the counterclaim is asserted. Bank of Vermont v. Lyndonville Sav. Bank Trust Co., 906 F. Supp. 221, 228 (D. Vt. 1995); Leon Tempelsman Son v. TECC Corp., 107 F.R.D. 384, 385 (N.D. Tex. 1985). See also Charles Wright, Arthur Miller, and Mary Kane, Federal Practice and Procedure 2d, § 1404 at 24 ("[O]ne important factor [in determining whether parties are opposing parties for purposes of Rule 13] is whether the party against whom the counterclaim is asserted is actually a party to the action/').

It is undisputed that Youell and Defendants were the only parties to this action when the Counterclaim was filed. The fact that Youell brings this action on behalf of the other Names who subscribe to the Certificate does not render the Syndicate or its other Names parties to the action. The Court is not aware of any case law that would support such an argument,⁵ and Defendants have not directed the Court to any such law. The Court therefore holds that neither the Syndicate nor its Participating Members (with the exception of Youell, who is the named Plaintiff) are "opposing parties" within the meaning of Rule 13. It therefore follows that leave of court must be granted before a counterclaim may be asserted against them.

5 In fact, case law would tend to point to the opposite conclusion. A number of cases have addressed the "opposing party issue" in cases where the plaintiff sues in one capacity and the defendant asserts a counterclaim against him in another capacity. Those cases have held that the counterclaim may not be brought against the plaintiff in a different capacity. See Charles Wright, Arthur Miller, and Mary Kane, Federal Practice and Procedure 2d, § 1404 at 19-20 and cases cited therein. Here, Defendants would be asking the Court to go much further and permit not just a counterclaim against a party in a different capacity, but against all the individuals whom the plaintiff is representing in his representative capacity.

2. Should the Court grant Defendants leave to join Syndicate No. 79 and its Participating Members as counterclaim defendants?

a. Joinder of Syndicate No. 79

The Court will now address Youell's argument that Syndicate No. 79 may not be joined as a counterclaim defendant because it is not a legal entity. The Court agrees with Youell that the Syndicate may not be joined for this reason. This is true, regardless of whether the law of Great Britain or Kansas is applied.

Syndicate No. 79, like the other Lloyd's Syndicates, was formed under the law of Great Britain, It is well settled under that country's law that Lloyd's Syndicates do not constitute legal entities. See Chemical Leaman Tank Lines, Inc. v. Aetna Cas. and Sur. Co., 177 F.3d 210, 221 (3d Cir. 1999) ("[Lloyd's] Syndicates are not legal entities."); E. R, Squibb Sons, Inc. v. Accident Cas. Ins. Co., 160 F.3d 925, 929 (2d Cir. 1998) ("[The Lloyd's] syndicates themselves have been said to have no independent legal identity"); Humm v. Lombard World Trade, Inc., 916 F. Supp. 291, 299 (S.D. N.Y. 1996) ("Lloyd's syndicates are not recognized as legal entities under British law."); Roby v. Corporation of Lloyd's, 796 F. Supp. 103, 105 (S.D. N.Y. 1992) ("It is undisputed that under the law of England, the syndicates do not constitute legal entities."). Because Lloyd's Syndicates are not recognized as legal entities under British law, they may not be sued in federal court in the United States. Id. 105-107, 111.

In light of the above, the Court holds that under British law, Syndicate No. 79 is not a legal entity and therefore may not be joined as a counterclaim defendant in this lawsuit.

If Kansas rather than British law is considered controlling, the outcome would be the same. It appears without question that Syndicate No. 79 is an unincorporated association.⁶ Kansas has "long adhered" to the rule that "in the absence of a statute to the contrary, an unincorporated association is not a legal entity and can neither sue nor be sued in the name of the association." Kansas Private Club Ass'n v. Londerholm, 196 Kan. 1, 3. 408 P.2d 891 (1965). Thus, if Kansas law is applied, Syndicate No. 79 may not be sued and may not be joined as a party to Defendants' counterclaim Accordingly, the Court holds that under either British or Kansas law, Syndicate No. 79 is not a legal entity. It therefore may not be joined as a counterclaim defendant,⁷ and the Court will deny I Defendants' motion to the extent Defendants seek to assert a counterclaim against Syndicate No. 79.

6 The Court has been unable to find a Kansas statutory or case law definition of unincorporated association. The Kansas Supreme Court has, however, distinguished between unincorporated associations on the one hand and individuals and corporations on the other hand, for purposes of determining when a party may sue or be sued. See Kansas Private Club Ass'n v. Londerholm, 196 Kan. 1,3, 408 P.2d 891 (1965). As Syndicate No. 79 is neither an individual nor a corporation, it should be deemed an unincorporated association under Kansas law, at least for purposes of determining whether it may be sued.
In addition, the Court finds that Syndicate No. 79 should be deemed an unincorporated association as that term is defined under the general common law. See Karl Rove Co. v. Thornburgh, 39 F.3d 1273, 1289 (5th Cir. 1994) (unincorporated association "is defined generally as a body of individuals acting together for the prosecution of a common enterprise"); Howard L. Click Martha E. Stewart, Nonprofit Corporations, Organizations, and Associations § 11, at 33 (6th ed. 1994) (defining unincorporated association as a "body of people united in purpose and acting together").
The Courts conclusion is consistent with the majority of courts that have held Lloyd's Syndicates are unincorporated associations. See, e.g., Indiana Gas Co., Inc. v. Home Ins. Co., 141 F.3d 314, 317-18 (7th Cir. 1998); Advani Enters., Inc. v. Underwriters at Lloyd's, 140 F.3d 157, 160(2d Cir. 1998); McAuslin v. Grinnell Corp., No. CIV. A. 97-775, 2000 WL 1059850, *4 (E.D. La. Aug. 1, 2000); Allendale Mut. Ins. Co. v. Excess Ins. Co. Ltd., 62 F. Supp.2d 1116, 1129(S.D. N.Y. 1999).

7 Because the Court finds that Syndicate No. 79 is not a legal entity and therefore not amenable to suit, the Court is not required to determine whether the Syndicate has the capacity to be sued under Fed.R.Civ.P. 17(b). As the court noted in Roby v. Corporation of Lloyd's, 796 F. Supp. 103, 105 (S.D. N.Y. 1992), capacity to be sued and legal existence are separate and distinct concepts. The Roby I Court stated: "Both capacity to be sued and legal existence are prerequisites to the suability of an entity, but Rule 17(b) speaks only to capacity to sue or be sued."
Even if the Court were to examine Syndicate No. 79's capacity to be sued, it would find such capacity lacking. Rule 17(b) provides that the capacity of a party that is not an individual or a corporation is to be determined by the law of the state in which the district sits. Kansas law holds that unincorporated associations do not have the capacity to be sued. See University of Texas at Austin v. Vratil, 96 F.3d 1337, 1339 (10th Cir. 1996) (under Kansas law, unincorporated associations lack capacity to sue or be sued in their own name); Frey, Inc. v. City of Wichita, 11 Kan. App. 2d 116, 121, 715 P.2d 417 (Kan.App. 1986) ("An unincorporated association . . . has no capacity to sue or be sued.").

b. Joinder of the Participating Members

As noted above in Part I.C.1, the Participating Members are not "opposing parties" within the meaning of Fed.R.Civ.P. 13(a) and (b). That does not, however, automatically preclude Defendants from joining them as counterclaim defendants. The Court must proceed to determine whether they may be joined pursuant to subsection (h) of Rule 13. That subsection provides that "[p]ersons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20." Fed.R.Civ.P. 13(h). Rule 19 deals with compulsory joinder of necessary and indispensable parties, while Rule 20 deals with permissive joinder of parties.

Rule 20 provides for permissive joinder under the following circumstances:

All persons . . . may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the actions.

Fed.R.Civ.P. 20(a).

Accordingly, permissive joinder of the Participating Members should be allowed in this case if: (1) Defendants assert joint, several, or alternative relief against them; (2) the requested relief arises out of the same transaction or occurrence underlying the claim for relief against Youell; and (3) any common questions of law or fact will arise in this action. The Court finds that all three factors are met here.

With respect to the first factor, Defendants seek a declaratory judgment on the Participating Members' liability under the insurance agreement. According to the Certificate, the Names are severally liable for their proportionate share of the loss on the insurance contract. See Certificate, Introductory Page ("Underwriters do hereby bind themselves each for his own part, and not one for another "). See also Shears Declaration, ¶ 6 (each individual Name subscribing to the risk is personally liable to the extent of the percentage share of the risk he has assumed). See also E. R. Squibb Sons v. Accident Cas. Ins. CV;., 160 F.3d 925, 929 (2d Cir. 1998) ("[A]Il the Names subscribing to [the Lloyd's] policy are liable for their several shares of any adverse judgment against the Lloyd's underwriters.") The Court therefore finds that the first factor is met.

The Court also finds that the second factor is met. The relief sought from Youell is the same relief sought from the other Participating Members, i.e., a declaration that each Member is liable to Defendants under the Certificate. That relief arises out of the very same certificate of insurance.

Finally, the Court finds that the third factor is also met, in that virtually all — if not all — questions of fact and law will be common to each Participating Member.

In light of the above, the Court holds that the Counterclaim allegations are sufficient to allow permissive joinder of the Participating Members pursuant to Rules 13(h) and 20.⁸ The Court will therefore grant Defendants' motion to the extent Defendants seek to join the Participating Members as parties to the Counterclaim.

8 Because the Court will allow the permissive joinder of the Participating Members, the Court need not address whether joinder of the Participating Members is required pursuant to Rule 19. Compare Allendale Mut. his. Co. v. Excess his. Co Ltd. 62 F. Supp.2d 1116. (S.D. N Y. 1999) (holding that each underwriter in Lloyd's Syndicate was indispensable party) with E.R. Squibb Sons, Inc. v. Accident Cas. Ins. Co., No. 82 CIV. 7327JSM, 1999 WL 350857, *11 (S.D. NY. June 2, 1999) (holding that all Names were not indispensable parties).

3. Summary of ruling

In light of the above, the Court will grant in part and deny in part Defendants" Motion for Leave to Name Syndicate No. 79 and its Participating Members as Parties to Counterclaim (doc. 66). Defendants are hereby granted leave to assert their Counterclaim against the Participating Members of Syndicate No. 79. Defendants shall serve the Counterclaim on said Participating Members within ten (10) days of Youell's service of his Rule 26(a)(1)(A) disclosures regarding the Participating Members, as set forth in the Court's April 13, 2001 Memorandum and Order granting Defendants' Motion to Compel Initial Disclosures as it applies to individuals. The Participating Members (with the exception of Youell, who has already filed an answer to the Counterclaim) shall file their answer(s) within twenty(20) days of service of the Counterclaim against them.

Defendants are denied leave to join Syndicate No. 79. Because Defendants filed their Counterclaim asserting claims against Syndicate No. 79 without obtaining leave to do so, the Court will strike all portions of the Counterclaim (doc. 50) that purport to assert claims against Syndicate No. 79.

II. Defendants' Motion for Order Fixing Cash Deposit of Unauthorized Insurer (doc. 53)

Defendants move for an order requiring Syndicate No. 79 and each of its Participating Members, including Youell, to post with the Clerk of the Court pre-answer security in the form of a cash deposit in the amount of two million dollars, the amount of insurance coverage in this case.⁹ Defendants' request is based on the Kansas Unauthorized Insurers Process Act (the "Act"), and, in particular, K.S.A. 40-2003(a), which provides as follows:

9 The Court notes that this is the second motion of this type that Defendants have filed. The first motion was filed before any counterclaim was on file, and Judge Lungstrum denied the motion, holding that K.S.A. 40-2003 does not apply to a lawsuit instituted by, and not against, an unauthorized foreign insurer for declaratory relief. See doc. 34.

Before any unauthorized foreign or alien insurer shall file or cause to be filed any pleading in any action, suit or proceeding instituted against it, such unauthorized insurer shall deposit with the clerk of the court in which such action, suit or proceedings pending cash or securities or file with such a clerk a bond with good and sufficient sureties to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in such action. . . .

K.S.A. 40-2003(a).

Youell does not dispute Defendants' allegation that he, the Participating Members, and Syndicate No. 79 are "unauthorized foreign insurers" within the meaning of the Act. He does, however, assert numerous arguments as to why none of them should be required to provide any security.

The Court agrees with Youell that K.S.A. 40-2003(a) is wholly inapplicable to Syndicate No. 79. The Syndicate is not now, and has never been, a party to this action the Court. The Court will therefore deny Defendant's motion as to the Syndicate.

The Court will now proceed to determine whether the statute is applicable to Youell and the other Participating Members, who are parties to the Counterclaim. The Court finds persuasive Youell's argument that the purpose of the Act would not be furthered by requiring him and the other Participating Members to provide security. The policy behind the Act, as is expressly stated in K.S.A. 40-2001, is to subject unauthorized insurers to the jurisdiction of the Kansas courts:

The purpose of this act is to subject certain insurers to the jurisdiction of courts of this state by or on behalf of insureds or beneficiaries under insurance contracts.

The legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies.

K.S.A. 40-2001.

The Court finds no basis to apply the Act here, where Youell has already brought himself within the Court's jurisdiction by filing this action on behalf of himself and the other Names subscribing to risk. While the other Names themselves did not personally join in the action, they are contractually bound through Clause XII of the Certificate to honor the final decision of this Court. Under these circumstances, the Court does not find that the purpose of the Act would be furthered by requiring Youell or the other Participating Members to provide any security.

The Court also finds K.S.A. 40-2003 inapplicable here because Defendants do not seek monetary damages in their Counterclaim. K.S.A. 40-2003 requires the unauthorized insurer to deposit cash or securities or to post a bond in an amount "sufficient to secure the payment of any final judgment which may be rendered in such action." K.S.A. 40-2003(a) (emphasis added). Defendants are seeking only a declaration of their rights under the Certificate and no monetary damages. Although they do seek their attorney fees pursuant to K.S.A. 40-256, such fees are recoverable only as costs. See K.S.A. 40-256 (when judgment is rendered against any insurer and the evidence shows that the insurer has refused without just cause to pay the full amount of the loss, the court shall allow the plaintiff a reasonable sum as an attorney fee "to be recovered and collected as a part of the costs") (emphasis added). The Court does not read K.S.A. 40-256 so broadly as to require a deposit or bond to secure the payment of any costs that may be awarded.

In light of the above, the Court will deny Defendants' Motion for Order Fixing Cash Deposit of Unauthorized Insurer (doc. 53).

III. Defendants' Motion Requesting Clarification of Withdrawal of Reference and Consolidation (doc. 54)

The Court finds that this issue was resolved in the related bankruptcy proceeding (In Re: Stoico Restaurant Group, Inc., Case No. 98-20602-11) when U.S. Bankruptcy Judge John Flannagan ruled at a November 16, 2000 hearing that " 11 U.S.C. § 362 does not apply to Movant's [Youell's] disputes with the Trustee over payment of attorneys fees under the Debtor's Directors and Officers insurance certificate." Order Granting Relief from the Automatic Stay, filed January 10, 2001. This motion is therefore denied.

IT IS THEREFORE ORDERED BY THE COURT that Defendants' Motion for Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Counterclaim (doc. 66) is granted in part and denied in part. Defendants are hereby granted leave to assert their Counterclaim against the Participating Members of Syndicate No. 79. Defendants shall serve the Counterclaim on said Participating Members within ten (10) days of Youell's service of his Rule 26(a)(1)(A) disclosures regarding the Participating Members, as set forth in the Court's 13, 2001 Memorandum and Order granting Defendants' Motion to Compel Initial Disclosures as it applies to individuals. The Participating Members (with the exception of Youell who has already filed an answer to the Counterclaim) shall file their answer(s) within twenty (20) days of service of the Counterclaim against them. Defendants are denied leave to join Syndicate No. 79. The Court will strike all portions of the Counterclaim (doc. 50) that purport to assert claims against Syndicate No. 79.

IT IS FURTHER ORDERED that Defendants' Motion for Order Fixing Cash Deposit of Unauthorized Insurer (doc. 53) is denied.

IT IS FURTHER ORDERED that Defendants' Motion Requesting Clarification of Withdrawal of Reference and Consolidation (doc. 54) is denied.

IT IS SO ORDERED.

MEMORANDUM AND ORDER

This matter is before the Court on the following motions: (1) Defendants' Motion to Compel Initial Disclosures (doc. 47-1); (2) Defendants' request for sanctions incurred in filing the Motion to Compel Initial Disclosures (doc. 47-2); (3) Plaintiff's cross-request for sanctions incurred in responding to Defendants' Motion to Compel Initial Disclosures (doc. 59); (4) Defendants' Motion to Compel Production of Documents (doc. 101); (5) Plaintiff's Motion to Strike Defendants' Motion to Compel Initial Disclosures (doc. 110); and (6) Plaintiff's Motion for Sanctions for Disclosing Confidential Information in a Public Filing (doc. 110).

A hearing was held on these motions on February 21, 2001. Plaintiff Richard Ludbrooke Youell ("Youell") appeared through counsel Nancy Tordai and David E. Everson, Jr. Defendants appeared through counsel Thomas M. Franklin and John J. Miller.

I. Background Information Regarding These Motions

Shortly before the deadline for serving initial Rule 26(a)(1) disclosures. Defendants' counsel wrote to counsel for Youell, setting forth various categories of documents that defense counsel expected to see identified in Youell's disclosures. Youell served his disclosures on Defendants on August 30, 2000. Immediately after receiving Youell's disclosures, defense counsel wrote to Youell's counsel again, requesting that Youell disclose eight different categories of documents that Defendants maintained should have been identified in the initial disclosures.

On October 19, 2000, Youell's counsel responded to defense counsel, informing him that Youell would treat the eight categories of documents as requests for production of documents. Youell's counsel then provided Defendants with specific objections to each of those eight requests, but indicated that Youell would produce all non-privileged documents responsive to the requests and provide a privilege log. When Youell did not immediately produce the documents or provide the privilege log, Defendants filed the instant Motion to Compel Initial Disclosures on October 30, 2000, asserting that Youell had failed to disclose numerous individuals and documents that Defendants believed should have been disclosed.

Youell subsequently produced numerous documents and submitted a lengthy privilege log, Defendants found both the production and privilege log incomplete. After the parties were unable to resolve their continuing dispute regarding these documents, Defendants filed the instant Motion to Compel Production of Documents on February 1, 2001.

In the Motion to Compel Production of Documents, Defendants ask the Court to "overrule the Youell's objections to production and order Youell to disclose the existence of and produce the requested documents." Doc. 101 at 3. Because Defendants now appear to seek the actual production of these eight categories of documents rather than the mere disclosure of documents under Rule 26(a)(1), the Court will deny as moot the Motion to Compel Initial Disclosures as it relates to documents and will proceed to determine whether Youell is required to produce the requested eight categories of documents pursuant to the Motion to Compel Production of Documents.

The Court, however, does not find that the Motion to Compel Initial Disclosures is moot as it applies to the disclosure of information about individuals under Fed.R.Civ.P. 26(a)(1)(A), ie., those individuals "who are likely to have discoverable information relevant to dispute facts alleged with particularity in the pleadings." The Court will therefore rule on the Motion to Compel Initial Disclosures as it relates to individuals. See Part IV below.

II. Background Information Regarding This Case

This action arises out of a controversy between the parties regarding the availability of insurance coverage under a Certificate of Insurance, Certificate No. DOM 3000357 (the "Certificate"). The Certificate was issued by certain underwriters ("Underwriters") at Lloyd's, London ("Lloyd's) to Defendant Stoico Restaurant Group, Inc. ("SRG") and its officers and directors. Youell filed this action against SRG and Cynthia F. Grimes, SRG's "Designated Representative," seeking declaratory relief on behalf of himself and the other Underwriters.

The Certificate is a Directors and Officers and Company Reimbursement Indemnity Certificate ("Certificate"). (A copy of the Certificate is attached to David Shears' Declaration, Exhibit A to Plaintiff's Objection to Defendants' Motion for Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Defendants' Counterclaim (doc. 70)). The Certificate contains a "Cooperation Clause" that requires the "Assureds" (SRG and its officers and directors) to provide the Underwriters with information, assistance, and cooperation as reasonably requested by the Underwriters. Id; Clause IX of the Certificate. The Cooperation Clause also requires the Assureds to refrain from taking any action that would increase the Underwriters' exposure under the Certificate. Id.

In 1997, a lawsuit was filed against SRG and its officers and directors by Billy and Grace Balee and Ashok Shah (the "Balee Lawsuit"),¹ on behalf of themselves and a class of shareholders who purchased SRG common stock in an initial public offering in 1996. The Balee Lawsuit alleged that SRG and its officers and directors had committed securities fraud in connection with the initial public offering. Prior to resolving the Balee Lawsuit, SRG filed for relief under Chapter 11 of the Bankruptcy Code. Defendant Grimes was appointed the Designated Representative of SRG, and the Bankruptcy Court issued an order confirming SRG's Amended Plan of Reorganization.

1 The Balee Lawsuit, which was originally filed in state court, was removed to this Court and is presently pending. See Case No. 00-1186-MLB.

In the instant lawsuit, Youell alleges that Defendants breached the requirements of the Cooperation Clause by filing an answer in the Balee Lawsuit admitting all of the essential allegations of the Balee complaint and by failing to assert any defenses. Amended Complaint for Declaratory Relief (doc. 43), ¶ l. Youell claims that as a result of Defendants' actions, the Balee plaintiffs increased their settlement demand. This in turn caused Defendants to demand that the Underwriters consent to settling the Balee Lawsuit for $1.7 million, Id. ¶¶ 39-40.

Youell seeks declaratory relief on behalf of himself and the other Underwriters on the Certificate. Id., Introductory Paragraph at p. 1 and ¶ 2. He seeks a judicial declaration that SRG, through Grimes, breached the Cooperation Clause of the Certificate, thereby precluding any coverage for, or monetary payment to, Grimes and SRG in connection with the Balee Lawsuit, including payment of any defense costs, any judgment to be entered in the Balee Lawsuit, and any settlement of the Balee Lawsuit. Id., ¶ 44. Alternatively, Youell seeks a judicial declaration that the Certificate's "Assured vs. Assured" exclusion excludes coverage for that part of the Balee Lawsuit which was brought on behalf of, or at the direction of, SRG against its own directors and officers. Id., ¶ l.

In a Memorandum and Order filed the same date as this Memorandum and Order, the Court has granted Defendants leave to assert a counterclaim against the Participating Members of Syndicate No. 70. Among other things, the Counterclaim seeks a declaration that (1) the Certificate affords coverage to SRG for the claims asserted in the Balee Lawsuit; (2) no exclusion bars coverage for the claims asserted in the Bale Lawsuit; (3) the Underwriters have acted in bad faith in investigating certain matters and in refusing to consent to the settlement proposed by the Balee plaintiffs, thereby materially breaching the Certificate; and (4) Defendants have not breached any provision of the Certificate. Counterclaim (doc. 50), ¶ 12.

III. Defendants' Motion to Compel Production of Documents (doc. 101)

A. Category 1

In Category 1, Defendants seek the following documents:

MGA or TPA — type agreements and documentation under which Special Program Management, Inc. (or any other their party) [sic] conducted business for Syndicate No. 79 with respect to the DO certificates of which DOM 30000357² is one.

2 This request (as set forth in Defendant's Motion to Compel doc. 101) mistakenly identifies the certificate as "DOM 30000357." The proper identification is "DOM 3000357."

Youell objected³ to producing these documents on the grounds that the request is unlimited in scope and time, the documents are irrelevant and will not lead to the discovery of admissible evidence, and the documents are "confidential business information." The Court will first address Youell's objections as to relevancy.

3 Youell's objections to the eight document "requests" are found in his counsel's October 19, 2000 letter to defense counsel. See Attachment 1 to Doc. 101.

In McCoo v. Denny's Inc., 192 F.R.D. 675 (D. Kan. 2000), this Court summarized the discovery rules regarding relevancy as follows:

Relevancy is broadly construed, and a request for discovery should be considered relevant if there is any possibility that the information sought may be relevant to the subject matter to the action. A request for discovery should be allowed unless it is clear that the information sought can have no possible bearing on the subject matter of I the action. 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 (1) does not come within the broad scope of relevance as defined I 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 disclosure.

Id. at 685-86 (internal quotations and citations omitted).

Conversely, when the relevancy of propounded discovery is not apparent, its proponent has the burden to show the discovery relevant. Simmons Foods, Inc. v. Willis, No. 97-4192-RDR, 2000 WL 204270 (D. Kan. Feb. 8, 2000); Pulsecard, Inc. v. Discover Card Serv., Inc., 168 F.R.D. 295, 309 (D. Kan. 1996). See also McCoo, 192 F.R.D. at 693 (denying motion to compel production of documents where moving party failed to demonstrate how her request for production, which appeared irrelevant on its face, was relevant or would lead to the discovery of admissible evidence).

Here, the Court cannot say that the relevance of this request is apparent on its face. Defendants do not explain what a "MGA or TPA — type agreement" is. Nor do they explain why this information should be provided as to "the DO certificates" and not just DOM 3000357, which is the only insurance certificate at issue in this case. Moreover, Defendants make only vague, general statements about these documents in their motion to compel. They state that these agreements "are discoverable as possible evidence of the Underwriters interpretation of the [Cooperation] Clause." Doc. 101 at 7. They also state that "disputes over the [sic] Youell's standing and capacity, the meaning and application of the Cooperation Clause, and the Underwriter's lack of good faith performance and waiver give discovery a wide scope that clearly encompasses all Eight Categories." Id. at 8.

While the Court agrees that the interpretation and application of the Cooperation Clause and the Underwriters' alleged lack of good faith performance under the Certificate are pertinent to this case, Defendants fail to explain how the "MGA or TPA-type Agreements" requested here for DOM 3000357 or any other "DO certificate" relate to those issues. Accordingly, the Court finds that Defendants have not met their burden to show that these agreements are relevant or that they may lead to the discovery of admissible evidence. The Court will therefore sustain Youell's relevancy objection and deny the Motion to Compel Production as to this request. Because the Court sustains Youell's relevancy objection, the Court need not address his other objections to this request.

B. Category 2

In Category 2, Defendants seek the following:

Internal claims notices and other materials about the Balee case received or generated by Special Claims Management, Inc. (or other third party administrator types).

1. Assertion of work product immunity, attorney-client privilege, and other privileges

Youell objected to this request "to the extent it seeks the production of documents which are protected by the attorney client privilege and work product privileges, the common interest privilege, the joint defense privilege or any other applicable privilege." Attachment 1 to Doc. 101.

While Youell did not identify any of the claimed privileged documents that were responsive to this particular request, he did provide Defendants with an 108-page privilege log identifying over 300 I claimed privileged documents. See Ex. D. to doc. 110. For each document identified, the log provides the following information: Bates-stamp number, date, author, recipient, and carbon copy recipient. In addition, the log contains a category labeled "Document Description," which purports to describe the document's contents or, in some cases, information that is redacted. For example, the log describes a document as "Confidential Communication" or "Attorney client communication containing reserve information, mental impressions, conclusions, opinions, legal theories, attorney strategies, and legal opinions redacted." The log also sets forth the privilege and/or objection that Youell asserts in connection with each document.

Defendants find fault with the privilege log and Youell's assertion of the various privileges in two respects. First, Defendants argue that the privilege log is deficient because it does not adequately describe the subject matter of the document and gives only a general description of the basis on which I I the document is being withheld. Second, Defendants argue that with respect to certain claimed privileged documents (e.g., communications between SRG's lawyers and the Underwriters' lawyers), no privilege should be recognized as a matter of law.

Before addressing each of these arguments, the Court will first set forth the rules regarding the assertion of privileges and work product protection. It is well established that the party asserting the privilege or work product protection has the burden of establishing that the privilege/protection applies. McCoo v, Denny's, Inc., 192 F.R.D. 675, 680 (D. Kan. 2000); Boyer v. Board of County Comm'rs, 162 F.R.D. 687, 688 (D. Kan. 1995). To carry that burden, the party must make a "clear showing" that the asserted privilege/protection applies. McCoo, 192 F.R.D. at 680. Under Fed.R.Civ.P. 26(b)(5), when a party withholds documents or other information based on privilege or work product protection, the "party shall make the claim expressly and shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection."

Based on Rule 26(b)(5), this Court has held that the party asserting the privilege/protection must "describe in detail" the documents or information sought to be protected and provide "precise reasons" for the objection to discovery. McCoo, 192 F.R.D. at 680; National Union Fire Ins. Co. v. Midland Bancor, Inc., 159 F.R.D. 562, 567 (D. Kan. 1994). The information provided must be sufficient to enable the court to determine whether each element of the asserted privilege or protection is satisfied. McCoo, 192 F.R.D. at 680; Jones v. Boeing Co., 163 F.R.D. 15, 17 (D. Kan. 1995). A "blanket claim" as to the applicability of the privilege/work product protection does not satisfy the burden of proof. McCoo, 192 F.R.D. at 680; Kelling v Bridgestone/Firestone, Inc., 157 F.R.D. 496, 497 (D. Kan. 1994).

Youell's privilege log does not meets these standards. In particular, the log does not describe each document and does not state the purpose for which each document was made (or in the case of alleged privileged notations, the purpose for which the notations were made). Thus, the Court is left without sufficient information to determine whether each element of the asserted privilege/protection is satisfied.

Given Youell's failure to provide the required information, the Court could grant Defendants' I motion to compel as it applies to the claimed privileged/protected documents. The Court, however, will defer ruling on Defendants' motion to compel as it pertains to the claimed privileged/protected documents and direct Youell to provide to Defendants within twenty (20) days from the date of filing of this Memorandum and Order a list with "a detailed description of the materials in dispute and . . . specific and precise reasons for [his] claim of protection from disclosure." Simmons Foods, Inc. v. Willis, No. 97-4192-RDR, 2000 WL 204270, at *5 (D. Kan. Feb. 8, 2000) (quoting Snowden v. Connaught Lab., Inc., 137 F.R.D. 325, 334 (D. Kan. 1991); Cypress Media, Inc. v. City of Overland Park, No. 82, 353, 2000 WL 85362, at * 13-14 (D. Kan. Jan. 28, 2000)). The description should include at least the following information for each document⁴ withheld:

4 Part III. J. below addresses the preparation of a privilege log for redactions.

1. A description of the document (e.g., correspondence, memorandum);

2. Date prepared;

3. Date of document (if different from # 2);

4. Who prepared the document;

5. For whom the document was prepared and to whom the document was directed (including all copies of the document);

6. Purpose of preparing the document;

7. Number of pages of each document;

8. Basis for withholding discovery of the document, i.e., the specific privilege being asserted;

9. Any other pertinent information necessary to establish the elements of each asserted privilege.

See Simmons Foods, 2000 WL 204270, at *5 (setting forth requirements for privilege log).

The Court notes that some documents identified in the present privilege log are described as "confidential business information." No privilege, however, exists for "confidential business information; See Folsom v. Heartland Bank, No. 98-2308-GTV, 1999 WL 322691, at *2 (D. Kan. I May 14, 1999) (overruling objection of confidentiality and holding that "[c]onfidentiality does not equate to privilege") (citing Federal Open Mkt. Comm. v. Merrill, 443 U.S. 340, 362 (1979)). Moreover, confidentiality does not constitute grounds to withhold information from discovery. Folsom, 1999 WL 322691, at *2. Thus, no privilege should be claimed in the new privilege log solely on the basis that the document is confidential or contains confidential business information.

In the event Defendants find that the new privilege log Youell submits to them is deficient or 1 that any claim of privilege/protection is inadequate or has been waived, Defendants should follow the procedure and briefing schedule set forth below in Part III.K.

2. Vagueness, overbreadth, and relevance

In addition to asserting various privileges and work product protection, Youell objected to producing the documents requested in Category 2 on the basis that the request (a) is vague; (b) is overly broad because it is unlimited in time and scope; and (e) seeks irrelevant documents. Subject to those objections, Youell did agree, however, to produce all "non-privileged and relevant documents that are in the possession of Special Program Management. Inc. that relate to the Balee claim." Doc. 101, Attachment 1.

a. Vagueness

The party objecting to discovery as vague or ambiguous has the burden to show such vagueness or ambiguity. McCoo v. Denny's Inc., 192 F.R.D. 675, 694 (D. Kan. 2000); Pulsecard, Inc. v. Discover Card Services, Inc., 168 F.R.D. 295, 310 (D. Kan, 1996). A party responding to discovery requests "should exercise reason and common sense to attribute ordinary definitions to terms and phrases utilized in interrogatories." McCoo, 192 F.R.D at 694. If necessary to clarify its answers, the responding party may include any reasonable definition of the term or phrase at issue. Id.

The Court does not find that Youell has carried his burden to show that this request is vague. Youell does not explain why he thinks the request is vague. While he may be asserting that the term "third party administrator types" is vague, common sense would dictate that Defendants are simply referring to third party administrators. At the very least, Plaintiff could have qualified his answer, making it clear that he was only responding with documents received or generated by Special Claims Management, Inc. and that he was unsure as to what the phrase "third party administrator types" meant. The Court will therefore overrule Youell's vagueness objection. b. Overbreadth

Unless a request is overly broad on its face, the party resisting discovery has the burden to support its overbreadth objection. McCoo v. Denny'y, Inc., 192 F.R.D. 675, 686 (D. Kan. 2000). The Court does not find this request overly broad on its face, and Youell does not explain his objection that it is unlimited in time or scope. The request is already limited to those documents that are about the Balee case. The Court sees no need to limit the request any further. This objection is therefore overruled.

c. Relevance

The Court finds that the request is relevant on its face, as it requests documents that relate to the Balee claim. Youell does not explain why he believes the request irrelevant. The Court therefore overrules this objection.

d. Summary of ruling

The Court overrules Youell's objections as to vagueness, overbreadth, and relevance. The Court therefore grants the Motion to Compel as to Category 3, and Youell shall produce all non-privileged/protected documents responsive to this request. To the extent Youell claims that any documents responsive to this request are privileged or protected by work product immunity, those documents shall be identified in the privilege log described above in Part III.B.1.

The Court notes that Youell states in his responsive brief that he has agreed "to produce all non-privileged documents in the possession of Special Program Management, Inc. that relate to the Balee claim." (Doc. 110 at 5) (emphasis added). Youell apparently believes that he has fulfilled his Fed.R.Civ.P. 34 obligation by producing those documents that are in the possession of that third party. Rule 34, however, requires a party upon whom a document request is served to produce documents that are in the party's "possession, custody or control." Youell's statement that he will produce those documents that are in the possession of Special Program Management, Inc. is therefore not responsive to the request and does not fulfill his Rule 34 obligation. Youell must produce those documents that are in his possession, custody or control — not in the possession of Special Program Management, Inc. To the extent that Youell has control over any responsive documents in the possession of Special Program Management, Inc., those documents must also be produced.

This general principle applies not only to this particular request for Category 2 documents but to all of the other document requests at issue here. Thus, to the extent this Memorandum and Order I directs Youell to produce documents, Youell is required to produce all documents that are in his "possession, custody or control."

C. Category 3

In Category 3, Defendants seek the following:

Claims handling, adjustment and settlement evaluation manuals, guidance's [sic], and similar materials.

Youell objected to this request on the basis that the request seeks irrelevant documents and is vague and unlimited in time and scope. Youell asserts that the events at issue in this case took place during a limited time period — from October 1997 through April 2000. He further states that in light of Judge Lungstrum's February 8, 2001 ruling on Plaintiff's Motion to Dismiss, he will search for responsive documents covering that time period.

The Court agrees that the request is overbroad because it is unlimited as to time. The Court, however, believes that the time period identified by Youell should be expanded to the present date since Defendants' Counterclaim contains at least one allegation of continuing misconduct. See Counterclaim (doc. 50), ¶ 9 ("The Underwriters have refused and continue to refuse . . . to articulate any basis for evaluating exposure in the Balee Litigation as less than the $1.4 million. . . .") (emphasis added).

In light of the above, the Court will sustain Youell's overbreadth objection to the extent that Defendants seek these documents for any time period other than October 1997 to the present.

The Court will overrule Youell's objection that the request seeks irrelevant documents. The Court finds the requested documents relevant in light of the bad faith allegations pled in Defendants' Counterclaim. The Court will also overrule Youell's vagueness objection as unsupported.

Accordingly, the Court will order Youell to produce all Category 3 documents for the time period October 1, 1997 to the present.

D. Category 4

In Category 4, Defendants seek "[r]eserve loss documentation." Youell objected to this request on the basis that it seeks irrelevant documents and it is unlimited in time and scope. He also objected because the reserve loss documents "contain confidential business information" and are protected by the attorney-client privilege and work product doctrine.

Defendants contend that these documents "are discoverable as possible evidence of the I Underwriters interpretation of [the Insured vs. Insured] exclusion." Doc. 101 at 8. Defendants also assert generally that the "disputes over the Youell's standing and capacity, the meaning and application I of the Cooperation Clause, and the Underwriter's lack of good faith performance and waiver give discovery a wide scope that clearly encompasses all Eight Categories." Id.

The Court does not find this request relevant on its face. Accordingly, Defendants have the burden to show how it is relevant. Defendants' mere assertion that these documents are relevant because they are "possible evidence" of the Underwriters' interpretation of the Insured vs. Insured exclusion does not meet that burden — the Court is still at a loss to understand how this information might shed light on how the Underwriters interpret the exclusion. The other conclusory assertions by Defendants also do not assist the Court in determining the relevance of the requested reserve los documents.

Moreover, as Youell points out, numerous courts have held in similar circumstances that this information is irrelevant. See, e.g., American Protection Ins. Co. v. Helm Concentrates, Inc., 140 F.R.D. 448, 450 (E.D. Cal. 1991) (reserve information not discoverable even in light of claim that insurer acted in bad faith in denying claim); Leski Inc. v. Federal Ins. Co., 129 F.R.D. 99, 106 (D. NJ. 1989) (reserve information not discoverable despite contention that it was necessary to gain insight into insurers' interpretation of the scope of coverage provided); Couch v. Equity General Ins. Co., 80 B.R. 512, 517 (S.D. Cal. 1987) (plaintiff not entitled to loss reserve information in claim against insurance agent for bad faith denial of claim; reserve does not equate with an admission of liability or the value of any particular claim).

In light of the above, the Court will sustain Youell's relevancy objection and will deny the motion to compel as to Category 4 documents. Because the Court is sustaining the relevancy objection, the Court need not address any of Youell's remaining objections or claims of privilege or work product protection as to these documents.

E. Category 5

In Category 5, Defendants seek "[c]laims management reporting materials." Youell objected on the basis that the request seeks irrelevant documents, is vague, and is unlimited in time and scope. He also objected to the extent that the request seeks documents protected by the attorney-client, work product, common interest and joint defense privileges, and "any other applicable privilege." He did state, however, that subject to those objections, he would produce all non-privileged and relevant documents that relate to the Balee claim.

As in the case of many of the other requests. Defendants merely state that these documents are discoverable "as possible evidence of the Underwriters interpretation of [the Insured vs. Insured] exclusion" and make the same conclusory statement that the "disputes over the Youell's standing and capacity, the meaning and application of the Cooperation Clause, and the Underwriter's lack of good faith performance and waiver give discovery a wide scope that clearly encompasses all Eight Categories." Doc. 101 at 8.

The Court will uphold Youell's relevance and overly broad objections to the extent the request seeks documents unrelated to the Balee claim. The Court notes that Youell states in his response to the Motion to Compel that he has produced all non-privileged claims management reporting material that relate to the Balee claim. Thus, no additional documents responsive to this request need to be produced at this time. However, in accordance with the above discussion regarding privilege issues (see Part III.B. 1.), Youell's privilege log must identify any documents responsive to this request relating to the Balee claim that Youell contends are privileged or protected work product.

F. Category 6

In Category 6, Defendants seek the following:

Correspondence, telephone communication records and other materials relating to communications with any Stoico Restaurant Group, Inc. director, officer, employee, professional, investor or other agent.

Youell asserted the same objections and privileges to this request that he asserted in response to the request for Category 5 documents (with the exception that he asserts attorney work product rather than work product protection). He stated, however, that without waiving those objections, he would produce all non-privileged and relevant documents that relate to the Balee Claim. Defendants do not specifically discuss this request in their Motion to Compel Production, other than to state that the documents are discoverable "as possible evidence of the Underwriters interpretation of this exclusion." Doc. 101 at 8.

The Court will overrule Youell's objection that the request is vague. It will, however, sustain Youell's relevance and overly broad objections to the extent the request seeks documents unrelated to the Balee claim. Youell asserts in his responsive brief that he has already produced all responsive non-privileged documents that relate to the Balee claim. To the extent Youell contends he has privileged I documents responsive to this request that relate to the Balee claim, he shall identify those documents in his new privilege log.

G. Category 7

In Category 7, Defendants seek all "statements taken in relation to any matter to [sic] relating to governance or the affairs of Stoico Restaurant Group. Inc." Youell asserted the very same objections and privileges to this request that he asserted in response to the request for Category 6 documents. He further stated that, without waiving those objections, no such statements had been taken.

The Court agrees with Youell that this request is overly broad in its scope. The Court will limit this request so that it applies only to the Balee claim. The Court overrules Youell's remaining objections.

Accordingly, the Court grants Defendant's motion to compel in part and will compel Youell to produce all responsive statements relating to the Balee claim or to identify them in the privilege log if Youell contends they are protected by work product immunity or some other privilege. Youell, however, states that no statements have been taken, and the Court cannot compel the production of documents that do not exist. In the event that any such statements relating to the Balee claim should be taken in the future, Youell will be required to produce them, or if he wishes to claim they are protected work product or otherwise privileged, to identify them in his privilege log.

H. Category 8

In Category 8, Defendants seek the following:

All of that other documentation was [sic] received or created in connection with decisions to approve engagement of counsel, investigation of the claim, settlement discussions, the Stoico bankruptcy and other matters relating to this claim and Certificate No. DOM 3000357.

Defendants claim these documents are relevant as "possible evidence of the Underwriters interpretation of this exclusion." Doc. 101 at 8. Youell asserted the same objections to this request as he asserted in response to the request for Category 6 and 7 documents. He also stated that, without waiving those objections, he would produce all non-privileged documents that relate to the Balee claim, Youell states in his responsive brief that he has in fact produced all non-privileged documents that relate to the Balee claim. He argues that documents which relate to Certificate No. DOM 3000357, but which do not relate to the Balee claim, are irrelevant.

While the Court finds that this request is rather inartfully worded, the Court does not find it to be so vague that a response cannot be given. Youell's vagueness objection is therefore overruled.

Turning to Youell's relevance and overbreadth objections, the Court finds those objections valid to the extent the request seeks documents relating to Certificate DOM 3000357 that do not also relate to the Balee claim. While DOM 3000357 is the certificate at issue in this case and the one that gives rise to coverage, if any, for the Balee claim, Defendants fail to explain in what way the requested documents relating to the SRG bankruptcy or any other matters relating to Certificate No. DOM 3000357 (e.g., the Spaghetti Jack's Litigation) are relevant to this case or how they may lead to the discovery of admissible evidence. The Court will therefore sustain Youell's overly broad and irrelevant objections to the extent the request seeks documents that relate to Certificate DOM 3000357 but that do not also relate to the Balee claim.

In light of the above, the Court will grant the motion to compel only as to the requested documents that relate to the Balee claim and will order Youell to produce all such non-privileged documents, to the extent he has not already done so. If Youell has any Category 8 documents that he claims are privileged, he shall identify those in his new privilege log. The Motion to Compel Production of Category 8 documents is denied in all other respects.

I. "Topside" Documents

Defendants assert in their Motion to Compel Production that Youell has refused to produce numerous so-called "topside" documents. Defendants describe these documents as being "topside" to I the Hanson Peters Law Firm ("Hanson Peters"). They explain that Hanson Peters was the law firm which interviewed and approved the engagement of defense counsel in the Balee Lawsuit, gathered documents in connection with the Balee Lawsuit, prepared written reports of the Balee Lawsuit, and directed the 1997-1998 settlement negotiations with the Balee plaintiffs. Doc. 101 at 4. The "topside" documents are therefore those documents that were "collected or maintained by agents of the Underwriters in investigation and adjustment of claims to coverage under the Certificate" in connection with the Balee Lawsuit. Id

Defendants state that their counsel has repeatedly requested Youell to produce these "topside" documents. They assert that all of these documents fall within the eight categories of documents specifically requested, but they fail to identify which categories. According to Defendants, the "topside" documents include documents maintained by Youell; Syndicate No. 79; Willis Corroon Professional Risks; Janson Green, Ltd.; Swett Crawford; Special Programs Managements, Inc.; and Willis Faber Dumas, Ltd. They claim that as of February 9, when the instant motion to compel was filed, no such documents maintained by Youell, Syndicate No. 79, Swett Crawford, or Willis Faber Dumas had been produced, and that only three such documents were produced from the files of Willis Corroon Professional Risks and only two such documents from the files of Janson Green.

Youell does not dispute that various "topside" documents exist nor does he deny Hanson Peters' role in the Balee Lawsuit. He does, however, dispute that he owes Defendants any additional "topside" documents. He states that he has produced all non-privileged "topside" documents that he has not specifically objected to producing in response to the eight categories of requested documents. He adds that he has produced all non-privileged documents contained in the Hanson Peters file (doc 1-1144), the Willis Corroon file (doc. 1145-1280), the Janson Green File (doc. 1281-1336), and the Special Program Management file (doc. 1337-1438). He explains that Syndicate No. 79 is the Janson Green syndicate and that there is no Syndicate No. 79 file other than the Janson Green file, from which all non-privileged documents have been produced. He further explains that he has informed Defendants he personally possesses no responsive documents.

As noted above, Fed.R.Civ.P. 34(a) requires a party responding to a request for production to produce all responsive documents in its "possession, custody or control." Thus, Youell must produce not only those responsive documents that are in his "possession, " but also those documents that are in his "custody or control." A party may retain the requisite control or custody of documents even if they are outside the party's actual possession. McCoo v. Denny's Inc., 192 F.R.D. 675, 692 (D. Kan. 2000); Pulsecard, Inc. v. Discover Card Services, Inc., 168 F.R.D. 295 307 (D. Kan. 1996).

Given the unusual posture of the instant motion to compel, it is not clear from Youell's response that he has produced all non-privileged "topside" documents responsive to the eight requests that are in his possession, custody or control. To the extent he has not produced all such documents, he shall do so, unless he claims that certain responsive documents are privileged or protected, in which case, he shall identify them in his new privilege log.

J. Redaction of Documents

Defendants state that Youell has produced many partially redacted documents and that Youell has failed to explain what was redacted or why the redactions were made. Thus, in addition to moving to compel the production of the "topside" documents and the eight categories of documents, Defendants ask the Court to order Youell to explain why each redaction was made and to state the legal authority for making each redaction. Youell responds that the privilege log he provided Defendants identifies (1) the specific Bates number page upon which the redaction was made; (2) the nature of the information redacated from the document; and (3) the privilege/grounds for the redaction.

The Court finds that the privilege log is insufficient to support Youell's assertion of privileges as to redactions. The Court will order Youell to provide a separate privilege log for redacted documents that shall contain the following information.

For each document that has been redacted, the log shall provide the following:

1. A description of the document containing the redaction (e.g., correspondence, memorandum);

2. Date the document was prepared;

3. Date of document (if different from # 2);

4. Who prepared the document;

5. For whom the document was prepared and to whom the document was directed (including all copies of the document); and

6. Number of pages of the document;

In addition, the log shall provide the following information for each redaction:

1. Date the redacted information was prepared or the redacted notation made;

2. Who prepared the redacted information or made the notation;

3. For whom the redacted information was prepared or the notation made and to whom the redacted information or notation was directed (including all copies);

4. Amount of material redacted (e.g., two sentences, one paragraph, two pages)

5. Purpose of preparing the redacted portion of the document or making the notation;

6. Basis for withholding discovery of the redacted portion or notation; and

7. Any other pertinent information necessary to establish that the redacted portion or notation is privileged.

K. Briefing Schedule on Privilege Log Issues

If Defendants finds either or both of the new privilege logs deficient or any claim of privilege/protection inadequate or waived. Defendants may, after satisfying the duty to confer under Fed.R.Civ.P. 37 and D. Kan. 37.2, move to compel production of the documents, by filing a supplemental brief in support of the instant Motion to Compel Production of Documents. Any such supplemental brief shall be filed within twenty (20) days after service of the privilege log at issue. To the extent Defendants wish to reassert the arguments made in their Motion to Compel Production of Documents, or to assert arguments for the first time, that any asserted privilege/protection should not be recognized as a matter of law. Defendants shall assert or reassert those arguments in the supplemental brief. Youell shall have ten (10) days to respond to Defendants' supplemental brief. The Court will defer ruling on all remaining privilege, work product protection, and redaction issues until such briefing is complete. If no supplemental brief is received from Defendants within the time frame set forth above, the Court will deny the Motion to Compel Production of Documents as moot with respect to privilege, work product protection, and redaction issues.

IV. Defendants' Motion to Compel Disclosures (As It Applies to Individuals) (doc. 47)

Defendants request that Youell be compelled to identify "each and every participating underwriter in Syndicate No. 79, and each and every person who has had some role in the handling and adjusting the coverage claims asserted because of the Balee Litigation." Doc. 47 at 6. Youell fails to address this issue in his response to the Motion to Compel Disclosures.

The Court finds that these individuals should be disclosed, particularly in light of the Court's Memorandum and Order filed on the same date as this Memorandum and Order, in which the Court grants in part Defendants' Motion for Leave to Name Syndicate No. 79 and Its Participating Members as Parties to Counterclaim (doc. 66). The Court will therefore grant Defendants' Motion to Compel Disclosures to the extent it requests that Youell be compelled to identify the participating Underwriters in Syndicate No. 79 and the persons who had some role in the handling and/or adjusting of the Balee claim. Within ten (10) days of the filing of this Memorandum and Order , Youell shall provide Defendants with the Rule 26(a)(1)(A) information pertaining to these individuals.

V. Defendants' Request for Sanctions Incurred in Filing Their Motion to Compel Initial Disclosures (doc. 47-2) and Youell's Cross-Request for Sanctions Incurred in Responding to Defendants' Motion to Compel Initial Disclosures (doc. 59)

A. Defendants' Request for Sanctions

Defendants seek to recover the fees and costs they incurred in filing their Motion to Compel Initial Disclosures, arguing that Youell lacked substantial justification for failing to provide complete initial disclosures. Federal Rule of Civil Procedure 37(a)(4)(C) allows a court to impose sanctions where, as here, a motion to compel disclosures is granted in part and denied in part. Under that rule, the court may "apportion the reasonable expenses incurred in relation to the motion among the parties and persons in a just manner." Fed.R.Civ.P. 37(a)(4)(C).

In this case, the Court has granted the Motion to Compel Initial Disclosures as it applies to individuals. The Court deems it just to allow Defendants to recover the reasonable expenses, including attorney fees, that Defendants incurred in bringing the Motion to Compel Initial Disclosures as it applies to individuals. The Court will therefore grant in part and deny in part Defendants' request for sanctions incurred in bringing their Motion to Compel Initial Disclosures.

To aid the Court is determining the proper amount of sanctions, the Court will ask Defendants' counsel to file (1) an affidavit itemizing the expenses, including attorney fees, that Defendants incurred in bringing the Motion to Compel Initial Disclosures, and (2) a memorandum, explaining how the Court should apportion the fees and expenses. Said memorandum and affidavit shall be filed within thirty (30) days of the filing of this Memorandum and Order . Youell shall have twenty days thereafter to file a response to the memorandum and affidavit. After receiving those pleadings, the Court will issue an order apportioning the expenses and fees and specifying the amount and time of payment.

B. Youell's Cross-Request for Sanctions

As the Court has granted in part Defendants' Motion to Compel Initial Disclosures, the Court does not find that motion to have been "frivolous, "as Youell asserts. The Court will deny Youell's I cross-request for sanctions.

VI. Youell's Motion to Strike Defendants' Motion to Compel Initial Disclosures (doc. 110)

Youell asks the Court to strike Defendants' Motion to Compel Initial Disclosures on the basis that Defendants' motion was rendered moot by virtue of Plaintiff producing documents to Defendants. As set forth above, the Court has denied as moot the Motion to Compel Initial Disclosures with respect to documents, as the documents at issue were treated as requests for production and ruled on in the context of Defendants' Motion to Compel Production of Documents (doc. 101). The Court has granted the Motion to Compel Production of Documents in part. The Court has also granted the Motion to Compel Initial Disclosures as it applies to individuals. The Court therefore finds no basis to strike the Motion to Compel Initial Disclosures, and will deny Youell's Motion to Strike.

VII. Youell's Motion for Sanctions for Disclosing Confidential Information in a Public Filing (doc. 110)

In Youell's Response to Defendants' Motion to Compel Production of Documents, Youell requests that the Court sanction Defendants for attaching to their Motion to Compel Production of Documents two documents that were stamped "Confidential." Youell asserts that these documents I were designated "confidential" pursuant to the parties' stipulated Protective Order (doc. 62) and that they should have been filed under seal when submitted to the Court in a pleading. Defendants have not filed a response to the Motion for Sanctions.

Although the Court could treat the Motion for Sanctions as unopposed and grant it, the Court prefers to issue an Order to Defendants to show cause in a written pleading, within twenty (20) days from the date of filing of this Memorandum and Order , as to why sanctions should not be imposed against them for their apparent violation of the Protective Order.

IT IS THEREFORE ORDERED BY THE COURT that Defendant's Motion to Compel Production of Documents (doc. 101) is granted in part and denied in part, as set forth herein. The Court will defer ruling on all remaining privilege, work product protection, and redaction issues until after Plaintiff Youell serves his new privilege logs and briefing is complete on privilege and word product protection issues under the schedule set forth herein. Each party shall bear his/her/its own costs, fees, and expenses incurred in connection with Defendants' Motion to Compel Production of Documents.

IT IS FURTHER ORDERED that Plaintiff Youell shall provide Defendants with a privilege log for all claimed privileged documents and a privilege log for all claimed privileged redactions, as set forth herein. Said privilege logs shall be served on Defendants within twenty (20) days from the date of the filing of this Memorandum and Order . If Defendants find either or both of the new logs deficient or any claim of privilege/protection inadequate or waived, Defendants may, after satisfying the duty to confer under Fed.R.Civ.P. 37 and D. Kan. 37.2, move to compel production of the documents, by filing a supplemental brief in support of the instant Motion to Compel Production of Documents. Any such supplemental brief shall be filed within twenty (20) days of service of the privilege log at issue. To the extent Defendants wish to reassert the same arguments made in their Motion to Compel Production of Documents, or to assert arguments for the first time, that any asserted privilege/protection should not be recognized as a matter of law, Defendants should assert or reassert those arguments in the supplemental brief. Youell shall have ten (10) days to respond to Defendants' supplemental brief. If no supplemental brief is received from Defendants within the time frame set forth above, the Court will deny the Motion to Compel Production as moot as to privilege, work product protection, and redaction issues.

IT IS FURTHER ORDERED that all documents required to be produced as a result of this Memorandum and Order shall be produced by Plaintiff Youell within twenty (20) days of the date of the filing of this Memorandum and Order. Said production shall take place at the offices of Defendants' counsel or at any other location agreed upon by the parties.

IT IS FURTHER ORDERED that Defendants' Motion to Compel Initial Disclosures (doc. 47-1) as it relates to documents is denied as moot.

IT IS FURTHER ORDERED that Defendants' Motion to Compel Initial Disclosures (doc. 47-1) as it applies to individuals is granted. Plaintiff Youell shall within ten (10) days of the filing of this Memorandum and Order serve on Defendants Rule 26(a)(1)(A) disclosures regarding the participating Underwriters in Syndicate No. 79 and the persons who had some role in the handling and/or adjusting of the Balee claim. IT IS FURTHER ORDERED that Defendants' request for sanctions incurred in filing their Motion to Compel Initial Disclosures (doc. 47-2) is granted in part and denied in part. Defendants' counsel shall file (1) an affidavit itemizing the expenses, including attorney fees, that Defendants incurred in bringing the Motion to Compel Initial Disclosures, and (2) a memorandum, explaining how the Court should apportion the fees and expenses. Said affidavit and supporting memorandum shall be filed within thirty (30) days of the filing of this Memorandum and Order Youell shall have twenty days thereafter to file a response to the memorandum and affidavit

IT IS FURTHER ORDERED that Plaintiff Youell's cross-request for sanctions incurred in responding to Defendants' Motion to Compel Initial Disclosures (doc. 59) is denied.

IT IS FURTHER ORDERED that Plaintiff Youell's Motion to Strike Defendants' Motion to Compel Initial Disclosures (doc. 110) is denied.

IT IS FURTHER ORDERED that Defendants shall show cause, within twenty (20) days from the date of filing of this Memorandum and Order , as to why sanctions should not be imposed against them for their apparent violation of the Protective Order.

IT IS SO ORDERED.

MEMORANDUM AND ORDER

This matter is before the Court on the following Motions: (1) Plaintiff's Motion for Protective Order (doc. 95); (2) Defendants' Motion to Enforce Unauthorized Insurers Process Act, for Protective j! Order and to Quash Subpoenas (doc. 102); and (3) Plaintiff's Motion to Strike Defendants' Motion to Enforce Unauthorized Insurers Process Act, Cross-Motion to Compel Defendants' Attendance at Deposition and Motion for Sanctions Pursuant to Fed.R.Civ. 37(a)(4)(B) (doc. 111).

A hearing was held on these motions on February 21, 2001. Plaintiff appeared through counsel Nancy Tordai and David E. Everson, Jr. Defendants appeared through counsel Thomas M. Franklin and John J. Miller.

I. Plaintiff's Motion for Protective Order (doc. 95)

Plaintiff's Motion seeks a protective order regarding the Fed.R.Civ.P. 30(b)(6) deposition notice served on Plaintiff on January 9, 2001 ("Notice"). See Notice, Ex. A to doc. 95. Plaintiff objects to the Notice on numerous grounds, including Defendants' failure to provide five days advance notice of the deposition, the manner in which Defendants define "Youell" in the Notice, and the various topics of testimony for which Plaintiff is requested to produce a representative.

A. Standard for Granting a Protective Order

The decision whether to enter a protective order lies within the court's discretion. Thomas v. International Bus. Mack Inc., 48 F.3d 478, 482 (10th Cir. 1995). Federal Rule of Civil Procedure 26(c) provides that upon a showing of good cause, a court "may make any order which justice requires to protect a party or person from annoyance, embarrassment oppression, or undue burden or expense." The party seeking a protective order has the burden to demonstrate good cause for the entry of the protective order. Sentry Ins. v. Shivers, 164 F.R.D. 255, 256 (D. Kan. 1996).

B. Analysis

The Notice states that Defendants will take the deposition of "one or more designated representatives of the plaintiff." Id Plaintiff in this case is John Richard Ludbrooke Youell. He I brings this action individually and on behalf of the underwriters who subscribe to Certificate No. DOM 3000357 (the "Underwriters"). Certificate No. DOM 3000357 is the certificate of insurance that is at issue in this case.

The Notice defines "Youell" as follows:

"Youell" is defined to include the named plaintiff in this action, any of the Underwriters, all of the Underwriters collectively, any agent or representative of Syndicate No. 79, and all divisions, subsidiaries, affiliates, predecessors, successors, and all present and former officers, directors, employees, agents, representatives, accountants, attorneys, and all other persons acting or purporting to act on behalf of any of the Underwriters or Syndicate No. 79.

Id

Plaintiff objects to this definition because it encompasses persons who are not employed by Plaintiff, who are not parties to tins lawsuit (such as Plaintiff's attorneys), and/or who are not within Plaintiff's control. Plaintiff argues that he should not be required to produce any such individuals to testify as "his representative "

The Court agrees that the Notice is improper and holds that Plaintiff has demonstrated good cause for the entry of a protective order. Although the Notice is made pursuant to Fed.R.Civ.P. 30(b)(6), Plaintiff is not one of the entities to whom that rule applies. Rule 30(b)(6) provides that the deposition notice may "name as the deponent a public or private corporation or a partnership or association or governmental agency." The rule states that "the organization so named shall designate one or more officers, directors, or managing agents, or other persons who consent to testify on its behalf." Fed.R.Civ.P. 30(b)(6).

Plaintiff Youell is an individual; he is not a corporation, partnership, association, or governmental agency. Thus, a Rule 30(b)f6) deposition of Plaintiff is inappropriate, and Plaintiff should not be required to produce any `"representatives" pursuant to the Notice. If Defendants wish to depose Plaintiff, they may notice and take his deposition pursuant to Rule 30(b)(1). If Defendants wish to depose the other individuals identified in the Notice, ¹ absent an agreement between the parties. Defendants should follow the customary subpoena procedures provided for under the Federal Rules of Civil Procedure. See Cutherberston v. Excel Indus., Inc., 179 F.R.D. 599, 602 (D. Kan. 1998) ("When the deponent is not a party to the action, the proper procedure for obtaining jurisdiction over the deponent is service of a subpoena pursuant to Fed.R.Civ.P. 45, issued from a court having jurisdiction over the person.").²

1 The Court notes that at the time the Notice was served on Plaintiff Youell, he was the only Underwriter who was a party to this suit. The Court has since granted Defendants leave to assert a counterclaim against the other Underwriters subscribing to Certificate No. DOM 3000357. See April 13, 2001 Memorandum and Order (doc. 119). Thus, if Defendants wish at this time to depose any of those Underwriters, Rule 30(b)(1) deposition notices may be served on them for their individual depositions.

2 Any objections that Plaintiff Youell or the subpoenaed individuals may have to those depositions would then be raised in an appropriate motion for protective order or motion to quash.

In light of the above, the Court will grant Plaintiff's Motion for Protective Order (doc. 95).

II. Defendants' Motion to Enforce Unauthorized Insurers Process Act, for Protective Order and to Quash Subpoenas (doc. 102).

A. Motion to Enforce Unauthorized Insurers Process Act (doc. 102-1)

Defendants ask the Court to enforce the Kansas Unauthorized Insurers Process Act, K.S.A. 40-2001, et seq. (the "Act"), against Plaintiff. Defendants do not state what specific provision of the Act they wish the Court to enforce. They merely state that the Underwriters are unauthorized insurers within the meaning of the Act and that Defendants have filed the instant motion "because plaintiff Youell has refused to cooperate to make the Underwriter's representatives³ available unless the Trustee travels either to Chicago, Illinois, or London, England, for depositions, and uses service of process to obtain those depositions." Doc. 102 at 1-2. Defendants argue that requiring Defendants to subpoena and travel to other locations to take the depositions of these seven individuals (the "Seven Witnesses") should not be required given that the stated purpose of the Act "is to subject unauthorized insurers to the jurisdiction of courts of this state in suits by or on behalf of insureds." Id. at 2 (quoting K.S. A. 40-2001). Defendants reason that Kansas residents should not have to face "the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such [insurance] policies" Id. (quoting K.S.A. 40-2001).

3 Defendants identify seven witnesses that they wish to depose, all of whom Defendants claim have represented the Underwriters in the matters in dispute.

The Court does not question the stated purpose of the Act. The Court, however, has already ruled that the Act's declared purpose is not met in this case, where Plaintiff Youell has already brought himself within the Court's jurisdiction by filing this action on behalf of himself and the other Underwriters subscribing to the certificate of insurance. See April 13, 2001 Memorandum and Order (doc. 119) (holding Act inapplicable to this case). Even if the Court were to hold otherwise and find the Act applicable to this case, there simply is no provision in the Act under which this Court could order an unauthorized insurer's representatives to be produced in this District for their depositions.

In light of the above, the Court wall deny Defendants' Motion to Enforce Unauthorized Insurers Process Act. If Defendants wish to depose the Seven Witnesses whom Defendants claim have represented the Underwriters in the matters at issue here, and Defendants are unable to reach any agreement with Plaintiff regarding those depositions. Defendants should subpoena the Seven Witnesses pursuant to Fed.R.Civ.P. 45.

B. Defendants' Motion for Protective Order (doc. 102-2)

Defendants seeks two protective orders The first requested protective order relates to the above-mentioned Seven Witnesses. The second requested protective order relates to Plaintiff Youell's request to depose Defendant Grimes and Defendants' counsel.

1. Protective order dealing with Plaintiff's witnesses

Defendants first seek a protective order directing Plaintiff "not [to] engage in any depositions on his behalf until such time as he has made suitable arrangements for the depositions of the Seven Witnesses by telephone or otherwise." Doc. 102 at 3.

Defendants do not support their request with any specific legal authority. As best as the Court can determine. Defendants' request is based on their belief that the Kansas Unauthorized Insurers Process Act requires Plaintiff to produce the Seven Witnesses in the District of Kansas, thereby relieving Defendants of the obligation to subpoena them and to travel to other states or countries to depose them. Defendants apparently contend that until Plaintiff produces these witnesses in Kansas, he should not be allowed to take any depositions of Defendants' witnesses.

The Court has already ruled that the Kansas Unauthorized Insurers Act does not apply to this case or to the taking of depositions. Thus, there is no basis for Defendants' contention that Plaintiff must produce the Seven Witnesses in Kansas. The Court holds that no good cause exists for granting the requested protective order. Accordingly, the Court will deny Defendants' this request for protective order.

2. Protective order relating to the depositions of Defendant Grimes and Defendants' counsel

Defendants also request that the Court enter a protective order prohibiting Plaintiff's counsel from deposing Defendant Grimes and Defendants' counsel about (1) attorney-client communications; (2) "strategies of representation, " and (3) "non-privileged matters that may be learned through the Trustee [Le, Defendant Grimes] or other witnesses." Doc. 102 at 3. Defendants do not oppose the depositions of their counsel in toto — they merely wish to limit the areas of inquiry.

The parties have failed to provide the Court with sufficient information or analysis that would allow the Court to determine whether a protective order is warranted here. More specifically, the parties have failed to address these issues under this Court's decision in Simmons Foods, Inc. v. Willis, 191 F.R.D. 625 (D. Kan. 2000), which sets various criteria and rules for deposing "opposing counsel." The Court will therefore ask the parties to address these issues under the criteria and rules set forth in Simmons.

Specifically, the parties shall provide sufficient information, argument, and analysis for the Court to determine whether the information sought in these depositions (1) cannot be obtained from another source; (2) is non-privileged; and (3) is crucial to the preparation of this case. In addition, the parties shall address whether the deposition of Ms. Grimes — who is an attorney, the Designated Representative of Defendant Stoico Restaurant Group in the bankruptcy action, and a party, but not counsel of record, in this case — should be analyzed under the Simmons criteria. If a party contends that Simmons does not provide the appropriate rules for deciding these issues regarding Ms. Grimes, that party shall set forth what rules he/it contends are proper and provide an analysis under those rules.

Because the party seeking to depose counsel bears the burden to establish the Simmons criteria, see Simmons Foods, 191 F.R.D. at 630, Plaintiff's brief shall be filed first. Plaintiff shall have ten (10) days from the date of filing of this Memorandum and Order to file and serve his supplemental brief on these issues. Defendants shall have ten (10) days thereafter to file and serve their response. Plaintiff shall have five (5) days thereafter to file and serve a reply brief. Service of all briefs shall be by hand-delivery or telefax.

C. Defendants' Motion to Quash Subpoenas (doc. 102-3)

Although Defendants' Motion is entitled "Motion to . . . Quash Subpoenas, " Defendants do not seek such relief in their brief, and, in fact, do not even discuss the quashing of any subpoenas. Rather, Defendants seek only a protective order limiting the areas of deposition testimony. The Court will therefore deny Defendants' Motion to Quash.

III. Plaintiff's Motion to Strike Defendants' Motion to Enforce Unauthorized Insurers Process Act, Cross-Motion to Compel Defendants' Attendance at Deposition and Motion for Sanctions Pursuant to Fed.R.Civ. 37(a)(4)(B) (doc. 111)

A. Plaintiff's Motion to Strike Defendants' Motion to Enforce Unauthorized Insurers Process Act

Plaintiff asks the Court to Strike Defendants' Motion to Enforce Unauthorized Insurers Act (doc. 102-1), arguing that the motion is redundant of Defendants' Motion for Order Fixing Cash Deposit of Unauthorized Insurer (doc. 53).

The Court does not find the two motions to be duplicative. Although the Motion for Order Fixing Cash Deposit and the Motion to Enforce were both brought under the Kansas Unauthorized Insurers Process Act, they sought different relief. The Court therefore finds no basis to strike the instant Motion to Enforce. The Court, however, has denied the Motion to Enforce on its merits. See Part ILA., above. Plaintiff's Motion to Strike is therefore denied.

B. Plaintiff's Cross-Motion to Compel Defendants' Attendance at Deposition

Plaintiff requests that the Court enter "an Order compelling Defendants' [sic] and Defendants' counsel to appear for their depositions." Doc. 111 at 12. Plaintiff does not discuss this request in its brief other than to state that Defendants "have cited no facts or law entitling them to refuse appearance at their properly noticed depositions." Id.

In Part II, B.2. above, the Court has asked the parties to submit additional briefs regarding the depositions of Ms. Grimes and defense counsel, so that the Court may rule on Defendants' Motion for Protective Order. Because the instant cross-motion is interrelated with that Motion for Protective Order, the Court will defer ruling on the cross-motion until the Court has reviewed the parties' supplemental briefs. C. Plaintiff's Motion for Sanctions Pursuant to Fed.R.Civ.P. 37(a)(4)(B)

Plaintiff asks the Court for an award of sanctions based on Defendants' filing of their Motion for Protective Order. The Court will defer ruling on this request for sanctions until the Court has reviewed the parties' supplemental briefing and ruled on the Motion for Protective Order.

IT IS THEREFORE ORDERED BY THE COURT that Plaintiff Youell's Motion for Protective Order (doc. 95) is granted.

IT IS FURTHER ORDERED that Defendants' Motion to Enforce Unauthorized Insurers Process Act (doc. 102-1) is denied.

IT IS FURTHER ORDERED that Defendants' Motion for Protective Order (doc. 102-2) is denied as to Defendants' request that Plaintiff not be allowed to depose any of Defendants' witnesses until such time as Plaintiff had made seven designated individuals available for their depositions.

IT IS FURTHER ORDERED that the Court will defer ruling on that portion of Defendants' Motion for Protective Order which seeks to limit the areas of inquiry in the depositions of Defendant Grimes and defense counsel (doc. 101-3). The Court will defer ruling on that portion of the Motion for Protective Order until the parties have filed supplemental briefs under the following schedule: Plaintiff Youell shall have ten (10) days from the date of filing of this Memorandum and Order to file and serve his supplemental brief on these issues. Defendants shall have ten (10) days thereafter to file and serve their response. Plaintiff Youell shall have five (5) days thereafter to file and serve a reply brief. Service of all briefs shall be by hand-delivery or telefax.

IT IS FURTHER ORDERED that Defendants' Motion to Quash Subpoenas (doc. 102-3) is denied. IT IS FURTHER ORDERED that Plaintiff's Motion to Strike Defendants' Motion to Enforce Unauthorized Insurers Process Act (doc. 111) is denied.

IT IS FURTHER ORDERED that the Court will defer ruling on Plaintiff's Cross-Motion to Compel Defendants' Attendance at Deposition and Motion for Sanctions Pursuant to Fed.R.Civ. 37(a)(4)(B) (doc. 111) until the Court has received the supplemental briefing requested herein.

IT IS SO ORDERED.