Opinion
CIVIL ACTION NO: 02-3682 SECTION: "R"(1)
February 10, 2004
ORDER AND REASONS
Defendant Fireman's Fund Insurance Company moves to exclude plaintiff's evidence of damages pursuant to Federal Rules of Procedure 26 and 37. For the following reasons, the Court denies the motion.
I. BACKGROUND
Henry's Marine Service, Inc. is a family-owned marine service and boat brokering/chartering business located in Morgan City, Louisiana. Part of Henry's business consists of chartering vessels to others. Henry's owns some of the vessels that it charters. Henry's also charters vessels and then sub-charters those vessels to its customers. To protect itself against claims arising from its boating operations, Henry's has arranged a comprehensive book of insurance coverage through defendants Fireman's Fund Insurance Company and New York Maritime and General Insurance Company.
In December 2002, Henry's sued Fireman's Fund in this Court on the issue of insurance coverage. Fireman's Fund's declaratory action, already filed in the Southern District of Texas, was transferred to this Court and consolidated with Henry's action. At the preliminary conference, the Court required the parties to submit their initial disclosures under Rule 26(a)(1) no later than July 21, 2003. ( See Rec. Doc. 14). Pursuant to this order, plaintiff filed its initial disclosures, identifying witnesses and documents on the coverage issue and describing the material on which it would base its damages calculation. (See Def.'s
Brief Regarding Application of Rule 26 Rule 37 Requirements" Initial Disclosure, Ex. 1, at 3). Fireman's Fund did not inspect the damages material, challenge the disclosure, communicate with plaintiff about it, or direct discovery to the issue.
In October 2003, this Court granted summary judgment in favor of plaintiff on the issue of insurance coverage. In November, Fireman's Fund moved for reconsideration or, in the alternative, for a new trial, which this Court denied. The parties are now set for trial in this matter. Fireman's Fund now moves to exclude Henry's evidence of damages. Fireman's Fund argues that Henry's did not disclose its evidence of damages in compliance with Rule 26 of the Federal Rules of Civil Procedure because it did not compute the damages or produce the material disclosed and that exclusion of this evidence pursuant to Rule 37(c)(1) is therefore proper.
II. Discussion
Federal Rule of Civil Procedure 26 provides that
Except in categories of proceedings specified in Rule 26(a)(1)(E), or to the extent otherwise stipulated or directed by order, a party must, without awaiting a discovery request, provide to the other parties:
(C) a computation of any category of damages claimed by the disclosing party, making available for inspection and copying as under Rule 34 the documents or other evidentiary material, not privileged or protected from disclosure, on which such computation is based, including materials bearing on the nature and extent of injuries suffered.
FED. R. Civ. P. 26(a)(1) (a)(1)(C) (emphasis added).
The advisory committee notes to Rule 26 clarify the rule : "A party claiming damages or other monetary relief must, in addition to disclosing the calculation of such damages, make available the supporting documents for inspection and copying as if a request for such materials had been made under rule 34." FED. R. Civ. P. 26 advisory's committee note (1993).
Fireman's Fund first argues that Henry's evidence of damages should be excluded because Henry's did not provide it with a "computation of damages" as required by Rule 26(a)(1)(C). Henry's stated that its damages were defense and indemnity expenses that it owed to a third-party, Tetra, and legal expenses associated with pursuing coverage against its insurers. Henry's argues that it could not provide a computation of damages at the time of the initial disclosures because two of the three underlying state suits on which it was incurring indemnity obligations were still ongoing, and the indemnitee had not yet sent Henry's the documents to establish the amount of indemnity or defense costs. Under Rule 26, the party making the disclosure need only disclose that "information reasonably available to it." FED. R. Civ. P. 26(a)(1). The Court finds that Henry's identified the categories of expenses that make up its damage computation and that it could not provide an exact amount of damages at the time. Plaintiff's response was not perfect but it was not a failure to disclose.
Fireman's Fund: next contends that because Henry's did not provide the material it described in its initial disclosures, automatic sanctions are warranted under Rule 37, which provides that "[a] party that without substantial justification fails to disclose information required by Rule 26 . . . is not, unless such failure is harmless, permitted to use as evidence at a trial . . . any witness or information not so disclosed." FED. R. Civ. P. 37(c)(1).
Defendant confuses Rule 26's requirement to "mak[e] the documents or other evidentiary material available for inspection and copying as under Rule 34" with "providing" the documents to the defendant. Congress promulgated and amended Rule 26 in order "to accelerate the exchange of basic information about the case" and to facilitate communication between opposing parties. See FED. R. Civ. P. 26 advisory's committee note (1993). Although Rule 26 clearly contemplates making documents available, it does not specify the precise procedure by which the parties must do so. Rule 26 refers to rule 34, which indicates that a requesting party must specify a reasonable time, place, and manner of production:
The request shall set forth, either by individual item or by category, the items to be inspected and describe each with reasonable particularity. The request shall specify a reasonable time, place, and manner of making the inspection and performing the related acts.
The dispute here centers around who should have acted next after plaintiff made its initial disclosures. What we have here is a failure to communicate. Contrary to defendant's assertion, plaintiff was not required to physically produce documents at the time that it made its initial disclosure. All plaintiff had to do was make the documentation available to defendant.
Pursuant to Rule 26, plaintiff identified the documentation on which it would rely for its computation of damages to the extent that it was able. Although plaintiff did not affirmatively aver that the documents were available for inspection, it made no objection to producing or copying any of this documentation. Indeed, it assures the Court that it stood ready to produce the material and simply waited to hear from the defendant on the logistics. Defendant never contacted plaintiff to arrange a time for inspection and copying. Defendant did not object to the initial disclosure. Defendant took no action to challenge its sufficiency. Defendant served no interrogatory or request for production on the issue of damages. Defendant did not file a motion to compel or ask the Court to intervene to force Henry's (had Henry's objected to any production) to produce the documentation. Defendant has had the initial disclosure for approximately six months and has made no attempt to inspect and/or copy the materials identified.
Rule 26 was promulgated to facilitate communication and cooperation between opposing parties. In the same spirit, the local rules of this Court provide that "[n]o motion relative to discovery shall be accepted for filing unless accompanied by a certificate of counsel for the moving party stating that counsel have conferred in person or by telephone for purposes of amicably resolving the issues and stating why they are unable to agree or stating that opposing counsel has refused to so confer after reasonable notice." LOCAL RULE 37.1E. Defendants strategy is contrary to the spirit of Rule 26 and the local rules of this Court. Instead of simply calling plaintiff's counsel to set up a time for inspection, defendant has waited until the eleventh hour, hoping to use "nondisclosure" as a last-minute basis to exclude Henry's evidence. Here, there was not even a dispute about whether plaintiff would produce the materials identified. It is true that it may have been the better practice for plaintiff to have confirmed that the materials it identified were available for inspection, but in the context of this proceeding, plaintiff's conduct does not warrant the draconian sanction of exclusion of its evidence.
Plaintiff has now produced all of its documents on the issue of damages. The Court has seen no indication that Henry's was anything but forthcoming with the documentation that it intended to use at trial. Rule 37 allows the Court to exclude evidence or sanction a party when it fails to disclose its evidence. See, e.g., Texas AM Research Found, v. Magna Transp., Inc., 338 F.3d 394, 401 (5th cir. 2003) (finding that district court did not abuse discretion in admitting evidence when defendant failed to disclose it). This is not the situation here. There has been no abuse of the discovery process. The Court will not exclude Henry's evidence of damages.
III. CONCLUSION
Accordingly, and for all of the foregoing reasons, the Court denies Fireman's Fund motion in limine to exclude plaintiff's evidence of damages.