Opinion
02 Civ. 1334 (SAS)
August 6, 2002
James E. Carroll, Esq. and Rory Z. Fazendeiro, Esq., Cetrulo Capone LLP, New York, NY, for Plaintiff.
David Hird, Esq., Peter Antonucci, Esq. and Konrad L. Cailteux, Esq., Weil, Gotshal Manges, LLP New York, NY, for Defendants.
MEMORANDUM OPINION AND ORDER
As set forth in a prior opinion of this Court, see National Union v. Hicks, Muse et al., No. 02 Civ. 1334, 2002 WL 1313293, at *1-*3 (S.D.N.Y. June 14, 2002), as amended, 2002 WL 1482625, at *1-*3 (S.D.N.Y. July 10, 2002), National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union") sued Hicks, Muse, Tate Furst, Inc. ("Hicks Muse") seeking declaratory relief to avoid coverage of International Wire Group, Inc.'s ("IWG's") tort liability. Subsequently, plaintiff amended its Complaint to include IWG as a defendant. National Union now moves to lift a stay of the action as to defendant IWG, and requests leave of court to exceed the Rule 30(a)(2)(A) limit on depositions. For the reasons set forth below, the stay is lifted but the request to exceed is denied.
National Union filed this action in the Supreme Court of New York, New York County, on January 28, 2002. On February 20, 2002, Hicks Muse removed the action to this Court. Federal jurisdiction is based on diversity of citizenship.
I. BACKGROUND
Familiarity with the facts underlying this action is assumed. In short, from 1986 to the present, IWG has been inundated with lawsuits brought on behalf of homeowners for damage caused by defective washing machine inlet hoses. In 2000, Hicks Muse, IWG's parent, obtained excess liability insurance coverage for IWG. In January 2002, National Union sued Hicks Muse for declaratory relief denying coverage. In March 2002, Hicks Muse moved to dismiss the action against it on the ground that National Union's claims against Hicks Muse, the parent company to IWG, were not justiciable. While that motion was being briefed by the parties, National Union was granted leave to add IWG as a defendant and the action as to IWG was stayed pending further order of this Court. See 4/8/02 Order of this Court. On June 14, 2002, this Court issued an opinion and order granting in part and denying in part Hicks Muse's motion to dismiss. See National Union, 2002 WL 1482625, at *6. The motion was denied because Hicks Muse allegedly procured the policy using material misrepresentation. See id. at *.5-*6 (explaining that, if the allegations are proven, the entire policy is void ab initio). However, the Court granted Hicks Muse's motion to dismiss the claim against it for a declaration of no coverage, reasoning that the interpretation of the insurance policy covering IWG is a matter between it and National Union — and does not involve Hicks Muse. See id. at *4-*5.
National Union sought a declaration denying coverage on eight grounds: (1) the underlying hose claims and other liabilities are not "occurrences" under the policy; (2) the primary insurance was not exhausted, and thus IWG does not qualify for excess coverage as provided by the National Union policy; (3) the underlying hose claims and other liabilities of IWG are not "fortuitous events," as required by the National Union Policies, but rather are known losses; (4) IWG breached the "Voluntary payment" clause of the National Union policy by entering into indemnity agreements with manufacturers of washing machines; (5) such agreements are not "insured contracts"; (6) IWG breached the "Supplementary Payment" provision of its primary policy by waiving critical defenses and contribution claims in the indemnity agreements; (7) IWG's hose claims and obligations in the indemnity agreements fall within the "Property Damage Expected" exclusion clause in the primary policy; (8) IWG's hose claims and obligations in the indemnity agreements fall within the "Products — Completed Operations Hazards" exclusion in the National Union policy. See Amended Complaint ¶¶ 35-40; 43-45; 48-52; 55-58; 63-66; 75-78; 81-84; 87-89.
On July 2, 2002, this Court held a conference to decide whether to stay this action in favor of the action currently pending in Illinois, where IWG sued National Union seeking coverage of its hose claim liability. The Court refused to stay the case on abstention grounds and instead determined that the case would proceed in tandem with the Illinois action. See 7/2/02 Transcript of Conference at 41. On July 16, 2002, National Union requested that the Court now lift the stay as to IWG. See 7/16/02 Letter from National Union to the Court ("7/16 Pl. Ltr.").
II. DISCUSSION
A. Stay
As National Union correctly argues, this litigation can only run parallel to the Illinois case if National Union is able to conduct discovery as to IWG. See id. Hicks Muse argues, in part, that the stay should remain intact because each of the eight claims for denial of coverage, see supra Part I, were dismissed in this Court's prior opinion. See 7/18/02 Letter from Hicks Muse to this Court ("7/18 Def. Ltr."). While the claims listed above were dismissed as against Hicks Muse, they were not dismissed as against IWG. Thus, defendant's argument that "bring[ing] those eight causes of action back into the case [would] greatly expand the number of issues in this action" is a mischaracterization. Id. Clearly, such claims state a cause of action as against IWG under ordinary contract law — and are therefore already "in" this action. The stay is therefore lifted as to IWG, and IWG is directed to respond to the Amended Complaint.
Hicks Muse also argues that if the stay is lifted, IWG is required by Rule 13 of the Federal Rules of Civil Procedure to file its compulsory counterclaims, including claims for damages based on National Union's alleged breach of contract. See 7/18 Def. Ltr. at 1-2. Hicks Muse is correct, and IWG must file its compulsory counterclaims by August 30, 2002.
B. Depositions
National Union also argues that it should be allowed to exceed the limit set forth in Rule 30 of the Federal Rules of Civil Procedure on the number of depositions that it may conduct in this action, citing "the complexity of this case" and "the importance of the issues at stake in this declaratory action." 8/1/02 Letter from National Union to this Court ("8/1 Pl. Ltr."). Rule 30 presumptively limits the number of depositions that each party may conduct to ten. Fed.R.Civ.P. 30(a)(2)(A); see New York v. Oneida Indian Nation, No. 95 Civ. 554, 2001 WL 1708804, at *2 (S.D.N.Y. Nov. 9, 2001). Rule 30(a)(2)(A) is intended to control discovery, with its attendant costs and delay. See Barrow v. Greenville Indep. Sch. Dist., 202 F.R.D. 480, 481 (N.D. Tex. 2001). A court may, however, increase the number of depositions when it is consistent with the principles of Rule 26. Fed.R.Civ.P. 26(b)(2). Rule 26(b)(2) states in pertinent part:
The frequency or extent of use of [depositions] shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, [etc.]; . . . or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving those issues.
Fed.R.Civ.P. 26(b)(2). Here, National Union has not demonstrated a need to exceed the presumptive limit on the number of depositions. This garden variety insurance coverage case is neither particularly complex nor of great public interest. Moreover, there is a parallel proceeding in Illinois, where the parties can and have conducted many depositions involving the same pool of witnesses. In fact, National Union has already deposed one IWG witness in Illinois, and several other depositions are scheduled. See 7/18 Def. Ltr. at 2. Finally, National Union will not be prejudiced here. It has taken no depositions yet in this action. See 8/1 Pl. Ltr. Thus, it need only eliminate one of the eleven depositions it has noticed.
III. CONCLUSION
National Union's request to lift the stay is granted, but its motion to exceed the number of depositions is denied.