Opinion
EP-20-CV-00280-FM
09-06-2022
STANTON 4433 OWNERS ASSOCIATION, Plaintiff, v. STATE FARM LLOYDS, Defendant.
DENYING IN PART MOTION TO COMPEL DISCOVERY [ECF NO. 50]
Frank Montalvo, United States District Judge
Before the court are “Defendant State Farm Lloyd's Opposed Motion to Compel Property Inspection and Motion for Extension of Discovery Deadlines” (“Defendant's Motion”) [ECF No. 45], filed June 10, 2022 by State Farm Lloyds (“Defendant”) and “Plaintiffs Motion to Compel” (“Plaintiffs Motion”) [ECF No. 50], filed June 22, 2022 by Stanton 4433 Owners Association (“Plaintiff'). Defendant requests Plaintiff be compelled to allow Defendant to inspect Plaintiffs property in preparation for discovery. Defendant also asks the discovery deadline be extended in order for the inspection to occur and for its experts to prepare reports based on the inspection.Plaintiff requests Defendant be compelled to produce a corporate representative for deposition and to respond meaningfully to Plaintiff's discovery requests. Plaintiff also requests an award of attorney's fees. After due consideration, Defendant's motion is GRANTED and Plaintiff's motion is GRANTED IN PART and DENIED IN PART.
“Defendant State Farm Lloyd's Opposed Motion to Compel Property Inspection and Motion for Extension of Discovery Deadlines” (“Mot. Compel INSPECT.”) 1, ECF No. 45, filed June 10, 2022.
“Plaintiffs Motion to Compel” (“Mot. Compel Disc.”) 1, ECF No. 50, filed June 22, 2022.
Mot. Compel INSPECT, at 6.
Id.
Mot. Compel Disc. at 1.
Id. at 8.
I. BACKGROUND
This case involves a dispute over insurance benefits. Plaintiff is a homeowner's association that manages a condominium complex in El Paso, Texas and Defendant is its insurance provider.In August 2019, a “significant hail and wind storm” hit El Paso, Texas, damaging all residential buildings in Plaintiffs complex. Shortly thereafter, Plaintiff filed an insurance claim with Defendant, who sent an investigator to determine the scope of the damage and how much Plaintiff was entitled to recover under its insurance policy. The investigator valued the damage at $319,859.18; after depreciation and deductibles, Defendant determined Plaintiff was owed $52,418.77. Plaintiff felt the estimate was “unreasonable” and “grossly misrepresented the scope and cost to repair and replace.” In response, Plaintiff secured its own estimator who assessed the damages at $1,031,456.91. Plaintiff also sought to invoke its right to appraisal pursuant to the insurance policy, but defendant found Plaintiffs proposed appraiser was not appropriate.Plaintiff then filed suit in Texas state court, claiming damages under breach of contract.Defendant removed.
“Plaintiffs First Amended Complaint” (“Am. Compl.”) 1 ¶ 5, ECF No. 18, filed Feb. 29, 2021.
Id. at 1 ¶ 8.
Id. at 3 ¶¶ 10-14.
Id. at 3 ¶ 14.
Id. at 3 ¶¶ 15-16. .
“Plaintiffs Motion to Compel Appraisal” (“Mot. Compel Appr”) 2, ECF No. 7, filed Jan. 5, 2021, “Estimate from Q Construction Compiled by Marcos Larranaga on September 9, 2019” 10, ECF No. 7-5, Ex. D.
Am. Compl. at 5 ¶¶ 22-24.
See “Plaintiffs Original Petition” 3, ECF No. 1-4, filed Nov. 3, 2020.
See “Defendant State Farm Lloyd's Notice of Removal,” ECF No. 1, filed Nov. 12, 2020.
Plaintiff subsequently sought to compel an appraisal but Defendant opposed on grounds that Plaintiffs appraiser was allegedly working alongside its damage estimator. This court granted “Plaintiffs Motion to Compel Appraisal” [ECF No. 7] in February 2021, finding unwarranted Defendant's “veiled suggestion of collusion between” Plaintiffs appraiser and damage estimator. The parties appointed appraisers, who inspected the property in May 2021.They reached an impasse, however, and an umpire was called in. In December 2021, the umpire and Plaintiffs appraiser agreed to a damages appraisal of $1,111,995.78.
See Mot. Compel Appr.; “Defendant State Farm Lloyds' Response in Opposition to Plaintiffs Motion to Compel Appraisal and Its Own Request for Plaintiff to Appoint an Impartial Appraiser” 1, ECF No. 9, filed Jan. 15, 2021.
“Order Granting Motion to Compel Appraisal” 7, ECF No. 21, entered Feb. 26, 2021.
“Joint Status Report Regarding Progress of Appraisal and Request for Extension of Stay” (“J.S.R.”) 2, ECF No. 35, filed Jan. 25, 2022
Id.
Id. Mot. Compel Disc. at 2.
Plaintiff contends that, based on this appraisal, Defendant owed $643,184.93 after deductions, plus interest and attorney's fees. Defendant sent Plaintiff a check for $635,754.15 while maintaining “the appraisal award is not an admission” of coverage. Plaintiff protested Defendant's failure to include interest or attorney's fees. Then, notwithstanding Defendant's assertion that the damage was not necessarily covered, Defendant allegedly paid Plaintiff $141,956.96 for interest and $40,000 for attorney's fees. Plaintiff felt this was still too low: according to its calculations, Defendant should have tendered $7,430.78 (the remainder of the appraisal estimate); $208,021.87 in interest; and attorney's fees in excess of $40,000.
Mot. Compel Disc. at 2 (citing Tex. Ins. Code § 542.051 et seq.); “Defendant State Farm Lloyd's Response to Plaintiffs Motion to Compel” (“Def. Resp.”) 4, ECF No. 52, filed June 29, 2022.
Mot. Compel Disc. at 2.
Id.
Id.
Unable to reach an agreement, the parties are proceeding with litigation. In March 2022, this court entered a scheduling order requiring the parties to complete discovery by August 2,2022, and file dispositive motions by September 16, 2022, in preparation for trial in January 2023.
“Scheduling Order” 2, ECF No. 38, entered Mar. 3, 2022.
Discovery, to put it bluntly, has not gone well. Both parties are attempting to hold discoverable information hostage; and, in June 2022, both filed motions to compel. Plaintiffs motion to compel cites Defendant's failure to produce a corporate representative for deposition or meaningfully respond to various interrogatories and requests for documents. Defendant claims neither the deposition nor any other meaningful discovery can adequately proceed until its experts are allowed to inspect the property. Meanwhile, Defendant filed a motion to compel an inspection of Plaintiff s property, claiming Plaintiff has refused to allow Defendant to inspect until Defendant produces a corporate representative for deposition.
See Mot. Compel Disc.
Mot. Compel INSPECT, at 7.
Id. at 4.
II. APPLICABLE LAW
A. Rule 26
Under Federal Rules of Civil Procedure Rule (“Rule”) 26(b)(1), parties “may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case.” Discovery rules “are to be accorded a broad and liberal treatment.” Once the requesting party has established that the material sought is relevant and proportional, “the burden shifts to the party resisting discovery to show why the discovery is irrelevant, overly broad, unduly burdensome or oppressive, and thus should not be permitted.”
Hickman v. Taylor, 329 U.S. 495, 507 (1947).
Camoco, LLC v. Leyva, 333 F.R.D. 603, 606 (W.D. Tex. 2019) (citation and internal quotation marks omitted).
If a party resists discovery, it must “state with specificity the grounds for objecting to the request” and it must do so for each item. “[S]imply objecting to requests as overly broad, burdensome, oppressive and irrelevant, without showing specifically how each request is not relevant or how each question is overly broad, burdensome or oppressive, is inadequate to voice a successful objection.” Even when the full scope of a request is ambiguous or overbroad, a responding party must nevertheless disclose that information which is clearly contemplated by the request or well within the proper scope.
Heller v. City of Dallas, 303 F.R.D. 466, 483-84 (quoting McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482, 1484-86 (5th Cir. 1990) (cleaned up).
Id. at 487 (“[A] responding party has a duty to respond to or answer a discovery request to the extent that it is not objectionable.”).
B. Rule 34
Rule 34(a)(2) provides that a party “may serve on any other party a request” to enter onto “designated land or other property possessed or controlled by the responding party, so that the requesting party may inspect ... the property.” If a responding party does not agree to an inspection, the requesting party “may move for an order compelling disclosure or discovery.”The resisting party must show why an inspection would be “irrelevant, overly broad, unduly burdensome or oppressive.”
Id. at 37(a).
Camoco, LLC, 333 F.R.D. at 606 (citation and internal quotation marks omitted).
III. DISCUSSION
A. Plaintiff's Motion to Compel Discovery
Plaintiff served numerous interrogatories and requests for documents and admissions. It also requested Defendant provide a corporate representative for deposition. According to Plaintiff, Defendant's responses to several interrogatories and requests for production (“RFP”) were deficient, its objections to discovery were “frivolous,” and its refusal to provide a corporate representative for deposition was inappropriate. After attempting to confer with Defendant regarding these deficiencies, it filed a motion to compel discovery. In addition to raising these issues, Plaintiff also requests an award of attorney's fees.
See Mot. Compel INSPECT., “State Farm Lloyd's Responses and Objections to Plaintiffs First Request for Production, Interrogatories, and Requests for Admission” (“Resp. and Obj. 1”) 2, ECF No. 45-2, Ex. 2, and “State Farm Lloyds' First Supplemental Responses and Objections to Plaintiffs First Set of Interrogatories” (Resp. and Obj. 2”) 2, ECF No. 45-5, Ex. 5.
Mot. Compel Disc. at 5.
Id. at 6-8.
Id. at 9; see Mot. Compel INSPECT., “Emails from State Farm's Counsel (Marquis) to Plaintiffs Counsel (Thompson) dated March 30, 2022 through April 5, 2022,” ECF No. 45-3, Ex. 3, “Emails from State Farm's Counsel to Plaintiffs Counsel dated May 4, 2022 through May 17, 2022,” ECF No 45-4, Ex. 4, and “Emails between State Farm's Counsel and Plaintiffs Counsel dated May 4, 2022 through May 25, 2022,” ECF No. 45-6, Ex. 6.
Mot Compel Disc. at 8.
a. Deficient Responses
Plaintiff challenges Defendant's responses to two interrogatories (numbers 3 and 16) and six RFPs (numbers 4, 10, 16, 17, 43, and 44) in particular:
Id. at 6-8.
Interrogatories number 3 and 16 asked Defendant to describe which damages it felt were not covered under the policy, if Defendant so contends, and to state the factual bases for that position. These were “contention interrogatories” as they sought the basis for a legal assertion.Defendant maintains it is unable to respond to these requests before an inspection occurs as it has not decided whether or to what degree the damage was covered-i.e. it has not yet asserted the legal contention contemplated in these interrogatories. Furthermore, under Rule 33, “answers to contention interrogatories may be postponed until the close of discovery, or amended during the discovery period as the party develops its case.” Defendant plans to update its responses to Plaintiffs interrogatories once it has had a chance to inspect the property. Accordingly, the court will not compel Defendant to respond to interrogatories number 3 or 16 at this stage.
Id. at 6.
See InternetAd Systems, LLC v. ESPN, Inc., No. Civ.A.3:03CV2787-D, 2004 WL 5181346, *2 (N.D. Tex. Oct. 8, 2004) (A contention interrogatory is one “that asks a party to state what it contends, state whether it makes a specified contention, state all the facts upon which it bases a contention, take a position and explain or defend the position concerning how the law applies to facts, or state the legal or theoretical basis for a contention.”).
Def. Resp. at 3-4 (“Payment of the appraisal award is not an admission nor does it establish Defendant's position on any of the issues in this case.”). Although the assertion that Defendant is not liable for the damage is disingenuous at best given Defendant paid over 98% of the appraisal determination ($635,754.15 out of $643,184.93) as well as a substantial amount of interest and attorney's fees, Defendant is entitled to make it.
Gardner v. Huott, No. SA-13-CA-840-OLG, 2015 WL 12733406, *6 (W.D. Tex. April 22, 2015); see FED. R. Civ. P. 33(a)(2).
Def. Resp. at 2.
RFP number 4 asked Defendant to produce its “Underwriting File” for Plaintiffs policy since Defendant's awareness of any pre-existing damage or lack of pre-existing damage would allegedly be captured in such a document. Defendant refused to disclose these files, arguing the request was “vague, ambiguous, and overbroad to the extent it assumes a physical file.”Defendant also claimed the request sought irrelevant information: according to Defendant, underwriting files are not “at issue in this case.”
Id. at 7.
Resp. and Obj. 1 at 23.
Id. Def. Resp. at 4.
Plaintiffs request, however, was not vague, ambiguous, or overbroad since it identified with reasonable certainty the documents it sought. Neither did it necessarily assume a physical file as the plain and obvious interpretation of Plaintiff s request is that it asked for underwriting documents, in whatever format (but likely electronic). Defendant's refusal to disclose information on this basis was disingenuous. Even if the request was not perfectly clear, parties are required to make a good faith effort to meaningfully comply with discovery requests-blanket refusals are generally insufficient.
Heller, 303 F.R.D. at 488-92 (nothing that parties who claim discovery requests are vague, ambiguous, overbroad, or unduly burdensome must attempt to obtain clarification before objecting, must explain the extent to which the requests are vague, ambiguous, overbroad, or unduly burdensome, and must disclose information to the extent they are not).
Furthermore, underwriting documents are almost certainly “relevant” and “proportional to the needs” in an insurance claim dispute. Accordingly, Defendant must respond meaningfully to RFP number 4 and disclose all relevant and proportional underwriting documents.
RFP number 10 requested Defendant produce all documents-“including reports, surveys, appraisals, damage estimates, proof of loss, or adjuster's report(s)”-that refer to Plaintiff s claim, the property, or damage to the property. In particular, Plaintiff sought any documents Defendant “created when the claim was adjusted,” contending it is “entitled to see what [Defendant's] adjusters said in real time.” Defendant produced for Plaintiff its “Claim File,” which, according to Defendant, includes “reports, surveys, appraisals, damage estimates, proof of loss, [and] adjuster's report(s).” Defendant refused, however, to disclose any information outside the Claim File, asserting Plaintiffs request was “vague and ambiguous,” overbroad, irrelevant, and “unduly burdensome.”
Mot. Compel Disc. at 7.
Id.
Def. Resp. at 5.
Resp. and Obj. 1 at 31.
Again, Plaintiffs request is not clearly vague, ambiguous, or irrelevant. And even though Plaintiffs request was quite broad-given it sought “all” documents referring to the claim, property, or damage-Defendant never attempted to comply by disclosing, other than the Claim File, information that was plainly not ambiguous, irrelevant, or outside of reasonable scope. Accordingly, Defendant must respond meaningfully to RFP number 10 and disclose all relevant and proportional documents.
RFPs number 16 and 17 sought all communications between “claims personnel, claims handlers, field adjusters, office adjusters, and their direct or indirect supervisors related to the investigation, handling, and settlement of Plaintiff s Claim” as well as “independent adjusters, engineers, contractors, estimators, consultants, or other third-parties who participated in investigating, handling, consulting on, and/or adjusting Plaintiffs Claim.” Plaintiff again wants to understand Defendant's claim adjustment process “in real time.” Defendant, again, asserted the requests were “vague and ambiguous” as well as overbroad and irrelevant since they were “not reasonably tailored to include only matters relevant to the adjustment of the insurance claim.”
Mot. Compel Disc. at 7.
Id.
Resp. and Obj. 1 at 37-39.
Yet again, Defendant made no attempt to disclose any information to the extent these requests did ask for information clearly relevant and discoverable. Defendant instead merely proffered more blanket rejections. Plaintiffs requests were neither vague nor ambiguous since they directed Defendant with reasonable specificity and clarity to the type of information sought. These requests were not irrelevant since they asked for communications pertaining to Plaintiff s claim. Additionally, although they were certainly broad, Defendant should have “exercise[d] reason and common sense” when construing them and therefore should have at least disclosed relevant information that was within reasonable scope.
Finally, Defendant also refused to disclose documents under RFPs number 16 and 17 because they may “potentially implicate information that is protected by the attorney/client or work product privileges.” This justification is improper to a fault. “When a party withholds information otherwise discoverable by claiming that the information is privileged ..the party must ... describe the nature of the documents ... not produced or disclosed-and do so in a manner that... will enable other parties to assess the claim.” “Blanket assertions of a privilege are unacceptable.” In describing each instance of claimed privilege, the proponent bears the burden of proving “(1) that he made a confidential communication; (2) to a lawyer of his subordinate; (3) for the primary purpose of securing either a legal opinion or legal services, or assistance in some legal proceeding.” Yet, not only did Defendant fail to provide a detailed privilege log, it withheld information because it could potentially implicate attorney-client privilege. Such a justification reeks of bad faith.
Id. at 39.
United Invs. Life Ins. Co. v. Nationwide Life Ins. Co., 233 F.R.D. 483, 486 (N.D. Miss. 2006) (citing U.S. v. El Paso Co., 682 F.2d 530, 541 (5th Cir. 1982)).
E.E.O.C. v. BDO USA, L.L.P., 876 F.3d 690, 695 (5th Cir. 2019) (emphasis removed).
Accordingly, Defendant must respond meaningfully to RFPs number 16 and 17 by disclosing all relevant and proportional communications.
RFPs number 43 and 44 sought all “documents, communications, or materials” relating to Defendant's decisionmaking with respect to what damages were and were not covered, “to the extent” Defendant contends any portion of Plaintiff s claim was or was not covered. These are contention interrogatories. Defendant will not be compelled to respond to them since “answers to contention interrogatories may be postponed until the close of discovery, or amended during the discovery period as the party develops its case.”
Mot. Compel Disc. at 7.
Gardner, 2015 WL 12733406, *6; see FED. R. CIV. P. 33(A)(2).
b. Frivolous Objections
Plaintiff took issue with what it saw as Defendant's “lengthy, frivolous objections to every single discovery request.” Plaintiff argues they “are so frivolous,” in fact, “that they indicate no intent by [Defendant] to act in good faith and respond to discovery.”
Mot. Compel Disc. at 8.
Id.
It is true Defendant included with each discovery request a lengthy, boilerplate objection.Defendant also objected to nearly every discovery request, claiming it was some combination of ambiguous, vague, irrelevant, overly broad, or unduly burdensome. Plaintiff is correct this does not demonstrate an effort to deal in good faith. Nevertheless, after lodging these complaints and objections, Defendant frequently complied with discovery, disclosing the requested information, albeit “[s]ubject to and without waiving [its] aforementioned objections.” Defendant's protestations, therefore, while lengthy and unnecessary, were clearly aimed at simply putting into the record its objections.
See, e.g, Resp. and Obj. 1 at 7, 10,12 (“State Farm objects to all discovery at this stage in the case on the grounds that (1) appraisal was invoked for the purpose of setting the amount of loss of Plaintiff s claim; (2) the appraisal process is complete; and (3) subject to any reservations of rights, State Farm has issued payment of the appraisal award to Plaintiff in accordance with the loss settlement provisions of the policy... .”).
See, e.g, id.
See, e.g., id. at 8, 27, 29; Resp. and Obj. 2 at 5, 6, 7.
c. Refusal to Provide a Corporate Representative for Deposition
A party, by giving reasonable written notice, may “depose any person, including a party.”If the responding party objects to “any” aspect of the deposition, they may note that objection on the record at the time of the examination-“but the examination still proceeds.” A court, meanwhile, may impose appropriate sanctions on anyone “who impedes, delays, or frustrates the fair examination of the deponent.”
Id. at 30(c)(2).
Id.
Plaintiff requested Defendant produce a corporate representative for deposition as far back as May 11, 2022. Defendant has consistently refused, claiming it could not “adequately prepare for [a deposition] and take a position, until Defendant has been permitted to inspect the Property .”Parties are not permitted, however, to withhold witnesses from deposition, even if they feel the other party is being obstructive. Accordingly, Defendant is required to promptly produce a corporate representative for deposition whether or not a property inspection has yet occurred.
See Mot. Compel INSPECT., “Emails between State Farm's Counsel and Plaintiffs Counsel dated May 4, 2022 through May 25, 2022,” ECF No. 45-6, Ex. 6.
Def. Resp. at 3.
Berg v. M&F W. Prods., Inc., No. 6:19-cv-00418,2020 WL 8270388, *1 (E.D. Tex., Oct. 22, 2020).
d. Attorney's Fees
If a motion to compel disclosure or discovery is granted, a court must require the party “whose conduct necessitated the motion” to “pay the movant's reasonable expenses incurred in making the motion, including attorney's fees,” unless “circumstances make an award of expenses unjust.”
Plaintiff has requested the court grant attorney's fees. If the court was required to compel only one party to comply with discovery, an award of attorney's fees would certainly be reasonable. However, both parties are playing hardball and holding information hostage. Defendant refuses to provide a corporate representative for deposition until it may inspect Plaintiffs property and has shown a near total disregard for the specific requirements of the discovery rules. Plaintiff meanwhile refuses to allow Defendant to inspect its property until Defendant provides a corporate deponent. Neither of these actions are appropriate. The court will not put the parties on the scales to determine whose conduct is more egregious in an effort to finely-parse an equitable allocation of attorney's fees. Instead, the court will leave the parties where it found them.
Mot. Compel Disc. at 8.
e. Conclusion
Plaintiffs motion to compel is granted with respect to RFPs number 4, 10, 16, and 17 and deposition of a corporate representative. The motion is denied with respect to interrogatories number 3 and 16, RFPs number 43 and 44, and attorney's fees.
B. Defendant's Motion to Compel Property Inspection
Defendant initially requested access to Plaintiffs property on May 17, 2022. Plaintiff responded that Defendant was welcome to inspect the property, but only after it had agreed to a deposition of one of its corporate representatives. Both parties, therefore, seem to agree the information Defendant seeks through inspection is relevant and discoverable. As a result, Plaintiff was required to demonstrate why it could nonetheless disregard Defendant's request by showing that inspection would be cumulative, burdensome, or the like. Conditioning permission to inspect on Defendant's acquiescence to some other, unrelated discovery fails to establish why the inspection is independently irrelevant, out of proportion, or otherwise inappropriate.
Mot. Compel INSPECT, at 5.
Id.
Defendant, meanwhile, alleges the inspection is necessary for its experts to form opinions on the “severity” and “causation” of damages and for Defendant to “take a position” on Plaintiff s discovery requests. Neither of these justifications are compelling. Regarding the first, it is difficult to see how a property inspection today would clarify any understanding of the cause and extent of damage that occurred three years ago, especially given two independent inspections and a full appraisal have already occurred. Nonetheless, the court cannot conclude with certainty that an inspection would yield no new and relevant, proportional information. Neither would it be unreasonably burdensome. Regarding the second, no matter how an inspection may help Defendant “take a position” toward Plaintiffs discovery requests, it does not affect whether those requests are relevant and proportional.
Id. at 7; Def. Resp. at 2.
That said, notwithstanding Defendant's weak justification for a property inspection, both parties seem to agree an inspection would be proper and permissible. The court is not inclined to disturb this rare point of agreement. Accordingly, the court grants Defendant's motion to compel property inspection. Plaintiff is required to promptly allow Defendant access to inspect its property, regardless of whether a corporate representative has been deposed by that time.
See “Plaintiffs Response to Defendant's Motion to Compel Property Inspection” 2, ECF No. 46, filed June 17, 2022 (“Plaintiff agreed to allow an inspection”).
C. Defendant's Motion to Extend Discovery Deadlines
In addition to its motion to compel, Defendant requests this court extend discovery deadlines. As it stands, the parties were required to complete discovery by August 2, 2022 and to file dispositive motions by September 16, 2022. Since the discovery deadline has passed, and the deadline for dispositive motions is fast approaching, the court grants Defendant's motion to extend discovery deadlines. All future deadlines in this case will be advanced. An updated scheduling order will follow.
Mot. Compel INSPECT, at 8.
Scheduling Order at 2.
A. CONCLUSION
The court pauses here to admonish the parties and counsel. Attorneys beware, continuation of this conduct will not be tolerated. Litigants must conduct discovery in good faith. Neither party appears to be doing so and the court does not appreciate wasting valuable judicial resources to straighten out this squabbling and intransigence.
Accordingly:
1. It is HEREBY ORDERED that “Defendant State Farm Lloyd's Opposed Motion to Compel Property Inspection and Motion for Extension of Discovery Deadlines” [ECF No. 45] is GRANTED. 2. It is FURTHER ORDERED that “Plaintiffs Motion to Compel” [ECF No. 50] is GRANTED in part and DENIED in part, as more precisely stated above.