AUGUST 2014 BAD FAITH CASES: COURT PERMITS DEPOSITIONS OF INSURER’S EXECUTIVE OFFICERS WHO WERE NOT DIRECTLY INVOLVED IN HANDLING A SPECIFIC CLAIM, ON THE THEORY THAT THE ACTUAL CLAIMS HANDLERS MAY BE FOLLOWING CORPORATE POLICIES OF THE INSURER THAT RESULTED IN THE ALLEGED BAD FAITH CLAIMS HANDLING (Middle District)
In Clemens v. New York Central Mutual Fire Insurance Company, the court addressed the propriety of deposing the insurer’s corporate officers in the context of a UIM bad faith claim. The bad faith claim was the only claim remaining in the case. The insurer offered two persons as the appropriate deponents, because they were the only decision makers in the case.
There was some dispute over their knowledge, and the insured wanted to depose the insurer’s President and CEO, CFO, and Casualty Manager. Because none of these people had direct involved with the particular claim, the insurer characterized this effort as harassment.
The court found the insurer’s position “overly simplistic.” While the two individuals directly involved with the claim “made all decisions regarding how and when to settle the underlying underinsured motorist claim, this begs the question whether company policies implemented by their superiors affected their decision making in a way contradictory to their insured’s interests, an obviously relevant line of inquiry in the context of a ‘bad faith’ claim.”
Invoking the Federal Rules liberal discovery principles, the court found “it appropriate, for now, to authorize the depositions of” the CFO and the Casualty Manager, finding that “given their titles, [they] ought to be persons with knowledge of the policies under which” the claims handlers made their decisions. Moreover, the court left open the possibility that the insurer’s President and CEO could be deposed if the depositions of these two implicated a need to depose that individual.