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Middle District Magistrate Judge Joseph F. Saporito, Jr. recently issued three discovery opinions arising out of a first party fire property damage case.  The insureds claimed a total loss, and sued for breach of contract and bad faith.

  1. Expert may be deposed when her investigation is part of ordinary claims handling, and not done in anticipation of litigation.

In the first opinion, Magistrate Judge Saporito addressed a subpoena directed to a fire analyst. This expert did not work directly for the insurer, but an independent investigation company. The insurer engaged this expert solely to determine the cause and origin of the fire.

The insurer argued that the fire analyst was not hired as a testifying expert, but as a non-testifying consulting expert. It moved to quash the subpoena “because she is an expert hired by it in anticipation of the possible litigation of the plaintiffs’ claim.” It relied on Federal Rule 26(b)(4)(D).

In opposition, the insureds argued this fire analyst was being deposed as a fact witness, not an expert witness, “regarding her communications with the defendant after the issuance of her expert report, her communications with the plaintiffs and their representatives, public authorities, including those associated with the City of Harrisburg Police and Fire Departments, and the Pennsylvania Department of Insurance.” Moreover, the insured contended the fire analyst was not retained in anticipation of trial, and thus Rule 26(b)(4)(D) did not apply.

Magistrate Judge Saporito first observed the liberal discovery standard and that “[t]he burden is on the objecting party to demonstrate in specific terms why a discovery request is improper. The party objecting to discovery must show that the requested materials do not fall within the broad scope of relevance or else are of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.”

The court found that the fire analyst’s work was not done in anticipation of litigation, and was thus outside Rule 26(b)(4)(D)’s protections.  While the expert did carry out a wide and ongoing investigation after the fire, this alone did not mean the investigation was done in anticipation of litigation.  Magistrate Judge Saporito cited a number of cases for the proposition that claim investigation and evaluation “is part of the regular, ordinary and principal business of insurance companies.”He further stated, “[g]enerally, documents and reports produced by or at the request of an insurer before arriving at a claims decision which consist of information reasonably related to the evaluation of a claim are presumed to have been produced or used for claims evaluation, not for litigation preparation.”

Magistrate Judge Saporito found on the facts that the fire analyst’s investigation, report, and communications all “clearly preceded a final claims decision by the defendant insurer.” (Emphasis in original) “Her investigation and report were an integral part of the insurer’s claims evaluation process, which ultimately culminated in a decision to pay the claim on or about May 1, 2019. Thus, it is presumed that [her] investigation was conducted, and her report was prepared, in the ordinary course of the defendant insurer’s business of claims evaluation, not in preparation for litigation.”

Magistrate Judge Saporito rejected the argument that given the circumstances of the fire, it was likely at the time of the expert’s retention coverage could be declined, which would then result in litigation. He found this argument “conclusory” and insufficient to overcome the presumption that the expert’s retention and work were to evaluate the coverage decision, and not to prepare a litigation defense.

Thus, he denied the motion to quash.

Date of Decision:  January 29, 2021

MAZER v. FREDERICK MUTUAL INSURANCE COMPANY, U.S. District Court Middle District of Pennsylvania No. 1:19-CV-01838, 2021 WL 311229 (M.D. Pa. Jan. 29, 2021) (Saporito, M.J.)

  1. Carrier lacks standing to challenge subpoena of police detective, nor can it obtain a protective order regarding his deposition testimony.

The second opinion involves a motion to quash, or for a protective, order involving plaintiff’s subpoena directed to the investigating police detective.  The insured alleged the detective “acted in concert with the defendant’s privately retained fire investigator during the investigation of the subject fire loss, and both had communications with representatives of the Pennsylvania Insurance Department.” The insureds argued this was part of their bad faith claim.

The legal issue was governed by Federal Rule 45, addressing subpoenas to non-parties.

First, Magistrate Judge Saporito found the insurer generally lacked standing to object to the subpoena.  Rule 45(d)(3)(A)(iii) provides a limited exception in circumstances where the objecting party “claims a property right or privilege in the disclosed information.” That exception, however, was inapplicable, and he denied the motion to quash.

Next, Magistrate Judge Saporito addressed the Rule 26(c)(1) motion for a protective order.  The insurer asked the court to limit deposition questions “to those which plaintiffs demonstrate are relevant to the outstanding issues in this matter.”This argument failed, with the court finding, “the defendant has not shown how it would be unduly burdened or harassed by preparing for and attending [the detective’s] deposition. Therefore, we will deny the defendant’s request for a protective order.”

Date of Decision:  January 29, 2021

MAZER v. FREDERICK MUTUAL INSURANCE COMPANY, U.S. District Court Middle District of Pennsylvania No. 1:19-CV-01838, 2021 WL 311231 (M.D. Pa. Jan. 29, 2021) (Saporito, M.J.)

  1. Insured allowed to take discovery of underwriter, whose role apparently went beyond underwriting.

On this third discovery motion, plaintiffs sought to depose one of the insurer’s underwriters.  The carrier moved for a protective order, arguing that any relevant testimony would be redundant with that of the claim handler to be deposed, and that there was no underwriting issued in the case so any testimony on that subject would be irrelevant.

The insureds argued the underwriter’s testimony was relevant “because she was involved in the handling and evaluation of their claim.” The insureds supported their position by referencing three emails the underwriter authored. The court concluded from these emails that the underwriter’s role did not appear to be limited to underwriting alone.

Thus, “[t]he plaintiffs should be permitted to take [the underwriter’s] deposition to determine the nature and extent of her role in this case. Moreover, the defendant has not shown how it would be unduly burdened by preparing for and attending [the] deposition.”

While the insurer’s motion was denied, “[h]owever, as plaintiffs’ counsel has previously offered to provide defense counsel with an outline of the topics and/or areas of inquiry in a notice of deposition, we will direct that they do so.”

Date of Decision:  February 2, 2021

MAZER v. FREDERICK MUTUAL INSURANCE COMPANY, U.S. District Court Middle District of Pennsylvania No. 1:19-CV-01838, 2021 WL 357333 (M.D. Pa. Feb. 2, 2021) (Saporito, M.J.)