Mark and Susannah Livingston Revocable Trust v. Liberty Mutual Insurance Company ( 2022 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Mark a nd Susannah Livingston ) No. CV-21-01367-PHX-SPL ) 9 Revocable Trust, et al., ) 10 ) O R D E R Plaintiffs, ) ) 11 vs. ) ) 12 Liberty Insurance Corporation, et al., ) 13 ) ) 14 Defendants. ) 15 Before the Court is Plaintiffs Mark and Susannah Livingston Revocable Trust 16 (“Livingston”) and Tempel Roofing, Inc.’s (“Tempel”) (collectively, “Plaintiffs”) Motion 17 for Hearing/Ruling on Discovery Dispute (Doc. 59) in which Plaintiffs move the Court to 18 set a hearing or issue a ruling regarding Defendant Liberty Insurance Corporation’s 19 (“Defendant”) apparent refusal to comply with written discovery requests. The Motion has 20 been fully briefed and is ready for review. (Docs. 59, 62, and 64). For the following reasons, 21 the Court grants Plaintiffs’ Motion in part. 22 I. BACKGROUND 23 Plaintiff Livingston was insured by Defendant for the period of March 20, 2019 24 through March 20, 2020 in the amount of $508,700 for the loss to the dwelling located at 25 5225 N. 43rd Pl., Phoenix, Arizona (the “Property”). (Doc. 1-3 at 3). In August and 26 September 2019, the Property’s wood shake roof and patio ceiling sustained damage during 27 a series of storms. (Id.). In late September 2019, Livingston filed a storm damage claim 28 with Defendant. (Id.). This apparently led to a series of disputes between the parties as to 1 whether there was storm damage, what caused the damage, and the cost of the repairs. (Id. 2 at 3–4). Defendant retained Rimkus Consulting Group, Inc. (“Rimkus”) to perform an 3 inspection of the Property. (Id. at 4). On or about January 6, 2020, Rimkus issued a report 4 claiming that there was no storm damage to the Property. (Id.). Relying on that report, 5 Defendant denied Livingston’s claim. (Id. at 5). 6 The parties agreed to submit the disputed claim to appraisal for a determination, 7 pursuant to the policy’s appraisal provision. (Id.). On July 2, 2020, as part of the appraisal 8 process, umpire Anthony Ramirez inspected the roof and found that the roof needed 9 replaced, that the drywall on the ceiling of the back patio had water damage, and that the 10 estimate written by Livingston’s appraiser was “consistent with the damage observed.” 11 (Id.). An Appraisal Award was entered in favor of Livingston, but Defendant declined to 12 pay the award because it continued to dispute coverage. (Id.). On or about June 29, 2021, 13 Plaintiffs filed a Complaint in state court, asserting breach of contract and bad faith claims 14 as a result of Defendant’s failure to pay the Appraisal Award. (Id. at 6–8). Livingston had 15 apparently already signed a contract with Tempel to repair the roof but lacked the finances 16 to pay for the repairs given Defendant’s refusal to pay the Appraisal Award. (Id. at 5). As 17 a result, Livingston assigned his breach of contract claims against Defendant to Tempel, 18 explaining Tempel’s inclusion as a Plaintiff in this suit. (Id.). On August 6, 2021, 19 Defendant removed the matter to this Court. (Doc. 1). 20 The parties now allege a discovery dispute concerning Defendant’s apparent refusal 21 to comply with certain written discovery requests propounded by Plaintiffs. Specifically at 22 issue are two non-uniform interrogatories (“NUI 3” and “NUI 4”) and three requests for 23 production (“RFP 2,” “RFP 4,” and “RFP 6”) that Plaintiffs served on Defendant in late 24 2021 and that Defendant objected to, refused to answer, and otherwise declined to comply 25 with. (See Defendant’s Answers to Plaintiffs’ First Set of Non-Uniform Interrogatories and 26 Requests for Production of Documents, Doc. 59-1 at 2–11). 27 /// 28 /// 1 II. LEGAL STANDARD 2 The purpose of discovery is to make trial “less a game of blind man’s bluff and more 3 a fair contest with the basic issues and facts disclosed to the fullest practicable extent 4 possible,” United States v. Procter & Gamble, 356 U.S. 677, 683 (1958), and “to narrow 5 and clarify the basic issues [in dispute] between the parties.” Hickman v. Taylor, 329 U.S. 6 495, 501 (1947). Necessarily, the scope of discovery is generally very broad. Under Rule 7 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged matter that is 8 relevant to any party’s claim or defense and proportional to the needs of the case.” Fed. R. 9 Civ. P. 26(b)(1). “Information within this scope of discovery need not be admissible in 10 evidence to be discoverable.” Id. 11 “[T]he party seeking to compel discovery has the initial burden of establishing that 12 its request satisfies the relevancy requirements of Rule 26(b).” Doe v. Swift Transp. Co., 13 Inc., No. 2:10-cv-00899 JWS, 2015 WL 4307800, at *1 (D. Ariz. July 15, 2015). This is 14 “a relatively low bar,” Cont’l Cirs. LLC v. Intel Corp., 435 F. Supp. 3d 1014, 1018 (D. 15 Ariz. 2020), as relevance in the discovery context is “defined very broadly.” Equal Emp. 16 Opportunity Comm’n v. Scottsdale Healthcare Hosps., No. CV-20-01894-PHX-MTL, 17 2021 WL 4522284, at *2 (D. Ariz. Oct. 4, 2021) (quoting Garneau v. City of Seattle, 147 18 F.3d 802, 812 (9th Cir. 1998)); see also Cont’l Cirs., 435 F. Supp. 3d at 1018–19 (citation 19 and internal quotations omitted) (“[C]ourts generally recognize that relevancy for purposes 20 of discovery is broader than relevancy for purposes of trial.”). Under Rule 401 of the 21 Federal Rules of Evidence, information having “any tendency” to make a fact in dispute 22 “more or less probable” is relevant. Fed. R. Evid. 401. If the movant meets its burden of 23 establishing relevancy, “the party opposing discovery has the burden to demonstrate that 24 discovery should not be allowed due to burden or cost and must explain and support its 25 objections with competent evidence.” Doe, 2015 WL 4307800, at *1. 26 /// 27 /// 28 /// 1 III. DISCUSSION 2 The parties dispute whether Defendant was justified in its refusal to answer or to 3 otherwise comply with five written discovery requests propounded by Plaintiffs: 4 (i) Non-Uniform Interrogatory Number 3 (“NUI 3”); 5 (ii) Request for Production 2 (“RFP 2”); 6 (iii) Request for Production 4 (“RFP 4”); 7 (iv) Non-Uniform Interrogatory Number 4 (“NUI 4”); and 8 (v) Request for Production 6 (“RFP 6”). 9 (Doc. 59 at 2–3). The Court will first address the parties’ dispute with respect to NUI 3 and 10 RFP 2 before turning to their dispute concerning NUI 4 and RFP 6. Finally, the Court will 11 address RFP 4, which Defendant has agreed to comply with upon this Court’s entry of a 12 protective order. (See Doc. 62 at 8). 13 A. NUI 3 and RFP 2 14 In NUI 1—which is not at issue on this Motion—Plaintiff requested that Defendant 15 identify the policy number and claim number for “every homeowner casualty claim which 16 was filed with [Defendant] in Arizona within the last three (3) years.” (Doc. 59-1 at 4). 17 Although there is no dispute with respect to NUI 1, the disputed NUI 3 specifically refers 18 to the request made in NUI 1: 19 NUI 3: With respect to the claims identified in NUI 1 above, 20 please identify by policy number and claim number, any claim that has gone to [appraisal] pursuant to the terms of the policy. 21 22 (Id. at 6). In other words, NUI 3—when read in conjunction with NUI 1—requests that 23 Defendant identify the policy and claim numbers for every homeowner casualty claim that 24 (i) was filed with Defendant in Arizona, (ii) within the last three years, and (iii) that went 25 to appraisal pursuant to the terms of the policy. (Id.). RFP 2 further requests that Defendant 26 produce the appraisal award for each claim identified in NUI 3. (Id.). 27 To start, the Court has little difficulty concluding that the information requested by 28 NUI 3 and RFP 2 is sufficiently relevant to Plaintiffs’ bad faith claim, at least for purposes 1 of discovery. Under Arizona law, an insured alleging a bad faith claim must prove two 2 elements: (1) that the insurer acted unreasonably and (2) that the insurer knew or recklessly 3 disregarded the fact that its conduct was unreasonable. Jones v. Colo. Cas. Ins. Co., No. 4 CV-12-01968-PHX-JAT, 2015 WL 1806726, at *5 (D. Ariz. Apr. 21, 2015) (citations 5 omitted). The first element involves an objective reasonableness test while the second calls 6 for a subjective test, “requiring the plaintiff to show that the defendant insurance company 7 committed consciously unreasonable conduct.” Milhone v. Allstate Ins. Co., 289 F. Supp. 8 2d 1089, 1094 (D. Ariz. 2003) (citation omitted). In this case, Plaintiffs allege that 9 Defendant’s failure to pay covered damages and the Appraisal Award was unreasonable 10 and that Defendant knew or recklessly disregarded the fact that it was unreasonable. (Doc. 11 1-3 at 7–8). To prove intent, Plaintiffs seek discovery of previous instances in which 12 homeowner casualty claims were filed with Defendant, Defendant invoked the appraisal 13 process, and Defendant subsequently failed to honor the Appraisal Award. (Doc. 59 at 6). 14 The Court agrees with Plaintiffs that such previous instances are relevant because the fact 15 that Defendant acted similarly with respect to previous claims tends to make it more 16 probable that Defendant was aware of the unlawfulness of its conduct and that its decision 17 to engage in such conduct anyway was intentional. 18 Defendant cites to several non-Arizona cases in which courts held that other 19 insurance claims are irrelevant and not discoverable. (Doc. 62 at 3–4). Arizona courts, 20 however, have explicitly recognized that, in the context of a bad faith insurance claim, 21 “[e]vidence of previous, similar acts alters the probability that the conduct in question was 22 unintentional; the more frequently an act occurs, the more probable it is intentional.” 23 Hawkins v. Allstate Ins. Co., 152 Ariz. 490, 498 (1987); see also State Farm Mut. Auto. 24 Ins. Co. v. Super. Ct. In & For Cnty. of Maricopa, 167 Ariz. 135, 138 (Ct. App. 1991) 25 (recognizing Hawkins’ holding “that information regarding how an insurance company 26 handles other claims is admissible if it is sufficiently similar to the insured’s experiences 27 to show a pattern of claims handling.”); Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 28 234, 238 (2000) (citing to Hawkins for the proposition that “past practices [are] relevant 1 and admissible”). Thus, Arizona courts appear to allow the discovery of information related 2 to other claims filed with the insurer, so long as the request is appropriately narrow in scope 3 and the other claims are “sufficiently similar” to the insured’s experiences such that they 4 become relevant to the issue of intent. See State Farm Mut. Auto. Ins. Co., 167 Ariz. at 138. 5 Here, the Court finds that previous homeowner casualty claims filed with Defendant in 6 Arizona—where the claim went to appraisal and where Defendant declined to honor the 7 Appraisal Award—are sufficiently similar to the experiences of Plaintiffs in this case and 8 serve as at least some evidence going to the intent element of Plaintiffs’ bad faith claim. 9 Thus, Plaintiffs’ discovery requests in NUI 3 and RFP 2 seek relevant, discoverable 10 information that should be permitted. 11 Defendant also argues that Plaintiffs’ requests in NUI 3 and RFP 2 are “vastly 12 overbroad” because they are “unlimited in time, geographic area or cause of loss.” (Doc. 62 13 at 3). The Court rejects this argument outright, as Plaintiffs’ requests in NUI 3 and RFP 2 14 are limited temporally (only those claims filed within the last three years), geographically 15 (only those claims filed in Arizona), and with respect to type of claim or cause of loss (only 16 those claims that are homeowner casualty claims). If that were not enough, Plaintiffs also 17 limit their request to only those claims which went to appraisal and in which Defendant 18 declined to honor the Appraisal Award. (Doc. 59 at 6 (“[A]ny Arizona homeowner casualty 19 claims filed with Defendant during the last three years in which the carrier forced the 20 insured to go through the appraisal process and then failed to honor the Appraisal Award 21 is relevant.”)). Finally, Plaintiffs’ requests are also limited in that they only request the 22 policy numbers, the claim numbers, and the appraisal award for each claim identified. In 23 sum, the Court finds that Plaintiffs’ requests in NUI 3 and RFP 2 are sufficiently narrow 24 and proportional to the needs of this case. 25 The Court will grant Plaintiffs’ request that this Court compel Defendant’s 26 compliance with NUI 3 and RFP 2. Defendant is ordered to identify, by policy and claim 27 number, any homeowner casualty claim filed in Arizona within the last three years and in 28 which the claim went to appraisal pursuant to the policy and in which Defendant ultimately 1 declined to honor the Appraisal Award. In accordance with RFP 2, Defendant shall also 2 provide the appraisal award for each such case they identify. 3 B. NUI 4 and RFP 6 4 In NUI 4, Plaintiffs request that Defendant “identify by claim number every matter 5 [Defendant] has retained Rimkus Consulting Group Inc. on to prepare a roof report/cost of 6 repair.” (Doc. 59-1 at 8). Relatedly, RFP 6 requests that Defendant “produce the total 7 amount of money that [Defendant] has paid Rimkus Consulting Group Inc. for its expert 8 report(s)/opinion(s) or estimate(s) over the last five years, identified by year.” (Id. at 9). 9 Plaintiffs assert that such information is “highly relevant” to the credibility and bias of 10 Rimkus Consulting Group Inc. (“Rimkus”). (Doc. 59 at 7). Plaintiffs argue that Rimkus is 11 serving as a retained expert witness for Defendant in this case, and that Defendant should 12 therefore be compelled to provide the requested discovery under Rule 26(a)(2)(B). 13 (Docs. 59 at 8 & 64 at 4). In its Response, Defendant argues that Rimkus is a non-retained 14 expert in this litigation and that Rimkus is therefore not required to comply with Rule 26. 15 (Doc. 62 at 5). Even if Rule 26 did apply, Defendant argues that Plaintiffs’ discovery 16 requests in NUI 4 and RFP 6 seek irrelevant information and that the requests are overbroad 17 such that compliance with them would be unduly burdensome. (Id. at 5–8). 18 “Rule 26 of the Federal Rules of Civil Procedure requires the parties to disclose the 19 identities of each expert and, for retained experts, requires that the disclosure includes the 20 experts’ written reports.” Goodman v. Staples The Off. Superstore, LLC, 644 F.3d 817, 827 21 (9th Cir. 2011) (citing Fed. R. Civ. P. 26(a)(2)). Even if this Court were to assume that 22 Plaintiffs are correct and that Rimkus is a retained expert in this matter, Plaintiffs’ 23 discovery requests in NUI 4 and RFP 6 are far broader in scope than what is required by 24 Rule 26. Under Rule 26, a retained expert’s written report must contain “a list of all other 25 cases in which, during the previous 4 years, the witness testified as an expert at trial or by 26 deposition.” Fed. R. Civ. P. 26(a)(2)(B)(v). Here, Plaintiffs’ NUI 4 requests the claim 27 number for every matter that Defendant has ever retained Rimkus on to prepare a roof 28 report/cost of repair. (Doc. 59-1 at 8). Such a request is far broader than just those cases in 1 which Rimkus testified as an expert in the last four years. Similarly, a retained expert’s 2 written report must contain “a statement of the compensation to be paid for the study and 3 testimony in the case.” Fed. R. Civ. P. 26(a)(2)(B)(vi). Here, Plaintiffs’ RFP 6 requests 4 “the total amount of money that [Defendant] has paid Rimkus . . . for its expert 5 report(s)/opinion(s) or estimate(s) over the last five years, identified by year.” (Doc. 59-1 6 at 9). Such a request is far broader than just the compensation Defendant paid for Rimkus’ 7 work in the present case. 8 Plaintiffs have failed to meet their burden of showing that the requested discovery 9 in NUI 4 and RFP 6 is relevant and proportional to the needs of this case. Therefore, the 10 Court will not compel Defendant’s compliance with respect to those written discovery 11 requests. To the extent Plaintiffs believe Rimkus is a retained expert in this matter and that 12 Defendant’s Rule 26(a)(2)(B) compliance is lacking, Plaintiffs should tailor their discovery 13 request to the requirements of Rule 26—that is, Plaintiffs should be seeking a list of cases 14 in which Rimkus has testified as an expert during the previous four years (rather than the 15 claim numbers for every matter that Defendant has ever retained Rimkus on to prepare a 16 roof report/cost of repair) and a statement of how Rimkus was compensated in this case 17 (rather than the total money paid by Defendant to Rimkus in the last five years). 18 C. RFP 4 19 In RFP 4, Plaintiffs ask Defendant to “produce any and all policies, procedures, 20 manuals and/or performance guidelines which [Defendant] currently has in its possession 21 regarding the adjustment of homeowner casualty claims.” (Doc. 59-1 at 7). Defendant does 22 not object to this request and states that it will “disclose the documents accordingly” 23 provided that this Court enters a protective order. Consistent with this Court’s July 7, 2022 24 Order (Doc. 49), Defendant is permitted to refile a Motion for Protective Order that 25 includes a Proposed Protective Order that is sufficiently completed to allow this Court to 26 rule on the issue. 27 /// 28 /// 1 IV. CONCLUSION 2 Accordingly, 3 IT IS ORDERED that Plaintiffs’ Motion for Hearing/Ruling on Discovery Dispute 4| (Doc. 59) is granted in part to the extent Plaintiffs request an order compelling 5| Defendant’s compliance with NUI 3 and RFP 2: 6 1. In accordance with NUI 3, Defendant shall identify by policy number and 7 claim number any homeowner casualty claim that was filed with Liberty in 8 Arizona within the last three (3) years, that went to appraisal pursuant to the 9 terms of the policy, and in which Defendant declined to issue the Appraisal 10 Award. 11 2. In accordance with RFP 2, Defendant shall produce the appraisal award for 12 each matter referenced in Defendant’s answer to NUI 3. 13 IT IS FURTHER ORDERED that Plaintiffs’ Motion for Hearing/Ruling on 14| Discovery Dispute (Doc. 59) is denied in part to the extent Plaintiffs request an order 15 | compelling Defendant’s compliance with NUI 4 and RFP 6. 16 IT IS FURTHER ORDERED that the Court shall withhold any ruling with respect to RFP 4, as Defendant states that it will comply with RFP 4 subject to this Court’s entry 18 | ofa protective order. Consistent with this Court’s July 7, 2022 Order (Doc. 49), the parties 19 | and/or Defendant shall have until no later than September 26, 2022 to file a Motion for 20 | Protective Order. The parties and/or Defendant are advised that any Proposed Protective 21 | Order filed with the Motion must be complete and may not omit any information that would 22 | be relevant to this Court in ruling on the Motion. Namely, the Proposed Protective Order’s 23 | exhibits may not be blank and must instead include the specific material at issue. 24 Dated this 13th day of September, 2022. 25 United States District Judge 28