in Re Fire Insurance Exchange ( 2004 )

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-04-301 CV ____________________

IN RE FIRE INSURANCE EXCHANGE

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Original Proceeding

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MEMORANDUM OPINION

Fire Insurance Exchange seeks a writ of mandamus commanding the Honorable Donald Floyd, Judge for the 172^nd District Court of Jefferson County, to vacate a protective order and issue a different order that restricts the use and disclosure of certain privileged documents to the specific case before the trial court and orders their return within ten days of the trial court's loss of plenary power. Relators further request the scope of Plaintiff's request for production be narrowed to comply with Texas Rules of Civil Procedure. For the reasons stated below, we conditionally grant relief.

During the course of discovery in the underlying litigation, Cause No. E-171,697, Betty Cowan v. Farmers' Insurance Exchange, Fire Insurance Exchange, Wardlaw Claims Service, Inc., Continental Staffing, Inc., Michael Slagle, Ron Hagood, Larry Trahan and Gerald Smith, the plaintiff sought production of certain documents. Because the documents comprised trade secrets or proprietary information, the trial court issued a protective order. Relators object that the protective order does not limit use of the documents to this case or require the return of the documents at its conclusion.

Because we conclude the trial court's order adequately protected Fire Insurance Exchange from the involuntary disclosure of its trade secrets, we hold the trial court did not abuse its discretion in this matter. See Eli Lilly and Co. v. Marshall, 850 S.W.2d 155 (Tex. 1993); Garcia v. Peeples, 734 S.W.2d 343 (Tex. 1987). ⁽¹⁾

Regarding Plaintiff's Request for Production (RFP), Relators objected to RFP 3-6, 14-18, 25-39, 42-46, and 48-50. The trial court sustained Relator's objections to RFP 6 and 26. Plaintiff's withdrew RFP 16, 17, 28, 32, 34, 35, 37-39, 44, 45, 48 and 49. The trial court stated it would review RFP 46 in camera. The record does not indicate a ruling has been made on that objection. Therefore we do not address it. In regards to RFP 14, Relators stated, "Subject to our retention policy, I agree to comply with Request for Production Number 14." RFP 33 requests information demonstrating Relator's net worth and income for the past five years. At the hearing, Relator stated, "in our response to their motion to compel, we have agreed to supplement our discovery responses to produce the annual statements for 2002 through 2004 regarding this information." Plaintiff's counsel responded, "That's fine." Accordingly, we discern no grounds for relief as to RFP 14 and 33.

Relator's objections to the remaining RFP (3-4, 15, 18, 25, 27, 29-31, 36, 42, 43, 50) were overruled. Generally speaking, RFP 3-5, 25, 29-31, and 36 concern production of any materials used for instruction of claims adjusters or handlers. RFP 15, 18, 42, and 50 regard the qualifications of engineering and plumbing vendors and engineering and remediation firms. RFP 27 seeks communications received from the Texas Department of Insurance, The Texas Insurance Commissioner, or their agents, regarding practices in the handling of claims for property damage under homeowners' policies. ⁽²⁾ RFP 43 asks for computer programs and other documents used by Relator's employees, agents and representatives to perform property damage estimates. All of these requests are limited to "within Texas in the last 5 years."

Requests for production of documents "may not be used simply to explore." Dillard Dep't Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex. 1995); Loftin v. Martin, 776 S.W.2d 145, 148 (Tex. 1989). Discovery requests must be specific and include only matters relevant to the case. See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998). A request for "all documents relevant to the lawsuit" is overly broad. See Tex. R. Civ. P.193 cmt. 2. "The trial court must make an effort to impose reasonable discovery limits." In re Am. Optical Corp., 988 S.W.2d at 713.

The underlying dispute concerns one homeowner's insurance policy claim. The discovery requests cover all of Texas. For example, the trial court ordered defendant to produce from its Texas mold and foundation claim files over the last five years "[a]ny and all materials, documents, files, invoices, and/or reports" made by the engineering and remediation firms used by defendant in this case. Although a responding party must object to an overbroad request, it does not have the burden to tailor a reasonable discovery request for the requesting party. See generally In re Am. Optical, 988 S.W.2d at 712. The requesting party has the responsibility to narrowly tailor its requests to produce. Id. at 713.

The defendant produced evidence indicating the burden imposed by the overly broad request. The affidavit of Roger Welch, branch claims supervisor, details the costs of reviewing all claim files in Texas for the requested information, and says to his knowledge "the only way to determine a particular vendor's involvement in a foundation or water damage claim would require pulling the file manually, as that informaton would not be maintained in a separate database." Though he did not limit his affidavit to mold and foundation claims, he estimates a review of all Texas claim files for the requested information for one year would cost $200,000. A trial court should consider the cost of conducting the discovery and tailor the request to provide relevant information with as little cost as possible. ⁽³⁾   

The trial court should have ordered the discovery requests to be narrowly tailored to the claim at issue here. Requiring production from all mold and foundation claims in Texas is overbroad.

We are certain the trial court will follow this decision and withdraw its order compelling production of documents from files throughout Texas. We will grant the petition only if the trial court does not.

WRIT CONDITIONALLY GRANTED.

PER CURIAM

Submitted on August 16, 2004

Opinion Delivered September 23, 2004

Before McKeithen, C.J., Burgess and Gaultney, JJ.

1. We decline to revisit our decision in

In re State Farm Lloyds, No. 09-03-311 CV, 2003 WL 22149155 (Tex. App.--Beaumont Sept. 18, 2003, orig. proceeding) (not designated for publication) as requested by Relators.

2. Plaintiff's counsel agreed to limit this request "to homeowners' and mold claims."

3.

See Explanatory Statement Accompanying the 1999 Amendments to the Rules of Civil Procedure Governing Discovery, Order of Approval of the Revisions to the Texas Rules of Civil Procedure, Misc. Docket No. 98-9196 (Tex. Nov. 9, 1998), printed in 61 Tex. Bar J. 1140 (Dec. 1998).