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Paul Johnson Drywall, Inc. v. The Phoenix Insurance Co.

United States District Court, D. Arizona

May 5, 2014

Paul Johnson Drywall, Inc., et al., Plaintiff,
v.
The Phoenix Insurance Company, Defendant.

ORDER

PAUL G. ROSENBLATT, District Judge.

Before the Court is Plaintiffs' motion to compel. (Doc. 39.) Plaintiffs seek disclosure of reserve information which Travelers has redacted or withheld as confidential. (Doc. 39.) Defendant filed a response in opposition. (Doc. 40.) The court conducted an in camera review of the withheld and non-redacted documents. For the reasons set forth herein, the motion to compel is granted.

BACKGROUND

As alleged in Plaintiffs' first amended complaint (Doc. 18), Prescott Resort Hotel, L.L.C. ("Prescott Resort"), owned and operated a Wyndham Garden Hotel in Prescott, Arizona. ( Id., ¶ 12.) Prescott Resort had a commercial insurance policy with Defendant ("Travelers") providing coverage for the hotel. ( Id., ¶ 14.)

On February 2, 2011, a water line broke, causing extensive damage to the hotel. ( Id., ¶ 20.) Prescott Resort made claims under its i policy with Travelers for property damage, business personal property, and loss of business income. ( Id., ¶ 21.)

Plaintiffs allege that Travelers refused to make repair payments it owed to Plaintiff Paul Johnson Drywall, who performed repair work on the hotel, and refused to make business personal property and business income loss payments it owed to Prescott Resort. ( Id., ¶ 40.)

Prescott Resort ultimately filed for bankruptcy. It assigned its claims against Travelers to Plaintiffs as part of the bankruptcy proceedings. ( Id., ¶ 1.)

On May 15, 2013, Plaintiffs filed a complaint alleging breach of contract, breach of the duty of good faith and fair dealing, and unjust enrichment. (Doc. 1.) They filed an amended complaint on August 19, 2013. (Doc. 18.)

DISCUSSION

Plaintiffs seek an order compelling Travelers to produce its reserve information. (Doc. 39.) Travelers contends that the information is irrelevant and not discoverable under applicable law. (Doc. 40.)

I. Legal Standard

The scope of discovery is governed by Rule 26 of the Federal Rule of Civil Procedure, which allows "discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." Fed.R.Civ.P. 26(b)(1). Relevance is construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that bears on, any issue that is or may be in the case. See id.; Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). "For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action." Fed.R.Civ.P. 26(b)(1). District courts have broad discretion in determining relevance for discovery purposes. Hallet v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002).

Rule 37(a) authorizes a party to apply for an order to compel disclosure or discovery. "If a party fails to make a disclosure required by Rule 26(a), any other party may move to compel disclosure and for appropriate sanctions." Fed.R.Civ.P. 37(a)(2)(A). The party resisting discovery has a "heavy burden" of showing why ...


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