United States District Court, D. Arizona
ORDER AND OPINION
[Re: Motion at docket 58]
JOHN W. SEDWICK, Senior District Judge.
I. MOTION PRESENTED
At docket 58 plaintiff White Mountain Communities Hospital Incorporated ("White Mountain") moves to compel defendant Hartford Casualty Insurance Company ("Hartford") to supplement its January 30, 2014 response to White Mountain's discovery requests. The statement required by local civil rule 37.1 is at docket 59, and there is a supplement at docket 67. Hartford responds at docket 73, and White Mountain replies at docket 82. Oral argument would not assist the court.
II. STANDARD F REVIEW
Rule 37(a)(3)(B) authorizes a party to move for an order compelling discovery. The scope of permissible discovery is broad. Rule 26(b)(1) provides that a party may obtain discovery of any non-privileged information which is relevant to any claim or defense. The information sought need not be admissible at trial, but it must be reasonably calculated to lead to the discovery of admissible evidence.
White Mountain obtained a commercial property insurance policy underwritten by Hartford covering the period from April 1, 2011, thru April 1, 2012. The policy provided coverage for business income losses in addition to property damage. White Mountain's hospital was affected by the wildfire known as the Wallow Fire. That wildfire led to the temporary evacuation of many residents within the area served by White Mountain. White Mountain sought payment under the policy for property damage and business income losses. Hartford began its processing of White Mountain's claim in June of 2011. Hartford paid White Mountain $723, 548 on the claims, of which $683, 520 was paid on the business income claim. Payment was made on or before June 6, 2012, when Hartford issued its final claim correspondence.
White Mountain contends in this lawsuit that it is entitled to be paid substantially more money on the business income claim. Its expert has estimated the loss of business income to be between $2, 760, 756 and $3, 214, 978. White Mountain's claim is based in large part on the proposition that the Wallow Fire so devastated the area served by White Mountain that residents were slow to return to the area and that their prolonged absence led to a substantial, if temporary, diminution in the demand for White Mountain's services and an associated loss of income.
White Mountain filed suit against Hartford in state court on June 4, 2013. Its complaint includes a claim for breach of the insurance contract, a claim of bad faith arising from the manner in which Hartford adjusted White Mountain's request for payment of insurance benefits, a claim that Hartford was unjustly enriched, and a claim for punitive damages based on Hartford's allegedly outrageous and malicious conduct in delaying payment and denying full payment to White Mountain.
White Mountain asks that Hartford be required to supplement some of its January 30, 2014 discovery responses to White Mountain's First Request for Production of Documents. Specifically, it asks the court to order Hartford to respond further to Requests for Production Nos. 2, 5, 6, and 8. In its reply memorandum, White Mountain seeks an order compelling Hartford to further respond to Requests for Production Nos. 13, 14, and 17. The court declines to consider that request, because the relief sought was first raised in a reply memorandum to which Hartford has not had an opportunity to respond.
A. Request Nos. 2 and 5
As pertinent to the pending motion, Request No. 2 asked for copies of claims manuals, training manuals, and claim handling guidelines. Request No. 5 asked for all documents relating to "Hartford Insurance's Corporate Incentive Program." As explained in White Mountain's motion papers, "Plaintiff requested disclosure of Hartford's claims standards and incentive program to understand how Hartford employees evaluate claims of this type and how the Hartford compensates its employees." White Mountain contends that without these materials, it is not able to assess the reasonableness of Hartford's claims handling. Of course, this is a topic relevant to both the contract and bad faith claims pled in the complaint.
Hartford opposes production of these materials on several grounds. First, it argues that when White Mountain deposed Hartford claims adjuster Michael Kenny and Hartford's forensic accountant Mary Faucher, White Mountain's counsel asked no questions about the subject matter of Requests Nos. 2 and 5. The tacit assumption is that failure to question the witnesses forecloses any further discovery, although Hartford cites no authority for that proposition. Mr. Kenny's deposition was taken on June 3, 2014. Ms. Faucher's deposition was noticed for June 19, 2014,  and taken on that date. By the time of the depositions, White Mountain had ...