United States District Court, D. Arizona
Honorable Cindy K. Jorgenson, United States District Judge
October 2018, the Court was made aware of a discovery dispute
between Plaintiff Western Surety Company
(“Western”) and Intervenor Defendant Employers
Mutual Casualty Company (“EMC”). This dispute
arose in connection with EMC's discovery requests seeking
reserve amounts set by Western relating to Select Development
& Construction, Inc. (“Select”). Western
objected to those requests claiming they were burdensome and
sought information that was confidential and privileged. Oral
argument was held on November 7, 2018 to discuss those
issues. After oral argument, Western's counsel informed
the Court that Western's attorney, Doug Mraz (“Mr.
Mraz”), was solely responsible for setting the reserve
amounts relating to Select and filed a memorandum on November
21, 2018 alleging that the information is protected by the
attorney-client privilege and work-product doctrine. (Doc.
81). EMC filed a response memorandum on November 30, 2018,
opposing Western's claims of privilege and
confidentiality. (Doc. 82).
February 2012, Select entered into a contract with the County
of Pima, Arizona, in connection with a road construction
project (“La Canada Project”). Western provided
Select with performance and payment bonds totaling $18, 750,
777.34 for this project naming Pima County as the obligee. In
June and October 2013, Select entered into two contracts with
Pima County in connection with two construction projects
(“Magee Road Project” and “Homer Davis
Project”). EMC provided Select with performance and
payment bonds for these projects in the amount of $10, 969,
001.40 naming Pima County as the obligee.
failed to comply with its contractual obligations for the La
Canada, Magee Road, and Homer Davis Projects leaving Western
and EMC with substantial losses in excess of $1.3 million. In
April 2017, Pima County entered into a Settlement Agreement
with Western in connection with unpaid funds arising out of
the La Canada Project in the amount of $1.3 million.
Subsequently, Pima County became aware that multiple parties,
including EMC, were exercising their rights to that $1.3
million settlement amount and Pima County filed a motion to
interplead those funds. (Doc. 32). The motion was granted and
that $1.3 million is currently in dispute between Western and
EMC. (Doc. 46).
connection with EMC's claim to the interpleaded funds,
EMC alleges that Western's financial loss for the La
Canada Project was due to Western's reimbursement of
Select's payroll expenses. EMC claims that those
reimbursement expenditures are not a performance bond loss
since Western was under no contractual obligation to assist
Select with continuing their business operations. In
connection with this argument, EMC states that it requires
the reserve amounts set by Western to determine if Western
suffered the financial losses it claims.
Rule of Civil Procedure 26(b) establishes the relevant scope
of discovery and provides, in pertinent part:
Parties may obtain discovery regarding any nonprivileged
matter that is relevant to any party's claim or defense
and proportional to the needs of the case, considering the
importance of the issues at stake in the action, the amount
in controversy, the parties' relative access to relevant
information, the parties' resources, the importance of
the discovery in resolving the issues, and whether the burden
or expense of the proposed discovery outweighs its likely
benefit. Information within this scope of discovery need not
be admissible in evidence to be discoverable.
Court has broad discretion to determine whether to compel
disclosure of discovery. Phillips ex rel Estates of Byrd
v. General Motors Corp, 307 F.3d 1206, 1211 (9th Cir.
propounded the following contested discovery requests upon
• Request for Production: Please
produce any documents that support your responses to the
Requests for Admission and Non-Uniform Interrogatories set
forth above, including but not limited to any documents
relating to reserves set by Western Surety relating to Select
Development & Construction, Inc.
• Interrogatory: If Western Surety set
reserves for a Performance Bond claim on the La Canada
Project, please state the date any such reserves were set and