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BancInsure, Inc. v. McCaffree

United States District Court, Tenth Circuit

October 24, 2013

BANCINSURE, INC., and Oklahoma Corporation, Plaintiff,
CARL L. McCAFFREE, et. al, Defendants, and FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of The Columbian Bank and Trust Company, Defendant.


Gerald L. Rushfelt United States Magistrate Judge

The Court has before it FDIC-R’s Motion to Compel (ECF 136). Invoking Fed.R.Civ.P. 37 and D. Kan. Rule 37.2, Co-Defendant Federal Deposit Insurance Corporation as Receiver of The Columbian Bank and Trust Company (FDIC-R) seeks to compel Plaintiff to produce documents responsive to its Document Requests Nos. 19 and 22. Plaintiff opposes the motion.

The parties have also filed two motions incidental to the motion to compel: BancInsure, Inc.’s Motion for Leave to File Supplemental Authority in Response to FDIC-R’s Motion to Compel (ECF 187); Federal Deposit Insurance Corporation as Receiver of the Columbian Bank and Trust Company’s Motion for Leave to Respond to BancInsure, Inc.’s Motion for Leave to File Supplemental Authority in Response to FDIC-R’s Motion to Compel (ECF 189). The Court has granted the former motion. Without objection it also grants the latter motion. It thus considers their respective arguments upon the motion to compel.

Initially the Court notes Fed.R.Civ.P. 1. It directs the Court to construe and administer the rules “. . . to secure the just, speedy, and inexpensive determination of every action and proceeding.” Subject to this direction, the Court exercises its discretion in ruling on the motion to compel. For the following reasons it grants the motion as to Request 22 and denies it as to Request 19.


Document Request No. 19 and the response of Plaintiff are as follows:

Request No. 19: All documents relating to coverage for claims by the FDIC as receiver for failed banks against directors and officers of failed banks.
RESPONSE: BancInsure objects to this Request for Production as overly broad in scope, burdensome, vague, and ambiguous. The request as drafted appears to seek information related to any FDIC claim as a receiver related to failed banks involving any officers or directors of those failed banks. It appears to include within its scope FDIC activities not involving BancInsure. It also appears to include within its scope banks not insured by BancInsure. To the extent this Request for Production seeks information communicated or gathered by counsel for BancInsure in connection with the defense of this or other FDIC claims, BancInsure objects to the production of that information based on Attorney-Client Privilege and the Work Product Doctrine.

The parties have agreed that Request No. 19 should be narrowed to seek only documents relating to claims by the FDIC as receiver for banks insured by Plaintiff BancInsure and not as to failed banks it did not insure. Plaintiff contends the request nevertheless remains overly broad in scope and burdensome. FDIC-R in turn argues that Plaintiff waived the objection that the request remains burdensome for the number of hours required to produce the documents. Defendant cites Johnson v. Kraft Foods North America, Inc., [1] to support this argument of waiver. The Court agrees with the holding in Johnson, but finds it inapplicable here. The objection to Request 19 contains sufficient detail to withstand the suggestion of waiver. And for the following reasons the Court agrees that the request, although narrowed, remains overly burdensome.

Defendant FDIC-R contends that Request 19 is reasonably calculated to lead to the discovery of documents within the files of Plaintiff for other claims by other insureds, unrelated to the claims of Defendants here. FDIC-R first argues there is a reasonable expectation that Plaintiff has conceded coverage under policy provisions like those in this case. Secondly it argues that such concession(s) to any other policyholder(s) as to other claims would require Plaintiff and the Court to interpret the policy to provide coverage in this case. Thirdly it contends the requested discovery relates to its affirmative defenses of waiver and estoppel.

The initial arguments of Defendant FDIC-R illustrate the classic effort to interpret a contract of insurance so as to create coverage, aside what the policy itself may provide to the contrary. Although our and other courts have sometimes allowed similar discovery, the supporting argument for it, at least as it applies here, appears to be little more than an effort to dance around the parol evidence rule. And against the basic premise that an insurance contract, if unambiguous, is to be construed by the language within its four corners and not by incorporating provisions from other sources. If the policy is ambiguous, on the other hand, the claimant is entitled to coverage. And that holds true not because of some extraneous document containing a prior admission of coverage for some other insured. But rather and more simply because Kansas law requires any ambiguity in the policy to be construed in favor of coverage and against the insurer as the party who drafted the contract. The briefing of the parties appears to recognize these basic premises of Kansas insurance law.[2]

The foregoing consideration upon the present motion, of course, addresses relevancy of the requested documents for purposes of discovery. Plaintiff did not object to Request 19, however, on grounds of irrelevancy, or whether it is reasonably calculated to lead to the discovery of relevant evidence. Consequently, it waived that objection. Plaintiff did object upon grounds that the request is overly broad in scope and is burdensome. In determining that objection, the Court will consider to what extent the requested production is likely to provide relevant information so as to justify whatever burden exists to produce it.

At the outset the Court finds little persuasion in the suggestion that documents from files for other claims against other banks would necessarily or even likely help Defendants in this case. Many liability policies, including those issued by the same carrier, may contain identical or similar provisions; and many may not. Insurers often tailor the provisions of a policy to fit both their own requirements, those of the individual policyholder, and those required by statute or the administrative regulations of the state in which the policy is issued. Policies vary not only from policyholder to policyholder and from state to state, but also from year to year. For some insureds, but not all, the insurer may add one or more individual endorsements to a basic policy form. For any given insured the insurer may use one of its standard policy forms and then add other provisions, either by using other standard forms, e.g. endorsements, or with more tailor-made language that addresses the specific needs of the particular policyholder. This manner of issuing insurance appears to be specifically true of the insurance here at issue, as reflected by the policy attached to the briefing.[3]

Beyond these variations, one cannot assume that any particular claim(s) arising under one policy will either duplicate or involve facts materially similar to those that underlie other claims under other policies issued to other policyholders, whether in Kansas or elsewhere. Any given claim generally arises, moreover, from circumstances peculiar to that particular claim, not from those that duplicate or replicate other claims. Exceptions to that generality, of course, may occur. But when a claimant thus asserts a claim under one policy, any expectation is at best random that it will probably bear some reasonably relevant resemblance to some other claim by some other claimant at some other time and under materially similar circumstances. The Court can hardly assume beyond speculation, therefore, that other ...

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