Opinion
Civil Action No: 99-2292-KHV
February 20, 2001
MEMORANDUM AND ORDER
Pending before the Court is Plaintiffs' Motion to Compel Production of Documents and Answers to Interrogatories and For Sanctions (doc. 149). Plaintiffs move the court for an order compelling Garnishee American State Insurance Company ("Garnishee") to answer Interrogatory Nos. 4, 5(c), 6(c), 15(e), 18, 19, 19A and 20 of Plaintiffs' First Set of Interrogatories and to produce documents responsive to Request Nos. 1, 4, 6, 9, 10, 11, and 12 of Plaintiffs' First Request for Production of Documents. For the reasons stated below, Plaintiffs' Motion to Compel Production of Documents and Answers to Interrogatories and For Sanctions (doc. 149) is granted in part and denied in part.
A. Relevant Background
After obtaining judgments against defendants, plaintiffs filed the instant garnishment action against Garnishee. Garnishee insured defendant Miller/Zoch under one or more liability insurance policies. Garnishee agreed to indemnify Miller/Zoch for claims arising from personal injuries including defamation and for damage caused to personal property in the custody and control of defendants. Co-defendants Debra (Miller) Gwartney and Peggy Zoch each own fifty percent of Miller/Zoch, d/b/a Flapjack's Restaurant. Defendants Bruce, Anderson, and Gwartney were employees of Miller/Zoch. Defendants Bruce, Anderson, and Peggy Zoch have assigned all their right, title and interest in the insurance policies to plaintiffs.
Garnishee has filed its answer to the garnishment. It generally denies being indebted to any of the defendants or holding any funds belonging to them. It contends that it is not bound by the judgment entered against plaintiffs and that the plaintiffs' claims are not covered under its insurance policy. Plaintiffs' reply to Garnishee's answer disputes Garnishee's assertion and raises claims of coverage, lack of exclusions, breach of duty, bad faith and misrepresentation.
Plaintiffs served Garnishee with their First Set of Interrogatories and First Request for Production on September 29, 2000. Garnishee asserted various objections. By the present motion plaintiffs seek an order compelling Garnishee to answer Interrogatory Nos. 4, 5(c), 6(c), 15(e), 18, 19, 19A and 20 of Plaintiffs' First Set of Interrogatories and to produce documents responsive to Request Nos. 1, 4, 6, 9, 10, 11, and 12 of Plaintiffs' First Request for Production of Documents.
B. Interrogatories
1. Interrogatory No. 4
Plaintiffs' Interrogatory No. 4 requests identification of each natural person involved in the drafting of the insurance polices at issue in this case. Garnishee initially objected to the interrogatory on the ground that the information sought was not reasonably calculated to lead to the discovery of admissible evidence but admitted that it had prepared the policy at issue in this case. In its response to plaintiffs' motion, Garnishee states that it "cannot identify an individual [who] came up with the words used in the [insurance policy] forms in the first place." Where relevancy is not apparent, the party seeking discovery, has the burden to show relevancy of the discovery request. Employers Commercial Union Ins. Co. of America v. Browning-Ferris Industries of Kansas City, Inc., No. CIV. A. 91-2161-JWL, 1993 WL 210012, *3 (D.Kan. Apr. 5, 1993). As plaintiffs have not met their burden of showing the relevancy of the identification of the natural persons who drafted the various policy forms, including I.S.O. forms, the Court denies Plaintiffs' Motion to Compel garnishee to answer Interrogatory No. 4.
2. Interrogatory Nos. 5(c), 6(c), and 15(e)
Plaintiffs' Interrogatory No. 5(c) seeks identification of "all related documents including, all drafting history documents" related to Garnishee's contention that the insurance policy's "employment-related exclusion" excludes coverage of plaintiffs' claims. Interrogatory No. 6(c) seeks identification of similar documents pertaining to the policy's "intentional act exclusion." Interrogatory No. 15(e) requests identification of "all related documents, including, without limitation, all drafting and history documents" relating to any other policy provision or exclusion that Garnishee contends bars coverage. All three interrogatories essentially are seeking discovery of the drafting history of the exclusions by which Garnishee would bar coverage in this action. Garnishee objects on the bases that these interrogatories are vague and ambiguous, overly broad and burdensome, and not reasonably calculated to lead to the discovery of admissible evidence. Garnishee argues that it is impossible to make any determination with regard to what document might be related to an exclusion in an insurance policy where the exclusion has widespread use in an ISO form. Garnishee also contends that the reference to "all drafting history documents" is vague, ambiguous, and unreasonably broad.
Federal Rule of Civil Procedure 26(b)(1) governs the scope of discovery and provides that "parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action." Fed.R.Civ.P. 26(b)(1). Relevance at trial differs from that in discovery. Sentry Ins. v. Shivers, No. 95-2025-GTV, 1996 WL 61771, *1 (D.Kan. Feb. 6, 1996). Relevancy is broadly construed, and a request for discovery should be considered relevant if there is "any possibility" that the information sought may be relevant to the subject matter in the action. Beach v. City of Olathe, No. CIV. A. 99-2210-GTV, 2000 WL 960808, at *2 (D.Kan. July 6, 2000). When the discovery sought appears relevant, the party resisting the discovery has the burden to establish the lack of relevance. Employers Commercial Union, 1993 WL 210012, at *3. However, where relevancy is not apparent, it is the burden of the party seeking discovery to show the relevancy of the discovery request. Id.
In ruling on discovery disputes concerning the production of drafting history material, state law governing contract interpretation is applied to the standard of relevancy governing discovery. Irene A. Sullivan, Case Management and Other Pretrial Considerations: The Insurer's Perspective, 690 PLI/Comm 489, 517 (1994). The relevant determination in an insurance policy contract interpretation action is whether there is "a possibility that under the facts of the case the insured may be found legally obligated to pay damages because of an occurrence that was an insured risk; that is, a possibility that there may be a duty to indemnify arising out of the facts of the case." Bankwest v. Fidelity Deposit Co. of Maryland, 63 F.3d 974, 978 (10th Cir. 1995) (quoting American Fidelity Ins. Co. v. Employers Mut. Cas. Co., 3 Kan. App.2d 245, 593 P.2d 14, 19-20 (1979)). Even if drafting history materials are found to be relevant, an insurer may not be required to produce them if the burden associated with the review and production of the materials outweighs any perceived relevance. Leksi, Inc. v. Federal Ins. Co., 129 F.R.D. 99, 103 (D.N.J. 1989).
Plaintiffs argue that in disputes over the duty to defend or coverage matters discovery should be permitted over a wide variety of documents and issues, including drafting history and interpretative documents. Garnishee argues that the drafting history materials are not reasonably calculated to lead to discovery of admissible evidence because determining whether the language is ambiguous depends upon examination of the policy itself and not extrinsic evidence.
Under Kansas law, when construing the terms of an insurance policy, the court must interpret the language according to its "plain meaning, consistent with the reasonable expectations, objectives, and intent of the parties." Security State Bank of Kansas City v. Aetna Cas. and Sur. Co., 825 F. Supp. 944, 946 (D.Kan. 1993) (citing American States Ins. Co. v. McCann, 17 Kan. App.2d820, 824, 845 P.2d 74, 77 (1993)). The test to determine whether an insurance policy is ambiguous is not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean. Bush v. Shoemaker-Beal, 26 Kan. App.2d 183, 184, 987 P.2d 1103, 1105 (1999). If a court determines that an insurance contract is unambiguous, the policy must be construed according to the sense and meaning of the terms, taken in its plain, ordinary, and popular sense. Id. Kansas' rules for interpreting insurance policies do not include consideration of extrinsic evidence. Coleman Co., Inc. v. California Union Ins. Co., 960 F.2d 1529, 1536 (10th Cir. 1992). The purpose for which an insurer drafts a policy exclusion, furthermore, does not control its interpretation when it is clear and unambiguous. Crescent Oil Co., Inc. v. Federated Mut. Ins. Co., 20 Kan. App.2d 428, 888 P.2d 869 (1995). If the court determines the insurance contract contains language that is uncertain, ambiguous, or have conflicting meaning, however, then the insurance policy is to be construed in favor of the insured and against the insurer. State Farm Fire and Cas. Co. v. Martinez, 26 Kan. App.2d 869, 876, 995 P.2d 890, 895 (2000) (citations omitted). In that instance, the construction most favorable to the insured must prevail. Union State Bank v. St. Paul Fire and Marine Ins. Co., 18 Kan. App.2d 466, 471, 856 P.2d 174, 178 (1993). This principle recognizes that an insurer prepares its own contract and thereby assumes the duty to make its meaning clear and define coverage limitations in explicit terms. Id. at 471.
For the foregoing reasons, the relevancy of the drafting history of the insurance policy in this insurance contract interpretation case is not apparent. As plaintiffs have not shown how the drafting history would be relevant, the Court denies Plaintiffs' Motion to Compel answers to Interrogatory Nos. 5(c), 6(c), and 15(e).
3. Interrogatory Nos. 18, 19, and 19A
Plaintiffs' Interrogatory Nos. 18 through 19A seek information regarding instances analogous to the present case wherein Garnishee paid or settled claims in the last ten years where the allegations involved nonparty claims similar to the ones asserted by plaintiffs in this case. Garnishee objected on the grounds that the information sought was not reasonably calculated to lead to the discovery of admissible evidence.
In this case, the main issues of law relate to whether Garnishee, under the liability insurance policy issued defendants, has a duty to defend defendants and a duty to indemnify defendants for the judgments rendered in favor of plaintiffs and against defendants. Plaintiffs' Interrogatory Nos. 18 through 19A seek information for the past ten years on instances analogous to the present case wherein Garnishee paid or settled claims similar to the ones asserted by plaintiffs in this case. Plaintiffs contend that in disputes over the duty to defend or coverage matters, discovery is permitted over a wide variety of documents and issues, including the insurer's resolution of similar claims involving the same policy terms and exclusions. Garnishee argues that such information is irrelevant because the court's determination of whether the insurance policy language is ambiguous under Kansas law is based upon examination of the policy itself and not extrinsic evidence.
Based upon the same rationale set forth by the Court for denying Plaintiffs' Motion to Compel as to Interrogatory Nos. 5(c), 6(c), and 15(e) seeking identification of drafting documents, the Court determines that the discovery of analogous instances wherein Garnishee paid or settled claims similar to those asserted by plaintiffs here does not appear relevant to the subject matter in this action. As plaintiffs have not demonstrated relevancy, the Court therefore denies Plaintiffs' Motion to Compel as to Interrogatory Nos. 18, 19, and 19A.
4. Interrogatory No. 20
Interrogatory No. 20 seeks identification of "each person who assisted in the preparation of the answers to these interrogatories." Garnishee objected in its answers on the basis of attorney/client privilege. As the party asserting the attorney/client privilege, Garnishee has the burden to establish that the privilege applies. Fears v. Wal-Mart Stores, Inc., No. 99-2515-JLW, 2000 WL 1679418, *4 (D.Kan. Oct. 13, 2000). To carry that burden, Garnishee must make a "clear showing" that the asserted objection applies. Id. A "blanket claim" as to applicability of the privilege does not satisfy the burden of proof. Id.
Garnishee states in support of its objection that "the Interrogatories were answered with the advice of counsel." Garnishee's Response to Motion to Compel. This is essentially a blanket claim of privilege and does not satisfy Garnishee's burden of demonstrating the applicability the attorney/client privilege. Furthermore, even if Garnishee met its burden of establishing the existence of attorney/client privilege, the interrogatory only seeks identification of persons who assisted in the preparation and not any substantive information they provided. The Court will therefore grant Plaintiffs' Motion to Compel Garnishee to answer Interrogatory No. 20.
C. Requests for Production
Plaintiffs also seek to compel Garnishee to produce all documents responsive to Request Nos. 1, 4, 6, 9, 10, 11, and 12 of its First Request for Production of Documents.
1. First Request for Production No. 1
Plaintiffs' Request No. 1 seeks "all documents identified in your answers to Plaintiffs' First Set of Interrogatories." Garnishee states that it has produced the documents identified in the Interrogatory answers. The present order does not require further answers to interrogatories except for Interrogatory 20. It requires only identification of natural persons, not documents. The Court, therefore denies Plaintiffs' Motion to Compel as to Request No. 1.
2. First Request for Production No. 4
This request asks Garnishee to produce "all documents that Garnishee may use to support its claims or defenses in this action." Garnishee objects to Request No. 4 on the bases the request is not relevant, is vague and ambiguous, and the Garnishee is uncertain of the nature of the documents identified. Garnishee also objects on the basis the request invades the attorney/client privilege and calls for the production of documents prepared in anticipation of litigation and preparation for trial. In its response to plaintiffs' motion to compel, Garnishee states that it has produced a copy of the claim file and policy. Plaintiffs contend that the request mirrors the language in the new Federal Rule of Civil Procedure 26(a)(1)(B), effective December 1, 2000, thereby demonstrating the relevancy of this request. Plaintiffs also contend that Garnishee's vagueness and ambiguity claims are boilerplate objections and are misplaced.
The Courts hold that Plaintiffs' Request No. 4 seeking "all documents that Garnishee may use to support its claims or defenses in this action" is relevant and does not appear vague and ambiguous. The Court will therefore grant Plaintiffs' Motion to Compel as to Request No. 4 but require Garnishee to provide a privilege log as required by Fed.R.Civ.P. 26(b)(5) for any documents it withholds as subject to attorney/client privilege.
3. First Request for Production No. 6
Plaintiffs' document Request No. 6 seeks all documents related to policy terms or exclusions that are at issue, including prior versions, drafts of terms or exclusion and any explanatory or interpretive memoranda. Garnishee objected to this request on the grounds that the information sought is not reasonably calculated to lead to the discovery of admissible evidence and it calls for legal opinion of counsel with regard to what is relevant. Garnishee states, in its response to the motion to compel, that there are no "prior versions of the policy" because the policy was new business at the time the policy was issued. Garnishee also argues that the request appears to refer to every other policy issued to any other insured, without regard to time. Based upon the same reasons set forth by the Court for denying Plaintiffs' motion on Interrogatory Nos. 5(c), 6(c), and 15(e) seeking identification of drafting documents, the Court denies Plaintiffs' motion to compel as to Request No. 6.
4. First Request for Production Nos. 9 — 12
Request Nos. 9 and 11 seek production of documents concerning Garnishee's payment or settlement of claims similar to those asserted by plaintiffs. Request Nos. 10 and 12 seek documents pertaining to Garnishee's refusals to provide a defense in cases involving claims similar to those asserted by plaintiffs over the past ten years. Based upon the same reasons set forth by the Court for denying plaintiffs' motion on Interrogatory Nos. 18, 19, and 19A seeking identification regarding instances analogous to the present case wherein Garnishee paid or settled claims in the last ten years where the allegations involved nonparty claims similar to the ones asserted by plaintiffs in this case, the Court also denies Plaintiffs' Motion to Compel as to Request Nos. 9, 10, 11, and 12.
D. Summary
The Court hereby grants in part and denies in part Plaintiffs' Motion to Compel (doc. 149). The Court grants Plaintiffs' Motion to Compel as to Interrogatory No. 20 of Plaintiffs' First Set of Interrogatories. The Court denies Plaintiffs' Motion to Compel as the remaining interrogatories at issue in this motion, specifically Interrogatory Nos. 4, 5(c), 6(c), 15(e), 18, 19, and 19A. In addition, the Court grants Plaintiffs' Motion to Compel as to Request No. 4 of Plaintiffs's First Request for Production of Documents, subject to allowing Garnishee providing plaintiffs with a privilege log of the documents for which Garnishee is asserting attorney/client privilege. The Court denies the remaining requests for production at issue in this motion, specifically Request Nos. 1, 6, 9, 10, 11, and 12 of Plaintiffs' First Request for Production of Documents.
IT IS SO ORDERED.