Wednesday, February 14, 2018

Court Upholds Insurer's Refusal to Produce in Discovery Information Regarding Claims of Other Insureds

Gray v. Tri-State Consumer Ins. Co.
(2nd Dept., 1/31/2018)

Though not yet 50 shades of Gray, this action is growing some long legs.

The Second Department's affirmance of Supreme Court's denial of summary judgment to the parties on their respective claims and counterclaims in this first-party property coverage case is relatively unremarkable.  What is noteworthy, however, is the appellate court's brief treatment of Supreme Court's conditional granting of plaintiff's motion to strike Tri-State's answer unless it provided a "meaningful" response to plaintiff's supplemental discovery demands within 15 days.  By that supplemental demand, plaintiff had sought discovery of:
     4.  ... true and complete copies of Defendant's claim records for all fire claims for the last three years ... [and] 
     5.  ... true and complete copies of Defendant's  fire claim estimates for the last year.
In REVERSING that part of Supreme Court's order which had conditionally granted plaintiff's motion to strike Tri-State's answer if it did not respond to these supplemental discovery demands, the Second Department held:
The Supreme Court improvidently exercised its discretion in conditionally granting the plaintiff's cross motion pursuant to CPLR 3126 to strike the defendant's answer unless the defendant served a "meaningful" response to the plaintiff's supplemental demand for discovery and inspection within a specified time. "The drastic remedy of striking an answer is inappropriate absent a clear showing that a defendant's failure to comply with discovery demands is willful and contumacious" (Lantigua v Goldstein, 149 AD3d 1057, 1059). Here, the defendant had already complied with the plaintiff's supplemental demand for discovery and inspection, except for items four and five of the demand. The defendant properly objected to items four and five, which called for information regarding the claims of other insureds, as those items sought information that was not necessary and proper to the prosecution of this action (see Diaz v City of New York, 140 AD3d 826, 827; Cabrera v Allstate Indem. Co., 288 AD2d 415, 416).
It is often the case, as it is in this action, that the complaints initiating first-party actions against insurers include in addition to their breach of contract claims, causes of action for "bad faith", consequential damages, and the like.  Insureds in such actions often seek discovery of other claims and other insureds of the defendant insurers.  This decision reaffirms the principle that when something sought by plaintiffs in discovery is not necessary and proper to the prosecution of their actions, an objection to such demands is appropriate and defensible.

No comments: