Landmark Am. Ins. Co. v. HECO Realty, LLC
Landmark Am. Ins. Co. v. HECO Realty, LLC
2024 WL 4920605 (W.D. Tenn. 2024)
February 9, 2024
York, Jon A., United States Magistrate Judge
Summary
Landmark American Insurance Company filed a motion to compel Liberty Mutual Fire Insurance Company to produce documents related to the issue of priority of coverage. However, the district court denied the motion, stating that the Sixth Circuit's ruling on this issue meant that the requested documents were irrelevant and outside the scope of discovery. The court also noted that Landmark had not shown how the requested documents would help determine how to prorate coverage or pertain to Landmark's remaining coverage defenses.
LANDMARK AMERICAN INSURANCE COMPANY, Plaintiff,
v.
HECO REALTY, LLC and LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendants
v.
HECO REALTY, LLC and LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendants
Case No.: 1:20-CV-02631-STA-jay
United States District Court, W.D. Tennessee, Eastern Division
Filed February 09, 2024
York, Jon A., United States Magistrate Judge
ORDER DENYING PLAINTIFF LANDMARK AMERICAN INSURANCE COMPANY'S MOTION TO COMPEL PRODUCTION OF DOCUMENTS FROM DEFENDANT LIBERTY MUTUAL FIRE INSURANCE COMPANY
*1 This matter comes before the Court on Plaintiff Landmark American Insurance Company's (“Landmark”) Motion to Compel Production of Documents from Defendant Liberty Mutual Fire Insurance Company (“Liberty Mutual”). D.E. 112. Defendant has responded in opposition. D.E. 115. This matter has been referred to the Magistrate Judge for determination. D.E. 114. After a thorough review, Plaintiff's Motion to Compel is DENIED based on the following reasons.
Applicable Law
Under Rule 26 of the Federal Rules of Civil Procedure, a party 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[.]” Fed. R. Civ. P. 26(b)(1). “Relevance for discovery purposes is extremely broad.” Kokosing Constr. Co. v. RLI Ins. Co., No. 2008 WL 619359, at *1 (S.D. Ohio 2008) (citing Miller v. Fed. Express, Corp., 186 F.R.D. 376, 383 (W.D. Tenn. 1999)); see also Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 402 (6th Cir. 1998) (“The scope of discovery under the Federal Rules of Civil Procedure is traditionally quite broad.”). Nevertheless, discovery does have “ultimate and necessary boundaries,” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978) (quoting Hickman v. Taylor, 329 U.S. 495, 507, 67 S.Ct. 385, 91 L.Ed. 451 (1947)), and “it is well established that the scope of discovery is within the sound discretion of the trial court.” Coleman v. American Red Cross, 23 F.3d 1091, 1096 (6th Cir.1994) (quoting United States v. Guy, 978 F.2d 934, 938 (6th Cir.1992)).
Background
The parties have provided detailed factual backgrounds in their briefing. A summary of the relevant background is as follows: two property insurers, Landmark and Liberty Mutual, dispute which insurer should pay for a loss sustained by HECO Realty, LLC (“HECO”) to its properties located at 2005 Forrest St., Dyersburg, Tennessee. Plaintiff Landmark insured the owner of the property, HECO Realty, LLC (“HECO”). Defendant Liberty Mutual insured HECO's tenant Renwood Acquisitions, LLC d/b/a Heckethorn Manufacturing (“Heckethorn”) and listed HECO as an additional insured. During Heckethorn's tenancy, damage occurred and HECO submitted claims for the damage under both the Liberty Mutual policy and the Landmark policies. Liberty Mutual, upon receipt of HECO's claim and an investigation, settled the claim. As part of that settlement Liberty Mutual obtained an assignment from HECO of its right to recover from Landmark. Landmark filed this lawsuit seeking a declaratory judgment that its policy does not cover HECO's loss to a property caused by the unauthorized removal of wiring and other building components. Defendant Liberty Mutual has counterclaimed, seeking to recover from Plaintiff Landmark all or a portion of its settlement payment to HECO. In August 2021, the Court granted summary judgment to Plaintiff Landmark. D.E. 92. The Court found that the parties' lease agreement governed priority of coverage and, under the lease terms, Landmark's coverage was excess only. Because HECO's loss did not exceed the Liberty Mutual policy limit, Landmark did not afford coverage for the loss.
*2 On August 22, 2022, the Sixth Circuit reversed the summary judgment for Landmark, finding Tennessee law did not support Landmark's position that the underlying lease should govern priority of coverage. Landmark Am. Ins. Co. v. HECO Realty, LLC, et al., No. 21-5858, 2022 WL 3585634, at **6-9 (6th Cir. 2022). The Sixth Circuit ruled that rather than the lease, the policies' “other insurance” clauses would govern priority of coverage. Applying these clauses, the court found, “[p]roration between Liberty Mutual and Landmark is appropriate here.” Id. at *11. The court thus remanded the matter to the district court to “determine how to prorate coverage” and to consider Landmark's remaining coverage defenses. Id. at *12.
Analysis
Plaintiff seeks, pursuant to Fed.R.Civ.P. 37, an order compelling Defendant to produce documents responsive to Requests 1 through 8 of Plaintiff's Second Requests for Production to Liberty Mutual Fire Insurance Company. The Requests for Production “seek documents relevant to the issue of which policy of insurance provides primary coverage for the claimed damages to property covered under respective policies of insurance issued by Liberty Mutual and Landmark.” D.E. 112, Motion to Compel at 1. Plaintiff argues that these requests are “highly relevant to the issue of priority.” D.E. 112-1 at 7.
Defendant Liberty Mutual maintains that the discovery sought is an attempt by Plaintiff to relitigate its argument that the parties' lease governs priority of insurance coverage rather than the policies' “other insurance” provisions. Because the Sixth Circuit has rejected this argument on appeal, Defendant Liberty Mutual urges, the discovery requests do not fall within the scope of Rule 26 as they are irrelevant. For these reasons, it argues that the Court should deny Landmark's motion to compel.
The Sixth Circuit, as stated supra, found on appeal that the underlying lease did not govern priority of coverage, but rather, under the facts of this case, the policies' “other insurance” clauses governed priority of coverage. Landmark Am. Ins. Co. v. HECO Realty, LLC, et al., No. 21-5858, 2022 WL 3585634, at **6-9 (6th Cir. 2022) (emphasis added). Defendant Liberty Mutual summarized the holdings succinctly:
First, the court stressed, Liberty Mutual did not agree in the Policy to insure Heckethorn's underlying obligations in the Lease. Instead, the Court noted, “[t]he policy itself is silent about Heckethorn's obligation to cover the costs of damage to the property.” Id. at *7. Second, the Court recognized, in the cases applying the majority rule, there was “ ‘a close factual relationship between the indemnity obligation and the insurance contracts.’ ” Id. at *8 (quoting Wal-Mart Stores, 292 F.3d at 589-90). Here, in contrast, Landmark failed to demonstrate any connection between Heckethorn's promise to buy property insurance and its promise to pay certain repair costs, other than admonishing the Court to “acknowledge ‘how business works[.]’ ” Id. at *9. Rather than the underlying lease, the court concluded, the policies' “other insurance” clauses would govern priority of coverage. Applying these clauses, the court found, “[p]roration between Liberty Mutual and Landmark is appropriate here.” Id. at *11. The court thus remanded the matter to the district court to “determine how to prorate coverage” and to consider Landmark's remaining coverage defenses. Id. at *12.
Defendant Liberty Mutual's Response, D.E. 115, at 2-3. The undersigned agrees with Defendant that this is a “narrow directive” to the district court on remand. Id. at 3.
A review of the requests at issue show that Plaintiff's Requests 1-3 seek underwriting files, and Requests 4-8 pertain to the lease agreement. Plaintiff admits in its Motion that it is seeking to relitigate the issue decided by the Sixth Circuit: “[b]ased on the Opinion of the Court of Appeals, the application of the majority rule depends on whether Liberty Mutual issued the Liberty Mutual Policy intending it to cover Heckethorn's lease obligations. Information relevant to this question would be found in the underwriting file.” D.E. 112-1 at 8. The Sixth Circuit has already ruled on that issue and declined to apply the majority rule; Plaintiff's attempt to get a second bite at the apple is not well-taken. Additionally, Plaintiff makes no attempt to describe how the information sought would help the Court determine how to prorate coverage or how the information sought would pertain to Plaintiff's remaining coverage defenses, which are the only remaining issues before the Court – it is clear that Plaintiff is well beyond this narrow directive in these requests. For these reasons, Plaintiff's Motion to Compel Production of Documents from Defendant Liberty Mutual Fire Insurance Company is DENIED.
*3 IT IS SO ORDERED this the 9th day of February, 2024.
IF DESIRED, AN APPEAL OF THIS ORDER TO THE PRESIDING DISTRICT COURT JUDGE MUST BE FILED WITHIN FOURTEEN (14) DAYS OF THE SERVICE OF A COPY OF THIS ORDER. SEE 28 U.S.C. § 636(b)(1)(C); LOCAL RULE 72(g)(2). FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS MAY CONSTITUTE A WAIVER/ AND OR FORFEITURE OF OBJECTIONS, EXCEPTIONS, AND ANY FURTHER APPEAL.