Free Brief in Opposition to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 00 CV 2098-REB-MJW KELLY FINCHER, by her guardian, JAMES FINCHER, on behalf of herself and all others similarly situated, Plaintiff, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant. ________________________________________________________________ DEFENDANT'S MEMORANDUM IN OPPOSITION TO PLAINTIFF'S MOTION TO COMPEL

Defendant Prudential Property and Casualty Insurance Company ("Prupac"), through its counsel, for its opposition to Plaintiff's Motion to Compel [Document 219, filed 4-16-07], states as follows:

CERTIFICATE OF COMPLIANCE Plaintiff's counsel's certification is incomplete and incorrect. Plaintiff attached as exhibits only the initial correspondence between counsel on the disputed issues. Notably, he failed to include two additional letters (dated March 28 and April 9, 2007, attached hereto as Exhibits 1 and 2), evidencing the Defendant's second request for an explanation of the relevance of the proposed areas of inquiry, Counsel's failure to provide such explanation, Defendant's invitation to discuss the matter by phone to perhaps narrow the overly broad requests (which Counsel ignored), and Defendant's explanation that it was not

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objecting to the requested deposition on grounds it had no remaining employees ­ as Plaintiff contends in her motion.1 SUMMARY OF POSITION Prupac objects to Plaintiff's motion in its entirety. Plaintiff's stated purpose in seeking the deposition is "to address facts that were not at issue previously", based on only one new development since the previous three Rule 30(b)(6) depositions of Prupac employees were taken ­ the Court's reformation order of February 28, 2006. Because this order does not affect the topics Plaintiff seeks to address in deposition, the Rule 30(b)(6) request is nothing more than an improper effort to conduct discovery after the deadline. Moreover, the requests are overbroad, irrelevant to any remaining issues in this case, unduly burdensome to the Court and Defendant, and harassing. DISCOVERY LIMITATIONS Discovery was previously extended at Plaintiff's request beyond the cut-off date set forth in a prior scheduling order [by Minute Order of October 1, 2001, Document 34]. In the Amended Scheduling Order of September 14, 2006 [Document 202]. the parties set forth their respective positions on remaining discovery. The Plaintiff proposed reopening discovery "as to all remaining issues for purposes of supplementing existing discovery only. . ." The Defendant's position was as follows:
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Plaintiff argues, in paragraph 7 of her motion, that Prupac claims it is unable to supply a 30 (b)(6) deponent because it has no remaining employees. This is inaccurate. As evidenced by Exhibit 2, counsel was fully aware that Prupac was not objecting to the deposition on those grounds, and that its previous letter (Exhibit B to Plaintiff's motion) merely responded to Plaintiff's initial observation that no remaining employees existed. (Prupac was sold in November of 2003, and because it no longer exists as an entity, it no longer has employees.)

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"The Defendant objects to the reopening of all discovery, as non-expert discovery was concluded as of December 15, 2001, and expert discovery pursuant to previous orders, scheduling orders and several final pretrial orders in this case. No new issues have arisen since that time, except for the possible change in Plaintiff's medical, life care or economic condition, and therefore discovery should not be reopened except as (described)." PLAINTIFF'S RULE 30(b)(6) REQUEST Fed. R. Civ. P. 30(b)(6) requires that notice to a corporate defendant must "describe with reasonable particularity the matters on which examination is requested". Although Plaintiff's motion fails to "set forth verbatim the request to which the motion is directed" as required by D.C. Colo. LCivR 37.1, presumably she seeks to inquire as to all of the matters identified in her counsel's letter, attached as Exhibit A to her motion, as outlined below. Plaintiff argues only that this "supplemental" discovery request is necessitated by a recent development ­ the Court's February 28, 2006 reformation order: "After a Prudential representative was deposed in this case, the trial court ruled that the subject policy is deemed reformed and established an effective date of reformation of May 8, 1994, the date of Ms. Fincher's accident. Because these developments post-date the last deposition, Plaintiff needs to address facts that were not at issue previously. One of the fundamental issues in this case is about why Prudential did not tender payment at various times after the effective date of reformation. Because the effective date was not established until after the initial deposition, Fincher is entitled to discover facts surrounding Prudential's knowledge and conduct at all times relating to the effective date of reformation." (emphasis supplied).

It is clear from a review of the 30 (b)(6) matters identified in counsel's letter, however, that this order does not justify the requested areas of inquiry.

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Counsel's request not only exceeds his own proposed discovery limitations, but fails to find any support in his motion. Subject Matters Relating To Putative Class Members 1) any decisions made by Prudential regarding the payment of claims for extended PIP benefits under the policies at issue in this case, including the handling of any claims for extended PIP benefits under the Prudential policies at issue in this case; the names of any such claimants and counsel, the case captions and venues of each suit filed, the disposition of each claim or case (denied, settled prior to trial, resolved prior to or by trial, etc.); 2) whether Prudential has sought out any other potential claimants for extended PIP categorically or otherwise, and if so, by what means; and 3) the position Prudential is taking regarding the inclusion of extended PIP coverage or payment of extended PIP to any such claimants, including whether the company will as a matter of company policy take any particular position regarding the payment of extended PIP payments under a particular set of facts or guidelines. These 3 subject matters involve discovery of claims and claimants unrelated to Fincher's claim, and are grouped together accordingly. The requested discovery is irrelevant to the claims and defenses remaining in this suit, not reasonably calculated to lead to the discovery of admissible evidence, not made necessary due to recent case developments, and is overly broad and unduly burdensome to the Court and the Defendant. First, these 30(b)(6) designations seek information concerning claims and treatment of putative class members which by Court order are not at issue in this suit. Regardless of whether such inquiries may have been relevant at an earlier time in this case, this Court's order denying class certification, dated March 22, 2007 [Document 217] confirms the lack of relevance of any other insurance

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policies or any other claims under policies that may have been issued by Prupac. (p.6 of Order Denying Plaintiff's Motion For Class Certification). Plaintiff has asserted no individual claims for relief based on Prupac's conduct toward any other individuals, and discovery directed to Prupac's position or actions concerning any other insureds under this or any other insurance policy form is entirely irrelevant to this case. No policy issued to any other policyholder has been judicially reformed. Indeed, the unique factual circumstances of other insureds (including whether Prupac agents orally offered full APIP limits to such policyholders as instructed) is critical to any such reformation, and far beyond the scope of any relevant inquiries concerning Ms. Fincher's individual claims or any issue remaining in this litigation. Second, these requests are not justified by the Court's reformation order, and therefore do not "address facts that were not at issue previously." That Order, entered on February 28, 2006 [Document 158], reformed Fincher's policy (only) to include an aggregate limit on benefits, and establish a reformation date of May, 8, 1994. The reformation ruling applied only to Ms. Fincher's claims, based on the unique facts and circumstances of this case as presented at a twoday trial; it has no application to any other potential claimants, and has absolutely no bearing on discovery concerning other claimants under this or any other Prupac policy. Counsel's attempt to characterize the need for such information as predicated upon the reformation order is simply an effort to conduct discovery which could and should have been requested within the original discovery deadlines. In fact, these matters were addressed both in written discovery and in

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the depositions of Mary Rowe and Mary Henry taken in 2001.2 The limited scope of the reformation ruling does not justify supplementation of the designated matters unrelated to that order. Third, a portion of these overly broad requests seeks the same information Fincher was prohibited from discovering by Court Order. On September 4, 2001, Plaintiff filed a motion to compel [Document 22] which included, inter alia, a request for information concerning post-1995 policies and claimants. (The policy under which Fincher seeks benefits was revised effective January, 1995, curing the defect of which she complained). Prupac objected to such requests by response brief dated September 17, 2001, [Document 25] as follows: "Neither the Plaintiff, nor the purported class she represents, can make any claims under the policy issued as of January 1995. The Plaintiff herself has no standing, as the 1995 policy was not the policy in effect at the time of issuance to Prudential's insured, or at the time of the accident, nor at the time Plaintiff made a demand for PIP benefits. Since the Plaintiff has no standing to make a claim under a subsequently issued policy, none of the purported class members have such a claim, either. Plaintiff has implicitly recognized this issue when she states, in paragraph 12 of her motion, that after 1995 "... a group of Prudential insureds still exists beyond those who were aggrieved by the policy deficiencies prior to February of 1995..." Plaintiff is not and cannot make a claim under those policies, either on behalf of herself or the putative class of which she claims to be a member. Not only has Plaintiff failed to respond to undersigned's request for legal authority for her position, she has utterly failed to advise this Court of any factual or legal basis supporting her claimed entitlement to this information. "

See, e.g., Plaintiff's First Set Of Interrogatories # 17 [notice to other PIP claimants] & 18 [identification of other suits], First Request for Production # 17 [documents re decision to provide APIP benefits to insureds not purchasing APIP coverage], First Request For Admissions # 3, 4 & 5, [modification of policy, recalculation of benefits and notifications to other insureds], and select requests from Plaintiff's Second Set Of Written Discovery [names of all PIP beneficiaries, records of PIP payments to other insureds, payments in excess of policy cap, etc], all set forth on Exhibit 3, "Plaintiff's Select Discovery To Defendant", and Mary Rowe deposition transcript, at p. 94-95 (Exhibit 4), discussing payment of benefits to other insureds in excess of policy limits.

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Magistrate Watanabe's Minute Order of October 1, 2001 [Document 34], denied Plaintiff's motion to compel this information, "substantially for the reasons stated in Defendant's response." Plaintiff now seeks to obtain the same information the Magistrate previously determined was neither relevant nor reasonably calculated to lead to the discovery of relevant information. Fourth, the burdensome nature of these requests, both to Prupac in responding to such overbroad and abusive inquiries, and the Court in having to conduct mini-trials on Prupac's handling of other claims, would be substantial. Prupac's representative Mary Rowe previously described in deposition that the computer generated information produced in discovery would be insufficient to answer inquiries relevant to whether any particular claimant may have requested or otherwise been entitled to additional (APIP) benefits. (Exhibit 4, p. 54 ­ 58.) It would thus be necessary to review each individual paper file, particularly to learn what discussions occurred and/or decisions were made regarding payment of individual claims. As evidenced by Prupac's discovery responses, it adjusted 256 PIP claims between July,1992 through January, 1995, and Plaintiff's inquiry requests claims under all Prupac policies ­ from 1990 through the present. These files would have to be located, retrieved from storage where possible, employees hired to review each and every claim file, and summaries prepared in advance of the deposition to enable the deponent to answer questions. The designated matter is so broad as to make it nearly impossible to anticipate questions concerning other extended PIP claims ("any decisions" regarding "the payment of claims", "including the handling of any claims"), thus necessitating the

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review and analysis of many hundreds of paper files in advance of the deposition. Plaintiff's fishing expedition does not justify the literally hundreds of hours necessary to obtain and review these files. The burden on the Court is also substantial. Plaintiff argues in paragraph 7 that "if Prudential `stonewalled' payment of benefits in light of controlling case law but paid other claims while leaving this one unpaid for a period of time, then such conduct is relevant to the pending bad faith claims." The Court's recent

reformation order in this case is unrelated to Prupac's conduct toward other parties, and there has been no change of "controlling case law" as to any other individuals during the pendency of this case as renders such issue newly relevant. That is, of course, because the reformation order applies only to Ms. Fincher, under the specific facts of Ms. Fincher's claims, and does not serve to reform any other Prupac insurance policy issued to any other insured at any other time. In any event, to inquire into other claims, where no policy reformation occurred, necessarily involves factual issues unrelated to this case. Whether Prupac paid or did not pay other claimants is irrelevant unless and until plaintiff establishes, at a minimum, based on the unique and equally complicated set of facts involving any other insured, that such payments were legally owed to other claimants, that those claimants were similarly situated to Fincher, and that failure to pay or the timing of payment was bad faith. Such a determination would require mini-trials for every other claimant, not only on the issues of factual similarities and legal duties to pay, but on the propriety of Prupac's handling of

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each of those specific claims given the unique circumstances of each case. This would substantially increase the necessary trial time, risk prejudice and issue confusion under F.R.E. 403 by suggesting bad faith in other cases is proof of bad faith to Fincher, and result in a substantial waste of judicial resources in litigating what are essentially claims of class members where no class has been certified because, among other things, individual issues predominate. [Document 217, p. 8-9] Indeed, Fincher abandoned bad faith claims in her Amended Motion For Class Certification [Document 175] for the very same reason. There are no other reformation orders on any Prupac policies in Colorado. The only other lawsuit seeking APIP benefits involving Prupac policies was filed by Fincher's same counsel, and in that case this same Court dismissed all claims on summary judgment. (Exhibit 5, Order Concerning Motions For Summary Judgment, Stapish v Prudential, Case No. 03RB718 (MJW)). The Court's dismissal of Stapish's suit underscores the fact such claims are fact-specific, rendering inquiry into other claims irrelevant to Fincher's case. The only other claim for APIP benefits identified during discovery was previously discussed by Prupac's Rule 30(b)(6) deponent Mary Rowe on August 2, 2001. (Exhibit 4, pp. 94-95), and is irrelevant because the policyholder had purchased APIP benefits and was paid accordingly. Even if such information is somehow relevant to Fincher's remaining individual claims, it was the subject of prior discovery, and since the reformation order does not affect this issue, Plaintiff's inquiry does not "address facts that were not at issue previously".

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Finally, Plaintiff's request for an identification of other policyholders is a thinly disguised improper effort to identify potential class representatives. Her attorneys have filed two duplicative class actions against Prupac, one of which was dismissed on summary judgment (Stapish v. Prudential), and in the instant case class certification was denied. Her attorneys, as learned from the deposition of Stapish's mother, have advertised on television seeking claimants against Prupac. Moreover, the request implicates substantial privacy rights of other claimant's medical conditions, protected by law, including federal statute (HIPAA). Fincher's previous request for identification of other policyholders was denied, and this most recent fishing expedition seeks to subvert that order, and constitutes an abuse of the discovery process. These designated inquiries into other claimants and other policies are overly broad and irrelevant, not reasonably calculated to lead to the discovery of admissible evidence, unduly burdensome, and ultimately constitute harassment of the Defendant. Subject Matter Relating To Plaintiff

4) the reasoning for payment of the Fincher claims at the time and in the amount paid; This subject matter is irrelevant, not reasonably calculated to lead to the discovery of admissible evidence, redundant, and serves only to harass the Defendant. Plaintiff suggests that this inquiry is relevant because, under Colorado law, bad faith issues in an insurance case can be ongoing even during litigation.

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However, Plaintiff has never asserted any "ongoing" bad faith claims in this lawsuit. Plaintiff's Second Amended Class Action Complaint alleges Prupac (1) "made a minimal effort, if any, to" identify Plaintiff as an insured entitled to extended PIP benefits under the Thompson and Brennan cases and to advise her of the availability of those benefits; and (2) "continued to prematurely terminate benefit payments" to Plaintiff despite knowledge of those cases. Amended Complaint at ¶¶ 45-46. The willful and wanton conduct alleged is essentially the same as the alleged bad faith--a refusal to pay Plaintiff extended PIP benefits after becoming aware of the Brennan case. Amended Complaint, ¶¶ 28-29, 49-53 (beginning some time after August 24, 1998, the date the Colorado Supreme Court denied certiorari in Brennan). Even if ongoing bad faith were an issue in this case, Plaintiff is well aware of the reasons for the payment of her claims at the time and in the amount paid; and there is nothing more to be discovered. These reasons are an integral history of the case. Prupac initially obtained summary judgment in its favor. Plaintiff appealed, and the 10th Circuit remanded the case for a specific determination by the trial court as to the scope and amount of policy reformation. This Court entered its reformation Order on February 28, 2006, and two weeks later, by letter of March 14, 2006 (Exhibit 6), Plaintiff advised Defendant: "In light of the trial court's ruling of February 28, 2005 (sic), on this case, it appears clear at this time that there are certain monies that are presently owed to Ms. Fincher, regardless of additional amounts that have yet to be determined by trial. (emphasis added)."

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Defendant then tendered the balance due under the reformed policy by letter of April 12, 2006, and the statutory interest on that amount by letter of May 11, 2006, (Exhibit 8), emphasizing that such payment was being made "even though the Court ruling which would require such payment is not final, and is subject to appeal." The timing and amount of the benefits payment is self-evident ­ it was made following the court order judicially reforming the policy to afford APIP benefits to Plaintiff. Similarly, the interest payment was made after calculating interest following the Court's reformation order, and following negotiations with Plaintiff's counsel regarding methodology and amount. (See Exhibits 6, 7 and 8). Prupac made the payments, even though it was not yet obligated to do so, as the reformation order is not a final order under Fed. R. Civ. P. 54(b) or 58, and certainly not an order entitling Plaintiff to immediate payment or even execution pursuant to Rule 62(a). Thus, the timing and reasons for the payments are selfevident, unrelated to any bad faith issues, and Plaintiff has failed to demonstrate any relevant or legitimate purpose in inquiring further. Moreover, Plaintiff is well acquainted with the timing and amount of payment, as evidenced by the ongoing correspondence between the parties on this issue, and the legal argument set forth in Defendant's Brief In Support of Motion For Partial Summary Judgment [filed March 9, 2007, Document 212, motion for relief to file brief in excess of page limitations pending, Document 210]. Inquiry concerning why Prupac did not pay APIP benefits to Fincher before the reformation order could have been made during the course of discovery. The

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order does not justify reopening discovery of facts at issue since the suit was filed. These facts relating to the reasons for timing of payment would not constitute bad faith, if Plaintiff had plead it; and there is no reason to believe that Plaintiff's proposed fishing expedition will change that. The cases cited by Plaintiff are inapposite, as they involve allegations of egregious patterns of improper conduct, and resulting damages for delayed conduct, not present in Fincher's case. In Southerland v. Argonaut Insurance Co., 794 P.2d 1102 (Colo. App. 1990), plaintiff alleged the insurer had breached its duty of good faith in handling her workers' compensation claim. The insurer made chronic late and underpayment of benefits, terminated plaintiff's benefits after being ordered to pay, refused to cooperate with plaintiff and her attorney, refused to provide economic information, delayed providing vocational rehabilitation and delayed paying the rehabilitation bills ­ all after plaintiff became totally disabled. This conduct adversely affected Plaintiff's physical recovery and contributed to her dire economic circumstances. Because those acts were "merely a continuation of the same difficulties that preceded the filing of the complaint and . . . relevant as evidence of the insurer's habitual pattern in dealing with plaintiff," this ongoing pattern of purposeful delays was deemed admissible as proof of the insurer's bad faith. Id, at 1106. Dale v. Guaranty National Insurance Co., 948 P.2d 545 (Colo. 1997), involved an insurer that delayed PIP payments after losing an arbitration,

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resulting in lack of treatment and worsening of the insured's medical condition. The plaintiff was able to resume her medical treatment only after a fourteen month hiatus caused by defendant's nonpayment of benefits (including its postarbitration issuance of a 9-party check). According to medical testimony, plaintiff developed an aggravated medical condition, reflex sympathetic dystrophy, and her prognosis worsened because her injuries were not treated during the interim when defendant refused payment. Citing Southerland, the Colorado Supreme Court observed that evidence of a consistent pattern of delaying payments was relevant in proving an insurer's bad faith. In contrast, Fincher was paid following this Court's judicial reformation of the policy to afford APIP benefits, so no "pattern of delaying payments" exists. In Tait v. Hartford Underwriters Insurance Co., 49 P.3d 337 (Colo. App. 2001), the court affirmed the trial court's increased award of exemplary damages in a bad faith breach of insurance contract action based on the insurer's improper litigation tactics. The insured was eighty years old and in poor health at the time of the accident, and entitled to an expedited trial date by Colorado law. The insurer twice attempted to remove the suit to federal court on the eve of the scheduled trial dates, prompting the federal judge to state that insurer's removal attempts appeared motivated by its desire to defeat the accelerated trial date. The insurer also committed discovery violations that required hearings to insure compliance, and delegated to counsel its continuing obligations to the insured. The plaintiff died after the trial, during the pendency of the appeal. Such conduct, which the Supreme Court called "extraordinary", was deemed the kind of ongoing

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willful and wanton conduct the insurer knew or should have known would have aggravated the plaintiff's damages. In contrast, Prupac paid to Fincher APIP benefits once the Court judicially reformed the policy to include such benefits. Moreover, Fincher has neither alleged nor suffered any damages as a result of such "ongoing" refusal to pay APIP benefits. Her father's insurer paid all medical expenses, no medical treatment was denied or delayed, Fincher sustained no out-of-pocket expenses (but rather gained a windfall from recovery of APIP benefits previously paid by another insurer) or any physical or mental injury as a result of the timing of Prupac's payment.

WHEREFORE, for the reasons set forth above, Prupac respectfully requests that Plaintiff's Motion To Compel be denied, and that Plaintiff be prohibited from conducting a Rule 30(b)(6) deposition of Prupac on the matters designated in counsel's letter of March 11, 2006.

Respectfully submitted this 8th day of May, 2007.

Campbell, Latiolais & Ruebel, P.C. Bryan Cave LLP Bruce C. Oetter 211 N. Broadway, Ste 3600 St. Louis, Missouri 63102-2750 (314) 259-2000 By: __/s/ Clifton J. Latiolais, Jr._____ Clifton J. Latiolais, Jr., #13765 825 Logan Street Denver, CO 80203-3114 (303) 861-7760 Attorneys for Defendant

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CERTIFICATE OF SERVICE

I hereby certify that on this 8th day of May, 2007, a true and correct copy of the foregoing DEFENDANT'S MEMORANDUM IN OPPOSITION TO PLAINTIFF'S MOTION TO COMPEL was filed and served electronically via CM/ECF to the following: L. Dan Rector, #7568 Franklin D. Azar & Associates, P. C. 5536 Library Lane Colorado Springs, CO 80918 (719) 527-8000 Robert B. Carey, #1717 Leif Garrison, #14394 Steve W. Berman, c/o The Carey Law Firm 2301 East Pikes Peak Avenue Colorado Springs, CO 80909 /s/ DeniseL.Albares______

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