Free Motion to Compel - District Court of Colorado - Colorado

Case 1:03-cv-02577-RPM

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-cv-2577-RPM-OES M.D.C. HOLDINGS, INC.; and RICHMOND AMERICAN HOMES OF COLORADO, INC. Plaintiffs, v. INTERSTATE FIRE & CASUALTY COMPANY, Defendant.

PLAINTIFFS' MOTION TO COMPEL THE DEPOSITION OF ROB WELCH

Certification Pursuant to D. C. Colo. LCivR 7.1 The undersigned certifies that he has conferred with counsel for the Defendant in good faith by various correspondence identified below, but has been unable to resolve the present dispute. COME NOW the Plaintiffs, by and through their attorneys, HOLLEY, ALBERTSON & POLK, P.C., and pursuant to Fed. R. Civ. P. 37(a), move the Court to enter an Order compelling Defendant Interstate Fire & Casualty Company ("Interstate") to allow Plaintiffs to take the deposition of Rob Welch, AND AS GROUNDS THEREFOR, state as follows: 1. Plaintiffs bring this motion pursuant to Fed. R. Civ. P. 37(a), for an Order compelling Interstate to allow Plaintiffs to depose Rob Welch, one of Interstate's insurance adjusters on the

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underlying claim. Interstate has unequivocally informed Plaintiffs that Mr. Welch's deposition may not be taken, and has waived the formality of notice prior to filing this motion. 2. This is an insurance coverage case. Interstate insured Plaintiffs under an excess liability insurance policy for the period July 1, 2000 through July 1, 2003; the underlying claim affects Interstate's coverage from July 1, 2000 through July 1, 2002. Interstate denied coverage for the underlying claim which arose out of water and moisture intrusion in approximately 3,500 single-family homes built and sold by Plaintiff Richmond American Homes of Colorado, Inc. ("Richmond"), between approximately 1993 and June 30, 2002. Plaintiffs seek the deposition of Rob Welch, Interstate's initial claims adjuster assigned to the underlying claim, who issued Interstate's initial denial of coverage to Plaintiffs. 3. Interstate's basis for refusing to allow the deposition of Mr. Welch is, ostensibly, that the deposition of Mr. Welch is directed exclusively at Plaintiffs' extra-contractual claims. In this regard, following the hearing on April 14, 2006, in which this Court denied all parties' motions for summary judgment, Plaintiffs and Interstate filed a proposed Second Amended Scheduling Order. Following the Scheduling Conference held on June 28, 2006, Plaintiffs and Interstate submitted a revised Second Amended Scheduling Order on or about June 30, 2006. This Court approved and entered the Second Amended Scheduling Order on July 3, 2006 (Docket No. 138). 4. The Second Amended Scheduling Order provides for discovery in two phases: the initial present phase allows for discovery and disclosures on Plaintiffs' First Claim for Relief. Discovery on Plaintiffs' remaining claims is stayed pending further Order of this Court. Second Amended Scheduling Order § 6. In relevant part, the Second Amended Scheduling Order states that "[d]isclosures under Rules 26(a)(1) and 26(a)(2), and further discovery shall be limited to

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Plaintiffs' First Claim for Relief. Disclosures under Rule 26(a)(1) and 26(a)(2), and further discovery on Plaintiffs' Second, Third, Fourth, Fifth and Sixth Claims for Relief shall be stayed pending further Order of the Court." Second Amended Scheduling Order § 6.h.5, p. 12. There is no further restriction on the scope of discovery on the First Claim for Relief. 5. Plaintiffs' First Claim for Relief seeks a declaratory judgment that Interstate breached its policy by denying coverage for the underlying claim. Plaintiffs' remaining claims assert various extra contractual claims based upon Interstate's denial of coverage. The issue before this Court is whether the deposition of Mr. Welch is reasonably calculated to lead to the discovery of admissible evidence on Plaintiffs' declaratory judgment claim against Interstate. 6. The "scope of discovery under the federal rules is broad[;] discovery is not limited to issued raised by the pleadings, for discovery itself designed to help define and clarify the issues." Gomez v. Martin Marietta Corp., 50 F.3d 1511, 1520 (10th Cir. 1995) (citations omitted). Rule 26(b)(1) "allows broad discovery, not only of any matter, not privileged, which is relevant to the subject matter involved in the pending action, but also of matters that appear reasonably calculated to lead to the discovery of admissible evidence." Gillard v. Boulder Valley Sch. Dist. RE-1, 196 F.R.D. 382, 385 (D. Colo. 2000); Echo Star Communs. Corp. v. The News Corp., Ltd., 180 F.R.D. 391, 394 (D. Colo. 1998). 7. The following demonstrate that the deposition of Mr. Welch is reasonably calculated to lead to the discovery of admissible evidence on Plaintiffs' First Claim for Relief: a. In its Rule 26(a)(1) disclosures, Interstate identified two corporate representatives as persons having information concerning all of Plaintiffs' claims, Rob Welch and Greg Brown, Interstate's claims adjusters for the underlying claim. Exhibit A.

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b. Based on documents produced by Interstate, it appears that Rob Welch was the initial adjuster assigned to the underlying claim. Mr. Welch authored Interstate's initial letter denying coverage in May 2003. Exhibit B. Mr. Welch's denial letter raises numerous questions about Interstate's coverage position. For example, Mr. Welch concludes that the underlying claims involves more than one occurrence, but does not state how many occurrences are involved. Inasmuch as Interstate's policy provides for a $500,000.00 SIR per occurrence, the number of occurrences on a claim involving 3,500 homes is relevant to the amount of Plaintiffs' recovery for the underlying claim. c. Mr. Welch's coverage position letter, and notes produced from the Interstate claim file suggest that Mr. Welch conducted an investigation of the underlying claim; however, the scope and details of that investigation are unclear. Plaintiffs are entitled to examine Mr. Welch on the scope of his investigation and basis for his denial of coverage for the underlying claim, as well as on the facts he gathered during the course of that investigation. d. Mr. Welch's basis for denying coverage, as well as the nature and scope of his investigation, are reasonably calculated to the discovery of admissible evidence. For example, from Mr. Welch's testimony, Plaintiffs may be able to independently evaluate the facts Mr. Welch considered in denying coverage, and may be able to ascertain whether additional fact discovery is appropriate to test the validity of Mr. Welch's assumptions and conclusions upon which he based Interstate's coverage position. 8. Plaintiffs recognize that certain factual issues on their First Claim for Relief may be intertwined with factual issues on their extra-contractual claims. The Second Amended Scheduling Order does not provide, and Plaintiffs submit it cannot be read, to preclude discovery

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that may be relevant (for discovery purposes) on Plaintiffs' First Claim for Relief simply because it may be relevant to Plaintiffs' other claims for relief. By the specific terms of the Second Amended Scheduling Order, only discovery on Plaintiffs' extra-contractual claims is presently stayed. 9. In this regard, Plaintiffs have attempted to reach a resolution with Interstate on the application of the discovery plan in the Second Amended Scheduling Order. Before Plaintiffs requested the deposition of Mr. Welch, Plaintiffs corresponded with Interstate on this issue, Exhibit C. Plaintiffs have also corresponded with Interstate specifically concerning the deposition of Mr. Welch, Exhibits D, E and F; Interstate has steadfastly maintained that Mr. Welch cannot be deposed in this phase of discovery, Exhibit G. 10. Plaintiffs are entitled to conduct broad discovery on their First Claim for Relief. Mr. Welch apparently investigated the facts of the underlying claim and applied various policy provisions to conclude that coverage was unavailable. Interstate does not suggest that Mr. Welch "does not have knowledge about any of the issues" in his coverage position letter. Cf. Rock v. UNUM Life Ins. Co. of America, 167 F.R.D. 88, 89 (D. Colo. 1996) (in-house counsel for defendant insurance company could be deposed on issues pertaining to the meaning ascribed by the insurance company to certain policy provisions); accord Jackson v. U.S., 153 F.R.D. 646, 648 (D. Colo. 1993) (the burden is on the movant to show the necessity of a protective order). 11. Interstate's coverage position letters, including the coverage position authored by Mr. Welch, were created in Interstate's ordinary course of business, e.g., National Farmers Prop. and Cas. Co. v. District Court, 718 P.2d 1044, 1047 (Colo. 1986). Moreover, given that Mr. Welch apparently applied various provisions of the Interstate policy but did not reduce all of his

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conclusions to writing, e.g., the number of occurrences, the nature and scope of property damage, etc., Exhibit B, p. 10, Plaintiffs are entitled to examine Mr. Welch about his investigation and conclusions, including conclusions that he may have reached which are not reduced to writing. 12. Interstate's basis for refusing to allow Plaintiffs to take Mr. Welch's deposition is that Interstate believes the deposition is solely directed toward Plaintiffs' extra-contractual claims. Exhibit H. Interstate's interpretation of the scope of discovery under the Second Amended Scheduling Order is improperly narrow. Assuming that Plaintiffs asserted only the First Claim for Relief, Interstate would have no basis to refuse the deposition of Mr. Welch or any of its other claims adjusters, including Greg Brown. Plaintiffs are entitled to an Order compelling Interstate to allow Plaintiffs to conduct the deposition of Mr. Welch. WHEREFORE, Plaintiffs pray that the Court enter an Order compelling Interstate to allow Plaintiffs to conduct the deposition of Rob Welch, and for such other and further relief as the Court deems just and proper.

HOLLEY ALBERTSON & POLK, P.C.

BY:

s/ Eric E. Torgersen Eric E. Torgersen 1667 Cole Boulevard, Suite 100 Golden Colorado 80401 Telephone: (303) 233-7838 Fax: (303) 233-2860 E-mail: [email protected] Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE I, Eric E. Torgersen, Attorney at Law, do hereby certify that on October 4, 2006, I electronically filed the foregoing PLAINTIFFS' MOTION TO COMPEL THE DEPOSITION OF ROB WELCH with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Robert M. Baldwin, Esq. Peter J. Morgan, Esq. [email protected] [email protected]

s/ Eric E. Torgersen Eric E. Torgersen HOLLEY, ALBERTSON & POLK, P.C. 1667 Cole Boulevard, Suite 100 Golden Colorado 80401 Telephone: (303) 233-7838 Fax: (303) 233-2860 E-mail: [email protected] Attorneys for Plaintiffs

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