Wide-Ranging Discovery Allowed in Breach of Contract and Bad Faith Claim on a Homeowner's Policy

Senior Judge Carmen D. Minora of the Lackawanna County Court of Common Pleas recently issued a notable discovery decision in the property damage homeowner's insurance breach of contract and bad faith case of Czaykowski v. Travelers Home and Marine Ins. Co., No. 19-CV-2928 (C.P. Lacka. Co. May 29, 2020 Minora, J.).

The Opinion addresses a Motion for a Protective Order filed by the carrier against a Plaintiff's request for institutional discovery from the carrier related to Pennsylvania matters and matters from other states.

The Plaintiff's wide-ranging discovery requests included demands for the production of policy manuals used by the carrier, personnel files of claims representatives, bonus incentive program documents, performance reviews, record retention and destruction policies of the carrier, as well as the production of copies of any complaints filed with the Insurance Commissioner against the carrier, any disciplinary proceedings against the carrier in any state, and any similar property damage breach of contract lawsuits. 

The carrier asserted that it would cost $1 million dollars to undertake the efforts to respond to the above discovery requests.

The Plaintiffs also requested the production of reserves information relative to the case at hand.

Judge Minora was not convinced by the carrier's assertions of undue burden and denied the motion in large part. However, he limited his allowance of the Plaintiff's discovery requests to only cover information for a four year period, which was selected as that is the statute of limitations for a breach of contract action. The Judge allowed the Plaintiff to pick the beginning and end date for the four years of discovery they desired.

The Court also limited the scope of the Plaintiff's discovery requests to Pennsylvania matters and decided that the carrier did not have to produce documents from other states that might be responsive.

Anyone wishing to review a copy of this decision may click this LINK.

Scope of Allowable Bad Faith Discovery Limited by Western District Federal Court of Pennsylvania

In the case of Horvath v. Globe Life & Accident Ins. Co., No. 3:18-CV-84 (W.D. Pa. Feb. 28, 2019 Gibson, J.), the court denied a Plaintiff’s Motion to Compel a Defendant carrier in a bad faith claim to identify all bad faith suits in which it was involved over the preceding ten (10) years.  

In denying this Motion to Compel by the Plaintiff, the court essentially ruled that the other, prior bad faith claims were irrelevant to the case at hand.   Judge Gibson found that there was no close “connection between other bad faith claims against Defendant and the issue of materiality here, particularly considering the myriad of potential factual differences between other claims and the present claim, including different types of policies, unique policy language, the application of different states’ law, [and] varying circumstances surrounding the bad faith allegations…..” 

Judge Gibson additionally noted that “the general rule [is] that courts in the Third Circuit ‘disfavor the discovery of similar claims evidenced in bad faith cases.’”  

The court additionally denied this Motion to Compel evidence of ten (10) years of prior bad faith actions as overbroad and unduly burdensome given that there was no geographic limit, no limit to the type of insurance policy at issue, no valid explanation as to why a ten (10) year period was required or why a shorter period would be inadequate.  

Anyone wishing to review this decision may click this LINK.  

I send thanks to Attorney Lee Applebaum of the Fineman, Krekstein & Harris law firm in Philadelphia for bringing this case to my attention.   Check out Attorney Applebaum’s excellent blog entitled Pennsylvania and New Jersey Insurance Bad Faith Case Law blog.