Associated Industries Insurance Company, Inc. v. Ategrity Specialty Insurance Co., Inc.

Opinion

ASSOCIATED INDUSTRIES Case No. 22-cv-04008-HSG (DMR) INSURANCE COMPANY, INC., Plaintiff, ORDER ON JOINT DISCOVERY v. Re: Dkt. No. 32 ATEGRITY SPECIALTY INSURANCE

Defendant.

The parties filed a joint discovery letter in which Defendant Ategrity Specialty Insurance Co., Inc. (“Ategrity”) moves to compel Plaintiff Associated Industries Insurance Co., Inc. (“Associated”) to provide further responses to 12 interrogatories. [Docket No. 32.] This matter is suitable for determination without oral argument. Civ. L.R. 7-1(b). For the following reasons, Ategrity’s motion is denied. This case involves an insurance coverage dispute. Associated and Ategrity mutually insure Veritas Investments, Inc. (“Veritas”), which was sued in an underlying case filed in San Francisco Superior Court called Evander v. Veritas Investments, Inc. Compl. ¶ 5. Evander includes more than 100 plaintiffs who alleged that Veritas bought approximately two dozen San Francisco residential buildings in which they reside and then undertook large scale and negligent construction projects at each building. Compl. ¶ 6. The Evander plaintiffs asserted that construction disrupted their use and enjoyment of their residences; that Veritas representatives entered their apartments without proper notice; and that Veritas subjected them to various other wrongful acts intended to drive them out of their rent-controlled units. Id. Certain Evander See Jt. Letter 3. Associated and Ategrity each issued three successive policies of commercial general liability insurance to Veritas. Associated’s policies were effective December 2016 through December 2019. Ategrity’s policies were effective December 2019 through December 2022. Id. at ¶¶ 7, 8. Associated is participating in the defense of Veritas in Evander and has demanded Ategrity’s participation. Ategrity has declined to take a position on its duties of defense and indemnity. Id. at ¶ 19-21. Associated filed this lawsuit seeking declaratory relief regarding Ategrity’s duty to defend Veritas in Evander. Associated filed a motion for partial summary judgment as to Ategrity’s duty to defend. [Docket No. 23.] That motion remains pending. Fact discovery closes on June 14, 2023 and a jury trial is scheduled to begin in July 2023. [See Docket No. 16.] The parties’ dispute centers around Associated’s use of Federal Rule of Civil Procedure 33(d)(1) in responding to 12 interrogatories. Ategrity’s interrogatory No. 1 states:

Please identify the names of all Plaintiffs who alleged claims for bodily injury and/or property damage against Veritas that occurred during the policy period of [Ategrity] policy number 01-B-GL- P00001257-0. Interrogatory Nos. 3, 5, 7, 9, and 11 are nearly identical but request the names of plaintiffs who alleged claims for bodily injury, property damage, and personal and advertising injury during the policy periods for the other two Ategrity policies issued to Veritas. Interrogatory No. 2 states:

Please identify all documents that establish that the Plaintiffs identified in your response to interrogatory number 1, sustained bodily injury and/or property damage that occurred during the policy period of [Ategrity] policy number 01-B-GL-P00001257-0. Nos. 4, 6, 8, 10, and 12 are nearly identical to No. 2 but request the identification of all documents that establish that the plaintiffs identified in the previous interrogatories sustained injury during Associated responded to the interrogatories by referring to discovery responses, documents, and depositions from Evander:

Associated refers defendant to the underlying plaintiffs’ interrogatory responses, document productions, and deposition transcripts from the “Underlying Action,” produced concurrently in response to defendant’s requests for production of documents. Associated has produced all such discovery responses and depositions in its possession, as kept in the normal course of business, on an underlying plaintiff-by-plaintiff basis, see Bates numbers 00000001-00048796. Id. The parties dispute the propriety of Associated’s response. Ategrity offers a barebones two-sentence argument. It asserts without elaboration that Associated “failed to fully comply with Rule 33(d)(1)” because it “abused the option” by referring Ategrity to 48,796 business records without specifying the particular documents from which the answers to the interrogatories may be ascertained. Jt. Letter 2. Associated contends that its responses are appropriate under Federal Rule of Civil Procedure 33(d) because the burden of deriving answers would be substantially the same for either party. Id. at 3-4. Rule 33(d)(1) provides that “[i]f the answer to an interrogatory may be determined by examining, auditing, compiling, abstracting, or summarizing a party’s business records . . . , and if the burden of deriving or ascertaining the answer will be substantially the same for either party, the responding party may answer by . . . specifying the records that must be reviewed, in sufficient detail to enable the interrogating party to locate and identify them as readily as the responding party could.” “A requesting party claiming an inappropriate use of Rule 33(d) must make a prima facie showing that the use of Rule 33(d) is somehow inadequate, whether because the information is not fully contained in the documents or because it is too difficult to extract.” RSI Corp. v. Int’l Bus. Machines Corp., No. 08-CV-3414 RMW, 2012 WL 3095396, at *1 (N.D. Cal. July 30, 2012) (internal quotation marks and citation omitted). The burden then shifts to the responding party to show that “(1) a review of the documents will actually reveal answers to the interrogatories; and (2) the burden of deriving the answer is substantially the same for the party serving the interrogatory as for the party served.” Id. (citation omitted). because it referred Ategrity to nearly 50,000 records without specifying the documents from which the answers to the interrogatories could be ascertained. This is insufficient under RSI because Ategrity has not established that the information “is not fully contained in the documents” or “is too difficult to extract.” Even if Ategrity had made its prima facie showing under RSI, Associated has demonstrated that the documents contain information that is responsive to the interrogatories and that the burden of answering the interrogatories will be “substantially the same for either party.” Associated explains that it produced the responsive material in its possession, namely, all the discovery in Evander. It provided the material to Ategrity in electronic form in folders labeled by plaintiff name. Jt. Letter 3. Associated states that Evander settled globally and “only the plaintiffs know what they individually collected.” Id. Associated did not undertake a plaintiff-by- plaintiff analysis of damages in that suit. Id. Associated argues that Ategrity is improperly attempting to shift the burden of analyzing the discovery in the Evander action to Associated. Id. at 3-4. It explains that if the court finds in the pending summary judgment motion that Ategrity owed a duty to defend in Evander, Associated would only need to establish Ategrity’s rejection of the tender, refusal to participate in Veritas’s defense, and sums involved in order to establish its case. The burden would then shift to Ategrity to prove the absence of actual coverage. See Safeco Ins. Co. of Am. v. Superior Ct., 140 Cal. App. 4th 874, 877 (2006) (“in an action for equitable contribution by a settling insurer against a nonparticipating insurer, the settling insurer has met its burden of proof when it makes a prima facie showing of coverage under the nonparticipating insurer’s policy—the same showing of potential coverage necessary to trigger the nonparticipating insurer’s duty to defend—and that the burden of proof then shifts to the recalcitrant insurer to prove the absence of actual coverage.”). At that point, Ategrity would need to “marshal and adduce evidence to prove the absence of coverage.” Jt. Letter 3. Associated argues that Ategrity is trying to use this discovery motion to force Associated to do this work for them by requiring Associated to analyze the voluminous discovery from Evander. 1 Evander or otherwise respond to Associated’s arguments. On this record, Ategrity has failed to 2 demonstrate that Associated’s Rule 33(d)(1) responses are inadequate. 3 I. CONCLUSION 4 For the foregoing reasons, Ategrity’s motion to compel further responses to Interrogatory 5 Nos. 1-12 is denied. KES DISTRIG> 6 IT IS SO ORDERED. YD SO A) Dated: May 8, 2023 x 7 ated: May i 5 ORDERED □ 8 f\ xx 1S □ ~ Dona Ml. Ryu 9 4 ct esi hc Mz 10 Voces bo □□□ □□ 11 “> □□ Lay AY . DISTRICS

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