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

N.D. California

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

DecidedMay 8, 2023

Docket4:22-cv-04008

StatusUnknown

This text of Associated Industries Insurance Company, Inc. v. Ategrity Specialty Insurance Co., Inc. (Associated Industries Insurance Company, Inc. v. Ategrity Specialty Insurance Co., Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Associated Industries Insurance Company, Inc. v. Ategrity Specialty Insurance Co., Inc., (N.D. Cal. 2023).

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ASSOCIATED INDUSTRIES Case No. 22-cv-04008-HSG (DMR) INSURANCE COMPANY, INC., 8 Plaintiff, ORDER ON JOINT DISCOVERY 9 LETTER v. 10 Re: Dkt. No. 32 ATEGRITY SPECIALTY INSURANCE 11 CO., INC.,

12 Defendant.

13 The parties filed a joint discovery letter in which Defendant Ategrity Specialty Insurance 14 Co., Inc. (“Ategrity”) moves to compel Plaintiff Associated Industries Insurance Co., Inc. 15 (“Associated”) to provide further responses to 12 interrogatories. [Docket No. 32.] This matter is 16 suitable for determination without oral argument. Civ. L.R. 7-1(b). For the following reasons, 17 Ategrity’s motion is denied. 18 I. BACKGROUND 19 This case involves an insurance coverage dispute. Associated and Ategrity mutually insure 20 Veritas Investments, Inc. (“Veritas”), which was sued in an underlying case filed in San Francisco 21 Superior Court called Evander v. Veritas Investments, Inc. Compl. ¶ 5. Evander includes more 22 than 100 plaintiffs who alleged that Veritas bought approximately two dozen San Francisco 23 residential buildings in which they reside and then undertook large scale and negligent 24 construction projects at each building. Compl. ¶ 6. The Evander plaintiffs asserted that 25 construction disrupted their use and enjoyment of their residences; that Veritas representatives 26 entered their apartments without proper notice; and that Veritas subjected them to various other 27 wrongful acts intended to drive them out of their rent-controlled units. Id. Certain Evander 1 See Jt. Letter 3. 2 Associated and Ategrity each issued three successive policies of commercial general 3 liability insurance to Veritas. Associated’s policies were effective December 2016 through 4 December 2019. Ategrity’s policies were effective December 2019 through December 2022. Id. 5 at ¶¶ 7, 8. Associated is participating in the defense of Veritas in Evander and has demanded 6 Ategrity’s participation. Ategrity has declined to take a position on its duties of defense and 7 indemnity. Id. at ¶ 19-21. Associated filed this lawsuit seeking declaratory relief regarding 8 Ategrity’s duty to defend Veritas in Evander. 9 Associated filed a motion for partial summary judgment as to Ategrity’s duty to defend. 10 [Docket No. 23.] That motion remains pending. Fact discovery closes on June 14, 2023 and a 11 jury trial is scheduled to begin in July 2023. [See Docket No. 16.] 12 II. DISCUSSION 13 The parties’ dispute centers around Associated’s use of Federal Rule of Civil Procedure 14 33(d)(1) in responding to 12 interrogatories. 15 Ategrity’s interrogatory No. 1 states:

16 Please identify the names of all Plaintiffs who alleged claims for bodily injury and/or property damage against Veritas that occurred 17 during the policy period of [Ategrity] policy number 01-B-GL- P00001257-0. 18 19 Interrogatory Nos. 3, 5, 7, 9, and 11 are nearly identical but request the names of plaintiffs who 20 alleged claims for bodily injury, property damage, and personal and advertising injury during the 21 policy periods for the other two Ategrity policies issued to Veritas. 22 Interrogatory No. 2 states:

23 Please identify all documents that establish that the Plaintiffs identified in your response to interrogatory number 1, sustained 24 bodily injury and/or property damage that occurred during the policy period of [Ategrity] policy number 01-B-GL-P00001257-0. 25 26 Nos. 4, 6, 8, 10, and 12 are nearly identical to No. 2 but request the identification of all documents 27 that establish that the plaintiffs identified in the previous interrogatories sustained injury during 1 Associated responded to the interrogatories by referring to discovery responses, 2 documents, and depositions from Evander:

3 Associated refers defendant to the underlying plaintiffs’ interrogatory responses, document productions, and deposition transcripts from the 4 “Underlying Action,” produced concurrently in response to defendant’s requests for production of documents. Associated has 5 produced all such discovery responses and depositions in its possession, as kept in the normal course of business, on an underlying 6 plaintiff-by-plaintiff basis, see Bates numbers 00000001-00048796. 7 Id. 8 The parties dispute the propriety of Associated’s response. Ategrity offers a barebones 9 two-sentence argument. It asserts without elaboration that Associated “failed to fully comply with 10 Rule 33(d)(1)” because it “abused the option” by referring Ategrity to 48,796 business records 11 without specifying the particular documents from which the answers to the interrogatories may be 12 ascertained. Jt. Letter 2. Associated contends that its responses are appropriate under Federal 13 Rule of Civil Procedure 33(d) because the burden of deriving answers would be substantially the 14 same for either party. Id. at 3-4. 15 Rule 33(d)(1) provides that “[i]f the answer to an interrogatory may be determined by 16 examining, auditing, compiling, abstracting, or summarizing a party’s business records . . . , and if 17 the burden of deriving or ascertaining the answer will be substantially the same for either party, 18 the responding party may answer by . . . specifying the records that must be reviewed, in sufficient 19 detail to enable the interrogating party to locate and identify them as readily as the responding 20 party could.” “A requesting party claiming an inappropriate use of Rule 33(d) must make a prima 21 facie showing that the use of Rule 33(d) is somehow inadequate, whether because the information 22 is not fully contained in the documents or because it is too difficult to extract.” RSI Corp. v. Int’l 23 Bus. Machines Corp., No. 08-CV-3414 RMW, 2012 WL 3095396, at *1 (N.D. Cal. July 30, 2012) 24 (internal quotation marks and citation omitted). The burden then shifts to the responding party to 25 show that “(1) a review of the documents will actually reveal answers to the interrogatories; and 26 (2) the burden of deriving the answer is substantially the same for the party serving the 27 interrogatory as for the party served.” Id. (citation omitted). 1 because it referred Ategrity to nearly 50,000 records without specifying the documents from which 2 the answers to the interrogatories could be ascertained. This is insufficient under RSI because 3 Ategrity has not established that the information “is not fully contained in the documents” or “is 4 too difficult to extract.” 5 Even if Ategrity had made its prima facie showing under RSI, Associated has demonstrated 6 that the documents contain information that is responsive to the interrogatories and that the burden 7 of answering the interrogatories will be “substantially the same for either party.” 8 Associated explains that it produced the responsive material in its possession, namely, all 9 the discovery in Evander. It provided the material to Ategrity in electronic form in folders labeled 10 by plaintiff name. Jt. Letter 3. Associated states that Evander settled globally and “only the 11 plaintiffs know what they individually collected.” Id. Associated did not undertake a plaintiff-by- 12 plaintiff analysis of damages in that suit. Id. 13 Associated argues that Ategrity is improperly attempting to shift the burden of analyzing 14 the discovery in the Evander action to Associated. Id. at 3-4. It explains that if the court finds in 15 the pending summary judgment motion that Ategrity owed a duty to defend in Evander, 16 Associated would only need to establish Ategrity’s rejection of the tender, refusal to participate in 17 Veritas’s defense, and sums involved in order to establish its case. The burden would then shift to 18 Ategrity to prove the absence of actual coverage. See Safeco Ins. Co. of Am. v. Superior Ct., 140 19 Cal. App.

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ASSOCIATED INDUSTRIES Case No. 22-cv-04008-HSG (DMR) INSURANCE COMPANY, INC., 8 Plaintiff, ORDER ON JOINT DISCOVERY 9 LETTER v. 10 Re: Dkt. No. 32 ATEGRITY SPECIALTY INSURANCE 11 CO., INC.,

12 Defendant.

13 The parties filed a joint discovery letter in which Defendant Ategrity Specialty Insurance 14 Co., Inc. (“Ategrity”) moves to compel Plaintiff Associated Industries Insurance Co., Inc. 15 (“Associated”) to provide further responses to 12 interrogatories. [Docket No. 32.] This matter is 16 suitable for determination without oral argument. Civ. L.R. 7-1(b). For the following reasons, 17 Ategrity’s motion is denied. 18 I. BACKGROUND 19 This case involves an insurance coverage dispute. Associated and Ategrity mutually insure 20 Veritas Investments, Inc. (“Veritas”), which was sued in an underlying case filed in San Francisco 21 Superior Court called Evander v. Veritas Investments, Inc. Compl. ¶ 5. Evander includes more 22 than 100 plaintiffs who alleged that Veritas bought approximately two dozen San Francisco 23 residential buildings in which they reside and then undertook large scale and negligent 24 construction projects at each building. Compl. ¶ 6. The Evander plaintiffs asserted that 25 construction disrupted their use and enjoyment of their residences; that Veritas representatives 26 entered their apartments without proper notice; and that Veritas subjected them to various other 27 wrongful acts intended to drive them out of their rent-controlled units. Id. Certain Evander 1 See Jt. Letter 3. 2 Associated and Ategrity each issued three successive policies of commercial general 3 liability insurance to Veritas. Associated’s policies were effective December 2016 through 4 December 2019. Ategrity’s policies were effective December 2019 through December 2022. Id. 5 at ¶¶ 7, 8. Associated is participating in the defense of Veritas in Evander and has demanded 6 Ategrity’s participation. Ategrity has declined to take a position on its duties of defense and 7 indemnity. Id. at ¶ 19-21. Associated filed this lawsuit seeking declaratory relief regarding 8 Ategrity’s duty to defend Veritas in Evander. 9 Associated filed a motion for partial summary judgment as to Ategrity’s duty to defend. 10 [Docket No. 23.] That motion remains pending. Fact discovery closes on June 14, 2023 and a 11 jury trial is scheduled to begin in July 2023. [See Docket No. 16.] 12 II. DISCUSSION 13 The parties’ dispute centers around Associated’s use of Federal Rule of Civil Procedure 14 33(d)(1) in responding to 12 interrogatories. 15 Ategrity’s interrogatory No. 1 states:

16 Please identify the names of all Plaintiffs who alleged claims for bodily injury and/or property damage against Veritas that occurred 17 during the policy period of [Ategrity] policy number 01-B-GL- P00001257-0. 18 19 Interrogatory Nos. 3, 5, 7, 9, and 11 are nearly identical but request the names of plaintiffs who 20 alleged claims for bodily injury, property damage, and personal and advertising injury during the 21 policy periods for the other two Ategrity policies issued to Veritas. 22 Interrogatory No. 2 states:

23 Please identify all documents that establish that the Plaintiffs identified in your response to interrogatory number 1, sustained 24 bodily injury and/or property damage that occurred during the policy period of [Ategrity] policy number 01-B-GL-P00001257-0. 25 26 Nos. 4, 6, 8, 10, and 12 are nearly identical to No. 2 but request the identification of all documents 27 that establish that the plaintiffs identified in the previous interrogatories sustained injury during 1 Associated responded to the interrogatories by referring to discovery responses, 2 documents, and depositions from Evander:

3 Associated refers defendant to the underlying plaintiffs’ interrogatory responses, document productions, and deposition transcripts from the 4 “Underlying Action,” produced concurrently in response to defendant’s requests for production of documents. Associated has 5 produced all such discovery responses and depositions in its possession, as kept in the normal course of business, on an underlying 6 plaintiff-by-plaintiff basis, see Bates numbers 00000001-00048796. 7 Id. 8 The parties dispute the propriety of Associated’s response. Ategrity offers a barebones 9 two-sentence argument. It asserts without elaboration that Associated “failed to fully comply with 10 Rule 33(d)(1)” because it “abused the option” by referring Ategrity to 48,796 business records 11 without specifying the particular documents from which the answers to the interrogatories may be 12 ascertained. Jt. Letter 2. Associated contends that its responses are appropriate under Federal 13 Rule of Civil Procedure 33(d) because the burden of deriving answers would be substantially the 14 same for either party. Id. at 3-4. 15 Rule 33(d)(1) provides that “[i]f the answer to an interrogatory may be determined by 16 examining, auditing, compiling, abstracting, or summarizing a party’s business records . . . , and if 17 the burden of deriving or ascertaining the answer will be substantially the same for either party, 18 the responding party may answer by . . . specifying the records that must be reviewed, in sufficient 19 detail to enable the interrogating party to locate and identify them as readily as the responding 20 party could.” “A requesting party claiming an inappropriate use of Rule 33(d) must make a prima 21 facie showing that the use of Rule 33(d) is somehow inadequate, whether because the information 22 is not fully contained in the documents or because it is too difficult to extract.” RSI Corp. v. Int’l 23 Bus. Machines Corp., No. 08-CV-3414 RMW, 2012 WL 3095396, at *1 (N.D. Cal. July 30, 2012) 24 (internal quotation marks and citation omitted). The burden then shifts to the responding party to 25 show that “(1) a review of the documents will actually reveal answers to the interrogatories; and 26 (2) the burden of deriving the answer is substantially the same for the party serving the 27 interrogatory as for the party served.” Id. (citation omitted). 1 because it referred Ategrity to nearly 50,000 records without specifying the documents from which 2 the answers to the interrogatories could be ascertained. This is insufficient under RSI because 3 Ategrity has not established that the information “is not fully contained in the documents” or “is 4 too difficult to extract.” 5 Even if Ategrity had made its prima facie showing under RSI, Associated has demonstrated 6 that the documents contain information that is responsive to the interrogatories and that the burden 7 of answering the interrogatories will be “substantially the same for either party.” 8 Associated explains that it produced the responsive material in its possession, namely, all 9 the discovery in Evander. It provided the material to Ategrity in electronic form in folders labeled 10 by plaintiff name. Jt. Letter 3. Associated states that Evander settled globally and “only the 11 plaintiffs know what they individually collected.” Id. Associated did not undertake a plaintiff-by- 12 plaintiff analysis of damages in that suit. Id. 13 Associated argues that Ategrity is improperly attempting to shift the burden of analyzing 14 the discovery in the Evander action to Associated. Id. at 3-4. It explains that if the court finds in 15 the pending summary judgment motion that Ategrity owed a duty to defend in Evander, 16 Associated would only need to establish Ategrity’s rejection of the tender, refusal to participate in 17 Veritas’s defense, and sums involved in order to establish its case. The burden would then shift to 18 Ategrity to prove the absence of actual coverage. See Safeco Ins. Co. of Am. v. Superior Ct., 140 19 Cal. App. 4th 874, 877 (2006) (“in an action for equitable contribution by a settling insurer against 20 a nonparticipating insurer, the settling insurer has met its burden of proof when it makes a prima 21 facie showing of coverage under the nonparticipating insurer’s policy—the same showing of 22 potential coverage necessary to trigger the nonparticipating insurer’s duty to defend—and that the 23 burden of proof then shifts to the recalcitrant insurer to prove the absence of actual coverage.”). 24 At that point, Ategrity would need to “marshal and adduce evidence to prove the absence of 25 coverage.” Jt. Letter 3. Associated argues that Ategrity is trying to use this discovery motion to 26 force Associated to do this work for them by requiring Associated to analyze the voluminous 27 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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Associated Industries Insurance Company, Inc. v. Ategrity Specialty Insurance Co., Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/associated-industries-insurance-company-inc-v-ategrity-specialty-cand-2023.