Certain Underwriters at Lloyd's v. National Railroad Passenger

318 F.R.D. 9, 2016 U.S. Dist. LEXIS 165967, 2016 WL 7017356
CourtDistrict Court, E.D. New York
DecidedNovember 30, 2016
Docket14-CV-4717 (FB)
StatusPublished
Cited by14 cases

This text of 318 F.R.D. 9 (Certain Underwriters at Lloyd's v. National Railroad Passenger) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Certain Underwriters at Lloyd's v. National Railroad Passenger, 318 F.R.D. 9, 2016 U.S. Dist. LEXIS 165967, 2016 WL 7017356 (E.D.N.Y. 2016).

Opinion

MEMORANDUM AND ORDER

ROANNE L. MANN, CHIEF UNITED STATES MAGISTRATE JUDGE:

In this declaratory judgment action, plaintiff-insurers seek, inter alia, a determination as to whether a series of liability insurance policies, issued to defendant National Railroad Passenger Corporation (“Amtrak”) more than three decades ago, obligate the plaintiff-insurers to reimburse Amtrak for costs incurred in connection with environmental waste allegedly found on Amtrak’s property. See Amended Complaint (Nov. 11, 2014) (“Am, Compl.”) ¶¶ 1-2, Electronic Case Filing Docket Entry (“DE”) # 111; Amtrak Amended Answer, Counterclaims & Cross-Claims (Dec. 30, 2015), DE # 277.

Currently pending before the Court is Amtrak’s motion to compel discovery from each plaintiff.1 Amtrak complains that LMI have produced documents from only the files of the lead undeiwriters on the policies (i.e., so-called “leader-only” discovery). See [Amtrak’s] Motion for Discovery Regarding Leader-Only Discovery (Nov. 1, 2016) (“Amtrak Mot.”), DE # 469. Amtrak first raised its objections to this limitation at a conference held on January 29, 2016. See Transcript of Hearing held on January 29, 2016 at 114-54, DE # 309. In a joint status report filed on April 12, 2016, the parties advised that they “were continuing to attempt to resolve their dispute over ‘leader-only' discovery.” Joint Status Report (Apr. 12, 2016) at 5, DE # 354. By letter-motion dated November 1, 2016, Amtrak seeks to compel the production of each plaintiffs underwriting and claims files for the policies at issue. See Amtrak Mot. at 1.

BACKGROUND

Plaintiffs in this action are insurers who “did business in the London Insurance Market and who issued or participated in—that is, subscribed to an agreed percentage share of the risk of— one or more liability insurance policies issued to Amtrak during the period beginning on or about June 1, 1972 and ending in 1986 (the “Policies”). See Am. Compl. ¶¶ 1-2. According to the Amended Complaint, due to certain environmental con-taminations and/or asbestos exposure, Amtrak demanded coverage under the Policies. See id. ¶¶ 7-8. In or around 2014, after many years of settlement discussions, this action was initiated. See id. ¶¶ 9-11.

In opposing Amtrak’s motion to compel, LMI submitted a series of declarations from knowledgeable individuals detailing how the London Insurance Market has operated, and the searches that were conducted in response to Amtrak’s document demands. Amtrak takes issue with the inferences to be drawn from the facts adduced, but, for the most part, does not dispute the facts alleged in those sworn statements.

1. The London Market

During the time the Amtrak Policies were in effect, underwriters at Lloyd’s were individuals who wrote insurance through unincorporated associations known as syndicates, which were managed by companies known as managing agents. See Declaration of Sharon Taylor dated November 10, 2016 (“Taylor Decl.”) ¶ 12, DE # 482-20. Entities that wished to obtain insurance from underwriters at Lloyd’s were required to act through an authorized broker (known as “Lloyd’s broker” or “London broker”)2; the broker, act[11]*11ing on behalf of the prospective insured, prepared a “placing slip” summarizing the terms, conditions and limits of the insurance, and approached an underwriter, either for a syndicate at Lloyd’s or for a London Market company, and proposed that the syndicate or company agree to participate in the described insurance policy. See Taylor Decl. ¶¶ 15-16; Wilson Decl. ¶¶ 17-18.

Each policy generally had a “lead underwriter,” for either a syndicate or a company, who negotiated with the broker over the terms of the policy and, if there was an agreement, made a commitment to provide the insurance by “scratching” the slip, which showed the company name or syndicate number, the date, the percentage of the risk to be taken, and the underwriter’s initials. See Taylor Decl. ¶¶ 14, 16; Wilson Decl. ¶¶ 18, 19. The syndicate or company whose underwriter negotiated the terms with the broker and first scratched the slip was known as the “slip lead” or “overall lead.” See Wilson Decl. ¶ 20. The first syndicate to scratch a slip was known as the “syndicate lead” or “lead syndicate,” and the first company to scratch a slip was known as the “company lead.” See Taylor Decl. ¶ 20; Wilson Decl. ¶ 22. The broker would then walk the slip around the market, approaching other underwriters for Lloyd’s syndicates and for London Market companies in an effort to obtain a full 100 percent subscription. See Taylor Decl. ¶ 16; Wilson Decl. ¶ 20. Underwriters who scratched the slip for their syndicates or companies after the lead were known as the “following market.” See Wilson Decl. ¶ 20. Once the slip was fully subscribed, the broker prepared a policy based on the terms recorded on the slip. See Taylor Decl. ¶ 18; Wilson Decl. ¶ 28. The policy was reviewed, stamped, and issued to the broker in multiple copies by a Lloyd’s department called the London Policy Signing Office (“LPSO”). See Taylor Decl. ¶ 18; Wilson Decl. ¶ 28. The LPSO-issued policy was for syndicates only. See Taylor Decl. ¶ 18. A separate policy, or multiple policies, were issued for the company subscribers. See id. It was the responsibility of the London broker to deliver a copy of each policy to the insured and its U.S. broker, and to retain a copy for the broker’s own files. See Wilson Decl. ¶ 30; see also Taylor Decl. ¶ 19.

The lead underwriter ordinarily would not retain copies of the documents it was shown by the broker; rather, the “placing” file was held by the broker. See Wilson Decl. ¶¶ 30-31; Taylor Decl. ¶ 17. Following market insurers typically retained “little to no documentation of the information presented by the broker, and no documents that would not also be in the records of the Lead Underwriter.” Wilson Decl. ¶ 21; see id. ¶ 31; Taylor Decl. ¶ 17 (following market was even less likely than overall lead to retain copies of documents in the placing file). The LPSO did not issue copies of policies to the syndicates, and it did not retain a copy for itself.3 See Taylor Decl. ¶ 19.

With respect to claims made under a policy placed through a London broker, it was the usual custom and practice for the insured to notify the London broker of a claim or potential claim; the broker in turn notified the claims department of the lead underwriter and, once agreement had been reached between the broker and overall lead, the broker would approach each of the following syndicates and companies to obtain their approval. See Wilson Decl. ¶ 34; Taylor Decl. ¶ 21. The policy could, however, provide for an alternative procedure for the handling of claims; indeed, the Amtrak Policies designated a U.S. law firm, Lord Bissell and Brook (“LBB”), to investigate claims and communicate with subscribing syndicates and companies once notified by the U.S. broker of a claim or potential claim. See Wilson Decl. ¶ 35; Taylor Decl. ¶ 21.

The custom and practice in the London Market was for basic underwriting records and claims records to be held by the London broker.4 See Wilson Decl. ¶ 37. Therefore, [12]*12any materials maintained by individual syndicates or companies would be duplicative of the underwriting, claims and policy materials typically held by the broker. See id.

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318 F.R.D. 9, 2016 U.S. Dist. LEXIS 165967, 2016 WL 7017356, Counsel Stack Legal Research, https://law.counselstack.com/opinion/certain-underwriters-at-lloyds-v-national-railroad-passenger-nyed-2016.