Park Board Ltd. v. State Automobile Mutual Insurance Company

District Court, E.D. Texas·Decided December 23, 2019·No. 4:18-cv-00382·Unknown

Opinion

United States District Court EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

PARK BOARD LTD. § Plaintiff, § v. § Civil Action No. 4:18-CV-00382 § Judge Mazzant STATE AUTOMOBILE MUTUAL § INSURANCE COMPANY and DANIEL § PROUGH, § Defendants. §

MEMORANDUM OPINION AND ORDER

Pending before the Court is Brett Lochridge’s Motion to Quash or, in the Alternative, Modify Subpoena (Dkt. #71). Having considered the Motion and the relevant pleadings, the Court finds that the Motion is GRANTED in part and DENIED in part. BACKGROUND Plaintiff Park Board Ltd. (“Park Board”) purchased an insurance policy (the “Policy”) from Defendant State Automobile Mutual Insurance Company (“State Auto”) in January 2017 for a commercial building in Collin County. The Policy includes a clause entitling the insurer and insured to an “appraisal,” which determines the amount of loss to damaged property if the Parties disagree on the initial valuation. Either side may demand an appraisal, which prompts each side to select its own appraiser. The chosen appraisers subsequently select a third—an “umpire”—or have one appointed by the Court. Working together, the group will determine the appropriate amount of damage. In March and April of 2017, Park Board’s property sustained damage from severe wind and hail storms. Park Board reported a claim to State Auto immediately. State Auto’s adjuster assessed the claim and found a damage amount of $8,097.85 (below the policy’s $26,006.00 deductible) (Dkt. #42, Exhibit 1 at p. 1, 3). Because the adjuster determined the damage to be less than the Policy’s deductible, State Auto informed Park Board that it would not pay the claim via email on April 7, 2017 (Dkt. #42, Exhibit 1 at p. 1). Park Board contends that State Auto failed to conduct a good faith investigation into the damages and that a reasonable insurer would not have valued the claim so low. Not satisfied with the result from the adjuster, Park Board sought to

initiate appraisal pursuant to the Policy in January 2018 (Dkt. #30, ¶ 32). According to Park Board, State Auto denied the request for appraisal in breach of the Policy. In response, Park Board filed suit in April 2018, a year after the storm occurred. The Parties ultimately initiated the appraisal process in August 2018. State Auto’s appraiser and the umpire signed and issued their findings in April 2019. The appraisers found that it would cost $211,546.56 to purchase replacement parts for any damages to the property. They also found that, at the time the wind and hail storms hit, the parts of the property that were damaged had already depreciated in value by $80,165.61. This means that the “actual cash value” of the parts needing repairs amounted to $131,380.95. State Auto provided Park Board

with a check for $49,531.29 shortly after. Due to the deductible and prior payments State Auto had made to Park Board, this payment ensured that the $131,380.95 “actual cash value” determination was satisfied.1 Under some circumstances, the Policy provides Park Board with the full replacement cost for damage to its property—including the amount of depreciation. State Auto informed Park Board that it would pay the $80,165.16 depreciation amount once repairs were completed. But it also advised that Park Board has “2 years from the date of the loss in which to actually complete the repairs in order to collect the balance of the damages”—a date that has passed. (Dkt. #39, Exhibit 4 at p. 3) (emphasis in original).

1 State Board contends that it has actually paid Park Board more than the $131,380.95 by this point. On April 22, 2019, State Auto filed Defendants State Automobile Insurance Company and Daniel Prough’s Motion to Dismiss (Dkt. #39). The Court granted in part and denied in part State Auto’s Motion. As the Court stated, “Plaintiff’s claims [were] dismissed only to the extent they [sought] damages for policy benefits that have been paid following the appraisal process . . . .” (Dkt. #58). Consequently, Park Board’s claim for breach of contract, as to the denial of its first

request for appraisal, survived (Dkt. #58). “Park Board’s extra-contractual claims” were deemed moot by the Court “to the extent they [sought] damages for policy benefits that State Auto paid following the appraisal process” (Dkt. #58). The remainder of Park Board’s extra-contractual claims survived. Finally, the Court allowed Park Board’s claims under the Texas Prompt Payment of Claims Act (“the PCCA”) to survive after finding that “State Auto’s prompt payment of the appraisal award does not immunize it from being in violation of the PCCA” (Dkt. #58). On or about October 10, 2019, Park Board served Brett Lochridge “with a subpoena duces tecum to appear at the undersigned counsel’s office on November 13, 2019 . . . .” (Dkt. #72). “The purpose of Lochridge’s testimony,” according to Park Board, “is to determine if the [appraisal]

award must be set aside” (Dkt. #72). On October 23, 2019, Brett Lochridge filed Brett Lochridge’ Motion to Quash or, in the Alternative, Modify Subpoena (Dkt. #71). Lochridge argues that, because of the Court’s recent Memorandum Opinion and Order (Dkt. #58), “no claims remain in this action to which Mr. Lochridge has knowledge and his deposition can only be seen as harassment” (Dkt. #71). Accordingly, Lochridge requests that the Court quash the subpoena (Dkt. #71). In the alternative, Lochridge argues that the Court should modify the date and scope of the subpoena (Dkt. #71). As to the date, Lochridge argues that he has informed Park Board that he is unavailable for a deposition on November 13 due to prior travel arrangements. Lochridge accordingly requests that the Court “modify the subpoena to allow that Mr. Lochridge [] be deposed on a mutually convenient date” (Dkt. #71). As to the scope of the subpoena, Lochridge first argues that the Court should modify the subpoena duces tecum to exclude document requests 3-10 which “seek materials related to Mr. Lochridge’s performance of his duties as an appraiser” (Dkt. #71). Lochridge similarly argues that document request 15 should be excluded because it

“asks for documents related to the basis for the award” (Dkt. #71). Lochridge also opposes document requests 11-13 which “ask for Mr. Lochridge to produce all materials regarding his payment for acting as an appraiser and any other documents relating to work done for the Defendants” (Dkt. #71). Finally, Lochridge opposes document request 14 which “asks for every affidavit or deposition that Mr. Lochrdige has ever given” (Dkt. #71). This request, Lochridge continues, is “horrifically overbroad and is not even attempting to be narrowed to relevant information” (Dkt. #71). On November 15, 2019, Park Board filed Plaintiff’s Response to Brett Lochridge’s Motion to Quash or, in the Alternative, Modify Subpoena (Dkt. #72). Park Board argues that Lochridge’s

Motion to Quash is “groundless” because the purpose of seeking the deposition of Lochridge is “to determine if the award must be set aside” (Dkt. #72). As to Lochridge’s opposition to the requested documents, Park Board simply replies that the “deposition must move forward as set in the attached subpoena . . . .” (Dkt. #72). The Court now considers Brett Lochridge’s Motion to Quash or, in the Alternative, Modify Subpoena (Dkt. #71). LEGAL STANDARD Pursuant to Federal Rule of Civil Procedure 26(b)(1), parties “may obtain discovery regarding any non[-]privileged matter that is relevant to any party’s claim or defense . . . .” FED. R. CIV. P. 26(b)(1). Relevance, for the purposes of Rule 26(b)(1), is when the request is reasonably calculated to lead to the discovery of admissible evidence. FED. R. CIV. P. 26(b)(1); Crosby v. La. Health & Indem. Co.,

Park Board Ltd. v. State Automobile Mutual Insurance Company, (E.D. Tex. 2019).

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