The Texas Supreme Court in In re National Lloyd's Insurance Company, No. 13-076 (Tex. Oct. 31, 2014) recently granted mandamus relief to an insurance company seeking to limit discovery requests by a plaintiff-insured seeking information on claim files similar to her own.
In re National Lloyd's involved allegations by an insured that the insurer, National Lloyd's, had undervalued and underpaid her claims stemming from damage from a series of storms in Cedar Hill near Dallas. The insured sought production of all claim files for a six-year period for three specific adjusters and all claim files for properties in Dallas and Tarrant counties by the two adjusting firms that handled the insured's claim.
Naturally, the insurer objected and a motion to compel ensued. The trial ordered production of all claim files for the two adjusting companies but limited production of other claims files to only properties in the same city and from the same storms that damaged the insured's home. National Lloyd's sought mandamus from the court of appeals, was denied, and sought mandamus from the supreme court.
The insured argued that her requested discovery of information on claims from the same storms and same localized area as her own were relevant and necessary to prove that the adjusters had "established a baseline" for damages and compared her claims to that baseline without properly inspecting or valuing her individual property. The insured contended this information would support her claims of bad faith and fraud. Thus, it was relevant and not overbroad.
But the supreme court did not agree. It rejected the argument that National Lloyd's evaluations of other properties would be "probative of its conduct with respect to [the insured's] undervaluation claims at issue in this case." As the court noted, "[s]couring claim files in hopes of finding similarly situated claimants whose claims were evaluated differently from [the insured's] is at best an 'impermissible fishing expedition.'"
The court also was unpersuaded by the insured's argument that the trial court's narrowing of the scope of discovery cured its overbroad request. Noting that "whether a request for discovery is overbroad is distinct from whether it is burdensome or harassing," the court reiterated that "[o]verbroad requests for irrelevant information are improper whether they are burdensome or not," citing In re Allstate Cnty. Mut. Ins. Co., 227 S.W.3d 667, 669–70 (Tex. 2007). Accordingly, the court granted National Lloyd's request for mandamus relief and ordered the trial court to vacate its discovery order.
This case is a good reminder that even if a trial court limits the scope of patently overbroad discovery, it doesn't immunize from challenge the rest of the information covered by the discovery order if the information is not relevant. It's still fishing, just in a smaller pond.
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