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Insurance Client Receives Favorable Ruling

News | November 4, 2014

Kutak Rock attorneys Erin McClernon, Brad Baumgart and Anna Berman successfully represented a major multinational insurer in a motion to compel production of documents filed by excess general liability insurance carriers. The excess carriers had previously issued a third-party subpoena to the insurer for the production of documents. The motion to compel sought to force the insurer’s production of numerous highly sensitive and privileged internal insurer documents. On September 8, 2014, the U.S. District Court for the District of Kansas accepted Kutak Rock’s argument that the excess carrier’s motion to compel was untimely, and outright denied the motion.

The underlying case originated when an international engineering firm procured and constructed defective jet bubble reactors for several power plants. The engineering firm submitted claims to its general and professional liability carriers, and ultimately negotiated a settlement with the plant owners. Kutak Rock’s client provided primary general liability coverage to the engineering firm and paid its policy limits. After the engineering firm’s excess general liability carriers refused to participate in the settlement, the engineering firm sued its excess carriers for breach of contract.

In May 2013, the excess carriers, represented by a Chicago-based law firm, served a third-party subpoena upon the insurer. The subpoena sought virtually any document that related in any way to the jet bubble reactors or to the insurer’s coverage for the issues related to the jet bubble reactors.

Kutak Rock became involved in the dispute in December 2013 to assist with the unusually large scope of document production and to address the intricate privilege and confidentiality issues at stake for the insurer. In June 2014, Kutak Rock, on behalf of the insurer, coordinated the production of thousands of redacted responsive documents, along with a detailed privilege log that ultimately exceeded 150 pages in length.

The excess carriers objected to the insurer’s production and essentially requested that the insurer reassess every privilege assertion and redaction in its production. On July 16, 2014, when the insurer refused to succumb to such unreasonable demands, the excess carriers filed a motion to compel. In addition to extensive argument on the merits, the motion suggested that the insurer had waived all of its objections/privilege assertions because it did not respond to the subpoena by the subpoena’s May 6, 2013 return date.

On behalf of the insurer, Kutak Rock argued in its opposition that it was the excess carriers who had waived any ability to object to the Insurer’s production, because their motion to compel was filed more than a year after the May 6, 2013 return date on the subpoena. The Court agreed with Kutak Rock’s argument, and in a five-page opinion, outright denied the excess carrier’s motion to compel as untimely. The Court held that, absent a showing of good cause, the excess carrier’s motion to compel was required to be filed within 30 days of the insurer’s alleged May 6, 2013 default in responding to the subpoena. The Court noted that if a party wants to preserve its opportunity to file a motion to compel pending the outcome of golden rule discussions, the common practice is for the party to move, prior to expiration of the deadline, for an extension of time to file the motion to compel.