The United States District Court for the Western District of Washington granted the insureds' motion to compel and ordered that the insurer produce withheld discovery. Bagley v. Travelers Home & Marine Ins. Co., 2016 U.S. Dist. LEXIS 115028 (W.D. Wash. Aug. 25, 2016).
The insureds' dock and boat ramp were damaged in a storm. Travelers refused to pay for the damage, arguing it was not covered. After Plaintiffs filed suit, Travelers admitted coverage and agreed to pay. The insureds' suit included a claim that Travelers wrongfully denied coverage, thereby costing the insureds money.
The insureds moved the court to compel Travelers to respond to certain discovery requests. First, the insureds requested the claims file Travelers maintained on their claim. The court did not order the production of privileged documents, but documents related to claims handling were not privileged. Travelers was ordered to produce all documents in the insureds' claim file that related to claim handling, even if the documents were created after the commencement of litigation.
Next, the insureds requested Travelers' training materials and claim manuals. Travelers argued that because the insureds' policy was a homeowner's policy, materials and manuals on property insurance in general were unlikely to lead to admissible evidence. The court disagreed. Because the insureds alleged bad faith, Travelers' materials and manuals on property insurance and claim handling in general were relevant. Travelers had materials on "Property Best Practices," "Introduction to Property," "The Life of the Claim," and "The Property Claim Determination Process" among other relevant topics. These materials could shed light on how Travelers instructed its adjustors to investigate, evaluate, and process a claim like the insureds.
The insureds alleged that Travelers tied the bonuses of its claim department employees to low claim payouts. Therefore, the insureds' requested that Travelers produce documents related to its employees compensation. The court held that the insureds were entitled to discovery of all documents relevant to the compensation program, including those that related to top-level employees who allegedly rewarded managers and the adjustors they supervised.
Travelers was also ordered to produce personnel files for all personnel working on their claim. This included reviews, disciplinary information, and compensation information.
Finally, the insureds sought "financial documents that evaluate the effect of reduced claims payments to Travelers' bottom line." Travelers argued the request was vague or unlikely to lead to admissible evidence. The insureds alleged that Travelers tracked information regarding the claim payouts of its offices nationwide and used this data to encourage certain claim handling behavior. Documents that confirmed the existence of such a program would be relevant to the insureds' claim. Therefore, Travelers was ordered to produce loss ratio and other profit information.
