United States District Court, D. Montana, Helena Division
ORDER DENYING PLAINTIFF'S SECOND MOTION TO COMPEL
TIMOTHY J. CAVAN, UNITED STATES MAGISTRATE JUDGE.
Tina McColl (“McColl”) brings this action against
Defendant Allied Professional Insurance Company
(“Allied”) for bad faith insurance practices
under Montana's Unfair Trade Practices Act. (Doc. 6.)
States District Judge Sam E. Haddon has referred the case to
the undersigned under 28 U.S.C. § 636(b)(1)(B). (Doc.
76, 82.) Presently before the Court is McColl's Second
Motion to Compel Discovery. (Doc. 122.) Having considered the
parties' submissions, the Court finds McColl's motion
should be denied.
insured Dr. Michael Lang, a Bozeman naturopathic physician,
under a professional liability policy. McColl presented a
claim for damages against Dr. Lang for professional
negligence, alleging that he applied “black
salve” to her nose, which burned a third-degree, 4 mm
deep hole in her nose. The claim was not resolved, and
ultimately the matter proceeded to trial. A jury rendered a
verdict against Dr. Lang in the amount of $138, 853.00. (Doc.
lawsuit arises out of Allied's handling of McColl's
claim against Dr. Lang. (Doc. 6.) McColl alleges Allied
failed to timely and adequately investigate, negotiate and
pay McColl's damages, despite the fact liability was
Professionals Insurance Services (“APIS”) is a
management services company which provides administrative,
management and claims handling functions for Allied. The
services are provided under a Corporate Services Agreement
between Allied and APIS. Pursuant to that agreement, an
employee of APIS, Sara Schroeder, participated in the
handling of McColl's underlying claim against Dr. Lang.
Id. Her father, Michael J. Schroeder, also
participated in the handling of McColl's underlying
claim. Mr. Schroeder is Vice President and legal counsel for
APIS, and is also a stockholder in APIS. Although it was
involved in the adjustment of McColl's claim, APIS is not
a party to this action.
present motion, McColl seeks to compel (1) the production of
the Corporate Services Agreement between Allied and APIS; (2)
a response to “interrogatories about Michael
Schroeder's remuneration for his claims handling
activities;” and (3) “Michael Schroeder to answer
questions about his ownership interest in APIS.” (Doc.
123 at 1.)
threshold requirement for discoverability under the Federal
Rules of Civil Procedure is whether the information sought is
“relevant to any party's claim or defense and
proportional to the needs of the case.” Fed R. Civ. P.
26(b)(1). Factors to consider include “the importance
of the issues at stake in the action, the amount in
controversy, the parties' relative access to relevant
information, the parties' resources, the importance of
the discovery in resolving the issues, and whether the burden
or expense of the proposed discovery outweighs its likely
benefit.” Id. “Information within this
scope of discovery need not be admissible in evidence to be
relevance standard is commonly recognized as one that is
necessarily broad in scope. See Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340, 351 (1978) (citing Hickman v.
Taylor, 329 U.S. 495, 501 (1947)). However broadly
defined, relevancy is not without “ultimate and
necessary boundaries.” Hickman, 329 U.S. at
507. Accordingly, district courts have broad discretion to
determine relevancy for discovery purposes. The party seeking
to compel discovery has the burden of establishing that its
request satisfies the relevancy requirements of Rule 26(b).
Soto v. City of Concord, 162 F.R.D. 603, 610 (N.D.
maintains that an adjuster's financial motivation to deny
claims or adjust claims in a particular manner is relevant
and discoverable. McColl argues the information sought to be
compelled by her motion is necessary to determine whether
Michael Schroeder or APIS had a financial motive to refuse to
timely investigate and pay her claim against Dr. Lang.
is correct that courts have found that adjuster compensation
may be relevant to bad faith claims in certain circumstances.
In Anspach v. United of Omaha Life Ins. Co., 2011 WL
3862267 at *9 (D.S.D. Aug. 31, 2011), for example, the
federal district court compelled the production of adjuster
personnel files, finding they “may reveal whether a
particular employee was rewarded financially for denying a
certain number or percentage of claims or achieving a
particular outcome with regard to claim's
handling.” Here, however, there is no indication that
is the case. In fact, Allied has responded to discovery on
this issue, and has stated that neither Sara nor Michael
Schroeder receive any financial benefit from the manner in
which either may handle or adjust individual claims,
including McColl's claim. Nevertheless, the Court will
discuss below each of the specific matters McColl seeks to