Opinion
Civil Action No. 03-5618.
May 11, 2004
ORDER
AND NOW, this 11th day of May, 2004, after a hearing at which counsel for Plaintiff and Defendants were present, upon consideration of Plaintiff's motion to strike Defendant's objections and compel discovery (doc. no. 11) and Defendant's memorandum in opposition thereof (doc. no. 14), it is hereby ordered as follows:
1. Plaintiff's request for information regarding all claims filed against Defendants by their insureds is GRANTED IN PART AND DENIED IN PART. Defendants shall provide Plaintiff with the names of the parties, the court, the year, and the docket numbers for all civil actions filed against Defendants for bad faith on all policies issued in Pennsylvania related to property damage that resulted in a verdict or other final disposition by a court for the time period ranging from two years before Plaintiff filed her claim until the present;
2. Plaintiff's request for Defendants' claims and procedural manuals is GRANTED IN PART AND DENIED IN PART. After the parties have reached a mutually agreeable confidentiality agreement, Defendants shall provide Plaintiff with the relevant portions of claims and procedural manuals that applied to Plaintiff's claim;
3. Plaintiff's request for the amount of the reserve established in this case and information about how Defendants establish a reserve is DENIED; and
Under Fed.R.Civ.P. 26(b), "parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party . . . For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action." The rule provides that "relevant information need not be admissible at the trial if reasonably calculated to lead to the discovery of admissible evidence." Id. The committee notes indicate that the court may order discovery of relevant information, that would not otherwise be admissible, upon a showing of good cause. Fed.R.Civ.P., Advisory Committee Notes, 2000 Amendment. Under this analysis, there are two types of discovery — core discovery, which is broadly discoverable, and discovery of information reasonably calculated to lead to the discovery of admissible evidence, which requires a showing of good cause for discovery. The discovery of reserve information falls into the latter category and, therefore, requires a showing of good cause.
The Pennsylvania statute that requires insurance companies to establish reserves appears to be designed in order that the Commonwealth could monitor the financial viability of the insurance companies to ensure that the companies have adequate capital to cover claims for which the companies may be liable.See North River Ins. Co. v. Greater N.Y. Mt. Ins. Co., 872 F. Supp. 1411, 1412 (E.D. Pa. 1995) ("The existence of these reserves also allows state insurance departments to monitor the financial condition of the insurance companies they regulate for the protection of insureds and the public.") The establishment of a reserve is unrelated to litigation strategy. See Fidelity and Deposit Co. of Md. v. McCulloch, 168 F.R.D. 516, 525 (E.D. Pa. 1996) (finding that a number of courts have observed that there is a "tenuous link between reserves and actual liability given that numerous considerations factor into complying with this statutory directive.")
While Plaintiff reads Hollock v. Erie Ins. Exchange, 842 A.2d 409 (Pa.Super. 2004), to permit the discovery of reserves and how reserves are established, this court does not find Hollock to stand for that proposition. Rather, that case discusses the propriety of a punitive damages award that resulted from a claim for bad faith against an insurance company who refused to increase an initial offer despite "receiving several pieces of information that should have caused it to reevaluate the value of the claim." Id. at 413. There is no need to discover the reserve in order to establish such liability, nor does Plaintiff show cause why this type of discovery should be had.
4. Judgement regarding Defendants' assertion of a privilege relating to the twenty-seven listed documents is RESERVED, pending in camera review of those documents.
AND IT IS SO ORDERED.