United States District Court, D. Maryland
CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited
B&R Management, Inc., et al.;
to an order referring this case to me for discovery, [ECF No.
78], I have reviewed Defendant Jessica-Carl, Inc.'s
(“Jessica-Carl's”) Motion to Compel and
Plaintiff CX Reinsurance Company Limited's (“CX
Re's”) Opposition. [ECF Nos. 87-3, 87-7]. I have
also reviewed CX Re's Motion for Leave to Supplement its
Opposition to Jessica-Carl's Motion to Compel
(“Motion to Supplement”), [ECF No. 136], the
corresponding Supplement, [ECF No. 138], as well as
Jessica-Carl's Opposition to the Motion to Supplement,
[ECF No. 140], and a related Motion to Seal, [ECF No. 141].
No hearing is deemed necessary. See Loc. R. 105.6
(D. Md. 2016). For the reasons set forth below, CX Re's
Motion to Supplement will be GRANTED; Jessica-Carl's
Motion to Seal will be GRANTED; and Jessica-Carl's Motion
to Compel will be GRANTED IN PART and DENIED IN PART.
action, CX Re seeks to rescind two general liability
insurance policies (“Policies”) issued to
Jessica-Carl, B&R Management, Inc. (“B&R
Management”), and other named insureds (collectively
“Defendants”) in 1997 and 1998, alleging that
Defendants made misrepresentations of material fact in the
underlying insurance application (“Application”).
See Pl.'s First Am. Compl., [ECF No. 25 at
¶¶ 1 & 11].
Policies provide insurance coverage for certain risks,
including lead exposure, relating to specified residential
rental properties in Baltimore, Maryland
(“Properties”). Id. at ¶ 13.
Policies, [ECF Nos. 1-2 & 1-3]. Specifically, CX Re avers
that Defendants falsely denied the existence of past lead
paint violations in connection with the Properties in
response to a question on the Application. Id. at
¶¶ 25-26. If Defendants had answered this question
truthfully, CX Re argues it would not have issued the
Policies or that it would have issued the Policies subject to
substantially higher premiums or substantially different
terms. Id. at ¶ 41. CX Re contends that it
“has incurred and paid costs of at least $853, 328 in
connection with the adjustment, defense, settlement and
satisfaction of judgments in these and other claims and
lawsuits under the Policies[, ]” including lawsuits
alleging bodily injury due to exposure to lead paint in the
Properties. Id. at ¶¶ 34-37. Consequently,
CX Re also demands an award of damages resulting from fraud
in connection with the aforementioned conduct. Id.
at ¶¶ 1-2. CX Re asserts that it first learned of
the misrepresentation on the Application while conducting
“a broad underwriting review of many insureds”
in August 2015, and filed this action shortly thereafter in
November, 2015. Id. at ¶¶ 27-28.
in this matter is underway, and the instant dispute involves
Jessica-Carl's First Requests for Production.
See Def.'s Mot., [ECF No. 87-3]. In its
Response, CX Re objected to Request Nos. 7, 8, and 10 on
relevance and privilege grounds. Id. at 5 &
10-12. Jessica-Carl served CX Re with its Motion to Compel on
January 31, 2017, Pl.'s Opp., [ECF No. 87-7, 1], seeking
production of documents pursuant to the above requests, as
well as a privilege log, Def.'s Mot., [ECF No. 87-3,
5-6]. In its Opposition, CX Re declined to respond, arguing
instead that CX Re's March 10, 2017 “settlement in
principle” with B&R Management, once finalized,
would render the Requests irrelevant and the Motion moot.
[ECF No. 87-7, 1-2]. However, the settlement-in-principle
never finalized. Pl.'s Mot. to Suppl., [ECF No. 136 at
¶ 10]. Following the parties' failed attempts
to resolve the dispute, Jessica-Carl filed its Motion to
Compel and related memoranda on March 30, 2017. [ECF No. 87].
See Loc. R. 104.8 (D. Md. 2016). On May 9, 2017,
CX Re filed a Motion to Supplement, seeking to address the
substantive arguments raised in the Motion to Compel.
Pl.'s Mot. to Suppl., [ECF No. 136]. Jessica-Carl opposes
CX Re's Motion to Supplement. Def.'s Opp., [ECF No.
140]. I will address each of these motions in
CX Re's Motion to Supplement
noted above, CX Re timely opposed Jessica-Carl's Motion
to Compel, but failed to address the substance of the issues
raised therein. Pl.'s Mot. to Suppl., [ECF No. 136 at
¶8]. CX Re's settlement-in-principle with B&R
Management fell through on or about April 4, 2017, and CX Re
now seeks leave to supplement its Opposition. Id. at
¶¶ 8 & 10. Jessica-Carl opposes CX Re's
Motion to Supplement on the basis of tardiness, and suggests
that CX Re must suffer the consequences of the
“risk” it took by foregoing a substantive
response in the first instance. Def.'s Opp., [ECF No.
140, 3]. I note that CX Re offers no explanation why it
waited over a month to file its Motion to Supplement, after
realizing there would be no imminent settlement with B&R
Management. See Id. at 3, n. 2. Nevertheless, since
the Supplement narrows the grounds of CX Re's objections
and presents relevant information that will aid the court in
resolving this dispute, I will treat CX Re's Motion to
Supplement as a Motion for Leave to File a Surreply and will
grant the motion in accordance with Local Rule 105.2(a).
Jessica-Carl's Motion to Compel
Rule of Civil Procedure 26(b)(1) permits discovery of
“any nonprivileged matter that is relevant to any
party's claim or defense and proportional to the needs of
the case.” In determining proportionality, the Court
must consider “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.” Fed.R.Civ.P.
Request for Document Production No. 10
Request for Document Production No. 10 asks CX Re for
“[a]ll documents pertaining to the ‘broad
underwriting review' conducted by [CX Re's]
London-based business manager … including but not
limited to any written review, all communications related to
such review, and any documents reviewed during the course of
the underwriting review.” Def.'s Mot. to Compel,
[ECF No. 87-3, 5]. Jessica-Carl seeks full compliance with
Request No. 10, arguing that the documents at issue are
“crucial” to Jessica-Carl's ability to
effectively challenge CX Re's claims regarding the
timeliness of this rescission action, as well as presenting
affirmative defenses. Def.'s Mot., [ECF No. 87-3, 4]. CX
Re correctly notes that “[t]his Request seeks
all documents pertaining to CX Re's broad
underwriting review of many insureds.”
Pl.'s Supp., [ECF No. 138, 2]. In its Supplement, CX Re
abandons its earlier privilege objections and instead argues
that documents relating to CX Re's underwriting review of
any landlord other than B&R Management are irrelevant to
the instant case. Pl.'s Supp., [ECF No. 138, 7-8]. CX Re
also aims to ...