United States District Court, D. Maryland
CX Reinsurance Company Limited, f/k/a CNA Reinsurance Company Limited
B&R Management, Inc., et al.;
pending is Defendant Jessica-Carl, Inc.'s
(“Jessica-Carl”) request that this Court
delineate the scope of CX Reinsurance Company Limited's
(“CX Re”) 30(b)(6) deposition. [ECF No. 250]. The
issues have been fully briefed [ECF Nos. 250, 251, 252], and
no hearing is necessary. See Local Rule 105.6 (D.
Md. 2016). The permissible scope of CX Re's 30(b)(6)
deposition is outlined below.
factual background has been recited in prior orders and will
not be repeated here. Relevant to the instant dispute, on
January 9, 2018, Jessica-Carl wrote the Court regarding the
testimonial scope of its 30(b)(6) designee, Alvin Lapidus.
[ECF No. 237 at 1]. Specifically, Topics 6, 7, and 9 in CX
Re's 30(b)(6) Notice of Deposition to Jessica-Carl seek
information relating to “[c]hipping, flaking, or
peeling paint” and “lead paint on the
surfaces” of insured properties at the time B&R
Management (“B&R”) submitted the Application.
See [ECF No. 237-1 ¶¶ 6-7, 9]. As of
January 9, 2018, however, CX Re's claim for rescission
was based solely upon its allegation that B&R falsely
answered “No” to Question 16 of the Application,
which asks whether “the insured ever had any lead paint
violations in the building(s)[.]” Pl.'s First Am.
Compl., [ECF No. 25 ¶¶ 25-26]. Pending, though,
was CX Re's Motion for Leave to File Second Amended
Complaint, [ECF No. 189] together with its proposed Second
Amended Complaint, [ECF No. 189-1], which alleged that
B&R also falsely answered Questions 12 and 14, denying
that there was “any lead paint on any interior or
exterior surface of the building[, ]” or “any
paint chipping or flaking, or otherwise coming off any
interior or exterior surface of the building[, ]”
respectively. [ECF No. 189-1 ¶ 44]; Application, [ECF
No. 1-4]. Jessica-Carl argued that Topics 6, 7, and 9
“would only be relevant if the Court granted the Motion
to Amend.” [ECF No. 237 at 2]. Thus, because
Jessica-Carl's objections to Topics 6, 7, and 9 would be
mooted if Judge Hollander approved CX Re's Motion to
Amend, after a telephone conference on January 11, 2018, the
parties agreed to defer the dispute. [ECF No. 239]. On
January 17, 2018, Judge Hollander denied CX Re's Motion
for Leave to File Second Amended Complaint, to the extent it
sought to add additional claims, [ECF No. 240 at 21], thus
leaving CX Re's rescission claim based solely upon the
allegation that B&R falsely claimed that it had never
received a lead paint violation. See Second Am.
Compl., [ECF No. 244]. In addition to now determining the
relevance of Topics 6, 7, and 9, Jessica-Carl also objects to
Topic 10, which seeks information regarding the
“factual bases for each of Jessica-Carl's
affirmative defenses.” [ECF No. 237-1 ¶ 10].
Topics 6, 7, and 9
objects to Topics 6, 7, and 9 on the grounds that, because CX
Re's claim for rescission is based solely upon the
allegation that B&R falsely answered Question 16,
“evidence of chipping, flaking, and peeling paint [is]
not relevant.” [ECF No. 252 at 1]. CX Re argues,
however, that the information remains relevant to
Jessica-Carl's “innocent co-insured defense,
” because “[e]vidence that one or more of
Jessica-Carl's properties had lead paint on, or paint
chipping, peeling, or flaking off of, any surfaces at the
time of the Application, would prove that Jessica-Carl is not
an innocent insured.” [ECF No. 251 at 2].
CX Re's assertions, Judge Hollander's ruling (denying
CX Re's motion to amend its claims for rescission)
renders evidence of peeling or chipping paint irrelevant to
Jessica-Carl's innocent co-insured defense. As
Jessica-Carl explains, it previously moved for a Temporary
Restraining Order (“TRO”) and Preliminary
Injunction to enjoin CX Re from entering into a settlement
agreement with B&R. [ECF No. 88]. At the time of the June
9, 2017 hearing on the motion, CX Re's complaint only
alleged that it was entitled to rescission because B&R
falsely claimed it had not received any lead paint
violations. See [ECF No. 194 at 6-7] Pl.'s First
Am. Compl., [ECF No. 25 ¶¶ 25-26]. The
complaint's sole allegation then gave rise to
Jessica-Carl's innocent co-insured defense. See
[ECF No. 194 at 3-4]. In discovery, though, CX Re had
produced more than 1, 300 documents pertaining to lead paint
cases, demonstrating that CX Re was also seeking rescission
of the Policies on the grounds of flaking and chipping paint.
Id. at 4-5. In discussing CX Re's allegations of
chipping or peeling paint at the TRO hearing, Judge Hollander
but my overarching concern is how is that a claim in this
case? It's not part of the amended complaint. The amended
complaint is there was a falsification in answer to Question
. . . .
If there's some other allegation, it's not part of
this case. It won't be part of the case unless
there's an amendment.
Id. at 10. Thereafter, in response to Judge
Hollander's reservations as to whether B&R's
misrepresentation of Question 16 alone could deprive
Jessica-Carl of insurance,  CX Re argued that Questions 12
and 14 contained misrepresentations “on th[e]
application concerning property Jessica-Carl owned.”
Id. at 12-13. Counsel for CX Re argued that, in
demonstrating that Jessica-Carl made material
misrepresentations, he “was not limited to just the one
allegation in the complaint.” Id. at 15-17.
Judge Hollander, however, directly rejected CX Re's
I don't agree with you, Mr. Ruberry. Either you move to
amend your complaint. If it's granted and the allegations
are thereby expanded, then this issue of lead paint peeling
and chipping may well be admissible. But right now . . .
I'm going to confine it to the allegations in the
complaint. I have to. That's just the way it has to be.
It can't possibly be that you get to open the door to
issues that were not alleged.
Id. at 17. Noting that CX Re has presented no new
arguments since the TRO hearing, I find that Judge
Hollander's rationale controls. CX Re's sole
allegation, giving rise to its claim for rescission, is that
B&R falsely denied receiving lead paint violations. Any
evidence of lead paint conditions at Jessica-Carl's
properties is thus irrelevant, because CX Re failed to allege
that the answers to Questions 12 and 14 were false. As such,
CX Re is foreclosed from inquiring into Topics 6, 7, and 9
when deposing Mr. Lapidus.
Jessica-Carl objects to Topic 10, on the grounds that the
factual bases for affirmative defenses “should be
addressed through Answers to Interrogatories” and that
“‘areas of examination regarding the factual
basis for claims and defenses asserted is not properly within
the scope of a 30(b)(6) deposition.'” Def.'s
Mem., [ECF No. 250 at 2] (quoting Fish v. Air &
Liquid Sys. Corp., No. CV GLR-16-496, 2017 WL 697663, at
*20 (D. Md. Feb. 21, 2017). CX Re argues, however, that it
“may ask Mr. Lapidus questions in this area, and if Mr.
Lapidus were unable to answer such questions,
Jessica-Carl's affirmative defenses would fail.”
Pl.'s Mem., [ECF No. 251 at 2] (citing Krakauer v.
Dish Network L.L.C., 165 F.Supp.3d 432 (M.D. ...