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Moslimani v. Union Valley Corp.

Decided: October 6, 1993.

ALEX MOSLIMANI AND DEBORAH JEAN MOSLIMANI, HIS WIFE, PLAINTIFFS,
v.
UNION VALLEY CORPORATION, CENTURY WEL-BUILT INDUSTRIES, INC., ABC COMPONENT PART MANUFACTURING/DISTRIBUTING COMPANY(S), FICTITIOUS COMPANY(S), DEF SUBCONTRACTOR/JOHN DOE, FICTITIOUS DEFENDANT(S), DEFENDANTS



Fisher, J.s.c.

Fisher

OPINION

The present controversy arose at a case management conference held before this court on August 12, 1993. In pretrial discovery, plaintiffs Moslimani ("plaintiffs") sought discovery of insurance information and defendant Century Wel-Built ("Century") objected. This court must determine whether such information should be provided.

After the commencement of this action, Century filed for protection under the Bankruptcy Code. The United States Bankruptcy Court eventually granted plaintiffs relief from the automatic stay imposed under the Bankruptcy Code, 11 U.S.C. § 362(d), but limited plaintiffs' potential recovery against the bankrupt estate to whatever proceeds remain available under Century's comprehensive general liability insurance policy for the policy year in question. In other words, in the absence of insurance coverage, plaintiffs will be unable to obtain satisfaction of any judgment they may obtain from the assets of Century.

Century states that the limits of the policy in question have been eroded by other claims or expense payments (including attorneys' fees and other defense costs). Century further argues that the limits will continue to be reduced by the incurring of defense costs in this action as well as by any other claims falling within the particular policy period.*fn1 Settlement Discussions have been ongoing among the parties and, to ascertain the amount of funds available to Century, plaintiffs seek to determine the amount which remains available to satisfy their claim. It is this information which Century declines to voluntarily provide.

R. 4:10-2(b) sets forth the standard by which such requests must be measured:

A party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.

It is axiomatic that the purpose of R. 4:10-2(b) is "to facilitate settlement." Pressler, Current N.J. Court Rules, comment on R. 4:10-2 (1994). Accord, Federal Rule of Civil Procedure 26, Notes of Advisory Committee on Rules ("Disclosure of insurance coverage will enable counsel for both sides to make the same realistic

appraisal of the case, so that settlement and litigation strategy are based on knowledge and not speculation.").*fn2 In this case, it is undisputed that the only satisfaction that plaintiffs can obtain on any judgment entered against Century is by way of its general liability insurance policy. Thus, any settlement Discussions between plaintiffs and Century are necessarily restricted to the funds available under the insurance policy. In opposing plaintiffs' request for information as to the amount of insurance available at the present time, Century analogizes to situations where communications between insurers and reinsurers have been sought, see, Potomac Elec. Power v. Calif. Union Ins. Co., 136 F.R.D. 1 (D.D.C.1990), and where a party has sought production of documents reflecting the reserves set by an insurer and other similar information, see, Rhone-Poulenc Rorer, Inc. v. Aetna Casualty & Surety Co., 139 F.R.D. 609 (E.D.Pa.1991). In those cases, the courts viewed the request for such information as beyond the scope of F.R.C.P. 26(b)(2).

It is important to note that in Potomac, the court permitted discovery of the contents of a reinsurance agreement, but denied discovery beyond the agreements themselves. The court's decision in Rhone-Poulenc also fails to support Century's position. In that case, the court was asked to consider whether information containing the insurer's reserves could be discovered. Noting, quite correctly, that a reserve "essentially reflects an assessment of the value of the claim taking into consideration the likelihood of an adverse judgment," 139 F.R.D. at 613, the court did not permit discovery because of its impact on the work product and attorney-client privileges.

Here, plaintiffs only seek information from Century as to what fund remains available on this policy. Due to the nature of the type of insurance maintained by Century during this period of time, i.e., an aggregate policy, it is of little use to plaintiffs to know ...


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