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Kull v. Arrowood Indemnity Co.

United States District Court, Third Circuit

October 11, 2013

GARY S. KULL, Petitioner,
v.
ARROWOOD INDEMNITY CO., Respondent.

MEMORANDUM OPINION

TONIANNE J. BONGIOVANNI, Magistrate Judge.

This matter comes before the Court upon non-party Gary S. Kull's ("Petitioner") motion pursuant to Fed.R.Civ.P. 45(c)(3) to quash or modify the subpoena served upon him. [Docket Entry No. 1]. Respondent Arrowood Indemnity Co. ("Arrowood") opposes Petitioner's motion. [Docket Entry No. 4]. The Court has fully reviewed and considered all of the papers submitted in support of and in opposition to Petitioner's motion and considers same without oral argument pursuant to Fed.R.Civ.P. 78. For the reasons set forth more fully below, consistent with this Opinion and the accompanying Order, Petitioner's motion to quash is GRANTED.

I. BACKGROUND AND PROCEDURAL HISTORY

Currently pending before the District Court for the Northern District of Ohio is an action entitled Arrowood Indemnity Co. v. The Lubizol Corporation v. United States Fire Insurance Company, Case No. 1:10-CV-02871-SO ("Ohio Action"). That action arises out of the Lubrizol Corporation's ("Lubrizol") claim for coverage for the environmental contamination of a tributary known as Patrick Bayou in Harris County, Texas, under policies allegedly issued by Arrowood and United States Fire Insurance Company ("U.S. Fire"). In 1993, Lubrizol sued U.S. Fire and Arrowood as part of an action entitled The Lubrizol Corporation v. The Central National Insurance Company of Omaha, et al. [No. 93-cv-00210], ("Central National Litigation"). The Central National Litigation was ultimately resolved via settlement between U.S. Fire and Lubrizol ("U.S. Fire Release") and separately, via settlement between Arrowood and Lubrizol ("Arrowood Release").

In December 2010, Arrowood filed the Ohio Action seeking a declaratory judgment relating to its coverage obligations for the Patrick Bayou site. Lubrizol filed an answer to Arrowood's complaint, a counterclaim against Arrowood for declaratory judgment, breach of contract and bad faith, and a third-party complaint against U.S. Fire seeking coverage for the environmental contamination of Patrick Bayou under policies allegedly issued by U.S. Fire. The District Court for the Northern District of Ohio has granted summary judgment to both Arrowood and U.S. Fire finding that the U.S. Fire Release and Arrowood Release discharged both U.S. Fire and Arrowood from any coverage obligation for the Patrick Bayou site. The Court found the language of the U.S. Fire Release and Arrowood Release to be "clear and unambiguous" and therefore refused to consider any extrinsic evidence in interpreting the releases. Palmer Certification, Ex's E & F. The only remaining claim is Lubrizol's claim of bad faith against Arrowood.

Arrowood has issued a subpoena to Petitioner Gary S. Kull, Esq. Petitioner represents U.S. Fire in the Ohio Action and represented U.S. Fire during the Central National Litigation. Petitioner states that Arrowood indicated to him that the subject of the deposition will be the language of the U.S. Fire Release. Certification of Gary Kull, ΒΆ 3. Arrowood asserts that they are not seeking to discover extrinsic evidence relating to the interpretation or construction of the U.S. Fire Release. Rather, the purpose of the deposition is "to obtain discovery regarding an entirely new theory of bad faith liability."

II. ARGUMENTS

A. PETITIONER'S ARGUMENT

1. RELEVANCE

Petitioner argues that the subpoena should be quashed because any information that he can provide about the U.S. Fire Release would be irrelevant to the only remaining issue in the Ohio Action between Arrowood and Lubrizol, which is the claim of bad faith claims handling. He contends that the U.S. Fire Release does not have any relevance to the way Arrowood handled Lubrizol's claim for the Patrick Bayou site. Petitioner further argues that the information requested must fall within the scope of discovery set forth in Federal Rule of Civil Procedure 26(b)(1). Ford Motor Co. v. Edgewood Properties, Inc., CIV.A. 06-1278 WJM, 2011 WL 601312, *2 (D.N.J. Feb. 15, 2011). Rule 26(b)(1) provides as follows:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense-including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations of Rule 26(b)(2)(C).

Petitioner argues that as a non-party to the Ohio Action, he is entitled to greater protection than that afforded to a normal party. Petitioner relies on Stamy v. Packer and In re Centrix, to note that "the standards for non-party discovery require a stronger showing of relevance than for simple party discovery." Stamy v. Packer, 138 F.R.D. 412, 419 (D.N.J. 1990); In re Centrix Financial, CIV.A. 12-6471 (AET), 2012 WL 6625920, *6 (D.N.J. Dec. 18, 2002). The District Court also held in Centrix that if a subpoena seeks information outside the scope of permissible discovery, a Court may quash the subpoena. In re Centrix Financial, CIV.A. 12-6471 (AET), 2012 WL 6625920 at *5.

Petitioner further argues that since the Court in the Ohio Action has already found the language of the U.S. Fire Release to be clear and unambiguous, any testimony from him regarding the language of the U.S. Fire Release is irrelevant.

Petitioner also notes that while Arrowood would like to link Lubrizol's bad faith theory to U.S. Fire by asserting that certain provisions of the Arrowood Release and U.S. Fire are "substantively identical", they are two separate contracts and Lubrizol has no bad faith claim against U.S. Fire. Petitioner claims that the theory of bad faith asserted against ...


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