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Brown v. Nationwide Affinity Insurance Co. of America

United States District Court, D. South Dakota, Southern Division

June 29, 2018





         This matter is before the court on plaintiffs Tommy Brown and Heather McDougall's complaint based on the court's diversity jurisdiction. See Docket No. 1. Plaintiffs assert claims of breach of contract, fraudulent misrepresentation and deceit, unfair trade practices, and vexatious refusal to pay insurance benefits against defendant Nationwide Affinity Insurance Company of America (“Nationwide”), arising out of a claim plaintiffs submitted on their homeowner's insurance policy. Plaintiffs now move the court to compel certain discovery and to increase the number of interrogatories they are permitted to serve on Nationwide. See Docket No. 18. Nationwide opposes the motion. See Docket No. 23. The district court, the Honorable Lawrence L. Piersol, referred plaintiffs' motion to this magistrate judge for resolution pursuant to 28 U.S.C. § 636(b)(1)(A).


         The following facts are taken from plaintiffs' complaint merely to provide context for the instant motion. The court implies no endorsement of the verity of these facts.

         On August 1, 2017, plaintiffs owned a house insured by Nationwide when a hailstorm came through their Sioux Falls, South Dakota, neighborhood, causing significant damage. Plaintiffs allege extensive, visible damage was done to their shake shingle roof, windows and other elements of their home. They timely submitted a claim under their insurance policy to Nationwide. Hail damage was a covered loss under that policy.

         Nationwide hired Allcat Claims Service, LLC (“Allcat”), a third party, to investigate the claim. Allcat sent its agent, Merle Schmidt, Jr., to inspect the damage.

         After inspecting the plaintiff's home, Mr. Schmidt placed a phone call to what he thought was Nationwide's phone number. Inadvertently, however, he had in fact called plaintiffs' phone. Mr. Schmidt proceeded to leave a detailed voice message on “Nationwide's” (aka plaintiffs') phone.

         In the message Mr. Schmidt recited detailed findings of his inspection. He indicated he had “a little dilemma that I'm running into” because he had seen evidence of hail damage on the roof, including soft metal elements and cedar-shake, and hail damage to the plaintiffs' windows. Furthermore, he was of the opinion that the roof “would not sustain repairs” and would have to be entirely replaced, resulting in a large loss. He estimated the total loss could be “well over $100, 000.” Mr. Schmidt recommended to “Nationwide” that they send a general adjuster who did not have specific knowledge and experience with roofing issues to handle the claim.

         Eleven days later, Nationwide gave plaintiffs a report on their loss indicating they valued the loss at $30, 383.19. After deducting depreciation and the deductible, Nationwide offered to pay plaintiffs $3, 850.89. The report from Nationwide to plaintiffs bore the signature of “Merle D. Schmidt, Jr.” as its author. A Nationwide employee, Tracie Althaus, sent plaintiffs an email along with the “Schmidt” report explaining that their “shingles do not show signs of hail damage. They show hail spatter which happens when the hail knocks off the dirt and oxidization (which essentially cleans the shingle and does not cause damage).”

         Mr. Brown contacted Ms. Althaus and asked her to explain the discrepancy between the report Nationwide had given plaintiffs and the voice mail message Mr. Schmidt had left on plaintiffs' phone. Ms. Althaus stated that Mr. Schmidt did not know what he was doing and his voicemail statements should not be credited.

         Nationwide then hired an engineering firm from Kentucky to perform a second inspection of plaintiffs' home. This Kentucky firm concluded the hailstorm had not caused any damage to plaintiffs' cedar-shake shingles.

         Plaintiffs present two issues in their motion to compel. First, they seek to know what reserves Nationwide set for their claim. Second, because Nationwide will not voluntarily share with them information pertinent to electronic discovery, plaintiffs seek an increase in the number of interrogatories they are allowed to propound from 25 to 40 so that they can query Nationwide about how it stores electronic information.


         A. Good Faith Efforts to Resolve the Issues

         A motion to compel requests for the production of documents is governed by Fed.R.Civ.P. 37. That rule provides in pertinent part as follows:

On notice to other parties and all affected persons, a party may move for an order compelling disclosure or discovery. The motion must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.

See Fed.R.Civ.P. 37(a)(1).

         Likewise, the local rules in this district require a movant to attempt to informally resolve matters with his or her opponent before filing a discovery motion:

No objection to interrogatories, or to requests for admissions, or to answers to either relating to discovery matters shall be heard unless it affirmatively appears that counsel have met, either in person or by telephone, and attempted to resolve their differences through an informal conference. Counsel for the moving party shall call for such conference before filing any motion relating to discovery matters. . . .

See D.S.D. LR 37.1.

         Here, plaintiffs assert, and have provided evidence to the court, that they exhausted their efforts to try to resolve these discovery matters with Nationwide prior to filing the instant motion. Nationwide does not dispute that the requirement of good-faith efforts to resolve the matters have been fulfilled. The court finds the prerequisite for filing the instant motion to compel has been met.

         B. ...

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