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Brown v. Nationwide Affinity Insurance Company of America

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

August 7, 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 previously prevailed on a motion to compel. See Docket Nos. 18 & 29. Plaintiffs now move the court for an award of attorney's fees in connection with their earlier motion in the amount of $3, 775.43. See Docket No. 32. Nationwide resists the motion. See Docket No. 34. 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). See Docket No. 37.


         The following facts are pertinent to the instant motion. 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 timely submitted a claim under their insurance policy to Nationwide. Nationwide offered to pay plaintiffs $3, 850.89, an amount plaintiffs maintain was well below what Nationwide's own agents and internal documents indicate their loss was worth.

         Plaintiffs filed the instant lawsuit on December 26, 2017. Plaintiffs' previously-granted motion to compel presented two issues. First, they sought to compel Nationwide to disclose what reserves it had set for their claim. Second, because Nationwide would not voluntarily share with them information pertinent to electronic discovery, plaintiffs sought 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.

         The court granted both requests, though it limited the additional interrogatories to 10 and specified they could be used only to find out the nature of Nationwide's electronic document system and those agents of Nationwide's who were most knowledgeable about them.


         Rule 37 of the Federal Rules of Civil Procedure provides that if a court grants a party's motion to compel, the court “must” award the moving party its costs and attorney's fees unless the resisting party's position was, inter alia, “substantially justified.” See Fed.R.Civ.P. 37(a)(5)(A). Nationwide resists the award of attorney's fees to plaintiffs on this basis. Nationwide has not objected to the amount of hours requested, the hourly rate requested, or any other matter touching on plaintiffs' calculation of the amount of their award.

         With regard to the reserves information, Nationwide initially objected to providing the requested documents to plaintiffs on the basis that the information was not relevant. See Docket No. 24-2 (Nationwide's Vaughn index). During plaintiffs' attempts to engage in a good faith effort to resolve the discovery dispute without court involvement, Nationwide hinted that there may be a lurking claim of work product doctrine, but did not affirmatively assert the claim until the motion to compel was actually filed. Even then, Nationwide-whose burden it was to establish the predicate necessary for the court to conclude work product doctrine applied to the documents-did not do more than assert the bare-bones allegation of work product. Nationwide provided no details about who, what, when, where or why the documents in question had been created. The court, accordingly, granted plaintiffs' motion to compel in this regard because Nationwide failed to carry its burden of an assertion of privilege/protection.

         With regard to the instant motion for attorney's fees, Nationwide argues that, because there is a split of authority on whether individual claims reserves are discoverable, its position in resisting the discovery was substantially justified. Because Nationwide initially resisted the discovery on grounds of relevance, and later did no more than simply mouth the words of a protective doctrine without shoring that assertion up with any facts, plaintiffs argue Nationwide's position was not substantially justified.

         The Supreme Court has held that “substantially justified” in the arena of discovery disputes means whether there was a “ ‘genuine dispute' or ‘[that] reasonable people could differ as to [the appropriateness of the contested action], . . .' ” Pierce v. Underwood, 487 U.S. 552, 565 (1988).

         A party asserting a privilege has a ...

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