Leevac Shipbuilder L L C v. Westchester Surplus Lines Insurance Co, 2:14-cv-00399

Background

Leevac served discovery (RFPs, interrogatories, RFAs) on Westchester on July 16, 2014; deadlines were extended to September 12, 2014 by agreement.
Westchester produced ~2,209 pages (claims file) and a one-page privilege log on September 12 but initially failed to provide substantive interrogatory answers, promising later supplementation.
Leevac moved to compel on October 8, 2014, arguing Westchester’s initial responses were non-substantive and that supplements were untimely.
Westchester supplemented its responses on or about October 27, 2014, tying answers to Bates numbers in the produced claims file and asserting no additional responsive documents exist or are privileged beyond its log.
Disputed categories included reinsurance communications, internal programs/manuals used to evaluate the claim, documents from third-party investigators, property-related records, training materials, and prior bad-faith litigation files.
Court balanced untimeliness against good faith delay, burden of production, and relevance, and ordered limited relief.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Westchester waived objections by failing to timely object to interrogatories	Waiver should be imposed; strike objections and compel supplemental answers	Delay was inadvertent and due to counsel’s inability to contact client; supplements were provided in good faith	Court declined to strike all objections; no waiver because delay was substantially justified and prejudice not shown
Whether privilege log/privilege assertions were insufficient and require clarification	Single-page privilege log inadequate; strike unsupported privilege claims and require full log	Privilege log was timely and complete; nothing more exists to add	Court accepted defendant’s log as sufficient and denied further clarification order
Whether reinsurance agreements/communications are discoverable	Reinsurance communications are relevant to bad-faith claim and must be produced	Not specifically disputed as to relevance in bad-faith context but defendant had produced what it had	Court ordered production of any reinsurance files/communications relating to Leevac’s policy/claim within 7 days
Whether production of claims-processing software/manuals and related materials is required	Plaintiff seeks programs/manuals used to evaluate/adjust the claim	Defendant produced the claims file and asserts no additional responsive materials exist	Court found defendant’s representation credible and denied motion to compel these materials
Whether prior bad-faith lawsuits must be produced	Plaintiff seeks prior bad-faith suits as relevant to pattern/practice	Defendant showed massive burden and lack of searchable records; production would be unduly burdensome	Court held request unduly burdensome and denied compel for broad prior-bad-faith file search
Whether movant is entitled to attorneys’ fees and costs under Rule 37	Fees are warranted because discovery was produced only after motion filed	Delay was substantially justified and conducted in good faith; sanctions unjust	Court denied fees, finding exceptions under Rule 37 applicable

Key Cases Cited

Hickman v. Taylor, 329 U.S. 495 (broad scope of discovery; limits for privileged work product)
Hebert v. Lando, 441 U.S. 153 (liberal treatment of discovery to inform litigants)
Burns v. Thiokol Chem. Corp., 483 F.2d 300 (scope of discovery within trial court discretion)
Drexel Heritage Furnishings, Inc. v. Furniture USA, Inc., 200 F.R.D. 255 (factors for waiver and sanctions for discovery failures)