District Court Compels Discovery of Reinsurance Agreement In Declaratory Judgment Action Between Insurers and Insured
In an insurance coverage case involving fifteen insurance companies and one insured, the insured, Bunge North America, filed a motion to compel discovery relating to reinsurance, loss reserves, claims handling manuals, and document retention policies. The insurers filed a declaratory judgment action against Bune seeking a declaration that under the terms of the policy, they did not have an obligation to defend, indemnify, or reimburse Bunge for damages caused by pollution at one of Bunge’s sites. In various counterclaims and cross claims, Bunge alleged that the insurers acted in bad faith in failing to fairly investigate Bunge’s coverage claims in a timely manner.
The Kansas District Court ruled that the reinsurance agreement, normally beyond the scope of discovery in a declaratory judgment action, was discoverable because Bunge had brought several counterclaims in which it sought a monetary award. Specifically, the court found that reinsurance was relevant “for purposes of rebutting the Insurers’ defense of late notice, for purposes of establishing Bunge’s claims of bad faith and improper handling, and for purposes of reconstructing the terms of any lost policies.” United States Fire Ins. v. Bunge North America, Case No. 05-2192-JWL-DJW (USDC D. Kan. May 25, 2007).
