COURT REBUKES POLICYHOLDER SEEKING DISCOVERY OF REINSURANCE AND SIMILAR CLAIM INFORMATION IN COVERAGE DISPUTE
Louisiana Generating LLC faced an action by the U.S. government seeking injunctive relief and civil penalties for its alleged violations of the Clean Air Act. It sought a defense and coverage under a Custom Premises Pollution Liability Insurance Policy issued to it by Illinois Union. Illinois Union denied coverage. Louisiana Generating brought a declaratory judgment action in federal court to establish coverage. The court entered a scheduling order allowing the parties discovery on the dispositive legal issue of Illinois Union’s duty to defend. Louisiana Generating sought information pertaining to Illinois Union’s reinsurance, pursuant to the “any insurance agreement” language of F.R.C.P. 26(a)(1)(iv), as well as information pertaining to prior coverage provided to other policyholders with Clean Air Act liabilities, among other things. Illinois Union objected, contending that the information was irrelevant to the purely legal issue of the duty to defend, to be determined as a matter of law solely by reference to the terms of the policy and the allegations of the underlying complaint. The court agreed with Illinois Union, denied the motion, and ordered Louisiana Generating to pay $2,000 to Illinois Union for its efforts in defending against the motion, which the court found to be “not substantially justified.” Louisiana Generating, LLC v. Illinois Union Ins. Co., No. 10-516 (USDC M.D. La. Aug. 8, 2011).
This post written by John Pitblado.
