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Lamorak Insurance Co. v. Certain Underwritres at Lloyd's London

Superior Court of Massachusetts, Suffolk

June 19, 2019

LAMORAK INSURANCE COMPANY fka OneBeacon America Insurance Company
v.
CERTAIN UNDERWRITRES AT LLOYD’S, LONDON

          MEMORANDUM AND ORDER DENYING DEFENDANTS’ MOTION TO COMPEL DISCOVERY

          Kenneth W. Salinger Justice

         Lamorak Insurance Company issued three excess insurance policies to Olin Corporation in 1970. It simultaneously reinsured those risks through reinsurance contracts issued by certain underwriters at Lloyd’s, London, who are the Defendants in this action. Olin sought coverage from Lamorak for environmental contamination or damage at different sites. After years of litigation in the underlying suits, Olin and Lamorak entered into a settlement agreement. Lamorak then sought payment by Underwriters. Lamorak and Underwriters dispute which costs are covered or not covered by the Underwriters’ reinsurance policies.

         Lamorak has not yet asked the Underwriters to pay any part of the declaratory judgment expenses that it incurred in connection with its declaratory judgment action against Olin (the "DJ Expenses"). Nonetheless, Underwriters has asserted a counterclaim seeking a declaratory judgment stating that they are not obligated under the reinsurance contracts to pay Lamorak for those DJ Expenses.

         The Underwriters have now moved to compel plaintiff Lamorak to produce all documents regarding the prior DJ Expenses, including all of Lamorak’s legal bills for those expenses. In the alternative, the Underwriters ask the Court to set a deadline for Lamorak to assert any claim for reimbursement of its DJ Expenses, and to bar Lamorak from asserting such a claim in this or in any separate civil action thereafter.

         The Court will DENY the motion to compel because the Underwriters have not shown that the disputed document request is reasonably calculated to lead to the discovery of any relevant evidence. It will deny the alternative relief requested because the Court is not convinced that it would be appropriate to, impose a case specific, non-statutory limitations period that would preemptively bar Lamorak from raising otherwise permissible claims in a future lawsuit.

         The Underwriters have not shown that Lamorak’s legal bills and other documents concerning its underlying DJ Expenses are relevant, needed, or discoverable in this case. Defendants’ arguments that the requested documents are relevant to its counterclaim seeking a declaratory that the DJ Expenses are not reimbursable under their reinsurance contracts is unavailing. That counterclaim turns on the proper interpretation of the reinsurance policies. If the contested language of those contracts is unambiguous, its meaning will be a question of law to be decided by the court. If the contract is found to be ambiguous, then parol evidence may be admissible to elucidate its meaning. But the Underwriters have not shown that the requested documents are likely to contain or lead to admissible parol evidence regarding the meaning of the reinsurance contracts.

         The Underwriters correctly observe that if Lamorak were to prevail on the counterclaim regarding the DJ Expenses, and as a result Lamorak asked the Underwriters to pay part or all of those DJ Expenses, then the requested documents may become relevant. But the possibility that documents may be relevant and therefore discoverable in a hypothetical future action regarding the DJ Expenses does not make them discoverable here.

         The Underwriters have also failed to show that documents regarding the DJ Expenses may be relevant to the Underwriters’ separate counterclaim alleging that Lamorak breached its duty to act in utmost good faith under the reinsurance contracts, in part by somehow improperly allocating the settlement amount it paid to Olin. The Underwriters did not raise this argument in their initial memorandum. They raised the point for the first time in their reply memorandum, in two sentences making the conclusory assertion that the requested documents "are likely to shed light on various issues relating to" its "claims for breach of contract and breach of the duty of utmost good faith." But the Underwriters never developed the point or explained why that is so. A party seeking relief in a Superior Court action must file a motion and a memorandum stating the reasons the motion should be granted. See S.Ct. Rule 9A(a)(1). A cursory, perfunctory, or conclusory assertion that is not supported by any kind of reasoned argument does not suffice. See Commonwealth v. Johnson, 470 Mass. 300, 319 (2014) (trial court judge "acted well within his discretion" in declining to consider unsupported and undeveloped argument in support of motion); see also Halstrom v. Dube, 481 Mass. 480, 483 n.8 (2019).

         As for the proposed alternative relief, the Underwriters argue that rules against claim splitting would bar Lamorak from bringing a new action seeking reimbursement of its underlying DJ Expenses. That may or may not be true. But courts only resolve actual controversies; they do not decide legal questions in the abstract, or offer opinions about hypothetical future conduct. See, e.g., Quincy City Hosp. v. Rate Setting Comm’n, 406 Mass. 431, 439 (1990) (applying declaratory judgment statute, G.L.c. 231A). If the Underwriters are correct, then there is no need for the Court to cutoff future claims that would be subject to immediate dismissal if they were ever brought. But if the Underwriters are incorrect, then the alternative relief they are seeking would impose an arbitrary deadline on Lamorak’s assertion of claims that by law it should be free to hold until later. The Court sees no reason to enter such an order.

         ORDER

         Defendants’ motion to compel ...


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