Trial Strategy: The Struggle over Perpetuating Testimony Before Litigation Begins--What's Happening in Louisiana?

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Can an insurance company seek a court order to protect evidence before it is sued by a policyholder? A carrier may want to do this to protect its interests in any coverage case that ultimately is filed. Several decisions by federal district courts in Louisiana have explored this topic – and have reached different conclusions.

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Trial Strategy: The Struggle over Perpetuating Testimony Before Litigation Begins--What's Happening in Louisiana?

  1. 1. The following article is from National Underwriter’s latest online resource, FC&S Legal: The Insurance Coverage Law Information Center. The Insurance Coverage Law Information Center TRIAL STRATEGY: THE STRUGGLE OVER PERPETUATING TESTIMONY BEFORE LITIGATION BEGINS – WHAT’S HAPPENING IN LOUISIANA? December 30, 2013 Steven A. Meyerowitz, Esq., Director, FC&S Legal Can an insurance company seek a court order to protect evidence before it is sued by a policyholder? A carrier may want to do this to protect its interests in any coverage case that ultimately is filed. Several decisions by federal district courts in Louisiana have explored this topic – and have reached different conclusions. The Great West Case The issue arose most recently when the Great West Casualty Company filed a “Verified Petition for Order Compelling Physical Examination and Complaint for Temporary Restraining Order and/or Preliminary Injunction” in the U.S. District Court for the Middle District of Louisiana. Great West alleged that it had issued an insurance policy that may have provided commercial automobile coverage for James L. Onan or the tractor and trailer he was operating when he collided with John B. Hickerson, who was operating a tractor truck pulling a cargo tanker. Great West alleged that, upon information and belief, Mr. Hickerson complained of back pain following the accident and sought continuing medical treatment. Specifically, Great West asserted that, based on communications with Mr. Hickerson’s counsel, it believed that he intended to undergo an invasive surgical operation on his back. Great West claimed that it expected to be named as a defendant in an action cognizable in a U.S. district court regarding this accident. Great West moved for an order compelling Mr. Hickerson “to submit to a physical examination by a board certified neurosurgeon or orthopedic specialist at a mutually convenient time and place as dictated by the Court so that the examiner may evaluate the nature, severity, and cause of John B. Hickerson’s alleged injuries.” Great West contended that without this order, “[i]rreplaceable evidence will be lost, and Petitioner will be unduly prejudiced in preparing its defense on the merits in the anticipated action.” Federal Rule 27 Rule 27 of the Federal Rules of Civil Procedure begins: A person who wants to perpetuate testimony about any matter cognizable in a United States court.... The Great West Court’s Decision The Great West court denied the petition, finding that it did not have jurisdiction to grant the relief requested by Great West. The court pointed out that Rule 27 does not state that a matter “may” be cognizable, adding that Great West had offered “only the conclusory allegation” that “the potential post-surgical value of the amount in controversy exceeds $75,000.00 exclusive of costs and interests.” The court decided that this “conclusory allegation” was insufficient to establish that jurisdiction “would” exist in a prospective suit arising out of the accident, and said that it was “not inclined to assume that the amount in controversy would be met.” Therefore, the court denied the relief requested by Great West, and dismissed its complaint without prejudice. The case is In re Matter of Great West Casualty Co. in Application for the Perpetuation of Certain Evidence, No. 13–804– SDO–RLB (M.D. LA. Dec. 18, 2013). Attorneys involved include: Bradley J. Luminais, Jr., Chopin, Wagar, Richard, & Kutcher, LLP, Metairie, LA, for In re The Matter of Great West Casualty Company in Application for the Perpetuation of Certain Evidence. Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
  2. 2. The Financial Indemnity Case The U.S. District Court for the Western District of Louisiana reached the same conclusion in In re Complaint of Financial Indemnity Company, 173 F.R.D. 435 (W.D.La.1997), where an automobile insurer who anticipated being named as a defendant in a diversity action sought to compel the prospective plaintiff to submit to an independent medical examination on an expedited basis. The court acknowledged that Rule 27(a)(3) authorizes a court to enter orders of inspection under Rule 34 and independent medical examination under Rule 35 where appropriate “to prevent a failure or delay of justice”; however, the court found that “it does not appear that jurisdiction has been established in this case sufficient to permit enforcement of Rule 27.” The court relied on the Fifth Circuit’s decision in Dresser Industries, Inc. v. United States, 596 F.2d 1231 (5th Cir.1979), which held that there need not be an independent basis of federal jurisdiction in a proceeding to perpetuate, but it must be shown that in the contemplated action, for which the testimony was being perpetuated, federal jurisdiction would exist. The Financial Indemnity court acknowledged that, “[w]hile it appears that diversity exists, FIC has not established that the amount in controversy requirement has been met.” The court analogized the case to “those involving removing defendants, who must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional amount.” The court continued: “Under the preponderance standard, ‘[t]he defendant must produce evidence that establishes that the actual amount in controversy exceeds [$75,000].’” The court stated that the petitioner failed to allege the nature and extent of the prospective plaintiff’s injuries, the amount of medical expenses incurred, or any potential lost wage claim. The court held that “FIC’s conclusory allegation that the amount in controversy exceeds $75,000.00 is legally insufficient to establish diversity jurisdiction. The jurisdictional amount ‘cannot be based simply on conclusory allegations.’” Thus, the court denied the requested relief and dismissed FIC’s complaint for lack of subject matter jurisdiction. The State Farm Case The U.S. District Court for the Eastern District of Louisiana reached a different result in In re Petition of State Farm Mutual Automobile insurance Company, No. 94–3054 (E.D.La. Dec. 20, 1994). There, the insurance carrier sought to compel the deposition testimony of a witness and medical examinations of claimants before a lawsuit had been filed. The insurance company presented the same argument to the district court that Great West presented in its case. Finding that “an action regarding this matter ‘may be cognizable’ in federal court as required by Rule 27,” the court denied the adverse parties’ motions to dismiss, stating that “Rule 27 requires only that the instant action may be cognizable in federal court.” The court was satisfied that allowing a pre-complaint deposition of certain witnesses and compelling medical examinations of certain parties was justified to prevent a failure of justice. Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
  3. 3. For more information, or to begin your free trial: • Call: 1-800-543-0874 • Email: customerservice@SummitProNets.com • Online: www.fcandslegal.com FC&S Legal guarantees you instant access to the most authoritative and comprehensive insurance coverage law information available today. This powerful, up-to-the-minute online resource enables you to stay apprised of the latest developments through your desktop, laptop, tablet, or smart phone —whenever and wherever you need it. NOTE: The content posted to this account from FC&S Legal: The Insurance Coverage Law Information Center is current to the date of its initial publication. There may have been further developments of the issues discussed since the original publication. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the services of a competent professional person should be sought. Copyright ©The National Underwriter Company. All Rights Reserved. Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com

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