Case Title: Ex Parte Union Security Life Ins. Co.

Citation: 723 So. 2d 34

Docket Number: 1971487

State: alabama

Court: Alabama Supreme Court

Date: 1998-10-30T00:00:00Z

Document:
723 So. 2d 34 (1998)
Ex parte UNION SECURITY LIFE INSURANCE COMPANY.
(Re Dessie Lanier
v.
Union Security Life Insurance Company et al.).
1971487.

Supreme Court of Alabama.
October 30, 1998.
*35 Dennis G. Pantazis and Brian M. Clark of Gordon, Silberman, Wiggins & Childs, P.C., Birmingham, for petitioner.
Christopher E. Connolly of O'Bannon & O'Bannon, L.L.C., Florence, for respondent.
COOK, Justice.
Union Security Life Insurance Company ("Union Security"), the defendant in an action pending in the Lauderdale Circuit Court, petitions this Court for a writ of mandamus directing the circuit court to vacate its orders compelling Union Security to produce documents in response to three of the plaintiff's requests for production. We grant the petition in part and issue the writ.
In August 1996, Dan Turner, a salesman for Dan Jones Ford, Inc., sold a Ford pickup truck to the plaintiff, Dessie Lanier, and her husband, Billy Lanier. In connection with the truck purchase, the Laniers purchased a Union Security credit life insurance policy insuring Billy Lanier. Dessie Lanier claimed that she and her husband told the Dan Jones Ford employees that Billy Lanier was receiving disability benefits at that time, and she *36 claimed that the Dan Jones Ford employees knew that Billy Lanier had cancer but that neither she nor her husband was asked any "health questions" when they closed on the purchase of the truck and were issued the Union Security insurance policy.
Billy Lanier died in March 1997. Dessie Lanier submitted a claim for benefits pursuant to the provisions of the credit life insurance policy purchased with the truck. Union Security denied the claim, on the basis that Billy Lanier had failed to disclose that he had cancer at the time the policy application was completed.
Dessie Lanier sued Union Security and Dan Jones Ford, Inc., alleging fraud, breach of contract, negligence, wantonness, and bad-faith refusal to pay insurance benefits, and seeking compensatory and punitive damages. Ms. Lanier's second filing requesting the production of documents asked Union Security to produce:
Union Security's responses and objections to these three requests for production read:
(Emphasis added.)
Ms. Lanier moved to compel further responses. The trial court conducted a hearing on the motion and, on March 26, 1998, entered an order limiting the scope of discovery with regard to production of the documents listed in requests 1, 5, and 6, as follows:
(Emphasis added.)
Union Security, seeking further limitations on discovery as to requests 1, 5, and 6, moved the trial court to alter, amend, or vacate its order. On May 15, 1998, the trial court denied the motion and gave Union Security 10 days within which to comply with the March 26 order.
Union Security petitioned this Court for a writ of mandamus directing the trial court to vacate the order compelling production of the documents described in requests 1, 5, and 6. Union Security also moved for a stay of the operation of the trial court's orders of March 26 and May 15 pending the outcome of its mandamus petition. We granted the motion to stay.
A challenge to a trial court's ruling on a discovery matter attacks the court's exercise of its broad discretion, and a petition for the writ of mandamus is the correct means for seeking appellate review of a discovery ruling. Ex parte Compass Bank, 686 So. 2d 1135 (Ala.1996). However, because mandamus is a drastic remedy, and because the trial court is in a better position than this Court to rule on discovery matters, which are decided on a case-by-case analysis of facts and circumstances (Ex parte Mobile Fixture & Equipment Co., 630 So. 2d 358, 360 (Ala. 1993), quoting Ex parte McTier, 414 So. 2d 460, 461 (Ala.1982)), we will not interfere with a trial court's ruling on a discovery matter unless that ruling is the result of clear abuse by the trial court (Ex parte Horton, 711 So. 2d 979 (Ala. 1998), and the authorities cited therein).
To determine whether the trial court abused its discretion in ordering Union Security to comply with Ms. Lanier's requests 1, 5, and 6, we must consider the nature of her claim and whether, in light of that claim, she demonstrated a particularized need for the discovery she seeks. Ex parte Horton, supra. If the record reflects the requisite need for discovery, then we must determine whether the trial court's order reflects an appropriate balance between meeting Ms. Lanier's discovery needs and protecting the legitimate confidentiality interests of Union Security and its customers. Id.
Clearly, the nature of Ms. Lanier's claims supports a finding of a need for broad discovery. The complaint alleges fraud, misrepresentation, and deceit, and resulting damage.
Ex parte Horton, 711 So. 2d  at 983 (some citations omitted).
Ms. Lanier's complaint reveals a particularized need for discovering evidence supporting allegations of fraud, including evidence of a pattern and practice of fraud on the part of the defendants similar to the fraud she alleges was committed by the defendants upon her and her husband. However, even in a fraud case, discovery is not unlimited (Ex parte Horton, supra), and "justice requires the trial court to protect a party from oppression or undue burden or expense." Ex parte Compass Bank, 686 So. 2d  at 1138.
With regard to request number 1as to which the court ordered production of all applications for Union Security credit life insurance received from Alabama residents for the period 1993 through 1997Union Security contends that Ms. Lanier's claim is that an employee of Dan Jones Ford knew her husband had cancer but did not ask the requisite health questions before filling out a Union Security application for life insurance on Billy Lanier. Therefore, Union Security argues, the conduct of Dan Jones Ford employees is the basis for Ms. Lanier's allegation of systematic fraud and information contained in Union Security documents cannot establish a pattern and practice of fraud in oral representations made by Dan Jones Ford employees.
The trial court did not abuse its discretion in ordering Union Security to comply with request number 1, as modified by the March 26 order. Dan Jones Ford's answer to the complaint contained a cross-claim against Union Security in which Dan Jones Ford alleged:
The pattern and practice of fraud alleged by Ms. Lanier is ultimately reflected in applications for Union Security credit life insurance, and these documents are the result of the efforts of agents, such as Dan Jones Ford, acting on behalf of Union Security. Clearly, then, in light of the authorities discussed above and under the circumstances of this case, the discovery of applications for Union Security credit life insurance made by Alabama residents within a five-year period could produce evidence relevant to Ms. Lanier's claims, and the process of producing these documents will not be burdensome to Union Security.
With regard to request number 5as to which the court ordered production of all consumer complaints from Alabama regarding Union Security credit life insurance policies for the period 1993 through 1997Union Security argues that this is a "fishing expedition" for documents relating to acts of Union Security that may have generated customer complaints (e.g., allegations of miscalculation of premiums, improper debt-collection practices, improper assessment of fees and charges), but that are unrelated to the issues raised by Ms. Lanier's complaint.
We do not conclude that the discovery of a limited type of communication between Alabama residents and Union Security over a five-year period can be classified as a "fishing expedition" under the facts of this case. Customer complaints filed directly with Union Security may not have resulted in the institution of legal actions; clearly, however, the discovery of these direct complaints can lead to evidence of representations similar to *39 those made to the Laniers that were made to others by agents of Union Security and that resulted in the issuance of credit life insurance policies against which claims were made and payment was refused.
Ms. Lanier must carry a heavy burden of proof with regard to her claims that Union Security has engaged in a pattern and practice of fraud in 1) issuing life insurance policies that are based on improperly completed applications but that contain a provision allowing Union Security to investigate the insured's health after a claim has been filed against the policy, 2) accepting the premiums therefor, and 3) denying coverage based on allegedly unreported preexisting medical conditions. Requests 1 and 5 could produce relevant and necessary information regarding applications for Union Security credit life insurance and complaints that have been made with regard to the policies issued as a result of those applications. Producing this information will not place an undue burden on Union Security and will not compromise Union Security's confidentiality interest. "When the discovery request of a plaintiff alleging fraud is closely tailored to the nature of the fraud alleged, the discovery should be allowed in full, as long as the party opposing discovery does not show that the requested discovery is oppressive or overly burdensome." Ex parte Horton, 711 So. 2d  at 983.[1]
Further, Ms. Lanier claims punitive damages. Regarding such a claim, we have written:
Id., at 983-84.
The trial court did not abuse its discretion in ordering Union Security to comply with requests 1 and 5, as limited by the trial court's order. See, also, Ex parte Wal-Mart Stores, Inc., 682 So. 2d 65 (Ala. 1996).
Union Security contends that by ordering it to comply with request number 6, as limited by the trial court's ordercalling for production of all documents in all lawsuits filed against Union Security during the period 1993 through 1997 in Alabama, Georgia, Florida, Mississippi, Louisiana, Tennessee, and Kentucky involving credit life insurancethe trial court clearly abused its discretion in defining an arbitrary geographical "Southeast" that has no relevance to Ms. Lanier's allegations.
In Ex parte State Farm Mutual Automobile Insurance Co., 452 So. 2d 861 (Ala.1984), State Farm petitioned for a writ of mandamus, challenging the trial court's discovery order requiring State Farm to answer the following interrogatory:
Id., 452 So. 2d  at 863-64.
In this present case, the trial court's order encompassed what it defined as the "Southeast," but our review of the record reveals no basis for this geographical requirement. If Union Security has engaged in the fraudulent practice alleged by Dessie Lanier, then the records relating to Union Security's activities in Alabama during the five-year period set out in request number 6 "should establish that fact." Requiring Union Security to produce records from the seven-state area defined in the March 26 order amounted to an unreasonable exercise of discretion by the trial court, and Union Security is entitled to a writ of mandamus ordering the trial court to vacate that portion of its order and to amend the order to conform with this opinion.
In her brief in opposition to Union Security's mandamus petition, Ms. Lanier argues that, pursuant to this Court's decision in Ex parte Reynolds Metals Co., 710 So. 2d 897 (Ala. 1998), the petition should be dismissed as premature. According to her, Rule 26(c), Ala. R. Civ. P., required Union Security to seek a protective order from the trial court before filing a mandamus petition with this Court, and its failure to do so rendered the petition premature.
In Reynolds Metals, the plaintiff filed a motion to compel Reynolds Metals to respond to discovery requests, which motion Reynolds Metals opposed. At the hearing on the plaintiff's motion to compel, the trial court ordered Reynolds Metals to respond to the plaintiff's discovery requests within 21 days. Reynolds Metals did not object to the trial court's order or move for a protective order; however, before the expiration of the 21 days it had been given to file its responses to the plaintiff's discovery requests, Reynolds Metals filed a mandamus petition with this Court, claiming that the discovery order was overly broad and unduly burdensome.
This Court pointed out that a party's entitlement to the writ of mandamus is based, in part, on showing the "lack of another adequate remedy." Holding that Reynolds Metals did have another adequate remedy, we stated:
Ex parte Reynolds Metals, 710 So. 2d  at 899-900 (citations omitted and emphasis added).
Union Security, however, filed a post-hearing motion with the trial court, asking that it alter, amend, or vacate its discovery order; thus it "afford[ed] the trial court the opportunity to address its alleged error before [Union Security sought] mandamus relief." See, also, Ex parte Compass Bank, supra. Thus, Union Security's petition for the writ of mandamus was not premature.
As to requests 1 and 5, the petition is denied. As to request number 6, the trial court is directed to set aside that portion of its order compelling disclosure as to the "Southeast United States" and to limit the required disclosure to conform with this opinion; otherwise, as to request number 6, the petition is denied.
PETITION GRANTED IN PART AND DENIED IN PART.
HOOPER, C.J., and MADDOX, ALMON, SHORES, HOUSTON, and KENNEDY, JJ., concur.
[1]  Union Security submitted the affidavit of its paralegal, in which she stated that collecting the information requested by Ms. Lanier would "take considerable man-hours, time, effort, and expense." This affidavit contains no specific statement of numbers (of files or hours); it is a general statement of inconvenience and does not provide a sufficient basis for finding that requests 1 and 5 are oppressive or burdensome.

With regard to request number 6, the paralegal stated that the files were stored "in an offsite facility" and that "once the actual files were located, I would then have to individually review each file to determine which documents should be produced."