Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-02099/USCOURTS-azd-2_10-cv-02099-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:2201 Declaratory Judgment

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Colonial American Casualty and Surety

Company, 

Plaintiff, 

vs.

BNCCORP Inc., et al., 

Defendants. _________________________________

St. Paul Mercury Insurance Company, 

Plaintiff, 

vs.

BNCCORP Inc., et al., 

Defendants. 

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No. CV 10-02099-PHX-NVW

(consolidated with CV10-2239-PX)

ORDER

Before the Court is Colonial American Casualty and Surety Company’s

(“Colonial”) Motion to Compel Defendant/Counter-Claimant BNCCORP’s Response to

Request for Production No. 13 (Doc. 117). The parties also have brought to the Court’s

attention disputes regarding requesting an extension of discovery deadlines (see Doc.

167) and interrogatories propounded to BNCCORP, Inc. (“BNC”) by St. Paul Mercury

Insurance Company (see Doc. 172). Oral argument on the pending motion and discovery

disputes was held on February 1, 2012, during which the parties agreed to resolve their

Case 2:10-cv-02099-NVW Document 188 Filed 02/06/12 Page 1 of 5
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dispute regarding BNC’s interrogatories or renew their request for judicial intervention on

that issue by February 15, 2012.

1. Motion to Compel (Doc. 117)

On a motion to compel discovery of electronically stored information (“ESI”), “the

party from whom discovery is sought must show that the information is not reasonably

accessible because of undue burden or cost.” Fed. R. Civ. P. 26(b)(2)(B). “If that

showing is made, the court may nonetheless order discovery from such sources if the

requesting party shows good cause, considering the limitations of Rule 26(b)(2)(C).” Id.

Rule 26(b)(2)(B) permits the court to specify conditions for the discovery; Rule

26(b)(2)(C) requires the court to limit the frequency or extent of discovery if it determines

that:

(i) the discovery sought is unreasonably cumulative or duplicative, or can

be obtained from some other source that is more convenient, less

burdensome, or less expensive;

(ii) the party seeking discovery has had ample opportunity to obtain the

information by discovery in the action; or

(iii) the burden or expense of the proposed discovery outweighs its likely

benefit, considering the needs of the case, the amount in controversy, the

parties’ resources, the importance of the issues at stake in the action, and

the importance of the discovery in resolving the issues.

The Advisory Committee Notes to the 2006 Amendment of Rule 26(b)(2) state in part:

The decision whether to require a responding party to search for and

produce information that is not reasonably accessible depends not only on

whether those burdens and costs of doing so, but also on whether those

burdens and costs can be justified in the circumstances of the case. 

Appropriate considerations may include: (1) the specificity of the discovery

request; (2) the quantity of information available from other and more easily

accessed sources; (3) the failure to produce relevant information that seems

likely to have existed but is no longer available on more easily accessed

sources; (4) the likelihood of finding relevant, responsive information that

cannot be obtained from other, more easily accessed sources; (4) the

likelihood of finding relevant, responsive information that cannot be

obtained from other, more easily accessed sources; (5) predictions as to the

importance and usefulness of the further information; (6) the importance of

the issues at stake in the litigation; and (7) the parties’ resources.

. . . .

In some cases, the court will be able to determine whether the identified

sources are not reasonably accessible and whether the requesting party has

show good cause for some or all of the discovery, consistent with the

limitations of Rule 26(b)(2)(C), through a single proceeding or presentation. 

Case 2:10-cv-02099-NVW Document 188 Filed 02/06/12 Page 2 of 5
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The good-cause determination, however, may be complicated because the

court and parties may know little about what information the sources

identified as not reasonably accessible might contain, whether it is relevant,

or how valuable it may be to the litigation. In such cases, the parties may

need some focused discovery, which may include a sampling of the sources,

to learn more about what burdens and costs are involved in accessing the

information, what the information consists of, and how valuable it is for the

litigation in light of information that can be obtained by exhausting other

opportunities for discovery.

The good-cause inquiry and consideration of the Rule 26(b)(2)(C)

limitations are coupled with the authority to set conditions for

discovery. . . . The conditions may also include payment by the requesting

party of part or all of the reasonable costs of obtaining information from

sources that are not reasonably accessible. A requesting party’s willingness

to share or bear the access costs may be weighed by the court in

determining whether there is good cause. But the producing party’s

burdens in reviewing the information for relevance and privilege may weigh

against permitting the requested discovery.

Colonial moves to compel BNC to produce all responsive documents to its

Request for Production No. 13 to BNC, Set One at BNC’s expense, which seeks “[a]ll

correspondence, emails, reports, and other DOCUMENTS exchanged between BNC and

AMS.” Colonial served this request on December 23, 2010, and BNC responded with its

objections on multiple grounds on February 3, 2011. BNC objected “to this Request in its

entirety until counsel reach an agreement regarding the scope, logistics, proper allocation

of costs and expenses, customer privacy concerns, and other privilege or confidentiality

concerns implicated by this overbroad and unduly burdensome Request.” After

unsuccessful efforts to resolve this dispute, in November 2011, the parties submitted a

summary statement to the Court and were granted leave to file and brief this motion to

compel. 

It appears that BNC has produced a forensic accounting report, supporting

documents, back-up data, and all of the relevant loan files, and Colonial has obtained a

copy of all of the files stored on the AMS server on which AMS’s emails were stored. 

What Colonial wants is a copy of the emails stored on BNC’s email archive server

because it is cumbersome and expensive to identify the relevant emails on the AMS email

archive server. BNC has spent approximately $17,000 to estimate the cost of producing

the requested emails narrowed to 38 custodians and certain search criteria. BNC

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estimates that the cost to prepare, index, process, and review the relevant data on its

archive server will exceed $100,000 if the search is limited to BNC’s proposed list of

custodians and search terms. Colonial contended that it cannot be assured the list of

custodians and search terms will adequately identify the relevant emails because it has not

seen a sample of the emails that would be identified. At oral argument, however, counsel

indicated that they likely could reach agreement on the criteria for searching the BNC

email archive server, but would be unable to reach agreement on which party or parties

should bear the expenses related to producing the identified emails.

The emails stored on the BNC email archive server may be more efficiently

accessed than those stored on the AMS email archive server and may possibly yield some

information that would warrant the cost of obtaining them. However, it appears that

Colonial has been provided the loan files, the written agreement between BNC and AMS,

and most, if not all, of the information more likely to determine the material litigation

issues. The search for a “smoking gun” email could pay off, but it could also pay off

from searching the AMS email server already in Colonial’s possession. BNC should not

bear the cost of a search of BNC’s data to avoid Colonial’s search of the AMS data. 

Therefore, if Colonial wants BNC to produce all emails between BNC and AMS stored

on BNC’s email archive server within agreed-upon search criteria, Colonial must pay for

the non-lawyer expense in doing so.

2. Revised Scheduling Order

Accordingly, the discovery deadlines will be extended as ordered below.

IT IS THEREFORE ORDERED that Colonial American Casualty and Surety

Company’s Motion to Compel Defendant/Counter-Claimant BNCCORP’s Response to

Request for Production No. 13 (Doc. 117) is granted in part and denied in part.

IT IS FURTHER ORDERED that the parties will meet and confer by February 24,

2012, to establish procedures for BNCCORP to produce its response to Request for

Production No. 13 and for Colonial American Casualty and Surety Company to pay for

the related non-lawyer expenses.

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IT IS FURTHER ORDERED that:

1. The close of fact discovery is extended from February 3, 2012, to May 31,

2012.

2. The deadline for expert disclosure by the party or parties with burden of

proof is extended from March 1, 2012, to June 29, 2012; the deadline for expert

disclosure by the opposing party or parties is extended from April 13, 2012, to July 31,

2012; the deadline for rebuttal expert disclosures, if any, is extended from May 11, 2012,

to August 17, 2012. Expert depositions shall be completed no later than September 28,

2012. 

3. The deadline for engaging in good faith settlement talks is extended from

March 2, 2012, to August 31, 2012.

DATED this 6th day of February, 2012.

Case 2:10-cv-02099-NVW Document 188 Filed 02/06/12 Page 5 of 5