Opinion ID: 1835448
Heading Depth: 2
Heading Rank: 1

Heading: Matters Discoverable

Text: The stated purpose of Hicks's discovery requests for the defendants' customer lists and related sales documents was to prove fraudulent intent and a pattern and practice of fraudulent conduct in the defendants' failing to disclose to their customers the effect of an oversale in connection with the presentation of a Liberty National, Family Reserve, or Brown-Service policy as payment for the defendants' services. A mandamus petition is a proper method for determining whether a trial judge has committed an abuse of discretion in limiting discovery. Ex parte Allstate Ins. Co., 401 So.2d 749, 751 (Ala.1981). The Alabama Rules of Civil Procedure were intended to allow for very broad and liberal discovery, within reason. Trial judges have discretion to control discovery and to prevent abuse of the discovery process by the parties. However, arbitrary limits placed on discovery are not within the discretion of the trial judge. The rules envision full discovery, which has the effect of saving time, effort, and money, in an effort to achieve substantial justice. Campbell v. Regal Typewriter Co., 341 So.2d 120, 123-24 (Ala.1976) (citations omitted); see Rule 26(b)(1), Ala. R. Civ. P. To be entitled to a writ of mandamus compelling a trial judge to permit full discovery, the petitioner must demonstrate that the circuit court clearly abused its discretion. Ex parte Clarke, 582 So.2d 1064, 1067 (Ala.1991). The first step in determining whether the court has abused its discretion is to determine the particularized need for discovery, in light of the nature of the claim.... Where a plaintiff alleges fraud, discovery must necessarily be broader than it would be in other cases, `in order to meet the heavy burden imposed on one alleging fraud.' Id.  Ex parte Rowland, 669 So.2d 125, 127 (Ala. 1995) (emphasis added). See also Ex parte Howell, 704 So.2d 479 (Ala.1997); Ex parte Pate, 678 So.2d 762 (Ala.1996); Ex parte Stephens, 676 So.2d 1307 (Ala.1996); and Ex parte Clarke, 582 So.2d 1064, 1067 (Ala.1991). In Rowland, the plaintiff sued an automobile dealership and its agent for fraud and breach of contract, alleging that the defendants had fraudulently induced the plaintiff to purchase an automobile by misrepresenting the size of the vehicle's engine. The plaintiff sought to discover the identity of plaintiffs in past fraud actions against the dealership, to develop evidence of a pattern and practice of wrongful conduct by the defendants. In response to the plaintiffs motion to compel and the defendants' objection to the plaintiffs discovery requests, the trial court ordered the defendants to provide the names of plaintiffs who had sued the defendants in the past 10 years for fraud or misrepresentation specifically in regards to misrepresenting the engine size of a vehicle. Ex parte Rowland, 669 So.2d at 126. This Court granted the plaintiffs petition for a writ of mandamus and directed the trial court to set aside its order restricting the plaintiffs access to information regarding fraud cases brought against the dealership. The Court held: Whether any prior acts of fraud concern engine size, mileage, damage, or other facts is immaterial. What is consequential is that Rowland seeks to learn of prior cases brought against [the dealership] in which plaintiffs have alleged fraud, the most likely occurrence of which would be fraud in the inducement concerning the purchase of vehicles. Thus, some earlier fraud actions need not relate to the specific focus of the fraud Rowland alleges, a fraud relating to engine size, for the discovery regarding earlier actions to be relevant to Rowland's action. Discovery of similarly situated plaintiffs could very well lead to admissible evidence of scheme, motive, or intent on the part of [the dealership]. Likewise, Rowland's discovery request is not overly broad, because (1) there is no indication that it would require the defendants to disclose frauds not analogous to that alleged in Rowland's claim, for example, frauds not concerning the purchase of vehicles, and (2) compliance with it should not be overly burdensome. Id., 669 So.2d at 127. Similarly, in this case the circuit court should not have limited Hicks's discovery to the list of customers who have submitted to the Defendants $300 Family Reserve burial policies in the past five years. Hicks's particularized need for discovery relates to his claim that the defendants engage in a pattern and practice of misrepresenting or intentionally suppressing the effect of an oversale on the burial insurance policies issued by Liberty National, Family Reserve, and Brown-Service. No explanation of an oversale is contained in the burial policy, so if the defendants do not explain the effect of an oversale, the insured's survivor will make an uninformed decision that can drastically reduce the value of the policy. It is clear that the defendants understand this fact. During the deposition of John Robert Holman, Hicks's lawyer asked if he knew what the term oversale meant. Holman replied: `Oversale' ... means that when a Brown-Service, Luquire, Family Reserve, or any other policy which is being handled by Liberty National or Brown-Service is presented to me, if the family orders additional services, or other services, or any other merchandise other than what is furnished by the policy, the policy then is credited against the funeral bill. The defendants stated that the provisions of the Liberty National, Family Reserve, and Brown-Service policies were all interpreted according to the defendants' contract with Brown-Service Funeral Homes, Inc., and that all of these policies contained similar provisions that were construed under Battle so that an oversale would occur if the customer varied from the exact funeral provided by the policy. Just as the limitation in Rowland to fraud allegations regarding engine size was an arbitrary limitation on discovery, the limitation of discovery in this case only to the list of customers who had submitted Family Reserve policies was an undue and inappropriate limitation. There is no reason to believe that the fraud alleged has any specificity to Family Reserve policies; the same misrepresentation or suppression could as well be made in regard to the other policies serviced by Liberty National and revised by Battle. In fact, when the defendants allegedly made the misrepresentations or suppressions at issue, Hicks had said, according to his testimony, that his mother had a Liberty National policy, not that she had a Family Reserve policy. When the defendants supplied their customer list for $300 Family Reserve policies submitted over a five-year period, the list they submitted contained 50 names. The defendants testified, however, that they service at least 100 funerals each year for which Liberty National, Family Reserve, and Brown-Service policies are submitted as payment. A list of 50 names relating to a 5-year period, compared to a list of 500 or more customers during the same 5-year period, is one indication of how the amended order improperly limits the plaintiffs right to discovery. Nor is there any indication that compliance with the requested discovery would be unduly burdensome or expensive. In deposition, the defendants stated that records of their transactions of providing services and merchandise are kept in the regular course of their business. Five hundred records dating from a 5-year period are dramatically fewer than the 21,246 customers and 35,000 transactions at issue in Ex parte Compass Bank, 686 So.2d 1135 (Ala.1996). Moreover, Hicks seeks discovery that is narrowly directed toward the alleged fraud, whereas the records sought in Compass Bank applied to a variety of types of transactions that were not related to the plaintiffs' annuities. Thus, the defendants' reliance on Compass Bank as support for the circuit court's amended order is misplaced. The argument that the plaintiffs agreed at the June 16 hearing to a compromise is not well taken. Hicks asserts that, at the hearing, the circuit court orally denied the motion to vacate the order but agreed to require production of documents regarding the treatment of the 50 Family Reserve policies. The defendants' rendition of those proceedings, as quoted above, supports this conclusion, not a conclusion that the parties agreed in general to a compromise. Thus, it is immaterial that Hicks's attorney, rather than submitting a draft order whereby he was still limited to discovery regarding only the Family Reserve policyholders, filed this petition for the writ of mandamus. As we have shown, the limitation of discovery only to the defendants' customers with Family Reserve policies was unrelated to the true scope of the alleged fraudulent practice. Any decision by the circuit court to grant further discovery that was still limited to the Family Reserve policyholders did not correct the fundamental error in the limitation on discovery.