Opinion ID: 1823218
Heading Depth: 1
Heading Rank: 6

Heading: Did the trial court exceed its discretion?

Text: As we concluded in section 1 above, the trial court ordered Orkin to produce depositions of its corporate representative in fraud cases and Orkin's Alabama customer files for 1978 to 2002. The Touarts allege that Orkin misrepresented that it had performed termite-repair services at their house and that it had falsified inspection reports. Because of the nature of those allegations, the Touarts contend that the contested discovery is warranted because evidence of similar misrepresentations by Orkin to other customers would be admissible in their cause. See Ex parte Allstate Ins. Co., 401 So.2d 749, 751 (Ala. 1981). Further, the Touarts argue that Orkin has not shown that the trial court exceeded its discretion in ordering the production of the contested items. Orkin principally contests the trial court's directive that it produce its files for customers in Alabama. Orkin acknowledges that discovery in a fraud case necessarily must be broader than in other cases because of the heavy burden of proof imposed on one alleging fraud. Ex parte Union Sec. Life Ins. Co., 723 So.2d 34, 39 (Ala.1998); Ex parte Horton, 711 So.2d 979, 983-84 (Ala.1998). Orkin also recognizes that this Court has permitted the discovery of names and addresses of nonparty customers in other fraud cases. See, e.g., Ex parte First Nat'l Bank of Pulaski, 730 So.2d 1160 (Ala.1999) (bank loan transactions of other customers over a two-year period discoverable); Ex parte Clarke, 582 So.2d 1064 (Ala.1991)(plaintiff entitled to meaningful contact with other purchasers of conversion policies like the one it purchased). Orkin notes, however, that even in a fraud case, discovery is not unlimited. Ex parte Union Sec. Life Ins. Co., 723 So.2d at 38. Orkin complains that the trial court did not tailor the discovery requests here with respect to time, geography, and the Touarts' claims. See Ex parte National Sec. Ins. Co., 773 So.2d 461, 465 (Ala.2000)(discovery allowed if closely tailored to the fraud allegations). Because the trial court's order compelled Orkin to produce thousands of customer files from 1978 to 2002 that may be unrelated to the Touarts' claims, Orkin argues, the trial court exceeded its discretion. See Ex parte Compass Bank, 686 So.2d 1135, 1137-38 (Ala.1996) (trial court erred in ordering discovery that was unrelated to the product purchased by the claimants and required the defendant to review 35,000 transactions). Additionally, Orkin presented evidence to the trial court concerning the logistics of producing its Alabama customer files for the 24-year period. Orkin attested that it had approximately 23,000 active termite-service customers in Alabama; that the active Alabama customer files were not stored in a central location; that, because of Orkin's regional structure, the production of active customer files for Alabama would require review of records at 12 locations in 5 states; that additional files for former Alabama customers may have been stored at locations off Orkin's sites; and that the Alabama customer files were not organized by date of service. Under these circumstances, Orkin contends, the production of its customer files would be oppressive and unduly burdensome. Rule 26(b)(1), Ala. R. Civ. P. [7] The parties argue the precedential value of two fraud cases in which this Court has allowed the discovery of the defendant's transactions with nonparty customers. In Ex parte Allstate Insurance Co., 401 So.2d 749 (Ala.1981), the plaintiff sued Allstate alleging misrepresentation after the insurer underpaid on a claim for uninsuredmotorist coverage. The plaintiff crafted an interrogatory asking Allstate to disclose the identities of its other policyholders in Alabama to whom, during a two-year period, it had paid a $10,000 uninsuredmotorist benefit (the benefit payable for one vehicle) when more than one vehicle was covered. This Court held that the trial court did not exceed its discretion when it ordered the insurer to answer that interrogatory. Allstate, 401 So.2d at 750. Further, in Ex parte State Farm Mutual Automobile Insurance Co., 452 So.2d 861 (Ala.1984), the plaintiff alleged that State Farm had defrauded him by including an unenforceable, anti-stacking clause in his automobile insurance policies. The plaintiff asked for the identities of other State Farm customers who, like him, had more than one policy but had received a reduced uninsured-motorist benefit. The State Farm Court allowed that discovery, but limited it to customers who were located in Alabama. State Farm, 452 So.2d at 864. The discovery related to nonparty customers in both Allstate and State Farm was clearly tailored to the fraud claims in those cases. However, the production ordered by the trial court in this caseall Orkin's Alabama customer files from 1978 to 2002does not correlate to the Touarts' fraud issues. The trial court authorized the Touarts to review approximately 23,000 files of active Alabama customers that were stored in five states. While the Touarts are entitled to discovery of materials necessary to their fraud claims, such a broad request should not be sanctioned on the unsubstantiated hypothesis that a search of records related to nonparties might uncover fact patterns similar to their own. Accordingly, we agree with Orkin that the trial court exceeded its discretion when it ordered Orkin to produce customer files without regard to the specific fraud claims alleged by the Touarts. [8] Further, the trial court exceeded its discretion because the production it ordered was not limited to periods in which discovery was reasonably calculated to lead to admissible evidence. The trial court ordered Orkin to produce nonparty customer files covering a 24-year period, and its order concerning depositions of corporate representatives was unlimited as to time. [9] No bright line exists concerning the maximum period over which a litigant should be required to search for records. The length of that period depends on whether the records being searched are relevant to the subject matter involved in the dispute. Rule 26(b)(1), Ala. R. Civ. P.; 8 Wright, Miller & Marcus, Federal Practice and Procedure § 2008 (1994). Even then, a litigant in a fraud action must show a substantial need for discovery of records that concern transactions with nonparties, that are older than five years, and that do not directly relate to the litigant's own claim or defense. See, e.g., Ex parte National Sec. Ins. Co., supra (search sanctioned in fraud case for documents covering five years); Ex parte Union Sec. Life Ins. Co., 723 So.2d at 37 (plaintiff could discover records concerning other customers within a five-year period). The discovery of Orkin's customer files here ordered by the trial court falls outside those parameters, and, absent a showing by the Touarts of a substantial need, the trial exceeded its discretion in so ordering. [10]