Opinion ID: 3001733
Heading Depth: 3
Heading Rank: 2

Heading: Application to “Reasonableness” Claims

Text: The present action also boils down to a dispute over compliance, or lack thereof, with the EUO clause in the insurance contract. The contract clearly states that the insured must submit to an EUO if requested by the insurance company. The parties conducted one day-long EUO. Both parties left that EUO with the expectation that another EUO would resume once the Defendant requested, and the Plaintiff provided, additional documents relating to the Plaintiff’s claims. The Plaintiff later objected to the second EUO and refused to participate because he became frustrated and concerned the Defendant was harassing him. The Plaintiff claimed then, and argues now, that a condition of its participation in a second EUO is that it be reasonable. As a general matter, it should also be noted that Morris and Skoutaris make clear that the insureds cannot put conditions on their existing contractual duties. The court in Morris stated that the insureds’ demand that they receive copies of the previous statements before submitting to an EUO was unfounded. “[T]he contract does not provide that an insured can impose this prerequisite upon the insurer before complying with agreed duties.” Morris, 848 N.E.2d at 666, quoted in Skoutaris, 453 F.3d at 925. This casts doubt on the legal basis for the Plaintiff’s owner, Snyder, to condition his participation in the second EUO upon an explanation of the scope, subject matter, or length of that EUO or that the EUO be reasonable. More specifically in regard to this case, demanding that an EUO have “reasonable limitations” lacks legal support. The Indiana Supreme Court rejected such an argument in Morris, where the insurance contract at issue had similar language to the contract here. The quoted phrase in that case was “[A]s often as we reasonably required.” Id. at 667 (alteration in original). “This reference . . . describes how often the insurer can make requests, not the nature 14 and extend of the information or statement sought.” Id. The court also noted that the insureds “do not contend that the frequence of [the insurance company’s] requests were unreasonable.” Id. The operative language of the contract in this case is: “We may examine any insured under oath . . . as may be reasonably required.” (DE 16-3, 3; Def. Desig. of Mat. Evid., Ex A-2, 3.). The Plaintiff argues that such language means that “[a]ny request for additional [EUOs] must be reasonable.” (DE 17, 2; Pl. Memo. of Law in Opp. to Summ. J, 2.) The Plaintiff’s arguments for “reasonableness” in reference to the EUO refer to both the subject matter or scope of the EUOs as well as the frequency or number of EUOs: “No rehashing of the same topics discussed in the seven-hour EUO ought to be conducted and some agreement on the length of the sworn statement should be reached.” (DE 17, 7; Pl. Memo. of Law in Opp. to Sum. J. at 7.) Because the Plaintiff here did undergo one EUO – unlike in Morris, Skoutaris, and Knowledge A–Z where the insureds never submitted to any EUO – the issue of the frequency or length of the EUO must be addressed. However, as explained below, the fact that the Plaintiff submitted to one EUO, or the start of the EUO, before refusing to participate in the second, or in the continuation of the EUO, is a distinction without a legal difference. The Plaintiff at some points in its legal argument combines the issues of reasonable scope or subject matter on the one hand, and reasonable time, length, or frequency on the other hand, and at other points the Plaintiff treats them separately. The Court will address each reasonableness objection in turn. (a) Reasonableness as to Scope or Subject Matter of the EUO The Plaintiff argues that there is a reasonableness limit on the subject matter or scope of a second EUO. The Plaintiff’s position is that: 15 a reasonableness limitation be placed on any further questioning of Mr. Snyder. Mr. Clark ought not to be allowed to rehash the same subject matter that was thoroughly covered in the first EUO. The subject matter ought to be limited to the new documents that were produced by NAS after the initial EUO. (DE 17, 7; Pl. Memo. of Law in Opp. to Sum. J. at 11.) This argument amounts to a claim that the contract has a reasonableness requirement on what kind of matters the insurance company may ask about. However, the contract provision at issue states that the examination may be taken “about any matter relating to this insurance or the claim.” (DE 16-3, 3; Def. Desig. of Mat. Evid., Ex A-2, 3) (emphasis added). Of course, if the Defendant began inquiring into issues completely unrelated to the insurance or the claim, that would be a different matter. But no such allegation is made here. In Morris, the Indiana Supreme Court said the similar contract provision: describes how often the insurer can make requests, not the nature and extent of the information or statement sought. The policy contract does not itself impose an explicit general “reasonableness” requirement on the insurer regarding what documentation the insurer might demand of the insured or in what context the insurer might ask for an examination under oath. Morris, 848 N.E.2d at 667. The word “reasonably” in the contract here, like “reasonablesness” in the contract in Morris, refers to how often the insurer may require the insured to undergo an EUO, not the subject matter or topic of an EUO. The Plaintiff’s legal authority for a claim that the EUO’s subject matter or scope be reasonable or limited is confined to three district court cases cited in its Memorandum of Law in Opposition to Summary Judgment: Kamin v. Central States Fire Ins. Co., 22 F.R.D. 220 (E.D.N.Y. 1958); Joe’s Market Fish, Inc. v. Scottsdale Ins. Co., No. 97-C-2313, 1998 WL 851504, 1998 U.S. Dist. LEXIS 19140 (N.D. Ill. Dec. 3, 1998); and, Jones v. State Farm & Cas. Co., 129 F.R.D. 170 (N.D. Ind. 1990). These cases are of little help to the Plaintiff. First, they all 16 concern discovery disputes, which are governed by the Rules of Civil Procedure. As has been pointed out, the dispute in this case, over EUOs, is a contractual matter. See Morris, 848 N.E.2d at 667 (rejecting the applicability of discovery rules). Second, the first two cases stand for the proposition that a previous EUO of a person does not preclude a party from deposing that person later. That holding supports the Defendant’s position if it is of any applicability at all. Jones has more conceivable applicability, and the Plaintiff puts stock in the holding. That case involved the plaintiff-insured’s motion to quash the deposition the defendant-insurer sought to conduct on the grounds that the insured had already given a recorded statement and an EUO about his claim. Jones, 129 F.R.D. 170, 170. The magistrate allowed the deposition to go forward but limited its scope or subject matter: “[T]here is no logical reason why that deposition should duplicate the material covered by the examination under oath or the statement taken by the claims adjustor. Therefore, the deposition must be limited to those areas not covered in the previous two statements.” Id. at 171. The Plaintiff adopts this view as its stance in this case, but this holding, like the other two cases, is inapplicable. The parties in this action are not fighting over discovery and depositions; they are debating the legal obligations and significance of the EUO provision in the insurance contract during the pre-litigation period of this case. That makes it an entirely separate issue governed by different legal authority, namely, Indiana contract law as spelled out in the Morris case. Also, as previously mentioned, the Plaintiff has not pointed to information that indicates the Defendant planned or intended to inquire into the same information and documents that were discussed in the first EUO. Last, Jones and the other cases have no binding authority on this Court; they are only persuasive authority. Therefore, the Plaintiff’s citation to these cases is unavailing for its position. 17 Even if it were true under the legal authority governing this case that a reasonableness principle applies to the subject matter, topic, or scope of the EUO, there are no material facts to support a claim a second EUO would be unreasonable in this context. There is no factual indication that the Defendant’s purpose in holding the second EUO was meant to harass the Plaintiff. In fact, the record indicates that the Defendant’s purpose in conducting a second EUO was to inquire into documents that were either requested of and received from the Plaintiff after the first EUO or not discussed during the first EUO. The record also is clear that this was the understanding of both Plaintiff and Defendant at the end of the first EUO. The Defendant indicated in Clark’s October 4, 2006, letter that its focus would be on new material or material not covered in the first EUO, though it reserved the possibility that other matters, including those discussed in the first EUO, might be addressed too. The mere possibility that matters discussed in the first EUO might be addressed again in a second EUO cannot create a basis for claiming the second EUO is presumptively unreasonable. The Plaintiff’s evidence does not include any allegation that the Defendant during the second EUO intended or planned to cover the same information as the first EUO, only that the Plaintiff feared this. The Plaintiff’s belief that the EUO was meant to harass, a belief not articulated until August 2006, does not create a triable issue of fact for a jury to determine. The Plaintiff only accuses the Defendant of refusing to set reasonableness limits on the scope or subject matter. While it might be courteous of the Defendant to do so, it was not required by contract or law, as enunciated in Morris and applied in Skoutaris and Knowledge A-Z. In sum, the Court cannot agree with the Plaintiff’s argument that in this case the scope or subject matter of the EUO must be “reasonable,” as set by a court or agreed upon by the parties. 18 (b) Reasonableness as to Time, Length, or Frequency of the EUO The Plaintiff also argues that the insurance “policy contains a limitation as to how often Westfield may require Mr. Snyder to sit for” EUOs. (DE 17, 2; Pl. Memo. of Law in Opp. to Summ. J. 2) (emphasis removed). This is a different argument than what the courts addressed in Morris, Skoutaris, or Knowledge A–Z. The contract in this case states that insureds must undergo an EUO “at such times as may be reasonably required.” (DE 16-3, 3; Def. Desig. of Mat. Evid., Ex A-2, Contract, 3.) As noted earlier, this means the number or frequency of EUOs must be reasonable. See Morris, 848 N.E.2d at 667 (“[R]easonableness . . . describes how often the insurer can make requests.). The Plaintiff in this case, however, does not state exactly what that reasonableness limit is or how often the Defendant may require an EUO other than claiming that “Mr. Snyder should not be required to sit for a second EUO unless some reasonable understanding can be reached with Westfield as to the length and scope of the second EUO/deposition.” (DE 17, 2–3; Pl. Memo. of Law in Opp. to Summ. J. 2–3.) But this mixes the prior argument regarding the scope or subject matter of the EUO with the issue of a reasonable frequency or number of EUOs. Because the Plaintiff made the argument about the frequency or length of the EUO after undergoing a seven or eight hour EUO, the Court will construe the Plaintiff’s argument to be that, at least here, more than one EUO of seven or eight hours is unreasonable. This is based on, in particular, the Plaintiff’s statement that after providing thousands of pages of documents, spending many hours handling information requests, and consenting to Defendant’s “eight (8) hours questioning Mr. Snyder under oath,” the Plaintiff “will not agree to your proposal to further question Mr. Snyder under oath.” (DE 18-2, 32; Pl. Desig. of Evid. in Opp. to Def. Mot. 19 for Summ. J., Ex. 9, 3). As authority for the claim that it is unreasonable to hold an EUO after seven or eight hours, Plaintiff cites the Federal Rules of Civil Procedure. Plaintiff also rests its argument on references to Defendant’s many requests for documents, suggesting that the cumulative amount of information sought from the Plaintiff became unreasonable. Plaintiff’s reliance on the Federal Rules of Civil Procedure comes from its incorporation and quotation of Baeverstad’s August 31, 2006, letter to Clark. That letter states that “the Federal Rules of Civil Procedure limit depositions to seven (7) hours.” (DE 18-2, 32; Pl. Desig. of Evid. in Opp. to Def. Mot. for Summ. J., Ex. 9, 3) (quoted in DE 17, 4; Pl. Memo. of Law in Opp. to Summ. J., 4.) Plaintiff presumably is referring to Fed. R. Civ. P. 30(d)(2), which states: Unless otherwise authorized by the court or stipulated by the parties, a deposition is limited to one day of seven hours. The court must allow additional time consistent with Rule 26(b)(2) if needed for a fair examination of the deponent or if the deponent or another person, or other circumstance, impedes or delays the examination. Fed. R. Civ. P. 30(d)(2). First and most importantly, the Federal Rules of Civil Procedure are not authoritative or dispositive regarding the contractual obligations at issue here. No party has cited any portion of the contract incorporating the Rules as the guidelines for interpretation or disputes, including how often EUOs “may be reasonably required.” (DE 16-3, 3; Def. Desig. of Mat. Evid., Ex A-2, Contract, 3.) The Federal Rules in this context are at best only persuasive or analogous. See Morris, 848 N.E.2d at 667 (submitting to an EUO “was a contractual obligation, not a discovery request. . . . Compliance was not optional or subject to a trial court determination of reasonableness.”). Second, Rule 30(d)(2) itself does not cap depositions categorically at seven hours. Instead, it states that the court may authorize more time “for a fair examination.” Fed. R. Civ. P. 30(d)(2). Hence, even if the rule was authoritative, its wording alone would not support a 20 claim that it is always unreasonable to conduct an EUO after the first EUO was eight hours. Plaintiff also couches its claim in the context of Defendant’s many requests for documents and information. The implication is that after the Plaintiff provided thousands of pages of documents, spent many hours dealing with Defendant’s document requests, and submitted to the first EUO, it was unreasonable to make Plaintiff submit to another EUO. While it is clear that the Plaintiff provided a great amount of cooperation with the Defendant’s requests, one problem with this argument is that the Plaintiff left the first EUO with the understanding that the Defendant would request, and the Plaintiff would provide, more documents, and that another EUO would be held to discuss them. The second EUO was not a surprise or an unreasonable ambush. But the Plaintiff’s argument creates the impression that the request for the second EUO was unexpected. However, the testimony of the Plaintiff’s owner indicates that he grew frustrated with the pace of the claim process and then objected to the second EUO. As noted before, The Defendant’s failure to respond as the Plaintiff desired or to specifically delineate the focus of the second EUO might have been courteous and productive, but for better or worse, the law does not require those qualities, at least in this context. A reasonable jury could not find that holding a second EUO, or continuing the first EUO, is unreasonable in this case. In other words, requiring the EUO in this case, in light of all the circumstances and events, was reasonable as a matter of law. Much more would be needed in this case to make this a triable issue of fact. Perhaps if repeated EUOs were conducted many times, it could become clear that the frequency of EUOs was becoming unreasonable and was meant to harass, as the Plaintiff had suggested in this case. This ruling does not lead to the “logical conclusion” that the Defendant “could take an infinite number of [EUOs] lasting days, 21 weeks or months on end without any limitation.” (DE 18-2, 26; Pl. Desig. of Evid. in Opp. to Def. Mot. for Summ. J., Ex. 11, 1) (quoted in DE 17, 5; Pl. Memo. of Law in Opp. to Summ. J. 5.) It is also possible that the second EUO could have become unreasonable, but it never occurred. The first EUO – and the prospect of having to sit through a second EUO – may have been trying for the Plaintiff and not particularly enjoyable, but that does not amount to unreasonableness. No material facts are presented for such a showing of unreasonableness or harassment here. Insofar as the Plaintiff claims that it is unreasonable and in violation of the contract policy to hold a second EUO after the first one was seven or eight hours, or that it is unreasonable to continue an EUO for more than eight hours on another date, the Plaintiff’s claim fails. In conclusion, it was not unreasonable as a matter of law – in terms of either scope or subject matter on the one hand, or length, frequency, or time on the other hand – to require a second or continued EUO of the Plaintiff. Because the Plaintiff refused to submit to the requested EUO as required by the contract, this Court has no choice but to find that the Plaintiff breached that provision and thus the contract. Morris, 848 N.E.2d at 667.