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Pacific Lumber Co. v. National Union Fire Insurance Co.

January 5, 2005


The opinion of the court was delivered by: James Larson United States Magistrate Judge



All discovery in this case has been referred by the district court (Hon. Saundra Brown Armstrong) as provided by 28 U.S.C. §636(b) and Civil Local Rule 72. Discovery cut-off was December 15, 2004 and the last day to file discovery motions under the version of Civil Local Rule 26-2 in effect until January 1, 2005 was December 27, 2004.

The parties met and conferred by letter and telephone to attempt to resolve this dispute. This Court prefers that parties meet and confer in person and reserves the right to order counsel to gather in a small unventilated witness interview room for that purpose.


On August 23, 2004, General Star, a third-party defendant brought into this lawsuit by defendant National Union ("NUFI"), propounded 18 contention interrogatories to National Union to determine, among other things, whether there is any theory or scenario under which National Union contends that General Star's umbrella policies might be obligated to defend or indemnify plaintiff Pacific Lumber Company ("PALCO"), and whether National Union is aware of any evidence or documents showing that any Wrigley plaintiff alleged or sustained physical injury to tangible property, loss of use of tangible property, or bodily injury before July 1, 1991, the date of expiration of General Star's policy with Pacific Lumber. Resolution of this part of the case hinges on this information.

Contention interrogatories are meant to narrow the issues in a lawsuit. Narrowing the issues to either the most significant or the most viable enables the parties and the court to bring the lawsuit to a close, either through settlement or trial. The former is presumably more economical as to both financial and judicial resources. General Star propounded its interrogatories to National Union to attempt to resolve the lawsuit prior to an expensive trial. It asked for specific facts and documents which support National Union's contentions that the plaintiffs in the underlying lawsuit (the Wrigley lawsuit, hence the "Wrigley plaintiffs"), over which many many insurance companies are battling, suffered alleged or actual damage to tangible property prior to 1991, the expiration date of General Star's policy with Pacific Lumber. Pacific Lumber settled with the plaintiffs in the underlying lawsuit and tendered that settlement to its insurers, who are passing it around like a hot potato.

National Union attempts to score with its quick pass in this particular discovery dispute. Not only do its responses not narrow the issues in the lawsuit, they actually manage to obscure, obfuscate and broaden the issues enough to render them virtually unrecognizable.

Factual Background

The landowners in the watershed on the North Fork of the Elk River sued for damages to their farms and homes caused by flooding and siltation which was in turn caused by Pacific Lumber's logging roads and logging debris, which denuded the hillsides and choked the streams with soil and timber slash. The streams in turn clogged the North Fork of the Elk River, which rose several feet on its new floor of silt, where it had previously been paved in cobbles and gravel. The rise in the water level and the amount of muck in the water led the Wrigley plaintiffs to suffer clogged water pumps, stinking drinking water, and flooded homes, orchards and barns. As "the Wrigley plaintiffs," they sued Pacific Lumber, which settled, paid them and then tendered the costs of settlement and defense to its insurers.

Contention Interrogatories

General Star's policy with Pacific Lumber expired in 1991. All it wants to know from National Union is what specific damage National Union contends that the Wrigley plaintiffs either allege they sustained or actually sustained while General Star's policy was in effect, that is, prior to 1991. It doesn't ask what Pacific Lumber did, either before or after 1991. It doesn't ask what happened to the Elk River, either before or after 1991. It asks only about the plaintiffs' damages.

National Union contends that General Star's dissatisfaction with its responses is "nonsense." It contends that it is reasonable to answer questions about specific damages to Wrigley plaintiffs with information about acts of Pacific Lumber because "Any facts regarding Pacific Lumber's timber harvesting practices which took place prior to July 1, 1991 clearly relate to alleged and actual 'pre-1991 damages to tangible property' since such damages were alleged by the Wrigley plaintiffs to have emanated from Pacific Lumber's harvesting practices." (Opposition at 8)

National Union contends that it is legitimate for it to respond to General Star's Interrogatory Nos. 3 and 4 with "facts indicating the Wrigley plaintiffs suffered damages from 1985 onward based on Pacific Lumber's logging and harvesting practices and information indicating the damage occurred to the Elk River and/or the Wrigley plaintiffs real or personal property occurring both before and after 1991." (Id.)

National Union advises General Star to "disregard" any irrelevant information in its discovery responses. (Id.) Specifically, damage to Freshwater Creek is relevant because reports by government agencies describe it as similar to damage on the Elk River. (Opp. At 9) In addition, any information regarding sedimentation and pollution of the Elk River is relevant to plaintiffs' alleged injuries because their injuries relate to their water supply. (Id.)

National Union also defends the letter of Susan Kuehl, the claims supervisor for Old Republic on the Wrigley claim, expressing her opinion that all of Pacific Lumber's insurers from 1985 onward would be obligated to provide a defense based on the allegations of the Wrigley complaint. Kuehl concluded that plaintiffs alleged a continuous loss. National Union finds this relevant to show that the Wrigley plaintiffs suffered damages prior to July 1, 1991. (Opp. At 11)

National Union contends that the details and circumstances surrounding the Wrigley plaintiffs' alleged and actual damages are the same, therefore the allegations of the complaint are responsive to General Star's interrogatories, specifically Interrogatory 3 and 4. In particular, the amount of the settlement plus the value of the land purchased by Pacific Lumber could show the total amount of damages. National Union provided page and line citations to plaintiffs' deposition testimony in support of its contentions regarding their damages. National Union says the allegations of the individual Wrigley plaintiffs are set forth in the four versions of the complaint in that case. (Opp. at 13-14)

In response to General Star's contention interrogatories:

Interrogatory 1 : National Union refused to state which policy provisions it relies on to contend that General Star had a defense obligation to Pacific Lumber. National Union responds only that discovery has not concluded and this litigation has not progressed fully, so it is unknown whether the General Star Umbrella Policies have any obligation to defend or indemnify Pacific Lumber with regard to the Wrigley lawsuit. National Union naively disregards its own Third Party Complaint against ...

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