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Catholic Mutual Relief Society v. Superior Court of the County of Los Angeles4/25/2005
Co. v. Stauffer Chemical Co. (Del. 1989) 558 A.2d 1091 (Stauffer Chemical).)
We recognize that Potomac and Union Fire both stated that because former rule 26(b) referred to "any" agreements by "any insurer," it applied to reinsurance. (Potomac, supra, 136 F.R.D. at p. 2; Union Fire, 116 F.R.D. at pp. 83-84.) However, the statement in Union Fire came after the court had already held the discovery proper because it was relevant to the claims and defenses in the action. (Union Fire, supra, at pp. 83-84.) The pronouncement in Potomac was made without analysis or citation to authority, and preceded a discussion about why certain reinsurance information was relevant to the issues in the case. (Potomac, supra, at p. 2.) In short, both statements appear to be dicta and are best viewed skeptically. Neither case concerned the issue before us: whether the statutory provision permitting discovery of insurance coverage information applied for settlement purposes only to reinsurance information from a non-party insurer.
Most important, however, is a key difference between section 2017(b) and former rule 26(b): section 2017(b)'s addition of language stating that a party could "also obtain discovery as to whether that insurance carrier is disputing the agreement's coverage of the claim involved in the action . . . ." Statutes must be read as a whole in a manner that leads to an internally consistent interpretation. (Jurcoane, supra, 93 Cal.App.4th at p. 893.) Under this rule, the insurance carrier referred to in the coverage dispute portion of section 2017(b) must be the same insurance carrier described in the first sentence as the one who might be liable under any insurance agreement. The purpose of the coverage dispute language was to "mak explicit the right to discover whether an insurance carrier, although providing a defense, is nonetheless contesting whether its policy covers the occurrence involved in the lawsuit." (Irvington-Moore, supra, 14 Cal.App.4th at p. 737.) Reinsurance carriers do not defend the policyholders of their reinsureds, however. (People v. Highway Insurance Co. (1974) 57 Ill.2d 590, 594 [reinsurer's liability is solely to its reinsured, and that reinsured, as the defendant's liability insurer, remains liable on its contract and handles all matters before and after the loss].) Based on this, the insurance carriers referred to in section 2017(b) cannot include reinsurers. We therefore conclude that section 2017(b) was intended to reach only a defendant's insurer, not that insurer's reinsurance agreements. Instead, as set forth below, the discoverability of reinsurance information, along with the other items requested by the subpoenas, rests on the general relevancy standards of section 2017(a). (See Dana, supra, 138 S.W.3d at pp. 302-303 [while discovery statute that permitted disclosure of existence and contents of defendant's liability policies could not be read to also permit disclosure of information concerning possible erosion of coverage by other claims, the statute did not preclude its discovery. Instead, plaintiff's ability to obtain such information turned on whether it was relevant under general statutory principles of discoverability].)
2. A Non-Party Insurer's Financial Condition Is Not Discoverable For Settlement Purposes Under Section 2017(a)
As mentioned above, information is discoverable if it is relevant to the subject matter of the action and, additionally, is either admissible in evidence or reasonably calculated to lead to the discovery of admissible evidence. (ยง 2017(a).) As both federal and California decisions have made clear, information concerning the existence and contents of a defendant's liability insurance p
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