A lack of personal knowledge does not shield a corporate representative from testifying at deposition. According to one state supreme court, insurance company representatives without personal knowledge of the disputed issues may be deposed so long as the questions relate to the subject matter of the action. ABA Litigation Section leaders agree that these depositions are permissible, so long as the scope is reasonable.
The conflict in In re USAA General Indemnity Co. began with a car accident involving an insured motorist and an underinsured motorist. The insured motorist settled a negligence action against the underinsured but later sued his insurance company to recover benefits under his uninsured/underinsured motorist (UIM) policy. In litigation with the company, the insured served a notice of intent to depose a corporate representative of the company.
The insured’s notice listed nine topics and included a subpoena for the corporate representative to produce all reports prepared in connection with the claim. The company conceded certain facts regarding the existence and terms of the policy at issue, then moved to quash the notice and subpoena on the grounds that a deposition regarding its assessment of the insurance claim would not be probative of the main issue of which driver was at fault, and that such information could be obtained from other witnesses with firsthand knowledge.
The trial court denied the motion to quash, reasoning that the plaintiff was entitled to depose his insurance carrier’s corporate representative “regarding the disputed liability and damages issues.” The company filed a petition for writ of mandamus with the court of appeals, which was also later denied.
On appeal of the denial of the writ of mandamus, the Supreme Court of Texas granted in part the company’s writ. The supreme court affirmed that the insured was entitled to depose the corporate representative “on matters that have bearing on the disputed issues in the case,” with the caveat that the scope of the deposition would be narrow. It noted that other Texas appellate courts had similarly held in cases involving that UIM insurance coverage, albeit with limitations on the deposition scope. The supreme court further observed that generally, the lower appellate courts had found topics regarding who had caused the accident, the amount of plaintiff’s damages, and the sufficiency of the other driver’s insurance coverage to be proper. By contrast, those same courts had found requests that would be available in the insured’s own records to be unduly burdensome.
In reaching its decision, the supreme court first rejected the insurer’s contention that its representative’s testimony was not relevant to the issues in the case. It reasoned that the discovery rules impose no personal knowledge requirement, and that “the rules expressly recognize that a person has ‘knowledge of relevant facts’ if he ‘has or may have knowledge of any discoverable matter,’ regardless of whether he has ‘admissible information or personal knowledge of the facts.’” Accordingly, the supreme court concluded that the insurer’s “insistence that a lack of personal knowledge necessarily equates to a lack of relevant knowledge rings hollow,” particularly since the insurer had already conceded certain underlying facts regarding coverage.
Next, the supreme court rejected the argument that deposing the insurer’s representative would be duplicative and unduly burdensome for lack of supporting evidence. It noted that the insurer did not object to providing the requested information through written discovery—only through deposition. The court also observed that the insurer could have disclosed documents pertaining to the liability and damages issues, that together with its representative’s lack of personal knowledge, may have been sufficient to show that the requested deposition would be unduly burdensome.
Finally, the supreme court held “some, but not all” of the deposition topics exceeded the permissible scope. While topics regarding the facts supporting the insurer’s legal theories and defenses and whether the other driver was an underinsured motorist were appropriate, inquiries into the UIM policy, the insured’s compliance with the policy, and the compliance with conditions precedent were not because they exceeded the “relevant subject matter of the suit.” The court explained that “entitlement to UIM benefits is a prerequisite to extracontractual bad faith claims,” and as such, “[a] plaintiff may not obtain discovery on an unasserted, abated, or unripe bad-faith claim under the guise of investigating a claim for benefits.”
Litigation Section leaders advise practitioners to ensure that the scope of the deposition is appropriate. “Where the insurer is denying liability and/or the amount of covered loss, the insurer necessarily puts these matters at issue. It therefore is essential that the entity divulge information and admit that it either has or does not have evidence or knowledge to support those matters in its pleadings,” explains Sherilyn Pastor, Newark, NJ, cochair of the Section’s Trial Evidence Committee and former cochair of the Section’s Insurance Coverage Committee. “There may be circumstances where a corporate representative deposition may appropriately be excused. For example, where the discovery sought from the representative is not relevant to the matters in issue, or the company adopts as its corporate position the testimony already offered by a fact witness on the topic,” she adds.
“It is always a good idea to meet and confer with a deponent prior to sending a deposition notice,” recommends J. James Cooper, Houston, TX, cochair of the Section’s Insurance Coverage Committee. “Educate the corporate representative about the matters. Be strategic about picking the right person. Look at the deposition notice to determine whether to object to the scope, issues, and timing,” he instructs.
