Lack of Personal Knowledge and Lack of Relevant Knowledge Are Not the Same
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.”
Best Practices for Insurance Representative Depositions
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.