DALLAS COURT OF APPEALS REVERSES LOWER COURT ORDER ALLOWING DEPOSITION OF UM/UIM INSURER’S CORPORATE REPRESENTATIVE

The Court of Appeals in Dallas recently concluded that a Dallas County trial court erred by denying an insurer’s motion to quash the deposition of its corporate representative and motion for protective order in a dispute stemming from an uninsured (UM)/underinsured (UIM) claim. In Re Home State Cty Mut. Ins. Co. d/b/a Safeco and Najeeba Aneesa Sabour, NO. 05-21-00873-CV, 2022 WL 1467984 (Tex. App.—Dallas May 10, 2022) involved a claim by an insured against his insurer (“Safeco”) seeking to recover UIM benefits after settling with the alleged underlying tortfeasor for his $30,000 policy limits.

After the insured sought to take the oral deposition of Safeco’s corporate representative, Safeco moved to quash the deposition, arguing that the deposition was not relevant or proportional to the proceedings and that the deposition topics were overly broad and beyond the scope of discovery. The trial court denied the motion, Safeco appealed, the court of appeals declined to hear the appeal, and the Texas Supreme Court denied review of the appellate court’s decision. The Texas Supreme Court subsequently issued its decision in In re USAA General Indemnity Co., 624 S.W.3d 782 (Tex. 2021), which addressed the scope of discovery an insured may pursue from an insurer in a UM/UIM case. In USAA, the Texas Supreme Court emphasized that the scope of discovery in UM/UIM cases differs from that in other insurance disputes because whether the insured is entitled to benefits hinges on showing the liability of a third-party motorist. As such, the Texas Supreme Court held, in relevant part, that deposition topics to an insurer in a UM/UIM dispute can include information supporting the insurer’s legal theories and defenses, but topics generally inquiring into the UIM policy or claims-handling processes were beyond the scope of discovery and improper. Additionally, the USAA court supported the proposition that a UM/UIM insurer could foreclose a corporate representative’s deposition by showing that the need for the deposition was not proportional to the needs of the case. In other words, if a UM/UIM insurer produced documents or referenced previously produced documents providing the information in its possession regarding the issues in the UM/UIM case and, combined with a lack of personal knowledge of the liability facts, the insurer could show that a corporate representative’s deposition would “provide little if any additional benefit in relation to the cost” of the deposition.

The insured in this case used USAA as a guide and served an amended notice of deposition to Safeco’s corporate representative. In response, Safeco produced over 1,000 pages of documents, including the unprivileged portions of its claim file. At the hearing on Safeco’s motion to quash, the insured argued Safeco just performed a “document dump” in an attempt to avoid the deposition, and Safeco argued that the documents it produced were in line with the holding in USAA and the deposition was both no longer relevant and no longer proportional to the needs of the case. The trial court denied the motion to quash, and Safeco appealed.

In its appeal, Safeco argued that, unlike the insurer in USAA, it supported its proportionality objection by producing documents and referencing previously produced documents that provided all the information in its possession regarding the issues at stake in the UM/UIM case and that information, combined with the corporate representative’s lack of personal knowledge, showed that a corporate representative deposition would provide little, if any, benefit to the proceedings in relation to the cost of the deposition. The appellate court agreed and concluded that the trial court abused its discretion by denying Safeco’s motion to quash. It therefore ordered the trial court to vacate its order denying Safeco’s motion to quash and motion for protective order and enter an order granting the motions.