Catholic Mutual Relief Society v. Superior Court

*363 Opinion

INTRODUCTION

In this case we must determine whether Code of Civil Procedure section 2017.210, 1 the statutory provision authorizing limited discovery of a defendant’s insurance coverage information, authorizes pretrial discovery of a nonparty liability insurer’s reinsurance agreements for purposes of facilitating settlement of an underlying tort action. We conclude that it does not.

As will further be explained, there may be unusual circumstances in which a reinsurance agreement is functioning in the same way as a liability policy (“fronting” arrangement), or where the reinsurance agreement is itself the subject matter of the litigation at hand (e.g., coverage action between liability insurer and its reinsurer). In such instances, discovery of such agreements would be appropriate. In this matter, however, there is no evidence that any reinsurance agreements for which pretrial discovery was being sought fall within those narrow exceptions.

The judgment of the Court of Appeal, which interpreted section 2017.210 consistently with the views expressed herein, shall accordingly be affirmed.

FACTS AND PROCEDURAL BACKGROUND

The Roman Catholic Archdiocese of San Diego is…

Kiesel Boucher & Larson, Raymond P. Boucher, Patrick DeBlase, Beverly Hills, and Anthony M. DeMarco, for Real Parties in Interest.

In this case we must determine whether Code of Civil Procedure section 2017.210, [1] the statutory provision authorizing limited discovery of a defendant's insurance coverage information, authorizes pretrial discovery of a nonparty liability insurer's reinsurance agreements for purposes of facilitating settlement of an underlying tort action. We conclude that it does not.

As will further be explained, there may be unusual circumstances in which a reinsurance agreement is functioning in the same way as a liability policy ("fronting" arrangement), or where the reinsurance agreement is itself the subject matter of the litigation at hand (e.g., coverage action between liability insurer and its reinsurer). In such instances, discovery of such agreements would be appropriate. In this matter, however, there is no evidence that any reinsurance agreements for which pretrial discovery was being sought fall within those narrow exceptions.

The judgment of the Court of Appeal, which interpreted section 2017.210 consistently with the views expressed…

I respectfully dissent. Code of Civil Procedure section 2017.210 unambiguously provides for discovery of reinsurance policies, by including “any agreement under which any insurance carrier may be liable to . . . indemnify or reimburse for payments made to satisfy the judgment.” 1 The majority detects an ambiguity in the “satisfy the judgment” term, because a reinsurer is “derivatively” rather than “directly” liable. (Maj. opn., ante, at p. 370.) However, the Legislature has chosen terminology that expressly includes derivative liability. The obligation to “indemnify or reimburse” easily encompasses the duty assumed by reinsurers.

The majority finds further ambiguity in the third sentence of section 2017.210: “ ‘A party may also obtain discovery as to whether that insurance carrier is disputing the agreement’s coverage of the claim involved in the action, but not as to the nature and substance of that dispute.’ ” According to the majority, only the defendant’s liability insurer is in a position to dispute coverage. (Maj. opn., ante, at p. 369.) This is not the case; reinsurers can and do argue that their policies do not cover the claim involved in the action. (See, e.g., Royal…