Court Orders Insurer To Pay Attorneys’ Fees

Sapphire Hospitality suffered losses arising out of a fire at a hotel it owned and operated in Idaho. Sapphire submitted a claim for recovery under a policy issued by Oregon Mutual. Oregon Mutual denied coverage, and Sapphire sued alleging breach of contract and bad faith. During the course of discovery, Sapphire asked for information regarding formal or informal customer complaints against the claims handlers who handled its claim; whether these particular claims handlers were ever disciplined and the conduct for which they were disciplined; cost containment, benefits, perks, bonuses, incentives or quotas for claims handling; and copies of the resume/curriculum vitae of the claims adjusters responsible for handling its claim.

Oregon Mutual refused to produce any of the requested information, arguing that the requests were irrelevant, not proportional, sought confidential and personal information and were designed to annoy, embarrass or harass its employees. It further argued that such information was not relevant to a bad faith claim. Despite meeting and conferring for several months, including a discovery conference with the court’s staff, Oregon Mutual continued to withhold any of the requested information from Sapphire. Sapphire then filed a motion to compel and requested attorneys’ fees.

In granting Sapphire’s motion, the court found that all of Sapphire’s inquiries were relevant, reasonable, narrowly tailored and could lead to evidence supporting its claims that Oregon Mutual acted in bad faith. With regard to Sapphire’s request for attorneys’ fees, the court noted that, since it had granted the motion to compel in full, it was required, pursuant to Fed. R. Civ. P. 37(a)(5)(A), to impose reasonable costs including fees, unless certain exceptions, which were not present here, applied. The court then ordered Sapphire to submit a request and supporting affidavit for reasonable expenses and fees it incurred in bringing the motion to compel.

The case is Sapphire Hospitality Investments, LLC., v. Oregon Mutual Insurance Co., No. 3:23-cv-00146-AKB, US Dist. Court for the District of Idaho.