In Catholic Mutual Relief Society v. Superior Court, 64 Cal.Rptr.3d 434 (Cal. 2007), the California Supreme Court has held that a California statute that authorizes pretrial discovery of a defendant’s liability insurance information does not entitle plaintiffs to obtain copies of a non-party liability insurer’s reinsurance agreements.
Catholic Mutual arose out of an action brought against the Roman Catholic Archdiocese of San Diego by numerous individuals alleging childhood abuse by priests. In a purported attempt to facilitate pretrial settlement discussions, the plaintiffs served deposition subpoenas on the Catholic Relief Insurance Company of America, the Archdiocese’s liability insurer who was not a party to the action. The subpoenas sought, among other information, discovery of reinsurance agreements.
The plaintiffs argued that they were entitled to discovery of the reinsurance agreements under California Code of Civil Procedure 2017.210, a statutory provision authorizing limited pretrial discovery of “any agreement under which any insurance carrier may be liable to satisfy in whole or in part a judgment that may be entered . . . or to indemnify or reimburse for payments made to satisfy the judgment.”
Analyzing the language of Section 2017.210, the Court determined that the statute neither expressly included nor expressly excluded discovery of reinsurance agreements. On one hand, the section provides for the discovery of an agreement “to indemnify or reimburse for payments made to satisfy the judgment.” On the other hand, a reinsurer is not directly liable to satisfy a judgment entered in the underlying action, and a reinsurer makes no payment to either the insured defendant or the third-party plaintiff.
The Court analyzed the California Legislature’s intent in enacting the statute. The Court determined that the legislative intent was “to authorize limited discovery of a defendant’s liability insurance coverage” because this information is “frequently the controlling factor in determining the manner in which a case is prepared for trial.” Unlike liability insurance, the Court explained that a non-party insurer’s reinsurance information is not relevant to a plaintiff. “The amounts of liability insurance policy limits directly available to respond to the underlying judgment are not increased by the existence of a liability insurer’s reinsurance agreements.”
The Court further explained that Section 2017.210 does not permit the discovery of the assets, such as reinsurance, of the insurance company providing the liability insurance. The Court also explained that allowing discovery of reinsurance agreements could lead to “burdensome” discovery requests to non-party insurers.
The Court noted that there might be “limited circumstances” when reinsurance agreements are discoverable. Two examples of such circumstances are: (1) when a liability insurer is “fronting” for a reinsurer who is the de facto primary insurer or (2) where the dispute is between a liability insurer and its reinsurer regarding coverage under the reinsurance agreement.