In a recent decision, the Massachusetts Superior Court held that reinsurance communications were not discoverable in a declaratory judgment action involving environmental claims. One Beacon Ins. Co. v. Narragansett Electric Co., C.A. No. 05-3086-BLS 1 (Mass. Super. Ct., Suffolk Co. June 23, 2008).

The plaintiff, OneBeacon America Insurance Company (“OneBeacon”), filed an action against Narragansett Electric Company (“Narragansett”) seeking a declaratory judgment that One Beacon had no duty to indemnify Narragansett for the costs of remediation of eight environmentally contaminated sites in Rhode Island and Massachusetts. Narragansett in turn filed third party actions against its other insurers seeking coverage from them for the environmental claims.

Narragansett moved to compel production of documents and responses to interrogatories from the third party insurer defendants. The court found it reasonable to request that the insurers identify those persons who participated as lead underwriters for the policies in question, were involved in crafting the policy language and determined whether the environmental claims at issue in the case were covered by the policies in question. The court also ordered the third parties to make a reasonable search for all policies at issue naming Narragansett and certain other companies as an insured or additional insured and for all underwriting and claims files for the environmental claims at issue in the litigation. While the court granted Narragansett’s request for underwriting or claims handling guidelines used to resolve environmental claims, it denied Narragansett’s request for any other guidelines. Finally, the court denied Narragansett’s request for discovery of communications between the third party insurers and their reinsurers. The court ruled that the benefit of producing those communications was outweighed by the burden associated with locating and producing them.

Click here to review a copy of the court’s decision.