Mechanical Dynamics & Analysis, LLC (“MD&A”) performed repairs on a generator at a power plant owned by the Arizona Public Service Company (“APS”). Thereafter, the generator failed and was out of service for 111 days, resulting in a loss of more than $20 million for APS. Certain subrogating insurance companies, including Hartford Steam Boiler Inspection and Insurance Company (“HSB”), reimbursed APS for the loss and brought an action against MD&A for recoupment, which ultimately settled for $8.5 million.

Other insurance companies, including plaintiff National Union Fire Ins. Co. of Pittsburgh, PA and defendant Continental Casualty Company, paid the settlement on behalf of MD&A and asserted contribution claims against each other. During discovery, Continental sought the production of certain reinsurance information from National Union, including whether any portion of the settlement paid to HSB was in turn paid to National Union pursuant to a fronting agreement and/or reinsurance contract. National Union objected to producing such information and Continental requested that the court compel production.

A U.S. Magistrate Judge for the Southern District of New York granted Continental’s request, finding that it fell within the scope of documents a party is entitled to pursuant to Fed. R. Civ. P. 34. Thus, National Union was ordered to produce non-privileged documents related to its reinsurance agreements that were responsive to Continental’s document requests.

Click here to review the District Court’s decision, captioned National Union Fire Ins. Co. of Pittsburgh, PA, et al. v. Continental Cas. Co., No. 07-cv-11073 (S.D.N.Y. July 27, 2009).