Mine Safety Appliances Co. v. AIU Ins. Co., C.A. No. 10C-07-241 MMJ, 2013 Del. Super. LEXIS 229 (Del. Super. Ct. Jun. 6, 2013).
A Delaware state trial court approved a Special Discovery Master’s memorandum opinion and clarifying letter granting in part and denying in part an insured’s motion to compel various insurance-related discovery from certain defendant insurance carriers. The case involved insurance coverage for thousands of toxic tort claims brought against an insured.
The insured had previously requested discovery of information on coal-dust-related claims submitted to the insurers by other policyholders, and information on the insurers’ agreements and communications with their reinsurers about policies issued to the insured. On the insured’s motion to compel, the Special Master (1) denied the insured’s request to compel production of other policyholder information, (2) granted the insured’s request to compel production of reinsurance agreements only as to those insurers against whom the insured was seeking monetary damages, and (3) denied the insured’s request to compel the insurers to produce all communications between them and their reinsurers relating to policies issued to the insured, with a narrow exception for those insurers that had raised and maintained an untimely notice defense.
The insured argued that reinsurance information should encompass all fact-based affirmative defenses, and should not be limited to the late notice defenses. The insurers presented various arguments in response: that the Special Master correctly concluded that only non-privileged communications with reinsurers regarding the late notice defense were sufficiently relevant to require production; that all communications between the insurers and their reinsurers are protected as work product or subject to the attorney-client privilege; that Delaware Superior Court discovery rules relating to insurance agreements do not apply to reinsurance contracts.
The reinsurers argued that because the insured was not a party to any reinsurance agreement, the reinsurers could not be liable for any risk beyond the terms of the reinsurance agreement and that any communications the reinsurers had with the insurer were protected by the work product privilege. Those arguments notwithstanding, the court approved of the Special Discovery Master’s memorandum opinion, finding that the opinion properly applied Delaware law and was crafted to balance the need for relevant discovery, the burden on the parties in identifying and producing discovery, and applicable privileges.