KRS 304.39-320 (which codified the procedure outlined in Coots v. Allstate Ins. Co.) continues to wreak havoc on attorneys, insurance adjusters, and appellate courts alike. The latest chapter was recently authored by the Kentucky Court of Appeals in Young v. Kentucky Farm Bureau Mut. Ins. Co.

At issue were seven stackable underinsured motorist (“UIM”) policies for Mr. Young, the driver of a car in a car v. big rig accident. Mr. Young was one of three injured persons who filed suit against the truck driver, and a tentative settlement was reached. Mr. Young’s attorney notified KFB of Young’s proposed settlement in the amount of $100,000. Two days later, KFB received correspondence from another of the victims, referring to Young’s $75,000 settlement. (As it turns out, the actual settlement was just under $73,000, thanks to some last-minute bargaining.)

Upon noticing this discrepancy, KFB’s adjuster followed up with a letter to Young’s attorney, seeking clarification as to what the actual settlement was and expressing its intent to substitute. There was no further communication until well after 30 days had elapsed, at which time KFB discovered that Young had finalized his settlement and executed a release in favor of the truck driver. KFB denied Young’s UIM claim, claiming that his actions had prejudiced its UIM subrogation rights.

In reversing the trial court’s summary judgment in favor of KFB, the Court of Appeals relied on several factors. First, the court thought that KFB should have been more diligent in determining the actual settlement, given the conflicting information. (Had the victims’ attorneys deliberately misled, or purposely avoided talking, the outcome may have been different.) Second, the court reiterated that KFB, per the statute, has 30 days to cough up the proposed settlement, not merely announce its intentions. Third, the difference between a $75,000 and a $100,000 settlement would not have mattered to KFB, as they would have pursued their subrogation rights regardless.

It appears that Kentucky courts will continue to require an extremely high degree of diligence from any UIM carrier who does not follow KRS 304.39-320 to the letter.

It should be old news by now that a party cannot resist producing documents by the mere assertion that production is burdensome. The resisting party must prove that burden, usually through an affidavit or testimony from its client.Apparently the lesson needs to be learned again in the electronic context. In a lawsuit between the City of Seattle and the Seattle Supersonics basketball team, the city sought production of emails from six of the eight members of the LLC that owns the team. The club produced 150,000 emails from two of the members, but argued that producing them from the other four members would “increase the universe exponentially,” and generate too many irrelevant documents. The city and the club had agreed on the use of certain search terms, but the club used those terms to search only the two members’ email files. Its argument was that the number of potentially relevant documents would be too large if it searched the other four members’ email files.

After resolving issues of whether the emails were in the custody of the responding party, and whether they were relevant (both questions answered “yes”), the Court turned to the nature of the club’s objection. It reminded counsel that party resisting production has the burden “to provide sufficient details in terms of time, money and procedure required to produce the requested documents.” An objection that only states that the request is burdensome fails to meet this test.

Attorneys and clients both have a tendency to treat electronic discovery as if it were a completely new creature, not subject to well-settled principles applicable to all discovery cases. But electronic discovery is still discovery, and the old rules still apply, as this case reminds us.

The case can be viewed or downloaded here. Thanks to the Justia site for providing the link to this and other court documents.

A recent Sixth Circuit case demonstrates that in order for there to be diversity jurisdiction, at least one of the parties must be a U.S. citizen. The case, Peninsula Asset Mgt., et al. v. Hankook Tire Co., et al. No07-3028, 2007 U.S. App. Lexis 28810, also demonstrates that it is never to late to raise the issue of subject matter jurisdiction, and the Court will do so on its own if none of the parties raise the issue.

Here, The Plaintiff is a Grand Cayman Island corporation, with its principal place of business in the U.S. The Defendant is a South Korean corporation. The Plaintiff brought suit in the Federal District Court for the Northern District of Ohio. That court granted summary judgment to the Defendants and the Plaintiff appealed. In dismissing the appeal the Sixth Circuit noted, on its own initiative, that diversity jurisdiction required one of the parties to be a U.S. citizen, and that neither of the parties in this case were, and thus the Court was required to dismiss the action for lack of subject mater jurisdiction.