Case 2:07-cv-05069-SRD-JCW Document 27-3 Filed 05/17/2009 Page 1 of 10

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

*
STEVEN FRUGHT AND *
CHERILYN FRUGHT * Civil Action No. 07-5069
Plaintiffs *
* Judge Stanwood Duval
Versus * Sec. “K”
*
STATE FARM FIRE AND *
CASUALTY COMPANY * Magistrate (2)
*
**************************************
___________________________________________________________________________

MEMORADUM IN SUPPORT OF MOTION TO COMPEL AND FOR SANCTIONS

___________________________________________________________________________

MAY IT PLEASE THE COURT:

STATEMENT OF FACTS

On March 27, 2009, plaintiffs, Stephen Frught and Cherilyn Frught (“Frughts”)

propounded Second Request for Production of Documents to defendant, State Farm Fire and

Casualty Company (“State Farm”) seeking very specific documents related to the Frughts’ initial

homeowner’s adjuster, Roger Melzer (“Melzer”). The Court may recall Melzer concluded flood

waters alone damaged the entirety of the Frughts’ home despite the fact Mr. Frught watched as

rain water poured into his home through a gaping hole that was created when Katrina’s winds

ripped a turbine, also known as a “whirly bird”, from his roof. The State Farm Activity Log kept

in connection with the Frughts’ homeowner’s claims shows that Mr. Frught contacted State Farm

at approximately 7:40 a.m. on August 29, 2005 and related his eye-witness account of the

damage Katrina’s wind and rain was causing his family’s home.

Subsequently, on May 7, 2009, State Farm responded to the Frughts’ Second Request

for Production by producing none of the requested documents, asserting meritless objections and

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providing highly questionable responses regarding documents State Farm asserts it does not

possess.1 Consequently, the Frughts file the present Motion to Compel and for Sanctions based

on defendant’s failure to produce specific requested documents.

LAW AND ARGUMENT

I. ALL OF THE DOCUMENTS REQUETSED ARE RELEVANT AND THUS,

DISCOVERABLE

All of the information and documents sought are relevant and thus, discoverable. Federal

Rule of Civil Procedure 26(b)(1) provides in pertinent part as follows:

Parties may obtain discovery regarding any matter, not privileged,

which is relevant to the subject matter involved in the pending
action, whether it relates to the claim or defense of the party
seeking discovery …. The information sought need not be
admissible at trial if the information sought appears reasonably
calculated to lead to the discovery of admissible information.

In the instant case, all of the information and documents sought are unquestionably

relevant and will likely lead to the discovery of admissible evidence. Accordingly, State Farm

should be compelled to produce the requested documents.

A. Supplemental Request for Production Number 1: Please produce complete

copies of any and all examinations and/or tests you administered to Roger
Melzer along with the test results

i. State Farm’s Response:

State Farm responded in pertinent part that Roger Melzer took and passed the basic tests

required of any person seeking to adjust State Farm homeowner’s claims; however, State Farm

does not have a copy of his individual test or answers.

ii. Argument in Support of Compelling Production:

State Farm’s response is incredible for several reasons. Without any documentation, how

does State Farm know that Melzer passed tests “required of any person seeking to adjust State

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Exhibit “A”, State Farm’s Responses to Second Request for Production of Documents.
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Farm homeowner’s claims”? Mr. Melzer recently testified during his deposition on May 14,

2009, that State Farm tested him on multiple topics during the one week of training Melzer

received in Gainesville, Florida in September, 2004.2 Melzer described the exams as “written”

and covering a variety of topics, including State Farm’s homeowner’s insurance policy. Melzer

further testified that upon completing his exams, he handed the exams to a State Farm supervisor

in Gainesville, who in turn graded the exam and apprised Melzer he passed. Lastly, Melzer was

surprised to learn State Farm reportedly did not have a copy of his exam or exam results and

described as “strange”, State Farm’s assertion that it did not have a copy of Melzer’s exam or

exam results.

Furthermore, undersigned counsel has obtained the tests and test results of other

“independent adjusters” just like Melzer, who completed State Farm training required to adjust

State Farm homeowner’s claims. 3 As the Court can tell from the documents marked Exhibit B in

globo and Exhibit “C” in globo, defendant maintains a wide array of documents going back to

the mid-1990s that relate to the qualifications of independent adjusters who defendant retained to

adjust homeowner’s insurance claims arising out of Hurricane Katrina. Defendant’s response

becomes even more implausible in light of the fact defendant issued Melzer some type of license,

license number E143345 and a State Farm id., SOMF, following his training in Gainesville,

Florida. Consequently, the Frughts respectfully request the Court order defendant to produce

Melzer’s exams and exam results. Alternatively, the Frughts respectfully request the Court order

defendant to produce the exams and answer keys for the exams Melzer took in order to become

2
The Frughts will supplement their Memorandum in Support of Second Motion to Compel with a copy of Mr.
Melzer’s deposition transcript should the Court so desire.
3
Exhibit “B” in globo, documents pertaining to independent adjuster, James Patterson, who handled Hurricane
Katrina homeowner’s insurance claims on behalf of State Farm. The materials were obtained pursuant to subpoena
duces tecum in the matter titled Voth v. State Farm Fire & Casualty Company, Civil Action No. 07-4393 (E.D. La.
2007) (Duval, J. presiding). See also Exhibit “C”, in globo, exam and exam results of independent adjuster, Karen
Stein, received from State Farm pursuant to Judge Fallon’s Order (R. Doc. No. 145) in Weatherly v. State Farm Fire
& Casualty Company, Civil Action No. 07-4371 (E.D. La.2007).
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State Farm certified so the Weatherlys may at least learn what subject matter was covered during

Melzer’s training to become State Farm certified.

B. Supplemental Request for Production Number 3: Please produce copies of

any and all documentation showing how much money you paid All Valley
Adjusters for work Roger Melzer did adjusting insurance claims arising out
of Hurricane Katrina

i. State Farm’s Response:

State Farm objects to the production of any documentation reflecting the basis of any

payments made to All Valley Adjusters on the basis that such information is proprietary and

constitutes a trade secret. The disclosure of pay rates and other confidential information in

connection with State Farm’s contracts with various third party adjusting firms could potentially

harm State Farm in both its present and future relationships with such firms.

State Farm further objects to this request because it is unduly burdensome. In order to

determine how much All Valley adjusters was paid for Roger Melzer’s work, State Farm would

be required to locate all Katrina claims adjusted by All Valley Adjusters, manually review each

claim to determine if Roger Melzer participated in the handling of each claim and then attempt to

locate each invoice pertaining to Roger Melzer. Such requirement is unduly burdensome and

costly especially considering the lack of relevance of this information. If the Court determines

that such a search is warranted, State Farm requests plaintiff bear the cost of the search.

ii. Argument in Support of Compelling Production:

First and foremost, defendant’s initial objection does not address the specific request

made in Supplemental Request for Production Number 3. More particularly, the request did not

ask for any information regarding how defendant determined the amount of compensation paid

All Valley Adjusters for the work its employees did handling Hurricane Katrina claims on

defendant’s behalf. The request simply asked for documentation showing the total amount paid to

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All Valley Adjusters for work Melzer did adjusting Hurricane Katrina claims.

Second, defendant articulates no factual or legal basis for its conclusory objection that

that “such information is proprietary and constitutes a trade secret. The disclosure of pay rates and

other confidential information in connection with State Farm’s contracts with various third party

adjusting firms could potentially harm State Farm in both its present and future relationships with

such firms.” The Frughts do not understand how defendant can reasonably claim that they are not

entitled to know how much money defendant was paying the adjusting firm defendant hired to

adjust their homeowner’s claims. In fact, defendant’s contention regarding the discoverability of

the payment information is shocking given that defendant is a “mutual” company meaning

policyholders like the Frughts have ownership interest in defendant. On one hand, defendant

sought and accepted the Frughts’ money in the form of premiums for countless years, yet now

claims the Frughts do not have a right to know how much of the Frughts’ money was paid to the

independent adjusting firm defendant hired to adjust their homeowner’s claims.

Third, the information is absolutely relevant as the information goes to Melzer’s bias.

Melzer testified he made $30,000.00 in one month adjusting Florida hurricane claims in 2004.

According to Melzer, the money he made adjusting hurricane claims was substantially more than

the money he made at his previous job as a clerical worker with the United States Navy.

Likewise, the Frughts suspect Melzer made similar or more money adjusting State Farm

Hurricane Katrina claims during the two (2) months he was in southeast Louisiana.

Finally, defendant’s suggestion that its insureds, the Frughts, shoulder the costs of

producing the documents/information as opposed to defendant is ridiculous. The Frughts have

given defendant enough money over the last several years and to even suggest the Frughts should

pay defendant for relevant documents/information is in and of itself a bad faith claims handling

practice. The Frughts, who are by no means independently wealthy, do not have the same vast
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resources as defendant, who was ranked number 32 on the 2008 Fortune 100 list. Thus, the

Frughts respectfully request the Court order defendant at its own cost, to produce documentation

showing how much money defendant paid All Valley Adjusters for work Roger Melzer did

adjusting Hurricane Katrina claims on defendant’s behalf.

C. Supplemental Request for Production Number 5: Please produce copies of

any and all billing invoices All Valley Adjusters submitted to you for work
Roger Melzer did adjusting insurance claims arising out of Hurricane
Katrina

i. State Farm’s Response:

Defendant’s response is the same as its response to Supplemental Request for Production

Number 3.

ii. Argument in Support of Compelling Production:

The Frughts adopt and re-iterate their arguments made in support of compelling

defendant to provide the documents requested in Supplemental Request for Production 3.

D. Supplemental Request for Production Number 6: Please produce copies of

any and all manuals, guidelines, textbooks or other written documentation
you gave Roger Melzer while undergoing any and all training you
administered to him

i. State Farm’s Response:

Roger Melzer adjusted claims for State Farm in Florida in 2004 and during Hurricane

Katrina. However, State Farm is unable to respond to this Request since State Farm is currently

not certain as to what, if any written materials were provided to Roger Melzer in the past. If

such materials are identified in the future, they will be produced; however, no confidential,

proprietary or trade secret information will be produced in the absence of the appropriate

protective order.

ii. Argument in Support of Production:

Defendant’s response is essentially a non-response and the brazen declaration that “if
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such materials are identified in the future, they will be produced” is worthy of sanction

independent of defendant’s other non-responses. What are the Frughts supposed to do, wait and

hope defendant voluntarily produces the requested documents at some unknown point and time

down the road in litigation? Defendant’s bold assertion that defendant will do what it wants and

at such time as defendant deems proper, violates of the core fundamentals of written discovery

and the time limitations for responding imposed by Federal Rules of Civil Procedure.

Furthermore, Melzer’s résumé indicates that Melzer underwent four (4) weeks of training

with defendant and became “State Farm” certified as a result of his four (4) week training course.

State Farm’s own response reveals that State Farm knows at the very least, Melzer received his

training in 2004. Finally, Melzer recently testified on May 14, 2009, that State Farm put him

through a one, not four week training course in Gainesville, Florida during September, 2004.

Surely defendant can determine what “manuals, guidelines, textbooks or other written

documentation” defendant gave Melzer during his one week training course in light of the very

specific information defendant possesses regarding when and where Melzer underwent his

training. The Frughts note that they already possess a portion of the Wind/Hail Catastrophe

Certification Manual given to adjusters like Melzer, who underwent training to become State

Farm certified in this particular area and thus, defendant cannot seriously contend that no written

materials exist.4 Accordingly, the Frughts respectfully request the Court deem defendant’s

evasive, incomplete answer a “non-response” and order defendant to immediately produce the

“manuals, guidelines, textbooks or other written documentation” given to Melzer while

undergoing the training defendant administered to him.

4
Exhibit 3 of Exhibit “D” in globo, specifically State Farm’s Wind/Hail Catastrophe Training Manual.
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E. Supplemental Request for Production No. 7: Please produce copies of any

and all performance evaluations or other type of documentation that
discusses or otherwise relates to Roger Melzer’s job performance adjusting
insurance claims on behalf of State Farm

i. State Farm’s Response:

State Farm objects to this request on grounds that disclosure of this information would

invade privacy rights of Roger Melzer, who has never been an employee of State Farm and is not

a party to this litigation.

ii. Argument in Support of Compelling Production:

Like the multitude of objections defendant asserted in response to the other supplemental

request for production of documents, defendant’s objection “on grounds that disclosure of this

information would invade privacy rights of Roger Melzer” is wholly without merit. First and

foremost, the documents are highly relevant and defendant is not asserting a privilege. Thus, the

documents should automatically be produced under Rule 26 of the Federal Rules of Civil

Procedure. Second, Melzer certainly does not have any reasonable expectation of privacy

regarding the very public nature of how he adjusted Hurricane Katrina property damage claims.

Third, the Frughts remind defendant that in a first party insurance dispute like the one at bar,

Melzer was supposed to be working on the Frughts’ behalf as much as he was working on State

Farm’s behalf. Lastly, defendant once again makes a conclusory objection without offering any

legal or factual explanation as to why an independent adjuster’s performance evaluations are

somehow undiscoverable under the Federal Rules of Civil Procedure based on “invasion of

privacy” principles. The fact Melzer “has never been an employee of State Farm and is not a

party to this litigation” is completely irrelevant to whether or not defendant’s evaluation(s) of

Melzer’s job performance during Hurricane Katrina should be produced. Accordingly, the

Frughts respectfully request the Court order defendant to produce Melzer’s performance

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evaluations.

II. DEFENDANT’S FAILURE TO ANSWER THE FRUGHTS’ DISCOVERY WAS

NOT SUBSTANTIALLY JUSTIFIED AND THUS, THE FRUGHTS ARE
ENTITLED TO ATTORNEY’S FEES UNDER FEDERAL RULE OF CIVIL
PROCEDURE 37(a)(4)(A)

Defendant’s failure to answer the Frughts’ discovery was not substantially justified and

thus, the Frughts are entitled to attorney’s fees under Federal Rule of Civil Procedure 37

(a)(4)(A). More particularly, Federal Rule of Civil Procedure 37 (a)(4)(A) titled “Expenses and

Sanctions” provides in pertinent part as follows:

(A) If the motion is granted or if the disclosure or requested

discovery is provided after the motion was filed, the court
shall, after affording an opportunity to be heard, require the
party or deponent whose conduct necessitated the motion or
the party or attorney advising such conduct or both of them to
pay to the moving party the reasonable expenses incurred in
making the motion, including attorney's fees, unless the court
finds that the motion was filed without the movant’s first
making a good faith effort to obtain the disclosure or
discovery without court action, or that the opposing party's
nondisclosure, response, or objection was substantially
justified, or that other circumstances make an award of
expenses unjust.

In the instate case, sanctions are warranted defendant refused without justifiable reason to

produce certain requested documents in its possession. Consequently, the Frughts submit that

sanctions are warranted given defendant’s continued refusal to produce documents undisputedly

in its possession and lack of candor in responding to the Frughts’ Second Request for Production

of Documents.

RESPECTFULLY SUBMITTED:

_/s/ Ryan P. Reece____________________

RYAN P. REECE (Bar #26479)
4933 Utica Street
Metairie, Louisiana 70006
(504) 342-4451
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CERTIFICATE OF SERVICE

I hereby certify that I have on this 16th day of May, 2009, electronically filed the

foregoing with the Clerk of Court by using the CM/ECF system which will send a notice of

electronic filing to all counsel of record.

__ /s/_Ryan P. Reece______________
RYAN P. REECE

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