General

Foremost Insurance Appeals $45 Million Discovery Order to Arkansas Supreme Court

The Southeast Texas Record notes an appeal (either an interlocutory appeal or a request for extraordinary writ relief) in Chivers v. State Farm, one of the many nationwide class actions simmering in the Texarkana, Arkansas-based state courts.

Chivers is a case against several major insurers over the way the insurers compensate contractors:

The lawsuit involves allegations that after a loss or damage to an insured’s property, insurance companies did not disclose or pay the general contractors’ overhead and profit. Although the insurance companies paid the claims to the insurers, the plaintiffs state they are entitled to the additional money. The complaint states that general contractors’ overhead and profit is 20 percent of an estimated construction job cost and is a paid-for-benefit to the customer.
The issue in the appeal is Circuit Judge Kirk Johnson’s order that one of the defendants, Foremost Insurance, produce discovery at a cost of $45 million.

Judge Johnson’s disagreed with Foremost’s cost estimate in his order and stated that non-lawyer clerks could be employed to search the discovery for privileged material:

After Judge Johnson analyzed the costs of production of Foremost’s claim files, he believes 90 percent of the costs are for attorneys’ fees for removing attorney-client work product, which “can be identified by company clerks for attorney review at a greatly reduced rate of pay.”