Insurer Seeks to Stay Discovery on “Secondary” Coverage Claims for Bad Faith and Breach of Contract.

Intel Corp. v. American Guarantee & Liability Insurance Co.
(N.D. California, October 1, 2009) 
 
Insurer seeks to stay discovery in anti-trust dispute regarding insured's bad faith and breach of contract claims,  arguing they are secondary to the primary coverage dispute.  Over eight years, the insurer issued excess and umbrella insurance policies totaling $300 million in coverage.  The coverage action stems from what has been called by the insured's counsel as the "largest anti-trust case that has been filed in the United States."  The underlying action includes over eighty claimants who alleged,over a span of two decades, the insured intentionally and unlawfully engaged in a scheme to coerce customers away from competitors. 
 
In its motion papers, the insurer asserts the insured has a proven history of pursuing coverage claims one insurer at a time.  In an attempt to avoid this tactic, the insurer filed a declaratory judgment against the insured in Delaware Superior Court, seeking a declaration of all policies it issued to the insured, as well as all policies by other insurers.  Approximately thirteen hours later, the insured filed the instant action in California, adding claims of bad faith and breach of contract only after learning of the Delaware Action.  After several motions, neither the California nor Delaware court dismissed the action, leaving two simultaneous actions regarding coverage issues
 
The instant motion takes the position that because both parties contend coverage issues can be resolved by dispositive motions, discovery on the secondary issues, including bad faith and breach of contract should be stayed.  The motion was filed in the Northern District of California earlier this month.  No scheduling order has been issued.
 
For a copy of the decision click here
 
Kimberly E. Whistler and Joanna M. Roberto