Riddell, Inc. v. Superior Court, No. B275482 (D2d7 Aug. 23, 2017)
Insurers filed a declaratory relief action regarding a coverage dispute with an Insured that manufactures football helmets. The rule is pretty well settled that, to the extent that there are factual questions in the DJ that overlap the underlying litigation, the DJ case must get stayed to avoid prejudice to the insured in having to litigate the merits as part of the coverage dispute. That said, the issue doesn’t come up very often because usually a coverage DJ action can be resolved as a matter of law based just on the policy language and the underlying complaint.
But not here, because there’s a dispute about whether the claims accrued during coverage periods. Insurers sought a raft of discovery regarding the head injury cases that gave rise to the Insured’s tenders for defense. Problem is that many of the head injury cases are still unresolved. So Insured sought to stay discovery, which the trial court denied, in error. So long as the fact issues and the discovery in the DJ action are logically related to the underlying cases, a stay was mandatory.
That said, prior to the stay request, Insured had already voluntarily produced a bunch of documents. It withheld information from that discovery on privilege grounds, but had never produced a log. The court holds that Insured needs to produce a log for what it already produced. Although Insured objects on burden grounds, Code of Civil Procedure § 2031.240(c), which requires a substantiation of grounds for withholding documents on the basis of privilege, doesn’t have a burden exception.
That said, the court wouldn’t make the Insured log its communications with counsel post-filing of the complaints in the underlying cases. It didn’t need to do so in that case and there was no good reason to require it to so in the DJ case either.
Writ granted.
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