The Subrogation Strategist

When an insurer files a subrogation suit in the insured’s name, questions often arise with respect to whether, by doing so, the insurer has to respond to discovery issued to the insured. In Aquatherm, LLC v. Centimark Corporation, 2017 U.S. Dist. LEXIS 85173 (C.D. Utah June 2, 2017), a case in which the insurer at issue made the insured whole, the District Court for the District of Utah answered the question in the negative.

In Aquatherm, Stag II Lindon, LLC (“Stag”) hired Centimark Corporation (“Centimark”) to perform roofing work on Stag’s commercial property located in Lindon, Utah. At the time, Stag leased the property to several tenants, including Aquatherm, LLC. While working on the roof, Centimark allegedly caused a fire that damaged Stag’s building and its tenants’ businesses. After the fire, Stag’s insurer paid benefits to Stag that covered all of the property damage Stag suffered as a result of the fire. Thereafter, Stag’s insurer and the insurers for several of the tenants filed suit against Centimark. Pursuant to Utah Code Ann § 31A-21-108, the subrogating insurers, who made their insureds whole, filed suit in their insureds’ names.

During litigation, Centimark attempted to serve interrogatories, requests for production and requests for admission on Stag by serving its insurer. Stag’s insurer interpreted the word “Stag” in the discovery requests to mean: “[Insurer] suing in the name of Stag pursuant to Utah Code Ann. § 31A-21-108,” and advised Centimark that Stag, who was not a party, would not be providing discovery responses. Subsequently, Centimark filed a motion seeking to compel Stag to respond to its discovery requests or, in the alternative, to deem Stag’s nonresponses to its requests for admissions as admitted.

Utah Code Ann. § 31A-21-108 states that “[s]ubrogation actions may be brought by the insurer in the name of its insured.” Thus, as stated in Aquatherm, while an insurer may bring an action in its own name, it is not required to do so, particularly where the insured has been made whole and the insurer is the only real party in interest.

Because Stag was not a party to the lawsuit and the insurer was the real party in interest with respect to any claim Stag had against Centimark, the court held that Stag was not obligated to directly respond to Centimark’s discovery requests. In addition, the court held that, to the extent that Centimark wants evidence from Stag, Centimark could subpoena such evidence using Fed. R. Civ. P. 45, which applies to non-parties.

Aquatherm serves as a reminder that, when insurers proceed in the name of the insured but the insurer is the only real party in interest, subrogation professionals should carefully review discovery requests to determine who the defendant is, in fact, seeking discovery from. To the extent that the defendant issued the discovery to the insured, subrogation professionals should take steps to insure that the defendant seeks the requested information directly from the insured, rather than from the insurer. While a subrogating insurer may, particularly if the insured is cooperating with the insurer’s subrogation efforts, want to assist the insured with its response to the defendant’s request for information, subrogation professionals, when responding to discovery requests, should keep in mind the identity of the party to whom the defendant issued the discovery.