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Keywords

contractlawsuitlitigationdiscoverystatutetrialwrit of mandamus
contractlitigationdiscoverytrial

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Henry Enterprises, Inc. v. Smith, 225 Kan. 615, 592 P.2d 915

Facts

Brookridge Golf and Country Club, Inc. entered into a roofing repair contract with Dentco Supply and Management Company, Inc. A dispute arose regarding the completion and quality of the work performed, leading to Dentco filing a lawsuit against Brookridge. Allstate Insurance Co., Inc., the insurer for Henry Enterprises, Inc., took a statement from Glen Henry, the principal officer of Henry Enterprises, during an initial investigation of the claim. Dentco later sought to compel the production of this statement, which Henry Enterprises refused, prompting the mandamus action.

Brookridge Golf and Country Club, Inc., entered into a contract with Dentco Supply and Management Company, Inc., on August 16, 1977, for extensive repairs to the clubhouse roof. Dentco allegedly subcontracted the work to Henry Enterprises, Inc., and Dan Harless. Ultimately, some work was done on the roof pursuant to the contract. A dispute arose as to whether the work was completed and whether it was done properly.

Issue

Are statements of witnesses, taken routinely by adjusters or investigators for insurance carriers upon receipt of claims or knowledge of potential claims under the policy, discoverable under K.S.A. 60-226(B)(1), or are such statements 'prepared in anticipation of litigation or for trial' and thus discoverable only upon a showing of 'substantial need' or 'undue hardship' under K.S.A. 60-226(B)(3)?

Are statements of witnesses, taken routinely by adjusters or investigators for insurance carriers upon receipt of claims or knowledge of potential claims under the policy, discoverable under K.S.A. 60-226(B)(1), or are such statements 'prepared in anticipation of litigation or for trial' and thus discoverable only upon a showing of 'substantial need' or 'undue hardship' under K.S.A. 60-226(B)(3)?

Rule

The initial investigation of a potential claim, made by an insurance company prior to the commencement of litigation and not requested by or made under the guidance of counsel, is made in the ordinary course of business of the insurance company, and not 'in anticipation of litigation or for trial' as those terms are used in K.S.A. 60-226(B)(3). Statements of witnesses taken during such an initial investigation are subject to discovery under K.S.A. 60-226(B)(1).

1. The initial investigation of a potential claim, made by an insurance company prior to the commencement of litigation and not requested by or made under the guidance of counsel, is made in the ordinary course of business of the insurance company, and not 'in anticipation of litigation or for trial' as those terms are used in K.S.A. 60-226(B)(3). 2. Statements of witnesses taken during such an initial investigation are subject to discovery under K.S.A. 60-226(B)(1).

Analysis

The court determined that the investigation conducted by Allstate was part of its regular business operations and not specifically aimed at preparing for litigation. The court emphasized that investigations of potential claims are routine for insurance companies and are necessary for evaluating claims. Therefore, the statements taken during such investigations are discoverable under the relevant Kansas statute.

It is apparent to us, and we hold, that the initial investigation of a potential claim, made by an insurance company prior to the commencement of litigation, and not requested by or made under the guidance of counsel, is made in the ordinary course of business of the insurance company, and not 'in anticipation of litigation or for trial' as those terms are used in K.S.A. 60-226(B)(3).

Conclusion

The court denied the writ of mandamus sought by Henry Enterprises, affirming that the statement taken by the insurance adjuster was subject to discovery.

Writ denied.

Who won?

Brookridge Golf and Country Club, Inc. prevailed in this case as the court ruled that the witness statement was discoverable, thereby allowing them access to potentially relevant evidence for their case.

Brookridge Golf and Country Club, Inc. prevailed in this case as the court ruled that the witness statement was discoverable, thereby allowing them access to potentially relevant evidence for their case.

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