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National Union Fire Ins. Co. of Pittsburgh v. TransCanada Energy USA, Inc.

Supreme Court of New York, New York County

June 14, 2013

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Associated Electric & Gas Insurance Services Limited, Ace Ina Insurance Company, and Arch Insurance Company, Plaintiffs,
v.
TRANSCANADA ENERGY USA, Inc. and TC Ravenswood Services Corp., Defendants. TC Ravenswood, LLC, Plaintiff,
v.
National Union Fire Insurance Company of Pittsburgh Pennsylvania (a/k/a AIG, n/k/a Chartis), Associated Electric & Gas Insurance Services Limited, Ace Ina Insurance, and Arch Insurance Company, and Factory Mutual Insurance Company, Defendants.

[967 N.Y.S.2d 637] John G. Nevius, Esq., John M. O'Connor, Esq., Kathleen Donovan, Esq., Anderson Kill & Olick, P.C, New York, for TransCanada.

Henry J. Catenacci, Esq., H. Richard Chattmen, Esq., Gregory D. Miller, Esq., Podvey, Meanor, Catenacci, et al., New York, for FMIC.

BARBARA JAFFE, J.

Page 704

By notices of motion dated October 18, 2012, TransCanada Energy USA, Inc., TC Ravenswood Services Corp., and TC Ravenswood, LLC (collectively, TransCanada) move pursuant to CPLR 3108, 3111, and 3120 for an order for an open commission to obtain documents and deposition testimony from a corporate representative of Failure Analysis & Prevention, Inc. (FAP) and Michael Casey, both Rhode Island residents. Defendant Factory Mutual Insurance Company (FMIC) opposes.

I. BACKGROUND

On September 12, 2008, a steam turbine power generator (unit 30) at Ravenswood in Queens, NY, shook violently, and was shut down. A crack was discovered in the generator's rotor. Unit 30 was thus out of service until May 11, 2009. TransCanada sought coverage under its insurance policy, held by FMIC, among other insurance companies.

On September 26, 2008, FMIC hired FAP and Casey to investigate how and when the crack was caused. FAP has worked for FMIC before, including in connection with a similar incident at another power plant. FAP's and Casey's investigation was thorough and cost more than $300,000. They collected data and drafted a report, ultimately concluding that the crack in the rotor started at least six months earlier and outside the policy period, according to FMIC. Based on FAP and Casey's report, FMIC denied coverage more than a year later. Litigation ensued.

The parties agreed to allow expert depositions. Although the dates on the scheduling order have been extended several times,

Page 705

the parties also agreed that all fact witness depositions must be completed several months before expert disclosures and expert depositions. FMIC plans to use FAP and Casey as experts in this litigation.

II. CONTENTIONS

TransCanada contends that FAP and Casey had a key role in investigating the broken rotor in unit 30 and that as they are out-of-state, nonparty witnesses whom cannot be served with ordinary deposition notices or subpoenas, an open commission is necessary.

FMIC agrees that FAP and Casey are important witnesses, and agrees to produce their relevant, non-privileged documents. It objects, however, to producing them both as fact witnesses and expert witnesses, and would produce them for expert depositions only. Consequently, it objects to the open commission because Casey and FAP agree to appear, just not until after fact discovery is over.

TransCanada contends that it will be prejudiced if it cannot depose FAP and Casey during fact discovery. The testimony could, according to TransCanada, lead their investigation in new directions that must be explored before fact discovery ends. It anticipates that FAP and Casey have information that TransCanada's experts need to form their opinions, and observes that it was FMIC's choice to use a fact witness as an expert witness, ...


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