Regardless of the defendants’ argument that some of the documents sought in discovery have “confidential financial information,” a federal judge has compelled the production of those documents after a discovery battle that has been drawn out more than two years in a commercial litigation case involving allegations of fraud.

Among the items the judge ordered turned over are bank statements, minutes of board meetings, payments on insurance claims, and records of fees collected.

Other items also listed in Bancroft Life & Casualty’s motion to compel have already been handed over, Intercontinental Management argued, suggesting that Bancroft is “merely using its ‘superior resources’ to ‘litigate the ICMC defendants into the ground,’” according to the opinion.

Referring to an assertion made by lawyers for ICMC “concerning the near insolvency of some or all of the ICMC defendants,” U.S. District Judge Arthur J. Schwab of the Western District of Pennsylvania said “the court finds that these defendants could benefit from proving their dire financial condition to the plaintiff in an effort to end this litigation.”

Schwab took on the case, Bancroft Life & Casualty v. Intercontinental Management, last month when U.S. District Senior Judge William Standish, who had been presiding over the case since it was filed in 2010, retired.

Schwab has been trying to “pick up the pace,” said Christopher “Kip” Schwartz of Schwartz & Associates in Washington, D.C., who is representing Bancroft. Schwab set a trial date for December 10.

Addressing ICMC’s argument that Bancroft is acting in bad faith by compelling discovery, Schwab said, “If, at the close of this litigation, the ICMC defendants wish to move for sanctions against plaintiff and proffer evidence that plaintiff’s motion to compel was in fact filed in bad faith, the court would entertain such a motion for sanctions.”

Bancroft, a captive insurance company with its headquarters in St. Lucia, hired ICMC in 2004 to run its basic, day-to-day functions, like conducting premium adjustments and billing, Schwartz said. Bancroft later discovered that ICMC had been diverting business from Bancroft to another insurance company in which ICMC had an interest, Schwartz said, which prompted the company to file the instant suit.
Within six months of filing the suit, Standish granted Bancroft a preliminary injunction and ordered ICMC to return any property belonging to Bancroft.

However, Schwartz said, “we’ve been effectively stonewalled.”

It took two years for Bancroft to get information stored on its server from ICMC, Schwartz said.

J. Russell McGregor Jr. of McGregor Law in Ligonier, Pa., represents ICMC and couldn’t be reached for comment.

Among the documents requested by Bancroft are ICMC’s internal communications regarding Bancroft; records of fees that ICMC collected on behalf of Bancroft; minutes of board meetings; ICMC’s bank statements; communications, including emails, with various third parties; tax forms, including W-2s and 1099s, for ICMC employees; and invoices and billing statements from ICMC to Bancroft, according to court filings.

In response to Bancroft’s motion to compel, ICMC said, “Beginning long before this litigation was commenced, the ICMC defendants have provided plaintiff with thousands and thousands of pages of documents which have been requested over and over again by Bancroft despite the fact that the documents requested are, and have been, in the possession, custody and/or control of Bancroft.”

It also argued that some of the documents being sought have been ruled by the court to be irrelevant or confidential.

Schwab, however, was unconvinced and ordered that ICMC furnish Bancroft with the documents by Wednesday.

Essentially, Schwab said, “‘the game playing ends this Wednesday,’” Schwartz said, summarizing the judge’s gist.

Saranac Hale Spencer can be contacted at 215-557-2449 or sspencer@alm.com. Follow her on Twitter @SSpencerTLI.

(Copies of the four-page opinion in Bancroft Life & Casualty v. Intercontinental Management, PICS No. 12-1974, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •