Farmers seeks bond to cover discovery costs in Arkansas class action

TEXARKANA, Ark. -- Six years into a pending Arkansas class action litigation and still maintaining their innocence against the plaintiffs' allegations, defendant Farmers Insurance Co. wants to recoup the millions they have spent providing documents to the plaintiffs' attorneys.

Farmers, one of the few remaining defendants who is still refusing to pay a settlement, is asking Miller County Circuit Court Judge Kirk Johnson to enforce the Arkansas Cost Bond Statute and order the non-resident plaintiffs to pay a bond to cover the insurance company's out-of-pocket costs.

In response to the request, the plaintiff's are challenging the constitutionality of the statute with the Arkansas Attorney General.

The original class action, which was filed Sept 8, 2004, in the Circuit Court of Miller County, Ark., accuses hundreds of insurance companies of not paying the general contractors' overhead and profit or not accounting for the cost of a general contractor's services when estimating the repair costs under their homeowners' policies. Although the insurance companies paid previous their client's previous damages claims, the lawsuit argues that plaintiffs are entitled to additional payments.

The class action alleges claims of civil conspiracy, unjust enrichment, fraud, and constructive fraud.

One of many insurance companies that believe this Arkansas case involves discovery abuse, Farmers has consistently asked Judge Johnson for protective orders against the plaintiff's extensive requests for production of documents.

Initially, the plaintiffs agreed to allow all the insurance companies to provide a 2,000 page-sampling of their case files, instead of producing all their claims files as previously requested.

Farmers filed numerous motions seeking protective orders and a court enforcement of the agreement to reduce the request of claim files. Many of the motions, some almost six years old, still remain undecided by Judge Johnson. The judge maintains he will not violate Arkansas law and delve into the issues of the litigation prior to class certification.

To some extent, Farmers has attempted to comply with the outrageous requests for documents, it has produced millions of pages of claim files and had the files converted to the requested format. In its most recent motion, Farmers states it has spent at least $6 million on this production and coupled with mounting defense fees and costs, it wants the plaintiffs to post that $6 million in a bond.

Farmers argues that the costs of its complying with the Court's discovery order is imposing an "undue burden and expense" and is depriving the company of its property pre-judgment in violation of the Fifth Amendment.

The plaintiffs are represented by Texarkana attorneys John Goodson and Matt Keil of the law firm Keil and Goodson; and attorneys Michael B. Angelovich, Cary Patterson, Brady Paddock and Christopher Johnson of the Texarkana law firm Nix, Patterson and Roach LLP.

Chivers v State Farm Case No 2004-294-3