Colony Insurance Company v. Oz Solutions

Background

Colony Insurance Company brought a lawsuit against Oz Solutions and Oren Ziv seeking a court declaration canceling two insurance policies issued to Oz Solutions. Colony alleges that defendants made fraudulent statements in their insurance applications by representing that Oz Solutions did not perform demolition or drilling and instead performed debris-cleanup work. Colony also seeks a declaration that it has no duty to defend or indemnify Oz Solutions in an underlying state-court action.

The 2016 policy covered August 12, 2016, through August 12, 2017. The parties renewed it for coverage through August 12, 2018. The parties were conducting preliminary discovery in preparation for possible summary-judgment motions, and fact discovery was scheduled to end on July 14, 2025.

Motion to Compel

Colony moved to compel Oz Solutions and Ziv to produce business records and answer interrogatories concerning their business dealings during the previous 10 years. The requests included information about construction projects, people with knowledge of the work, payments, insurance agents and brokers, invoices, contracts, daily construction reports, tax returns, financial records, payment accounts, and loans.

Defendants objected that the requests were overly broad and unduly burdensome because they covered 10 years, even though the insurance policies at issue covered only two years. The court agreed that Colony had not explained how 10 years of records about unrelated projects and financial matters were relevant to whether defendants misrepresented their work during the policy period. The court held that the 10-year requests were not proportional to the needs of the case.

The court therefore denied the motion to compel to the extent it sought records covering the full 10-year period. It granted a narrowed version of the motion, ordering defendants to produce, to the extent relevant, the requested information from one year before the 2016 policy application through the end of the 2017–18 policy period. The court stated that Colony could seek a broader period later if it first met and conferred with defendants and made a particularized showing that specific materials outside the authorized period were relevant.

Sanctions

The parties cross-moved for sanctions under Federal Rule of Civil Procedure 37(b). Colony argued that defendants had failed to comply with outstanding discovery requests. Defendants argued that Colony’s requests were frivolous.

The court denied both sanctions motions. Defendants represented that, apart from the documents covered by the motion, they had produced all responsive documents in their possession and would comply with the order. The court found sanctions against defendants unwarranted at that time, but expected them to produce the required documents promptly and ordered them to file an affidavit by June 13, 2025, confirming that they had done so. The court also found that Colony’s requests were overbroad and lacked justification, but were not sufficiently baseless to warrant sanctions.

Disposition

The court granted in part and denied in part Colony’s motion to compel. It ordered defendants to produce relevant documents from the authorized period and denied both parties’ motions for sanctions. Judge Paul A. Engelmayer directed the Clerk of Court to terminate the motion at Docket 122.