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Woody's Restaurant, LLC v. Travelers Casualty Insurance Company of America

United States District Court, Sixth Circuit

January 9, 2014

WOODY'S RESTAURANT, LLC, et al., Plaintiff,
v.
TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, Defendant.

MEMORANDUM OPINION AND ORDER

JOSEPH M. HOOD, Senior District Judge.

This matter is before the Court upon Defendant's Motion to Bifurcate and Stay Discovery. [D.E. 26]. Plaintiffs have filed a Response [D.E. 27], and Defendant has filed a Reply. [D.E. 28]. This matter being fully briefed, and the Court being otherwise sufficiently advised, this matter is ripe for the Court's review.

I. Procedural and Factual Background

Plaintiffs originally filed this suit in the Boyle County Circuit Court, seeking monetary damages. [D.E. 1-1]. Defendant removed the action to this Court [D.E. 1] and Plaintiffs' Motion to Remand was denied. [D.E. 23]. Plaintiffs assert claims for (1) breach of contract; (2) violation of the Unfair Claims Settlement Practices Act, KRS 304.12-230; (3) common law bad faith; (4) a violation of KRS 304.12-235; and (5) a violation of the Kentucky Consumer Protection Act, KRS 367.110-.360. [D.E. 1-1].

The suit arises out of an insurance contract Plaintiffs made with Defendant as lessee of a property located in Danville, Kentucky. [D.E. 1-1]. On July 9, 2010, the property was damaged due to a severe thunderstorm. Plaintiffs submitted a claim to Defendant for the damage. It is uncontested that Defendant has paid an amount to Plaintiffs under the policy of insurance, see [D.E. 26-1; 27]; however, the parties dispute whether this payment satisfies Defendant's obligations under the insurance contract. Defendant claims it "denied claims for amounts that exceeded the coverage or were not within the coverage provided." [D.E. 26-1 at 2]. Plaintiff believes the dispute is "about the amount of damages owed under a contract of insurance that indisputably does provide coverage for the loss." [D.E. 27 at 1].

Defendant has filed a Motion to Bifurcate and Stay Discovery claiming that the breach of contract claim should be bifurcated from all other claims because bifurcation will "allow for a more efficient and expedient resolution of the claims" and that if not bifurcated, Defendant would be prejudiced "because it would be subjected to cumbersome and potentially unnecessary discovery and costly litigation." [D.E. 26-1 at 4]. Plaintiffs argue that Defendant will not be prejudiced if the case is not bifurcated because this is a first-party action and that discovery should not be stayed because Defendant's concerns can be adequately addressed through a privilege log.

II. Standard of Review

"For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims. When ordering a separate trial, the court must preserve any federal right to a jury trial." Fed.R.Civ.P. 42(b). The decision to bifurcate is discretionary, but "it is the burden of the party seeking bifurcation to present evidence establishing that separate trials are necessary." Hoskins v. Allstate Prop. & Cas. Ins. Co., No. 6:06-389-DCR, 2006 WL 3193435, at *2 (E.D. Ky. Nov. 2, 2006) (citations omitted). "In determining whether separate trials are appropriate, the court should consider several facts, including the potential prejudice to the parties, the possible confusion of the juries, and the resulting convenience and economy." Brantley v. Safeco Ins. Co. of Am., No. 1:11-cv-54-R, 2011 WL 6012554, at *1 (W.D. Ky. Dec. 1, 2011) (quoting Wilson v. Morgan, 477 F.3d 326, 339 (6th Cir. 2007) (internal quotation marks omitted). "Only one of these criteria need be met to justify bifurcation." Saxion v. Titan-C-Mfg., Inc., 86 F.3d 553, 556 (6th Cir. 1996) (citations omitted).

"Bifurcation may be appropriate where the evidence offered on two different issues will be wholly distinct, or where litigation of one issue may obviate the need to try another issue." Athridge v. Aetna Cas. & Sur. Co., 604 F.3d 625, 635 (D.C. Cir. 2010). (quoting Vichare v. AMBAC Inc., 106 F.3d 457, 466 (2d Cir. 1996)) (internal quotation marks omitted). "[T]he question of bifurcation centers on whether resolution of a single claim would be dispositive for the entire case." Brantley, 2011 WL 6012554, at *2 (citing Smith v. Allstate Ins. Co., 403 F.3d 401, 407 (6th Cir. 2005)).

Similarly, "[t]rial courts have broad discretion and inherent power to stay discovery until preliminary questions that may dispose of the case are determined." Gettings v. Bldg. Laborers Local 310 Fringe Benefits Fund, 349 F.3d 300, 304 (6th Cir. 2003) (quoting Hahn v. Star Bank, 190 F.3d 708, 719 (6th Cir. 1999)). However, "bifurcation of the trial does not necessarily require bifurcation of discovery." Honican v. Stonebridge Life Ins. Co., No. 05-cv-73-DLB, 2005 WL 2614904, at *2 (E.D. Ky. Oct. 13, 2005) (quoting Cook v. U.S. Auto. Ass'n, 169 F.R.D. 359, 362 (D. Nev. 1996)). "One of the purposes of bifurcation under Rule 42(b) is to defer costly discovery and trial preparation costs pending the resolution of preliminary liability issues." Id. (quoting Novopharm Ltd. v. Torpharm, Inc., 181 F.R.D. 308, 312 (E.D. N.C. 1998)). "Stay is appropriate where claims may be dismissed based on legal determinations that could not have been altered by any further discovery." Pollard v. Wood, No. 5:05-cv-444-JMH, 2006 WL 782739, at *2 (E.D. Ky. Mar. 27, 2006) (quoting Gettings v. Bldg. Laborers Local 310 Fringe Benefits Fund, 349 F.3d 300, 304 (6th Cir. 2003)) (internal quotation marks omitted).

III. Analysis

The circumstances of this action do not warrant bifurcation. It is undisputed that Kentucky law favors bifurcation in a third-party case.

A bifurcated procedure was the proper way to try the present [third-party] case. This procedure better protects the rights of the two different defendants because it keeps out of the first trial evidence which was relevant to the issue of bad faith but unnecessary and possibly prejudicial... in the trial of the preliminary question of liability.

Wittmer v. Jones, 864 S.W.2d 885, 891 (Ky. 1993) (citations omitted) (internal quotation marks omitted). However, in this action the claims brought by Plaintiffs are against a single defendant. Thus, this is a first-party action where "[t]he concerns addressed in Wittmer regarding the presentation of evidence against one defendant which may be prejudicial to another, simply are not present." Lively v. USAA Cas. Ins. Co., No. 08-cv-422-JMH, 2009 WL 1116327, at *1 (E.D. Ky. Apr. 24, 2009); see also Tharpe v. Ill. Nat'l Ins. Co., 199 F.R.D. 213, 214 (W.D. Ky. 2001) ("This ...


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