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Live Nation Worldwide, Inc. v. Secura Insurance

United States District Court, W.D. Kentucky, Louisville Division

January 3, 2018

SECURA INSURANCE, et al., Defendants.


          Colin Lindsay, Magistrate Judge.

         This action involves plaintiff Live Nation Worldwide, Inc. (“Live Nation”) and defendants Secura Insurance (“Secura), City Securities Insurance, LLC (“City Securities”), and ESG Security, Inc. (“ESG”). Before the Court are two motions: (1) Motion to Bifurcate and Stay Discovery on Bad Faith Claim (DN 22) filed by Secura; and (2) Motion to Bifurcate, Stay, and for Protective Order filed by ESG (DN 42).[1] The Court will address both motions together.

         I. BACKGROUND

         This is an action concerning the rights of Live Nation under an insurance policy procured by City Securities for ESG and issued by Secura. It arises out of a July 16, 2013 concert at the Louisville Palace in Louisville, Kentucky. At the time of the concert, Live Nation operated the Louisville Palace and had contracted ESG to provide security services. According to Live Nation, pursuant to the terms of a vendor services agreement, ESG agreed to, among other things, name Live Nation as an additional insured on its insurance policy. (DN 1 at 2-3 [Complaint].) Live Nation alleges that ESG placed its insurance for the applicable policy period through City Securities, and City Securities placed the coverage with Secura. (Id. at 3.)

         On or about December 9, 2013, two concert-goers filed suit in Jefferson Circuit Court against Live Nation and ESG for injuries they allegedly sustained while at the July 16 concert. (Id.) According to Live Nation, it notified Secura and requested defense and coverage for the claims brought against it in Jefferson Circuit Court. Live Nation alleges that Secura declined to provide Live Nation an unqualified defense and indemnity in the Jefferson Circuit Court action. (Id. at 3-4.) Live Nation avers that Secura asserts that the policy provided was excess to Live Nation's own coverage. (Id.) Live Nation alternately claims that, if Secura is correct in its assertion, ESG breached the vendor services agreement by failing to obtain an insurance policy that included Live Nation as an additional insured. (Id. at 4.) Live Nation also asserts that, to the extent City Securities failed to place the proper coverage on Live Nation's behalf, it also has liability for negligence, and Secura is responsible for the negligence of its agent, City Securities. (Id.)

         Live Nation has asserted the following claims: (1) Count I - Declaratory Judgment, declaring that Secura owes Live Nation a full defense and indemnity; (2) Count II - Bad Faith against Secura; (3) Count III - Breach of Contract against ESG; (4) Count IV - Negligence against Secura and City Securities. (Id. at 4-6.) According to a status report (DN 51) filed on December 1, 2017, the Jefferson Circuit Court action has been settled, and Live Nation and ESG have agreed to litigate their claims against one another in this lawsuit.

         The Court notes that two dispositive motions (DNs 52, 53) were filed on December 8, 2017 by ESG and Secura, respectively. At this juncture, the undersigned sees no reason to alter its previous order (DN 48) denying the request for a stay of all discovery pending a ruling on the dispositive motions.


         A. Motion to Bifurcate and Stay Discovery and Bad Faith Claims (“Motion to Bifurcate”) (DN 22) by Secura

         1. Parties' arguments

         In the Motion to Bifurcate, Secura requests that the Court bifurcate Live Nation's bad-faith claim against it and stay discovery on that claim until final disposition of the underlying coverage claim. Secura argues, among other things, that doing so would promote judicial efficiency and convenience. Secura further argues that resolution of Live Nation's coverage claim against Secura may also be dispositive of Live Nation's claims against ESG and City Securities. Secura asserts that, if the Court concludes that the vendor services agreement did not contractually require ESG to provide liability coverage to Live Nation that would be primary to Live Nation's own coverage, then Secura does not have an obligation under its policy to cover Live Nation on a primary basis and the breach of contract claim against ESG will fail. Secura asserts that, similarly, if ESG was not obligated under the terms of the vendor services agreement to purchase liability insurance that covered Live Nation on a primary basis, Live Nation's negligence claim against City Securities will also fail. These factors, Secura asserts, weigh in favor of the Court granting its motion.

         Live Nation argues, among other things, that bifurcation is inappropriate because the facts supporting Live Nation's coverage, breach of contract, negligence, and bad-faith claims are inextricably intertwined. Live Nation argues that to properly prosecute these claims, discovery is required on defendants' communications regarding the coverage required under the vendor services agreement; defendants' positions once Live Nation tendered its defense and requested indemnity; and communications between and among the defendants related to the transactions underlying the placement of the policy and decision to deny coverage. Live Nations asserts that all of this evidence will be appropriate for trial of the claims, including the bad-faith claim.

         Live Nation avers that Secura does not dispute that it owes Live Nation coverage, only the extent of that coverage. Live Nation therefore argues that even if the vendor services agreement did not clearly require Live Nation to be covered as an additional insured on a primary basis, then the vendor services agreement is ambiguous on that issue. According to Live Nation, this ambiguity raises the question of whether Live Nation and ESG reasonably expected that Secura would cover Live Nation as an additional insured on a primary basis. As part of this question, Live Nation asserts that Secura will have to explain why ESG and Live Nation would have entered into a vendor services agreement for security at an event venue to have primary coverage only extended to Live Nation for automobile liability. Live Nation further asserts that delving into the question of the reasonable expectations of the parties will raise issues concerning the communications among the parties to determine, among other things, whether Secura issued an insurance policy inconsistent with the wishes of ESG and what positions defendants took after Live Nation tendered its defense and sought indemnification and coverage. Live Nation also argues that judicial economy will not be served by bifurcation.

         In reply, Secura argues, among other things, that Live Nation's coverage claim should be decided on a reading of the vendor services agreement, the relevant insurance policies, and the complaint in the Jefferson Circuit Court action. Secura also argues that, until the Court determines that any contract at issue is ...

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