United States District Court, W.D. Kentucky, Paducah Division
J. RICHARD WALKER and ESTATE OF GENE HIPP through its Personal Representative JULIE HIPP d/b/a HIPP BUILDING PARTNERSHIP PLAINTIFFS
SENECA INSURANCE COMPANY, INC. DEFENDANT
OPINION AND ORDER
KING, MAGISTRATE JUDGE.
Greg N. Stivers referred this matter to Magistrate Judge
Lanny King for resolution of all litigation planning issues,
entry of scheduling orders, consideration of amendments
thereto, and resolution of all non-dispositive matters,
including discovery issues. (Docket # 7). Defendant Seneca
Insurance Company, Inc. (“Defendant Seneca”),
filed a Motion to Bifurcate and Stay Discovery. (Docket #
11). Plaintiffs filed their Response in opposition and
Defendant Seneca filed its Reply. (Docket # 14, 15). This
matter is ripe for adjudication. For the reasons stated
below, Defendant Seneca's Motion to Bifurcate and Stay is
granted. (Docket # 11).
Insurance Company issued policy No. SCC 201 68 80 to named
insured, J. Richard Walker and Gene Hipp, d/b/a Hipp Building
Partnership. (Docket # 5). On or about April 27, 2017, the
roof on the Hipp Building incurred damage from water. (Docket
# 1). Plaintiffs submitted a claim for damages and loss to
the Hipp Building, including repair, mitigation, clean up,
and restoration estimates; Defendant Seneca denied coverage
for Plaintiffs' claimed loss. (Docket # 5). Plaintiffs
sued Defendant Seneca for breach of contract, requesting
benefits under their policy (Count I), and statutory bad
faith (Count II). (Docket # 1).
Federal Rule of Civil Procedure 42, the court may bifurcate
“one or more separate issues, claims, crossclaims,
counterclaims, or third-party claims” in order
“to avoid prejudice, or to expedite and
economize.” Fed.R.Civ.P. 42(b). “The decision to
bifurcate lies within the sound discretion of the trial
court.” Live Nation Worldwide, Inc. v. Secura
Ins., 298 F.Supp.3d 1032, 1035 (W.D. Ky. 2018) (quoting
Smith v. Allstate Ins. Co., 403 F.3d 401, 407 (6th
Cir. 2005)). The decision to bifurcate is made on a
case-by-case basis. See In re Bendectin Litig., 857
F.2d 290, 307 (6th Cir. 1988). “In determining whether
bifurcation is appropriate, the court should consider several
factors, including ‘the potential prejudice to the
parties, the possible confusion of the jurors, and the
resulting convenience and economy.'” Clift v.
LaFarge W., Inc., No. 5:14-CV-00057, 2015 U.S. Dist.
LEXIS 103731, at *3-4 (W.D. Ky. Aug. 7, 2015) (quoting
Wilson v. Morgan, 477 F.3d 326, 339 (6th Cir. 2007)
(internal citation omitted)). The burden to establish the
appropriateness of bifurcation rests with the movant.
courts in the Western District of Kentucky frequently
bifurcate claims addressing coverage and bad faith against
insurance companies, as deciding the first claim may obviate
the need to litigate the second. See, e.g., Live Nation
Worldwide, Inc. v. Secura Ins., 298 F.Supp.3d 1032,
1035-36 (W.D. Ky. 2018); Graves v. Standard Ins. Co., No.
3:14-CV-558-DJH, 2015 U.S. Dist. LEXIS 66894, 2015 WL
2453156, at *3 (W.D. Ky. May 22, 2015); Nationwide Mut.
Fire Ins. Co. v. Jahic, No. 3:11-CV-00155, 2013 U.S.
Dist. LEXIS 1798, at *8 (W.D. Ky. Jan. 7, 2013); Brantley
v. Safeco Ins. Co. of Am., No. 1:11-CV-00054-R, 2011
U.S. Dist. LEXIS 138111, at *3-5 (W.D. Ky. Dec. 1, 2011);
Galloway v. Nationwide Mut. Fire Ins. Co., No.
3:09-CV-491-JDM, 2010 U.S. Dist. LEXIS 106520, 2010 WL
3927815, at *1 (W.D. Ky. Oct. 5, 2010) (“In third-party
and first-party cases alike, coverage issues commonly hinge
on an issue of contract interpretation and are frequently,
although not always, adjudicated on summary judgment motions.
Limited discovery and adjudication of the threshold coverage
dispute would, in the court's view, streamline
adjudication-a conclusion reached without any view of the
merits of the underlying coverage claim.”). Indeed,
first-party bad faith claims are routinely separated from
coverage issues. E.g., White v. ABG Caulking Contractors,
Inc., No. 5:13-CV-00194-TBR, 2014 U.S. Dist. LEXIS
32413, at *4 (W.D. Ky. Mar. 12, 2014); Brantley v. Safeco
Ins. Co. of Am., No. 1:11-CV-00054-R, 2011 WL 6012554,
at *2 (W.D. Ky. Dec. 1, 2011) (“A brief review of the
prevailing precedent indicates first-party bad faith claims
are routinely separated from coverage issues.”)
(collecting cases). The question of bifurcation in these
cases centers on whether resolution of a single claim would
be dispositive of the entire case. Id.; In re
Beverly Hills Fire Litig., 695 F.2d 207, 216 (6th Cir.
1982) (highly relevant where single claim would be
dispositive); Bruckner v. Sentinel Ins. Co., No.
09-195-JBC, 2011 WL 589911, at *2 (bifurcation acceptable
where bad faith claims depended on success of coverage
all pertinent factors weigh in favor of bifurcation. First,
the viability of Plaintiffs' bad-faith claims is
contingent upon the existence of an enforceable contractual
obligation to pay. Alvey v. State Farm Fire & Cas.
Co., 2017 WL 2798501, at *2 (W.D. Ky. June 28, 2017)
(citing Davidson v. Am. Freightways, Inc., 25 S.W.3d
94, 100 (Ky. 2000) (“Absent a contractual obligation,
there simply is no bad faith cause of action, either at
common law or by statute.”)). Because “resolution
of [that] single issue” will be “dispositive of
an entire claim, ” it is more convenient and economical
to decide the breach-of-contract claim before passing on the
bad-faith claims. In re Beverly Hills Fire Litig.,
695 F.2d 207, 216 (6th Cir. 1982). Second,
“[b]ifurcation of the trials will thus avoid the
expense of litigating issues that may never arise, and will
permit the jury to focus on a single issue at a time thereby
avoiding the introduction of potentially confusing evidence
until absolutely necessary.” Nationwide Mut. Fire
Ins. Co. v. Jahic, No. 3:11-CV-00155, 2013 WL 98059, at
*3 (W.D. Ky. Jan. 7, 2013); see also Alvey v.
State Farm Fire & Cas. Co., 2017 WL 2798501, at *2
(W.D. Ky. June 28, 2017). Indeed, because Plaintiffs'
bad-faith claim turns on the success of their breach of
contract claim, failure to issue a stay might result in
needless discovery and added expense. Sandusky v. Acuity,
A Mut. Ins. Co., Civil Action No. 3:17-cv-516-DJH-CHL,
2018 WL 2054565, at *5 (W.D. Ky. May 1, 2018). Third,
separate proceedings will mitigate possible prejudice to
Seneca-even if that prejudice might not be as severe as in
the context of litigating a third-party bad-faith claim.
Alvey, 2017 WL 2798501, at *2 (citing Foster v. Am. Fire
& Cas. Co., No. 13-426-GFVT, 2014 WL 7499427, at *3
(E.D. Ky. Jan. 8, 2014) (collecting cases)); see Sandusky,
2018 WL 2054565, at *5 (W.D. Ky. May 1, 2018) (insurance
company may be able to avoid any unnecessary and premature
litigation on the issue of bad faith).
rely upon several federal district court opinions where the
courts declined to bifurcate and stay discovery related to
bad faith claims in the first party insurance context.
See Foster v. Am. Fire and Cas. Co., 2014 WL
7499427, at *1 (E.D. Ky. Jan. 8, 2014); Woody's Rest.,
LLC v. Travelers Cas. Ins. Co of Am., 2014 WL
108317, at *4 (E.D. Ky. Jan. 9, 2014); Lively v. USAA
Cas. Ins. Co., 2009 WL 1116327, at *2 (E.D. Ky. Apr. 24,
2009); Colvin v. Am. Bankers Ins. Co., 2006 U.S.
Dist. LEXIS 19189, at *3 (W.D. Ky. Apr. 11, 2006); Tharpe
v. Ill. Nat'l Ins. Co., 199 F.R.D. 213, 215 (W.D.
Ky. 2001). Indeed “some courts take a different
approach when confronted with the question of whether to
bifurcate a first-party action. A split in authority is
unremarkable, however, since the decision to bifurcate is
discretionary and made on a case-by-case basis.” 2017
WL 2798501, at *2 (W.D. Ky. June 28, 2017) (citations
as the court in Foster v. American Fire and Casualty
Company explained, “[t]he common thread in the
cases denying bifurcation is that-based on the particular
facts of each case-the factual and legal issues in a
plaintiffs contract claim are “inextricably
intertwined” with his bad faith claims.” 2014 WL
7499427, at *2. This is not a situation where a ruling on the
coverage issue is inextricably tied to whether Defendant
Seneca denied Plaintiffs coverage in bad faith. The coverage
issue will likely be decided on the basis of the nature of
the covered event and language of the policy, a separate
issue from Defendant Seneca's conduct in denying the
claim. In light of the dispositive nature of Plaintiffs'
breach-of-contract claim and the possibilities of confusion
and prejudice resulting from a single trial, there is ample
justification to bifurcate the trial of this action. Alvey,
2017 WL 2798501, at *2 (W.D. Ky. June 28, 2017).
Defendant Seneca's Motion to Bifurcate and Stay Discovery
on the bad-faith claim until the underlying contract claim