United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
M. Hood Senior U.S. District Judge.
matter comes before the Court on Defendant's Motion to
Bifurcate [DE 10], insofar as it requests that discovery
pertaining to the bifurcated claim be held in abeyance
pending resolution of the underlying contractual claim. [DE
10, at 1]. Plaintiff has responded in opposition, and
Defendant subsequently filed a reply. [DE 14; DE 15]. This
matter is now ripe for review.
FACTUAL AND PROCEDURAL BACKGROUND
Complaint [DE 1-1, at 12-18] alleges she was injured in an
automobile accident on or about August 9, 2016, in which an
automobile driven by Deonsha Jackson struck the rear of
Plaintiff's vehicle. Id. at 13. Since the
accident, Plaintiff has settled her claim against Ms. Jackson
for $25, 000.00, which was the limit of Ms. Jackson's
insurance policy. Id. at 14; [DE 14, at 2]. Also,
Plaintiff submitted her claims to Defendant, her underinsured
motorist (“UIM”) carrier, and argues Defendant
“is contractually obligated to compensate Plaintiff for
UIM benefits for all damages Plaintiff sustained in excess of
Deonsha Jackson's insurance policy limits.” [DE
1-1, at 14-15]. Despite allegedly having a single limit
amount of $100, 000.00 under Plaintiff's UIM coverage,
Plaintiff claims that on February 21, 2019, Defendant
tendered $7, 500.00 to resolve the UIM claim. [DE 14, at 3].
In addition to Plaintiff's contractual claim, since
Defendant allegedly did not pay the full amount of
Plaintiff's damages, Plaintiff further claims Defendant
committed bad faith by failing to pay the full amount of
Plaintiff's damages that were not covered by the
settlement of Plaintiff's claim against Ms. Jackson.
Id. at 15-17; see also [DE 14, at 3].
Defendant filed the present Motion to Bifurcate [DE 10], the
Parties agreed to bifurcate the underlying contractual claim
from the bad faith claims. [DE 13]. Despite the Parties'
agreement to bifurcate the claims, the Motion to Bifurcate
[DE 10] required further briefing, insofar as it pertains to
the bifurcated claims being held in abeyance pending
resolution of the underlying contractual claim. This matter
is now fully briefed, and for the following reasons,
Defendant's Motion to Bifurcate [DE 10], insofar as it
requests that discovery pertaining to the bifurcated claim be
held in abeyance pending resolution of the underlying
contractual claim, will be granted.
STANDARD OF REVIEW
42(b) of the Federal Rules of Civil Procedure provides that
in order to promote convenience and economy or avoid
prejudice, a district court ‘may order a separate trial
of any claim ... or ... any separate issue.'”
Bath & Body Works, Inc. v. Luzier Personalized
Cosmetics, Inc., 76 F.3d 743, 747 (6th Cir. 1996)
(quoting Fed.R.Civ.P. 42(b)). “The decision whether to
try issues separately is within the sound discretion of the
court.” Id. (quoting In Re Bendectin
Litigation, 857 F.2d 290, 307 (6th Cir. 1988)).
argues discovery pertaining to Plaintiff's bad faith
claims should be stayed until liability is established on the
underlying contractual claim. [DE 10-1, at 6-12].
“Trial 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) (citing Hahn v. Star Bank,
190 F.3d 708, 719 (6th Cir. 1999). Indeed, the Sixth Circuit
held in Smith v. Allstate Ins. Co., 403 F.3d 401
(6th Cir. 2005) that it is well within a district court's
discretion in a first-party insurance contract dispute to
stay discovery on a bad faith claim since “the merits
of the bad faith claim depend[ ] on” the merits of the
underlying contract claim. Smith, 403 F.3d at 407.
This Court exercises this discretion accordingly, as staying
discovery of Plaintiff's bad faith claims will prevent
prejudice to Defendant while trying the UIM case and further
judicial economy by avoiding “complicated privilege
issues involved with discovery of the claims file.”
Pollard v. Wood, No. Civ. A. 5:05-444-JMH, 2006 WL
782739, at *3 (E.D. Ky. Mar. 27, 2006).
Shearer v. Ohio Cas. Ins. Co., No.
5:12-CV-00188-JMH, 2012 WL 4338675, at *2 (E.D. Ky. Sept. 20,
2012), this Court addressed whether discovery should be
stayed in a first-party insurance action, such as the present
case. Distinguishing the Shearer action from that of
Tharpe v. Illinois Nat'l Ins. Co., 199 F.R.D.
213 (W.D. Ky. 2001), which held that bifurcation was
inappropriate in a first-party action where the insurer
denied payment to the insured, claiming her chiropractic
bills were unreasonable, this Court found the following:
[L]ike in Durbin [v. State Farm Mut. Auto. Ins. Co.,
No. Civ.A. 3:00CV-384-S, 2001 WL 1793734, at *1 (W.D. Ky.
Mar. 22, 2001)], a different situation is
presented on the facts of this case since Plaintiff is
seeking UIM benefits. Durbin, 2001 WL 1793734, at
*1. Specifically in a UIM case, “the defendant's
exposure to the plaintiff on the underinsured motorist claim
is implicated only to the extent that the tortfeasor's
liability coverage is insufficient.” Id.
Therefore, if a jury determines that Plaintiff's damages
are less than or equal to the amount paid by the underlying
carrier, then she will not be entitled to UIM benefits, nor
will a bad faith claim lie against Defendants. Thus, even
though this is a first-party action, bifurcation is
appropriate . . . . [J]udicial economy will be furthered by
staying discovery because a second trial and second set of
discovery will not be necessary if Plaintiff fails to succeed
Shearer, 2012 WL 4338675, at *2-3.
Shearer, the present case involves a Plaintiff who
is seeking UIM benefits and claiming the insurer acted in bad
faith. While Defendant allegedly paid $7, 500.00 to resolve
the UIM claim, and Plaintiff alleges this was done in bad
faith, there is still a preliminary question of whether
Defendant was required to pay more. Before a determination
can be made regarding whether Defendant acted in bad faith by
failing to pay more than $7, 500.00, Plaintiff must show her
damages were in excess of the $25, 000.00 Plaintiff received
from Ms. Jackson and the $7, 500.00 provided by Defendant. To
allow discovery to proceed on bad faith claims that are
dependent on the underlying contractual claim goes against
judicial economy by requiring the Parties to expend countless
hours and resources on claims that may ultimately be