• Birfurcation of UIM Bad Faith and Breached Contract Claims Denied where Insurer unable to Demonstrate Prejudice (Philadelphia Federal)
  • April 1, 2017
  • The court denied an insurer’s motion to bifurcate, and stay, the plaintiff’s bad faith claim that was brought alongside a breach of contract claim. The plaintiff’s complaint alleged that he had been a passenger in a co-worker’s car when they were involved in automobile accident. The Plaintiff filed a UIM claim with his insurance carrier because the benefits he recovered under his co-worker’s policy were not enough to cover the extent of his injuries. The insurer denied plaintiff’s claim on three separate occasions before the plaintiff brought suit.

    The insurer put forth three arguments in support of its motion to bifurcate and stay. First, the insurer argued that evidence and testimony regarding the bad faith claim would be irrelevant to the breach of contract claim and would unnecessarily confuse the jury. Next, the insurer argued that allowing the jury to hear evidence presented on the bad faith claim would “undoubtedly bias” the jury and influence the jury’s decision on the breach of contract claim. Finally, the insurer noted that if the breach of contract claim was resolved in its favor then the bad faith claim would be rendered moot. Plaintiff’s rebuttal was simply that bifurcation would be inefficient because “the insurer’s conduct evincing the bad faith is the very same conduct evincing the breach of contract.”

    The court determined that the insurer had not met its burden in demonstrating that the prejudice it would face from trying both claims together would outweigh the detrimental effects of bifurcation. The court first explained that bifurcation would be an inefficient manner of proceeding with the case and would unnecessarily prolong the case. The court further explained that while the two claims were distinct, the evidence related to both claims would be similar and that presenting the same evidence to two juries would constitute a “waste of resources.” The court also rejected the insurer’s position that a finding for the insurer on the breach of contract claim would automatically render the bad faith claim moot, noting that “Pennsylvania law allows for recovery due to undue delay in processing claims which is not contingent on a breach of contract.”

    The court then turned to the insurer’s argument that it would be prejudiced if forced to litigate the claims together. The court rejected the insurer’s argument that combining the two discovery phases would allow plaintiff to obtain documents reflecting the insurer’s assessment of the case. The court explained that the “work product doctrine does not disappear just because two claims are tried simultaneously,” and that the insurer would have to “provide its entitlement to work product protection as needed.”

    The court also observed that plaintiff, by opposing bifurcation, was taking “a risk of more discovery disputes and a greater likelihood that defendant will be unwilling to produce certain documents” but that this was plaintiff’s choice and “not defendant’s argument to make.” Finally, the court opined that “a concern that a jury would be unable to disregard certain evidence” was not a reason to bifurcate the two claims. The court reasoned that there were other adequate procedures available in federal court if this concern was deemed valid as trial approached.