AUGUST 2017 BAD FAITH CASES: INSURER’S MOTION TO BIFURCATE BREACH OF CONTRACT AND BAD FAITH CLAIMS DENIED BECAUSE OF SIGNIFICANT OVERLAP IN EVIDENCE, AND LITTLE RISK OF PREJUDICE (Philadelphia Federal)

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In this UIM action, the insured alleged she suffered severe and permanent injuries following an auto accident that significantly exceeded the tortfeasor’s $25,000 policy limit. The insurer refused to accommodate the insured’s request of a $350,000 payment under the policy’s UIM provision. The insured brought breach of contract and bad faith claims.

The insurer moved to bifurcate the trial of both claims. In deciding the insurer’s motion, the Court considered “(1) whether the claims sought to be tried separately are significantly different from one another, (2) whether the claims require different evidentiary proof, (3) whether the non-moving party will be prejudiced by severance, and (4) whether the moving party will be prejudiced by proceeding to one trial.”

The insurer argued there is no evidentiary overlap between the two claims; that the resolution of the breach of contract claim may render the bad faith claim moot; and that some evidence relevant to the breach of contract claim may be protected attorney work product, thus prejudicing the insurer and causing juror confusion. The Court rejected the insurer’s arguments.

While the Court acknowledged the distinct causes of action between a breach of contract claim and a bad faith claim, it found that “any reasonableness of [insurer’s] investigation would surely include the facts and documentation surrounding the underlying accident, meaning that both claims are likely to rely on the same documentation and witness testimony at trial….”

Given the overlapping nature of the evidence, the Court ruled that bifurcation would be a waste of judicial resources. Furthermore, the Court found that even if the parties resolved the contract claim, the insured could still pursue her bad faith claim on a theory of undue delay in claims handling.

Thus, resolution of the breach of contract claim does not necessarily render the bad faith claim moot.

Lastly, the Court held that it is more efficient to require the insurer to prove its entitlement to any attorney work product, rather than to bifurcate the claims. The Court is equipped to address any issue of prejudice that may arise through the normal rules and procedures of litigation.

Therefore, the Court ruled that insurer failed to meet its burden to show the appropriateness of bifurcation, and denied the motion.

Date of Decision: July 31, 2017

Jones-Silverman v. Allstate Fire & Casualty Insurance Co., No. 17-1711, 2017 U.S. Dist. LEXIS 119878 (E.D. Pa. July 31, 2017) (Baylson, J.)

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