Bachrach v. USAA General Indemnity Company

WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
DEBORAH BACHRACH, )
)
Plaintiff, )
)
vs. )
)
USAA GENERAL INDEMNITY CO., )
) Case No. 3:22-cv-0271-HRH
Defendant. )
_______________________________________)
O R D E R
Motion to Bifurcate and Stay Discovery1
Defendant USAA General Indemnity Company moves to bifurcate trial and to stay
discovery on plaintiff Deborah Bachrach’s “bad faith” claims pending resolution of her
uninsured motorist claim. Plaintiff has responded.2 Defendant has replied.3 Oral argu-
ment has been requested4 and has been heard.
1Docket No. 17.
2Docket No. 18.
3Docket No. 21.
4Docket No. 22.
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Background
Plaintiff was injured in a motor vehicle collision on November 13, 2020.5 Plain-
tiff’s vehicle was struck by the operator of an uninsured motor vehicle.6 The parties do not
dispute that the driver of the uninsured motor vehicle was at fault.7
Plaintiff had an insurance policy issued by defendant at the time of the accident.8
The policy contained a provision for uninsured motorist coverage and a provision for
medical payments coverage.9 The policy’s medical payments coverage was limited to
expenses incurred within one year of the collision.10 Defendant paid some of plaintiff’s
medical expenses under that coverage.11 Plaintiff sought additional benefits for medical
expenses incurred beyond the one-year mark under the policy’s uninsured motorist cover-
age.12 Defendant determined that those medical expenses were outside the terms of
coverage and denied the claim.13 Defendant offered plaintiff $11,000 to resolve the unin-
sured motorist claim. Plaintiff did not accept that offer.14 According to plaintiff, the
5Complaint at 2, ¶ 3, Exhibit 1, Notice of Removal, Docket No. 1.
6Id. at 2, ¶ 8.
7Id. at 2, ¶ 3; Docket No. 8 at 1-2, ¶¶ 3, 5.
8Complaint at 2, ¶ 4, Exhibit 1, Notice of Removal, Docket No. 1.
9Id. at 2-3, ¶¶ 14.
10Id. at 3, ¶ 14.
11Id.
12Id. at 3, ¶ 15.
13Id.; Docket No. 8 at 3, ¶ 15.
14Complaint at 3, ¶ 16, Exhibit 1, Notice of Removal, Docket No. 1; see also
Docket No. 17 at 2.
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compensatory damages caused by the operator of the uninsured motor vehicle “signifi-
cantly” exceeded the value of defendant’s offer.15
Plaintiff commenced this action in state court on November 9, 2022. Defendant
removed the action based on diversity jurisdiction.16 Plaintiff’s complaint asserts: a
breach of contract claim based on defendant’s denial of plaintiff’s uninsured motorist
claim, a claim for breach of the covenant of good faith and fair dealing based on defen-
dant’s handling of the uninsured motorist claim, and a claim that defendant acted negli-
gently or recklessly in adjusting the uninsured motorist claim.17 Plaintiff alleges that
defendant “failed to promptly and reasonably investigate, evaluate, and pay” her uninsured
motorist claim.”18
Shortly after the filing of this case, the parties completed a scheduling and planning
report, in which the parties recommended to the court that fact discovery in this case be
completed by January 30, 2024, and that expert discovery be completed by January 30,
2024.19 The parties’ report further recommended that expert reports be exchanged by
November 11, 2023.20 In its scheduling and planning order,21 the court approved the fore-
going recommendations. The court’s scheduling and planning report form further called
upon the parties to answer the question: “Should discovery be conducted in phases or
15Complaint at 3, ¶¶ 17, 19, Exhibit 1, Notice of Removal, Docket No. 1.
16Docket No. 1 at 2.
17Complaint at 3-5, ¶¶ 17-40, Exhibit 1, Notice of Removal, Docket No. 1.
18Id. at 3, ¶ 18.
19Docket No. 11 at 4-5.
20Id. at 4; November 11 being a holiday, the order indicated November 13, 2023.
21Docket No. 12 at 4.
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limited to or focused on particular issues?” The parties responded: “No.”22 The court’s
scheduling and planning expressly provided that: “Discovery shall not be conducted in
phases or limited to or focused on particular issues.”23
Defendant now moves for bifurcation of trial on plaintiff’s breach of contract claim
on one hand, and on plaintiff’s bad faith and negligence adjustment claims on the other
hand. Defendant also moves for a stay of discovery on plaintiff’s bad faith and negligent
adjustment claims pending resolution of plaintiff’s uninsured motorist claim.
Discussion
Federal Rule of Civil Procedure 42(b) authorizes the court to order a separate trial
of any claim “[f]or convenience, to avoid prejudice, or to expedite and economize....”
Bifurcation of claims for trial “does not necessarily require bifurcation of discovery.”
Cook v. United Serv. Auto. Ass’n, 169 F.R.D. 359, 362 (D. Nev. 1996). If claims are
bifurcated pursuant to Rule 42, discovery on the second set of claims may but need not be
stayed. Id. Both the decision to bifurcate trial and to stay discovery are within the sound
discretion of the trial court, id.; Hangarter v. Provident Life & Accident Ins., 373 F.3d
998, 1021 (9th Cir. 2004). “With respect to both discovery and trial, the moving party has
the burden of proving that bifurcation will promote judicial economy or avoid inconveni-
ence or prejudice to the parties.” Karpenski v. Am. Gen. Life Cos., LLC, 916 F. Supp. 2d
1188, 1190 (W.D. Wash. 2012).
Defendant requests bifurcation of both trial and discovery. Defendant submits that
bifurcating trial would avoid complicating the issues, confusing the jury, and prejudicing
defendant “by allowing the jury to hear evidence of bad faith,” which could influence the
22Docket No. 11 at 3, ¶ II.C.2.
23Docket No. 12 at 3, ¶ II.C.2.
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jury’s determination of the uninsured motorist claim.24 Plaintiff does not oppose bifurca-
tion of trial as long as each phase of the trial is before a single jury. The court finds that a
sequential trial of the uninsured motorist claim, followed by trial of the bad faith and
negligent adjustment claims is appropriate to avoid prejudice to defendant. Defendant’s
motion for a separate trial of the uninsured motorist claim and the bad faith and negligent
adjustment claims is granted.
Turning to defendant’s motion for a stay of discovery on plaintiff’s bad faith and
negligent adjustment claims, defendant contends that “[s]eparate trials of the UM claim
and bad faith claims and a stay of bad faith discovery pending resolution of the UM claim
will avoid undue prejudice, prevent unfair tactical advantages, and will promote efficiency
and judicial economy.”25 Defendant further asserts that a discovery stay would promote
economy and efficiency because a determination of the uninsured motorist claim could
dispose of the bad faith claims.26
Plaintiff opposes a discovery stay of the bad faith and negligent adjustment claims
because, if discovery were stayed, it would be necessary to summon and empanel a sec-
ond, separate jury after bad faith and negligent discovery were completed. Plaintiff further
argues that a discovery stay would prejudice and burden her because she would have to
spend significant resources re-litigating the “causation and damage aspects of [her] injury”
in a trial before a different jury on her bad faith claim.27 Plaintiff contends that bifurcating
her claims for trial without staying discovery is sufficient to address defendant’s concerns
24Docket No. 17 at 8.
25Id. at 12.
26Id.
27Docket No. 18 at 2.
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about the potentially prejudicial effect of bad faith evidence on the resolution of the unin-
sured motorist claim.28
The court is not persuaded that a stay of discovery on plaintiff’s bad faith and negli-
gent adjustment claims would promote judicial economy or avoid inconvenience or preju-
dice to the parties. In so ruling, the court is guided by Judge Gleason’s March 15, 2021,
decision in Lindfors v. State Farm Mut. Auto. Ins. Co., No. 3:20-cv-00178-SLG
(D. Alaska 2021). The issues raised in Lindfors are, for all practical purposes, the same as
the issues now before this court. The factual differences between this case and Lindfors
are insufficient to distinguish the two cases.
The court finds that ordering bad faith and negligent adjustment discovery to pro-
ceed prior to resolution of plaintiff’s uninsured motorist claim will not prejudice defendant
because plaintiff will not be permitted to admit such evidence in the course of an unin-
sured motorist claim trial. Defendant fears that mere access to bad faith and claims adjust-
ment information will prejudice defendant or give plaintiff a tactical advantage. The court
is unpersuaded. Indeed, defendant has already produced for plaintiff its claims file.
Access to that information will not put at risk defendant’s defense of its decisions and
procedures if the parties are unable to reach a settlement short of a second trial.
The court is also not persuaded that a stay of discovery as to plaintiff’s bad faith
and negligent adjustment claims will promote judicial economy. Because it is not possible
to predict when, how (how much), or if any of plaintiff’s claims will be settled, it is not
possible to know what if any economies (or costs) will flow from a decision to stay dis-
covery or a decision not to stay discovery. Where judicial economy lies in this situation is
purely speculative.
28Id. at 6.
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At oral argument, plaintiff raised a new objection to defendant’s motion to stay
discovery. Plaintiff points out that the parties’ scheduling and planning report expressly
addressed the question of bifurcating discovery; and the court accepted the parties’ pro-
posal that discovery not be bifurcated. As a consequence, discovery has gone forward.
The date for identifying expert witnesses and disclosing their reports has passed. “A
schedule may be modified only for good cause and with the judge's consent.” Fed. R.
Civ. P. 16(b)(4). In its motion and at oral argument, defendant has not advanced any
change in circumstances which would constitute good cause for the court to stay discovery
as to plaintiff’s bad faith and negligent adjustment claims. At this late date, the court does
not consent to a modification of its scheduling order.
Defendant’s motion to stay discovery as to plaintiff’s bad faith and negligent
adjustment claims is denied.
Conclusion
Defendant’s motion to bifurcate trial and stay discovery is granted in part and
denied in part. Discovery on the bad faith and negligent adjustment claims may proceed at
the same time as discovery on the uninsured motorist claim. The two sets of claims will be
bifurcated and tried before the same jury, beginning with the uninsured motorist claim. At
a trial on the uninsured motorist claim, evidence pertaining to bad faith and negligent
adjustment of claims will not be admitted.
DATED at Anchorage, Alaska, this 11th day of December, 2023.
/s/ H. Russel Holland
United States District Judge
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