AUGUST 2012 BAD FAITH CASES: COURT REFUSES TO BIFURCATE BREACH OF CONTRACT AND BAD FAITH PROCEEDINGS DUE TO CONSIDERABLE OVERLAP BETWEEN CAUSES OF ACTION (Western District)

In Craker v. State Farm Mut. Auto. Ins. Co., the court heard the carrier’s motion in limine to bifurcate the insured’s breach of contract and bad faith actions. This case stemmed from the carrier’s denial of the insured’s claim for Underinsured Motorist (“UIM”) benefits under its policy. The court had already denied the carrier’s motion to sever the bad faith claim (see this blog) and the carrier’s motion for summary judgment (see this blog).
The carrier argued that bifurcation was proper because the issues related to the UIM claim were separate and distinct from the insured’s bad faith claim. The insured countered that bifurcation would be ineffective because the issues and evidence required to prove its case significantly overlap.
The court ruled for the insured, finding that bifurcation was not proper here. First, the court reasoned that the significant overlap of issues made bifurcation improper. Specifically, the court held that there was no question that the insured’s UIM coverage was triggered and that the carrier refused to meet the insured’s demand under the policy. The only disputed issue with respect to the UIM claim was its valuation – this was the court’s reason for denying summary judgment.
Second, the court held that the evidence and witnesses required to prove both the UIM breach of contract and bad faith claims are substantially similar. While the carrier argued that bifurcation was proper because the testimony of its trial counsel may be required, the court disagreed, finding that to be a mere “risk of litigation.”
Date of Decision: August 3, 2012
Craker v. State Farm Mut. Auto. Ins. Co., No. 11-0225, 2012 U.S. Dist. LEXIS 109357, U.S. District Court for the Western District of Pennsylvania (W.D. Pa. Aug. 3, 2012) (Lancaster, J.)