COURT BIFURCATES DECLARATORY JUDGMENT AND BAD FAITH CLAIMS TO PROMOTE JUDICIAL ECONOMY AND TO AVOID PREJUDICE (Philadelphia Federal)

In AstenJohnson v. Columbia Gas Company, the U.S. District Court for the Eastern District of Pennsylvania was faced with determining the meaning of an asbestosis exclusion to a policy, where no underlying claims were actually pending against insured.  The carrier contended it was not responsible for defending or providing coverage in any action where damages stemmed from any asbestos-related disease or injury.  Plaintiff sought a declaratory judgment that the exclusion solely applied to asbestosis, and not all asbestos-related diseases.  Plaintiff also claimed that the carrier breached the insurance contract and was acting in bad faith for taking the position that all asbestos-related diseases were excluded.  The Court dismissed the breach of contract claim because there were no actions to date against plaintiff for any asbestos related injury, and therefore damages were speculative at best.  The court then decided to bifurcate the trial: first, the court would conduct a bench trial to determine the scope of the coverage pertaining to asbestos; second, if the carrier was determined to have wrongfully denied coverage, the court would conduct a jury trial on the bad faith issue.  This would serve both judicial economy and avoiding prejudice.  The court determined that were Plaintiff successful in obtaining a declaratory judgment for the underlying case, additional evidence would then be introduced, including expert testimony, on the remaining bad faith claim.  The court considered Seventh Amendment case law, which requires that a separate trial of a particular issue cannot be ordered when the issue is so interwoven with the other issues in the case that it cannot be submitted to the jury independently of the others without confusion and uncertainty that would amount to a denial of fair trial.  The court found that such concerns were not raised in the instant case.  Not only would bifurcation preclude the introduction of evidence that would be prejudicial to the remaining Defendants in the underlying declaratory judgment case, but bifurcation was also in the interest of judicial economy. 

Date of Decision: June 22, 2006

AstenJohnson v. Columbia Gas Company, United States District Court for the Eastern District of PA, No. 03-cv-1552, 2006 U.S. Dist. LEXIS 42606 (E.D.Pa. June 22, 2006) (Stengel, J.)