MARCH 2009 BAD FAITH CASES MOTION TO STAY DISCOVERY, PENDING RESOLUTION OF MOTION TO DISMISS BAD FAITH COMPLAINT, IS GRANTED BASED ON BALANCING TEST RESULTS (Middle District)

In Babalola v. Donegal Mutual Insurance Company, the court granted the insurer’s motion to stay discovery, pending resolution of its motion to dismiss the bad faith allegations in the insured’s amended complaint.  The court conducted a balancing test.

The insured’s original complaint alleged bad faith for failure to defend under his homeowner’s insurance policy, but the court found that the underlying case for negligence and negligent infliction of emotional distress was not covered under the policy’s bodily injury clause.  The insured amended his complaint, and the insurer moved for its dismissal and to stay discovery pending resolution of that motion.

The court conducted a balancing test, weighing the harm to the insured against the benefits of granting the stay.  It considered the following.  First, no additional discovery was needed on the contract interpretation issues raised in the motion.  Second, the insured did not cite authority for opposing the motion.  Third, the insured’s only alleged harm or prejudice was delay, which the court found could only minimally prejudice the insured at this point and might, instead, streamline the subsequent process.  Fourth, the fact that the court denied a similar motion on the original complaint did not control the disposition of this motion.  The court found the balance weighed in favor of the stay and granted it.

Date of Decision:  December 18, 2008 

Babalola v. Donegal Mut. Ins. Co., CIVIL ACTION No. 1:08-CV-621, 2008 U.S. Dist. LEXIS 102517 (M.D. Pa. Dec. 18, 2008)(Kane, C. J.)