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Stanford v. Liberty Mutual Group Inc.

United States District Court, N.D. Mississippi, Greenville Division

September 16, 2019




         On February 11, 2019, Liberty Mutual Group, Inc., a/k/a Liberty Mutual Insurance, filed “Defendant's Motion to Bifurcate and Sever, to Stay Extra-Contractual Claims, and to Prohibit Insurance Reference at Car Wreck Trial.” Doc. #41. Liberty Mutual asks that (1) the bad faith claims brought by Jacqueline Stanford and Roy Stanford be bifurcated and severed from their underlying uninsured motorist claims; (2) the bad faith claims be stayed pending resolution of the underlying uninsured motorist claims; and (3) the issue of insurance coverage be excluded from trial. See Doc. #42. The Stanfords did not respond to the motion.


         Bifurcation and Severance

         Pursuant to Federal Rule of Civil Procedure 21, a “court may … sever any claim against a party.”[1] Rule 42(b) authorizes a court to “order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.” “The procedure authorized by Rule 42(b) should be distinguished from severance under Rule 21. Separate trials will usually result in one judgment, but severed claims become entirely independent actions to be tried, and judgment entered thereon, independently.” McDaniel v. Anheuser-Busch, Inc., 987 F.2d 298, 304 n.19 (5th Cir. 1993). Accordingly, if this Court were to sever the claims, bifurcation would be unnecessary.

         A. Severance

         Rule 21 provides district courts with discretion to sever claims. A district court may exercise this discretion if an action “is misjoined or might otherwise cause delay or prejudice.” Applewhite v. Reichhold Chems., Inc., 67 F.3d 571, 574 (5th Cir. 1995). In applying this discretion, district courts in the Fifth Circuit “have settled on a standard which accords with that used in other circuits.” In re Rolls Royce Corp., 775 F.3d 671, 680 n.40 (5th Cir. 2014). Under such standard, courts consider five factors:

(1) whether the claims arise out of the same transaction or occurrence; (2) whether the claims present some common questions of law or fact; (3) whether settlement of the claims or judicial economy would be facilitated; (4) whether prejudice would be avoided if severance were granted; and (5) whether different witnesses and documentary proof are required for the separate claims.


         The first factor is analyzed under the “logical relationship test, ” which asks whether the claims at issue share an aggregate of operative facts. Cooper v. Meritor, Inc., No. 4:16-cv-52, 2018 WL 1934065, at *2-3 (N.D. Miss. Apr. 24, 2018). Operative facts are “those relating directly to the claims in an action.” Id. (alterations omitted).

         Under Mississippi law, an uninsured (or underinsured) motorist claim requires that the plaintiff show he is covered by an uninsured policy and that he is “legally entitled to recover … damages” against the owner or operator of an uninsured vehicle. See Wachtler v. State Farm Mut. Auto. Ins. Co., 835 So.2d 23, 26 (Miss. 2003). A bad faith claim, in contrast, requires the plaintiff to show that an “insurer lacked an arguable or legitimate basis for denying [a] claim, or that the insurer committed a willful or malicious wrong, or acted with gross and reckless disregard for the insured's rights.” Liberty Mut. Ins. Co. v. McKneely, 862 So.2d 530, 533 (Miss. 2003). However, “[a]n insured seeking to recover on a claim of bad faith must first establish the existence of coverage on the underlying claim.” Stubbs v. Miss. Farm Bureau Cas. Ins., 825 So.2d 8, 13 (Miss. 2002).

         To the extent the bad faith claim depends on showing an underlying entitlement to benefits, there is indisputably an overlap in operative facts. However, because the crux of a bad faith claim depends on how an insured acted, as opposed to the facts of the underlying accident (the central focus of the uninsured motorist claim), the Court concludes that the two claims do not share an aggregate of operative facts. Accordingly, the first factor weighs in favor of severance, while the second factor does not.

         As to the third factor, to the extent the bad faith claim depends on the plaintiffs prevailing on their uninsured motorist claim, the Court concludes that separating the claims would advance the interest of judicial economy because resolution of the uninsured motorist claim in favor of Liberty Mutual would obviate the need for discovery and trial on the bad faith claim. See Mason v. State Farm Mut. Auto. Ins. Co., No. 5:19-cv-2, 2019 WL 1767558, at *2 (E.D. Ky. Apr. 22, 2019) (“To allow discovery to proceed on bad faith claims that are dependent on the underlying contractual claim goes against judicial economy by requiring the Parties to expend countless hours and resources on claims that may ultimately be unnecessary.”).[2]

         With regard to the fourth factor, Liberty Mutual argues it would be prejudiced in the absence of severance because a single trial, even if bifurcated into phases, would create confusion and prejudice with the jury members; and because litigating the bad faith claim alongside the uninsured motorist claim would force it to disclose “certain privileged items relating to the analysis, evaluation, and investigation of UM claims.” Doc. #42 at 12.

         As discussed below, Liberty Mutual's concerns regarding a joint trial may be alleviated by bifurcation, rather than severance. As to Liberty Mutual's discovery concerns, the Court notes that discovery has closed without any discovery disputes. Accordingly, the Court finds no potential ...

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