United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER DENYING DEFENDANT STATE
MATTER comes before the Court on Defendant State Farm Mutual
Automobile Insurance Company's (“State Farm”)
Motion to Bifurcate and Stay, filed on February 22, 2017
(Doc. 17). Having reviewed the relevant pleadings and the
applicable law, the Court finds the Motion is not well-taken,
and is therefore DENIED.
Theresa Martinez claims she was injured in a rear-end vehicle
accident on November 12, 2014 in Deming, New Mexico. The
alleged tortfeasor, Charlene Ramos, struck Plaintiff's
vehicle on the rear bumper. Ms. Ramos had automobile
liability coverage with Farm Bureau Insurance Company
(“Farm Bureau”) in the amount of $25, 000.
Plaintiff alleges she experienced personal injuries from the
accident extending beyond the limits of Ms. Ramos' Farm
Bureau policy. Thus, Plaintiff made a claim against her own
auto insurer, State Farm, under a policy that provided bodily
injury liability coverage in the amount of $100, 000/$300,
000 and uninsured/underinsured motorist coverage limits in
the amount of $25, 000/$50, 000. Plaintiff states that under
the terms of the State Farm policy, State Farm is liable to
pay Plaintiff's damages, because Plaintiff sustained
bodily injuries as a result of Ms. Ramos' negligent
driving. Plaintiff states that she made a timely and
reasonable underinsured motorist (“UIM”) claim
with State Farm, but State Farm has failed to honor the
Martinez filed suit against State Farm. In Count I of her
Complaint, Plaintiff seeks to recover damages for Breach of
Contract and Fiduciary Duties Under Contract. Count I is
principally based on Plaintiff's contention that State
Farm breached its policy with Plaintiff in failing to honor
Plaintiff's requests for UIM coverage at limits equal to
the bodily injury liability coverages in the policy and in
failing to pay claims under the policy. See Compl.
¶ 18. In Count II, Plaintiff alleges Breach of the
Covenant of Good Faith and Fair Dealing. The basis of this
claim is that State Farm failed to act in good faith and deal
honestly with Plaintiff in denying coverage to her under the
policy. Id. ¶¶ 20-21. Count III alleges
Violations of the New Mexico Unfair Claims and Trade
Practices Act. These claims are primarily based on
allegations that State Farm mishandled Plaintiff's UIM
claim, breached its duty in bad faith by failing to honor
Plaintiff's requests for UIM coverage, and failed to pay
the UIM claim under the policy. Id. ¶¶
Civ. P. 42 states, in pertinent part:
(b) Separate Trials. The court, in furtherance of convenience
or to avoid prejudice, or when separate trials will be
conducive to expedition and economy, may order a separate
trial of any claim . . . or issue . . . .
Fed. R. Civ. P. 42(b). District courts have broad discretion
in deciding whether to sever issues for trial and the
exercise of that discretion will be set aside only if clearly
abused. U.S. ex rel. Bahrani v. ConAgra, Inc., 624
F.3d 1275, 1283 (10th Cir. 2010) (quoting Anaeme v.
Diagnostek, Inc., 164 F.3d 1275, 1285 (10th
Cir. 1999)). “Bifurcation is not an abuse of discretion
if such interests favor separation of issues and the issues
are clearly separable.” Angelo v. Armstrong
World Industries, Inc., 11 F.3d 957, 964 (10th Cir.
1993). Bifurcation is often in the interest of efficiency and
judicial economy when the resolution of one claim may obviate
the need to adjudicate one or more other claims. See
Mandeville v. Quinstar Corp., 109 Fed.Appx. 191, 194
(10th Cir. 2004). “Regardless of efficiency and
separability, however, bifurcation is an abuse of discretion
if it is unfair or prejudicial to a party.”
Angelo, 11 F.3d at 964.
party seeking bifurcation bears the burden of proving that
bifurcation is proper “in light of the general
principle that a single trial tends to lessen the delay,
expense, and inconvenience.” Belisle v. BNSF Ry.
Co., 697 F.Supp.2d 1233, 1250 (D. Kan. 2010).
Bifurcation under Rule 42(b) is inappropriate where evidence
to be presented against the parties is inextricably linked.
Certain Underwriters at Lloyd's, London, Subscribing
to Policy No. 501/NB03ACMD v. Nance, CIV-04-0937 JB/WDS,
2007 WL 1302569 (D.N.M. Apr. 23, 2007) (quoting FDIC v.
Refco Grp., Ltd., 184 F.R.D. 623, 629 (D. Colo. 1999)
(finding that bifurcation would have no effect on evidence
offered at trial because claims and evidence were
Farm seeks to bifurcate and stay Plaintiff's
extra-contractual bad faith claims for both discovery and
trial purposes until after a jury determines the value of
Plaintiff's UIM claim. State Farm contends
Plaintiff's right to recover on her extra-contractual bad
faith claims is predicated on the determination of value of
her UIM benefits. State Farm urges the Court to consider
bifurcation to reserve judicial and attorney resources,
because if it is determined that there is no coverage under
the policies, the remaining claims fail. See Sloan v.
State Farm Mut. Auto. Ins. Co., 2004-NMSC-004, 135 N.M.
106, 85 P.3d 230.
State Farm argues that whether it acted in bad faith cannot
be determined without first determining the value of
Plaintiff's UIM claim. State Farm argues that disagreeing
with Plaintiff's evaluation of her UIM claim and
negotiating with her to resolve the claim does not constitute
bad faith. To establish a claim for bad faith to settle in
New Mexico, Plaintiff must prove that State Farm refused to
pay or delayed in paying the claim for “reasons which
are frivolous or unfounded.” See UJI 13-1702
NMRA; Sloan, 2004-NMSC-004, ¶¶ 3, 18. An
insurer is not guilty of bad faith simply because the insured
believes her claim is worth more than the insurer offers.
State Farm states it never denied Plaintiff's claim but
rather the value of her UIM claim has not yet been
determined. As such, State Farm argues bifurcation is
mandatory because resolution of the UIM claim is a condition
precedent to Plaintiff bringing claims for bad faith. State
Farm maintains it has a right to first litigate the dispute
over value before any extra-contractual claims are brought.
If a jury agrees with State Farm's evaluation of damages,
then there cannot be any bad faith.
State Farm argues bifurcation and stay of Plaintiff's bad
faith claims would promote convenience and judicial
efficiency. Because a determination of value is a
pre-requisite to any bad faith claim, bifurcation would best
serve judicial efficiency by focusing this litigation on
value first. State Farm contends that Plaintiff is using
unsupportable bad faith allegations in order to serve
overbroad discovery to leverage State Farm by increasing the
time, aggravation, and expense of discovery in this case.
State Farm contends bifurcation of Plaintiff's bad faith
claims is also necessary to avoid prejudice. See
Mendenhall v. Vandeventer, 1956-NMSC-064, ¶ 7, 61
N.M. 277, 299 P.2d 457 (bifurcation is appropriate when
trying all issues in one trial would “create an
atmosphere which will produce an unconscious influence upon
the triers of fact as to … entirely disconnected and
distinct issue[s]”). If Plaintiff's contractual and
bad faith claims were tried together, State Farm maintains,
the jury would hear evidence regarding extra-contractual
claims that could taint the jury's view of the value of
the underlying case. See Oulds v. Principal Mut. Life
Ins. Co., 6 F.3d 1431, 1435-36 (10th Cir. 1993)
(affirming district court's bifurcation of contract and
bad faith claims to avoid potential prejudice to ...