United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
MATTER comes before the Court on Defendant Bristol West
Insurance Company's Motion to Bifurcate Trials and Stay
Discovery of Bad Faith Claims (Doc. 18), filed
October 24, 2018. Pursuant to 28 U.S.C. § 636(c) and
Fed.R.Civ.P. 73(b), the parties have consented to me serving
as the presiding judge and entering final judgment. Docs.
7, 8, 9. Having reviewed the submissions of the parties
and the relevant law, the Court will deny Defendant's
Motion to Bifurcate and Stay Discovery.
Melinda Prescott alleges she was injured in a motor vehicle
accident after being rear-ended by the tortfeasor, Leonard
Marjerison. Plaintiff settled with the tortfeasor's
liability insurance carrier for its policy limits. She then
made a demand with Defendant Bristol West Insurance Company
for underinsured motorist coverage (“UIM”).
filed the instant lawsuit against the UIM carrier in state
court on January 22, 2018. Doc. 1-2 at 1. After
Plaintiff filed an Amended Complaint on July 2, 2018
(Doc. 1-1 at 21), Defendant removed the case to
federal court (Doc. 1). In her Amended Complaint,
Plaintiff brings a claim for breach of contract based on
non-payment of UIM benefits (Count I) and a claim for breach
of the duties of good faith and fair dealing (Count V). She
also brings extra-contractual claims for insurance bad faith
(Count II), violations of New Mexico's Unfair Insurance
Practices Act (“UIPA”) (Count III), and
violations of New Mexico's Unfair Trade Practices Act
(“UTPA”) (Count IV). In the current motion,
Defendant requests that the Court bifurcate the trials of
Plaintiff's UIM breach of contract claim from her bad
faith, UIPA, and UTPA claims (collectively referred to as
“bad faith claims”) and stay discovery on those
extra-contractual claims “until such time as a jury has
found that the Plaintiff is legally entitled to recover
benefits on the underlying UIM breach of contract
claim.” Doc. 18 at 13-14.
Rule of Civil Procedure 42(b) allows that, “[f]or
convenience, to avoid prejudice, or to expediate and
economize, the court may order a separate trial of one or
more separate issues, claims, crossclaims, counterclaims, or
third-party claims.” Bifurcation under Rule 42(b) is
“appropriate ‘if such interests favor separation
of issues and the issues are clearly separable,
''' Ortiz v. Safeco Ins. Co. of Am., 207
F.Supp.3d 1216, 1217-18 (D.N.M. Sept. 13, 2016) (quoting
Palace Exploration Co. v. Petroleum Dev. Co., 316
F.3d 1110, 1119 (10th Cir. 2003)), such as “when the
resolution of one claim may eliminate the need to adjudicate
one or more other claims.” Id. at 1218
(citation omitted). However, bifurcation is
“inappropriate when it will not appreciably shorten the
trial or [a]ffect the evidence offered by the parties because
claims are inextricably linked.” Buccheri v. GEICO
Ins. Co., No. 17-CV-0490 LF/KK, 2017 WL 3575486, at *2
(D.N.M. Aug. 17, 2017) (quotation omitted). Further,
bifurcation “is an abuse of discretion if it is unfair
or prejudicial to a party.” Ortiz, 207
F.Supp.3d at 1218 (citing Angelo v. Armstrong World
Indus., Inc., 11 F.3d 957, 964 (10th Cir. 1993)).
Court has broad and considerable discretion is deciding
whether to sever issues for trial. Buccheri, 2017 WL
3575486, at *1 (citing United States ex rel. Bahrani v.
ConAgra, Inc., 624 F.3d 1275, 1283 (10th Cir. 2010)). To
that end, “bifurcation is decided on a case-by-case
basis and should not be regarded as routine.”
Id. at *2 (citing Marshall v. Overhead Door
Corp., 131 F.R.D 94, 97-98 (E.D. Pa. 1990)). The burden
is on the moving party to show bifurcation is needed
“as a single trial normally lessens the expense and
inconvenience of litigation.” Ortiz, 207
F.Supp.3d at 1217.
Court also has broad discretion in managing its docket,
including staying portions of discovery. See Swepi, LP v.
Mora Cty., No. CIV 14-0035 JB/SCY, 2014 WL 7474084, at
*15 (D.N.M. Dec. 19, 2014) (citing Clinton v. Jones,
520 U.S. 681, 706 (1997)). “Whether to stay discovery
depends to a substantial degree on the facts and procedural
progress of each individual case.” Kennicott v.
Sandia Corp., No. CIV 17-188 JB/GJF, 2018 WL 4510254, at
*2 (D.N.M. Sept. 20, 2018) (citations omitted). “The
party seeking a stay generally faces a difficult burden,
” and must “make a strong showing of
necessity” when seeking relief that would delay the
court proceeding. Swepi, 2014 WL 7474084, at *15.
Bifurcation of the UIM claim and the extra-contractual claims
is not mandatory in this case.
argues that Plaintiff must prove she is entitled to UIM
benefits before she can procced with her bad faith claims.
Thus, Defendant asserts that bifurcation of Plaintiff's
UIM claim and her extra-contractual claims is mandatory. To
recover UIM benefits, a plaintiff must establish the
tortfeasor's negligence by proving duty, breach of duty,
causation, and damages that exceed the tortfeasor's
liability limits. Aragon v. Allstate Ins. Co., 185
F.Supp.3d 1281, 1283 (D.N.M. May 10, 2016) (citing State
Farm Mut. Auto. Ins. Co. v. Safeco Ins. Co.,
2013-NMSC-006, 298 P.3d 452, 456). A claim for bad faith
failure to pay, on the other hand, requires a plaintiff to
prove that “the insurer's reasons for denying
payment of [her] claim were frivolous or unfounded.”
Ortiz, 207 F.Supp.3d at 1218. However, the UIM
carrier is not required to pay until the plaintiff proves she
is legally entitled to collect UIM damages. Aragon,
185 F.Supp.3d. at 1284. Accordingly, “under New Mexico
law, resolution of the UIM claim is a condition precedent to
[the plaintiff] bringing claims for bad faith [failure to
pay].” Id. at 1286; see also Ortiz,
207 F.Supp.3d at 1220 (explaining that the only bad faith
alleged in Aragon was failure to pay). The court in
Aragon, therefore, held that bifurcation of a bad
faith failure to pay claim from a UIM claim is mandatory. 185
F.Supp.3d at 1286; see also Ortiz, 207 F.Supp.3d at
judges in this district have denied requests to bifurcate
when the parties dispute only the value of damages, not the
underlying liability of the tortfeasor. Compare Willis v.
Gov. Emp. Ins. Co., No. 13-CV-0280 KG/KK, 2015 WL
11181339, at *2 (D.N.M. June 17, 2015) (denying bifurcation
when parties did not dispute underlying liability, only the
value of the plaintiffs' damages), and Sanchez v.
Safeco Ins. Co. of Am., No. 14-CV-0926 MV/GBW, Order at
2 (D.N.M. Sept. 11, 2015) (CM/ECF No. 44) (same), with
Ortiz, 207 F.Supp.3d at 1218, 1222 (granting
bifurcation when underlying liability was in dispute),
and Aragon, 185 F.Supp.3d at 1286 (same), and
Shultzaberger v. State Farm. Mut. Auto. Ins. Co., No.
17-CV-1028 KRS/CG, 2018 WL 456154, at *2 (D.N.M. Jan. 17,
2018) (granting bifurcation when the “[u]nderlying
liability in this case is not a foregone conclusion”).
Here, it is unclear if liability is in dispute. Plaintiff
asserts multiple times that Defendant never contested the
liability of the tortfeasor. See Doc. 20 at 2, 4, 5.
However, in its Answer to the Amended Complaint, Defendant
repeatedly states that it is “without sufficient
information and knowledge to form a belief” regarding
the facts of the underlying accident. Doc. 6,
¶¶ 6-11. In contrast, the court in Willis
found that liability was not disputed because the Defendant,
in its answer, admitted “that the parties have an
honest dispute over the value of Plaintiffs' insurance
claim.” 2015 WL 11181339, at *2.
assuming both liability and damages are disputed in this
case, bifurcation is still not mandatory because
Plaintiff's bad faith claims are not completely
contingent on the resolution of her UIM claim.
Aragon and Ortiz “stand for the
narrow proposition that to recover on a bad faith
failure to pay claim, plaintiffs
must first prove they are legally entitled to recover [UIM]
damages.” Buccheri, 2017 WL 3575486, at *3
(emphasis added). However, “[a]n insurer can act in bad
faith in its handling of a claim for reasons other than its
refusal to pay a claim in full.” Ortiz, 207
F.Supp.3d at 1219. For example, an insurer can act in bad
faith by failing to timely and fairly investigate an
insured's claim, failing to timely evaluate a claim, or
exploiting an insured's vulnerable position. Id.
(citing O'Neel v. USAA Ins. Co., 2002-NMCA-028,
41 P.3d 356, 359). Bifurcation is not required when a
plaintiff alleges bad faith beyond just failure to pay
because, then, “not all of plaintiff's
extra-contractual claims are dependent on her contractual
claims.” Buccheri, 2017 WL 3575486, at *3;
see also Sanchez, No. 14-CV-0926 MV/GBW, Order at 2
(denying bifurcation when plaintiffs alleged bad faith based
on the defendant's failure to investigate the claim);
Martinez v. State Farm Mut. Auto. Ins. Co., No.
16-CV-1029 WJ/LF, Mem. Op. & Order at 7 (D.N.M. Mar. 27,
2017) (CM/ECF No. 27) (“[D]etermining the value of
Plaintiff's UIM claim is not necessary before Plaintiff
can establish bad faith based on the way [the defendant]
handled her claim.”)
Defendant asserts that Plaintiff's claims “are not
based on conduct separate from [Defendant's] refusal to
pay the amount of the UIM benefits sought by Plaintiff;
rather they are clearly failure to pay claims.”
Doc. 24 at 4. But, Defendant offers no further
evidence to support this assertion. While Plaintiff does
allege Defendant acted in bad faith by refusing to pay a
“fair and reasonable value for the claim”
(Doc. 1-1, ¶ 31), she also ...