Federal Judge Denies Bifurcation of Bad Faith / UIM Claims

discovery

WILLIAMSPORT, Sept. 20  — A Pennsylvania federal has refused GEICO’s motion to sever and stay bad faith claim after finding that judicial economy would not be served, and that no prejudice would occur to GEICO if the bad faith and UIM claims were tried together.

In David Newhouse et al. v. GEICO Casualty Co., No. 17-477, M.D. Pa., 2017 U.S. Dist. LEXIS 150793, U.S. Middle District of Pa. Judge Matthew Brann denied GEICO’s request to bifurcate the case, which was originally filed in state court, but removed by GEICO to the U.S. District Court for the Middle District of Pennsylvania.

On March 16, 2015, GEICO insured David Newhouse was operating a rental car when he was struck from behind by a car driven by Joseph Haywood.  As a result of the accident, Newhouse alleged he  suffered a number of injuries. Haywood’s liability  insurer tendered his $15,000 limit of his insurance policy to Newhouse.  The policy Newhouse had with GEICO provided $100,000.00 in UIM coverage, stacked for two vehicles, for a total of  $200,000 in UIM benefits.

After the Haywood tender, Newhouse  demanded the $200,000.00 policy limit he had with GEICO.  GEICO responded with an offer of  $10,000,  after which Newhouse filed suit for breach of contract and bad faith.

Judge Brann rejected GEICO’s argument that the breach of contract and  bad faith claims were “wholly distinct” from one another and severing the claims would promote judicial economy:

 

“Newhouse’s bad faith claim is based on GEICO offering $10,000.00 as the UIM settlement amount and failing ‘to act with reasonable promptness in evaluating and responding’ to Newhouse’s demand.  While the two claims are grounded on similar findings of evidence, they are nevertheless separate claims.  Thus, litigation on the bad faith claim is not contingent upon success of the breach of contract claim. . .  For example, documents concerning how Newhouse’s insurance claim was handled, documents reflecting the claims adjuster’s determination, and how GEICO arrived at its settlement value would be relevant for both claims.  Contrary to GEICO’s contention, bifurcating these claims and consequently requiring two separate discovery processes would be a waste of both judicial resources and time.”

Judge Brann also determined that GEICO would not be prejudiced by denial of the motion to bifurcate, sever, and stay.

David Newhouse et al. v. GEICO Casualty Co., No. 17-477, M.D. Pa., 2017 U.S. Dist. LEXIS 150793

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