Brown v. Allstate Property and Casualty Insurance Company
MEMORANDUM OPINION AND ORDER: it is hereby ORDERED as follows: 1) The 11 Motion to Bifurcate and Stay Discovery filed by Allstate Property and Casualty Insurance Company ("Allstate") is DENIED; 2) The 14 Motion for Partial Summary Judgment is DENIED. Signed by Honorable Judge W. Harold Albritton, III on 11/3/2015. (Attachments: # 1 Civil Appeals Checklist) (wcl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
ALLSTATE PROPERTY AND
CASUALTY INSURANCE CO.,
Civil Action No. 2:15cv488-WHA
MEMORANDUM OPINION AND ORDER
This case is before the court on a Motion to Bifurcate and Stay Discovery (Doc. #11) filed
by Allstate Property and Casualty Insurance Company (“Allstate”), and a Motion for Partial
Summary Judgment (Doc. #14) filed by Barbara Brown (“Brown”).
The Plaintiff filed a Complaint in the Circuit Court of Montgomery County, bringing
claims of breach of contract, a claim for uninsured motorist benefits and medical payments, and
bad faith. The case was removed on the basis of diversity jurisdiction. No motion to remand was
Complete diversity of citizenship exists and the amount in controversy exceeds $75,000.
Therefore, the court has diversity subject matter jurisdiction pursuant to 28 U.S.C. §1332.
The Motion to Bifurcate and to Stay Discovery states that there is an issue as to whether
Brown complied with South Carolina statutory requirements which must be decided before Brown
can recover uninsured motorist benefits or proceed with her claim for bad faith, so the case should
be bifurcated and discovery stayed on issues of bad faith. The Motion for Partial Summary
Judgment seeks a judgment that Alabama law applies to Brown’s claims.
For the reasons to be discussed, the Motion to Bifurcate and Stay Discovery is due to be
DENIED and the Motion for Partial Summary Judgment is due to be DENIED.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is proper "if there is no genuine issue as to any material fact and
the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986).
The party asking for summary judgment "always bears the initial responsibility of
informing the district court of the basis for its motion,@ relying on submissions Awhich it believes
demonstrate the absence of a genuine issue of material fact." Id. at 323. Once the moving party
has met its burden, the nonmoving party must Ago beyond the pleadings@ and show that there is a
genuine issue for trial. Id. at 324.
Both the party Aasserting that a fact cannot be,@ and a party asserting that a fact is genuinely
disputed, must support their assertions by Aciting to particular parts of materials in the record,@ or
by Ashowing that the materials cited do not establish the absence or presence of a genuine dispute,
or that an adverse party cannot produce admissible evidence to support the fact.@ Fed. R. Civ. P.
56 (c)(1)(A),(B). Acceptable materials under Rule 56(c)(1)(A) include Adepositions, documents,
electronically stored information, affidavits or declarations, stipulations (including those made for
purposes of the motion only), admissions, interrogatory answers, or other materials.@
To avoid summary judgment, the nonmoving party "must do more than show that there is
some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). On the other hand, the evidence of the nonmovant must be
believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby,
477 U.S. 242, 255 (1986).
After the nonmoving party has responded to the motion for summary judgment, the court
shall grant summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).
The submissions of the parties establish the following facts, construed in a light most
favorable to the non-movant:
This case involves an issue of automobile insurance coverage for a single car accident by
Brown, the insured.
Brown is a resident of South Carolina. At the time of the accident she had
an Auto Insurance Policy issued by Allstate in South Carolina.
In the Complaint, Brown alleges that she was traveling in her automobile on Interstate 85
in Montgomery County, Alabama, when she came upon an abandoned vehicle which was close to
the interstate. In swerving to avoid the vehicle, Brown lost control of her vehicle, left the
roadway, and came to rest on the shoulder. Brown suffered personal injuries and property
Brown made a claim against her Allstate Auto Insurance Policy. Allstate did not pay her
claim. The denial of claim letter stated that under the policy, if a phantom vehicle causes injury or
damage without physical contact between the vehicles, the facts of the accident must have been
witnessed by someone other than the owner or operator of the vehicle. The letter stated that the
affidavits submitted by Brown stated that the affiants heard the sounds of tires squealing but did
not see the accident. (Doc. #21-1 at ¶30).
On September 15, 2015, in response to Allstate’s Motion to Bifurcate and Stay Discovery,
Brown submitted new affidavits from the witnesses. (Doc. #16-1 at p.30, 32).
A. Motion for Partial Summary Judgment
The Motion for Partial Summary Judgment seeks a judgment that Alabama law applies to
Brown’s claims. Brown’s initial brief cites to a policy provision within her Auto Insurance Policy
entitled “What Law Will Apply,” which states that “ [i]f a covered loss to the auto, a covered auto
accident, or any other occurrence for which coverage applies under this policy happens outside
South Carolina, claims or disputes regarding that covered loss to the auto, covered auto accident,
or other covered occurrence may be governed by the laws of the jurisdiction in which that covered
loss to the auto, covered auto accident, or other covered occurrence.” (Doc. #14-1 at p.4). The
basis for the Plaintiff’s motion is that Alabama, and not South Carolina, law applies in this case
based on that contract provision. The Plaintiff’s Motion for Partial Summary Judgment is not a
motion as to the merits of the breach of contract claims.
Allstate’s position in response is that South Carolina law applies to the interpretation and
application of the contract because the policy was issued in South Carolina, citing, among other
cases, American Motorists Ins. Co. v Southern Security Life Ins. Co., 80 F. Supp. 2d 1285, 1287
(M.D. Ala. 2006) (stating the district court sitting in diversity “is obliged to apply the laws of the
state where the last act is receipt and acceptance of the insurance policy”). Allstate contends that
the choice-of-law provision pointed to by Brown in her motion only applies where there is a
covered loss, accident, or occurrence. Allstate contends that South Carolina law must first be
applied to determine whether there is a covered loss under the policy before analyzing the
substantive claims under the choice-of-law provision.
Allstate relies on reasoning found in Hollins v. Adair, No. 2013 CA 1622, 2014 WL
2547977 (La. App. 1 Cir. June 3, 2014). In that case, a resident of Mississippi had an automobile
accident in Louisiana. The court analyzed a choice-of-law provision in the insurance contract at
issue, which provided that if a covered loss happens outside of Mississippi, claims or disputes may
be governed by the law of the jurisdiction in which the covered loss happened. Id. at *4. The
court determined that “a plain reading of the policy indicates that this provision applies only after
a determination has been made that a loss, accident, or occurrence is covered under the terms of the
policy in accordance with [the state of issuance’s] law.” Id. at *4. The court explained that a
contrary result, that is, applying the law of Louisiana, would abrogate the Mississippi contract.
Id. at *5. The court also noted that the premium for uninsured motorist coverage was based on
application of Mississippi law. Id.
In reply, Brown first attempted to distinguish Hollins, arguing that in that case there was no
coverage under Mississippi law, but in this case there is coverage because Brown has complied
with South Carolina law and the policy. (Doc. #21 at p.4). Brown then states, however, “[i]n fact,
Hollins supports Plaintiff’s position in that once coverage is established (contractual issues
resolved) the choice of law provision becomes effective.” (Doc. #21 at p.5). Brown goes on to
summarize her position as being that “if Plaintiff has satisfied the conditions of coverage, the
choice of law provisions addressed in Hollins are now triggered and applicable to this claim.”
(Doc. #21 at p.6). Brown concludes her brief by stating, “Hollins holds that once a determination
has been made that a loss, accident, or occurrence is covered under the terms of the policy in
accordance with South Carolina law, Alabama law applies.” (Doc. #21 at p.7). It appears,
therefore, that Brown has refined her argument and agrees that Alabama law is not the only law to
be considered in this case based on the choice-of-law contract provision. She now argues that
South Carolina law regarding coverage has been satisfied so that there is coverage, and that
Alabama law applies to the substantive claims. This refinement, however, was not a ground for
summary judgment in her motion, was not raised in the initial brief in support of her motion, and is
an argument to which Allstate has not had an opportunity to respond.
This court is persuaded by, and the parties apparently agree with the application of, the
reasoning in Hollins that the law of the state of contract formation applies to coverage issues
before the covered loss choice-of-law provision applies. Therefore, the Motion for Partial
Summary Judgment, which seeks a judgment that only the law of the State of Alabama applies in
this case based on a specific choice-of-law provision, is due to be DENIED.
The parties’ other arguments whether raised in the reply brief, or in the context of the
Motion to Bifurcate and Stay Discovery, such as arguments regarding whether South Carolina law
is more restrictive than the insurance policy language, whether the policy requirements have been
met by the new affidavits Brown submitted, and as to the effect of Allstate’s admissions of fact,
may be raised in a new, timely-filed Motion for Summary Judgment later in the proceedings.
B. Motion to Bifurcate and Stay Discovery
Allstate seeks to bifurcate the breach of contract and bad faith claims in this case and stay
discovery as to the bad faith claim. Allstate has cited the court to decisions from other courts
which have bifurcated breach of contract and bad faith claims and stayed discovery as to the bad
faith claims in part because discovery on bad faith issues exposes insurers' work-product protected
or privileged materials to disclosure. Those decisions, of course, evaluated the facts and
procedural context of those particular cases in reaching that determination. See Wolf v. Geico Ins.
Co., 682 F. Supp. 2d 197, 198-99 (D.R.I. 2010) (noting that issues of whether to allow discovery
on breach of contract and bad faith claims together requires a case- by-case approach, and a
determination of how best to manage judicial resources).
Brown, in response, has cited to authority for the proposition that discovery can proceed as
to breach of contract and bad faith claims for reasons of judicial economy. See, e.g., Cook v.
United Serv. Auto. Ass'n, 169 F.R.D. 359, 362 (D.Nev.1996).
In this case, the issues of the requirement of affidavits, the interpretation of that
requirement, and whether and at what point it may have been complied with in this case, are
pertinent issues with respect to all of Brown’s claim against the insurance policy. For example,
Allstate argues that the Brown’s attempt to cure deficient affidavits with recently-submitted
affidavits supports a finding that there was no bad faith in the denial of her claims based on the
initial affidavits. The factual overlap, therefore, appears to the court to counsel against
bifurcation. See Wolf, 682 F. Supp. 2d at 200 (stating “the greater the overlap, the greater the
likelihood that splitting discovery into two phases will be needlessly duplicative. Conversely, the
less the facts overlap, the fewer disputes will likely arise, and lesser the likelihood that the second
phase of discovery will retread old ground.”). Accordingly, under the facts as presented thus far
in this case, and in the interest of judicial economy, the Motion to Bifurcate and Stay Discovery is
due to be DENIED.
For the reasons discussed, it is hereby ORDERED as follows:
1. The Motion to Bifurcate and Stay Discovery (Doc. #11) filed by Allstate Property and
Casualty Insurance Company (“Allstate”) is DENIED.
The Motion for Partial Summary Judgment (Doc. #14) is DENIED.
Done this 3rd day of November, 2015.
/s/ W. Harold Albritton___________________
W. HAROLD ALBRITTON
SENIOR UNITED STATES DISTRICT JUDGE
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