Ferguson v. State Farm Mutual Automobile Insurance Company et al
ORDER denying 12 Motion to Sever; denying as moot 20 Motion for Hearing. Signed by Judge John W. Sedwick on 10/18/11. (GMM, CHAMBERS STAFF)
UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA
STATE FARM MUTUAL
ORDER AND OPINION
Motions at Docket 12 and 20]
I. MOTION PRESENTED
At docket 12, defendant State Farm Mutual Automobile Insurance Company
(“defendant” or “State Farm”) moves pursuant to Federal Rules of Civil Procedure 21
and 42 to sever and stay the bad faith claims asserted against it. Plaintiff Lola
Ferguson (“plaintiff” or “Ferguson”) opposes the motion at docket 19. Defendant’s reply
is at docket 24. Oral argument was requested by plaintiff in a motion at docket 20, but
would not assist the court.
Ferguson was involved in an automobile accident in April 2009. The driver of the
other vehicle was insured by 21st Century Insurance. Ferguson settled her liability claim
against the other driver for the limits of the other driver’s insurance policy in July 2010.
Ferguson had underinsured motorist (“UIM”) coverage with State Farm. She maintains
that she is entitled to and has made numerous demands of State Farm for the limits of
her UIM policy. Ferguson claims that she provided State Farm with all necessary
documentation and that State Farm took no steps to process her claim. Ferguson filed
suit in April 2011 and asserted claims for a host of statutory violations (some of which
can be characterized as “bad faith” claims), breach of contract, and breach of the
covenant of good faith and fair dealing.
Rule 42(b) states that “[f]or convenience, to avoid prejudice, or to expedite and
economize, the court may order a separate trial of one or more separate issues, claims,
crossclaims, counterclaims, or third-party claims.”1 “Bifurcation is particularly
appropriate when resolution of a single claim or issue could be dispositive of the entire
case.”2 In insurance cases, courts frequently bifurcate bad faith claims when they would
be precluded by resolution of a breach-of-contract claim in the insurance company’s
As plaintiff points out, even if a jury determined that State Farm was not liable on
Ferguson’s breach-of-contract claim, plaintiff’s claim for breach of the covenant of good
faith and fair dealing would go forward. That is because Ferguson’s bad faith claims are
largely based on State Farm’s inaction. Consequently, bifurcation would neither
expedite nor economize this case. State Farm’s argument that settlement of the UIM
claim or a verdict in the range of what Ferguson has already recovered would reduce
the likelihood that plaintiff would pursue the bad faith claim is speculative. If the claim is
not settled, or a jury finds that Ferguson is entitled to more than what she has already
recovered, then two trials would be necessary and judicial economy would not be
State Farm’s primary argument is that the bad faith claims should be severed to
avoid prejudice. State Farm’s argument is conclusory–State Farm does not explain how
Fed. R. Civ. P. 42(b).
Drennan v. Maryland Cas. Co., 366 F. Supp. 2d 1002, 1007 (D. Nev. 2005) (citing
O’Malley v. United States Fidelity and Guaranty Co., 776 F.2d 494, 501 (5th Cir. 1985)).
See, e.g., id. at 1007–08.
the evidence that might support a bad faith claim would “prejudice the outcome of a trial
on the UIM claim.”4 State Farm relies heavily on Gibson v. GEICO Gen. Ins. Co.,5 to
support its position that evidence intended to prove anything beyond “liability, causation
and damages”6 is prejudicial, irrelevant, or both. But State Farm ignores a critical
distinction–the plaintiff in Gibson “did not allege bad faith on the part of” the insurer.7
The court noted specifically that “insurer bad faith was not an issue.”8 State Farm’s
argument “that the trial in this case on the UIM claim should be handled the same as in
Gibson” is therefore not persuasive.9
State Farm has not advanced an argument that severance would be convenient.
Because the court has determined that Ferguson’s bad faith claims need not be
severed, State Farm’s request for a protective order staying discovery on those claims
For the reasons above, State Farm’s motion at docket 12 to sever plaintiff’s bad
faith claims pursuant to Federal Rule42(b) is DENIED. State Farm’s request for a
protective order staying discovery on plaintiff’s bad faith claims is DENIED.
Ferguson’s motion at docket 20 for oral argument is DENIED as moot.
DATED at Anchorage, Alaska, this 18th day of October 2011.
/s/ JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE
Doc. 12 at 7.
153 P.3d 312 (Alaska 2007).
Doc. 12 at 5.
Gibson, 153 P.3d at 315.
Id. at 316.
Doc. 12 at 8.
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