Country Club of Fairfield, Inc. v. New Hampshire Insurance Company

Filing 39

ORDER denying the Defendant's 21 Motion to Stay Discovery and Bifurcate Claims and granting the Plaintiff's 37 Motion to Compel. See the attached Memorandum of Decision. Signed by Judge Vanessa L. Bryant on 8/8/14. (Ives, D)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

COUNTRY CLUB OF FAIRFIELD, INC.,
Plaintiff,

:
:
:
v.
:
:
NEW HAMPSHIRE INSURANCE COMPANY, :
Defendant.
:

CIVIL ACTION NO.
3:13-CV-00509 (VLB)

August 8, 2014

MEMORANDUM OF DECISION DENYING DEFENDANT’S MOTION TO STAY
DISCOVERY AND BIFURCATE CLAIMS [Dkt. 21], AND GRANTING PLAINTIFF’S
MOTION TO COMPEL [Dkt. 37]

I.

Introduction
The Plaintiff, Country Club of Fairfield, Inc. (the “Club”), has brought this

insurance coverage action against Defendant New Hampshire Insurance
Company (“New Hampshire”), alleging breach of contract and breach of the
implied covenant of good faith and fair dealing stemming from the Defendant’s
alleged failure to compensate the Plaintiff for damage sustained as a result of
Tropical Storm Irene. Currently pending before the Court is New Hampshire’s
Motion to Stay Discovery pursuant to Federal Rule of Civil Procedure 26(c) as to
the Club’s claim for breach of the implied covenant of good faith and fair dealing,
and its request to bifurcate the two claims in this action pursuant to Federal Rule
42. For the reasons that follow, the Defendant’s Motion is DENIED.
II.

Factual Background
The following facts and allegations are taken from Plaintiff’s complaint.

1

The Club is a full-service golf course and country club located in Fairfield,
Connecticut and bordered on three sides by Long Island Sound and by a seawall.
[Dkt. 1, Compl. ¶6]. New Hampshire issued a commercial property insurance
policy to the Club with a limit of $10,304,070 and an effective period of June 13,
2011 to June 13, 2012. [Id. at ¶7]. The “Premier Property Coverages” section of
the policy requires New Hampshire to “pay for direct physical loss of or damage
to Covered Property at the premises described in the Declarations caused by or
resulting from any Covered Cause of Loss.” [Id. at ¶8]. Covered Property
includes “retaining walls” and “golf holes.” [Id. at ¶9]. The policy defines
“Covered Causes of Loss” as “RISKS OF DIRECT PHYSICAL LOSS” unless the
loss is excluded or limited by the terms of the Policy. [Id. at ¶10].
The policy contains a Business Income (Extra Expense) Coverage Form,
which states that New Hampshire will pay for “the actual loss of Business Income
you [ ] sustain due to the necessary ‘suspension’ of your ‘operations’ during the
‘period of restoration.’” Suspension “must be caused by direct physical loss or
damage to the property at premises which are described in the Declarations” and
“[t]he loss or damage must be caused by or result from a Covered Cause of
Loss.” [Id. at ¶11]. Business Income is defined as “a. Net Income (Net Profit or
Loss before income taxes) that would have been earned or incurred; and b.
Continuing normal operating expenses incurred, including payroll.” [Id. at ¶12].
The policy also includes a Windstorm or Hail Deductible Endorsement, which
“modifies insurance provided under the … Country Club Premier Property
Coverage Form [and the] Business Income (and Extra Expense) Coverage Form”
2

and “applies to loss or damage to Covered Property caused directly or indirectly
by Windstorm or Hail, regardless of any other cause or event that contributes
concurrently or in any sequence to the loss or damage.” [Id. at ¶13].
On or about August 28, 2011 Tropical Storm Irene caused documented high
wind speeds in the Fairfield, Connecticut area of more than sixty miles per hour
and caused extensive damage to the Club’s property. [Id. at ¶14]. The excessive
wind speeds caused Long Island Sound’s waters to breach the seawall and spill
onto the golf course, and caused significant damage to the golf holes. [Id.]. Due
to the physical damage to the golf holes, the Club was forced to cancel golf
tournaments scheduled from September 2011 through the remainder of the year,
resulting in significant loss of revenue. [Id. at ¶15]. The Club notified New
Hampshire of the damage to the golf holes and related loss of business income
and demanded coverage. [Id. at ¶16]. New Hampshire thereafter made a partial
payment to the Club as “coverage for the flood damage to the [seawall],”
applying a higher deductible and denying and disclaiming any obligation to pay
for the physical damage to the golf holes and any related business income
losses. [Id. at ¶17].
The Club alleges breach of contract in its first count for New Hampshire’s
failure to provide coverage under the policy and breach of the implied covenant
of good faith and fair dealing in its second count. As to count two, the Club
alleges that New Hampshire “act[ed] in its own self-interest and with reckless
indifference to the rights of its insured” in the following ways: (1) by failing to
conduct a reasonable and adequate investigation regarding the cause of the
3

Club’s loss and damage, including deliberately ignoring factual information
demonstrating windstorm as the preceding or concurrent cause and summarily
deciding, in the face of overwhelming evidence to the contrary, that the damage
to the golf holes was due to flood in order to avoid coverage; (2) by deliberately
and unreasonably ignoring substantial and relevant terms in the Windstorm or
Hail Deductible Endorsement of the policy and/or deliberately misinterpreting
these terms contrary to a reasonable lay person’s interpretation in order to avoid
providing full coverage; (3) by acting with reckless indifference to the Club’s
interests by intentionally misleading the Club to believe that there is no coverage
for the majority of its claim based on a standard-form water exclusion while
knowing that this exclusion was modified and/or abrogated by endorsements
added to the policy; (4) by intentionally misleading the Club to believe that
coverage for business income loss is conditioned upon coverage for property
damage to golf holes in order to avoid providing coverage for business income
loss while knowing that the Club is entitled to such coverage; (5) by neglecting
and/or refusing to provide the coverage afforded to the Club through
endorsements added to the policy despite collecting and retaining premiums for
said endorsements; and (6) by denying coverage knowing that the Club would be
forced to bring suit to obtain the coverage to which it is legally entitled. [Id. at
¶28]. The Club alleges that New Hampshire’s conduct was designed to mislead
and/or deceive the Club, and was not prompted by negligence or an honest
mistake as to New Hampshire’s rights and obligations under the policy. [Id. at
¶29].

4

New Hampshire contends that it has made all payments due under the
policy and that the Club is entitled to no further coverage or payment. [Dkt. 16,
Answer, Defenses, Counterclaim]. New Hampshire has also filed a counterclaim
for declaratory judgment seeking a declaration as to its obligations under the
policy. [Id.].
III.

Legal Standards
a. Stay of Discovery
Federal Rule of Civil Procedure 26(c) allows a court, for “good cause” and

in favor of “any person from whom discovery is sought,” to “issue an order to
protect a party or person from annoyance, embarrassment, oppression, or undue
burden or expense.” Fed. R. Civ. P. 26(c). “[U]pon a showing of good cause a
district court has considerable discretion to stay discovery” pursuant to Rule
26(c). Hong Leong Fin. Ltd. (Singapore) v. Pinnacle Performance Ltd., 297 F.R.D.
69, 72 (S.D.N.Y. 2013) (quoting Integrated Sys. & Power, Inc. v. Honeywell Int'l,
Inc., 2009 WL 2777076, at *1 (S.D.N.Y. Sept. 1, 2009)). See also United Rentals,
Inc. v. Chamberlain, 3:12-CV-1466 CSH, 2013 WL 6230094, *3 (D. Conn. Dec. 2,
2013) (“[T]he decision whether to issue a stay is ‘firmly within a district court's
discretion.’”) (citing LaSala v. Needham & Co., Inc., 399 F. Supp. 2d 421, 427
(S.D.N.Y. 2005)). The party seeking the stay bears the burden of demonstrating
good cause for the stay. United Rentals, Inc., 2013 WL 6230094 at *3.
The filing of a dispositive motion does not automatically constitute good
cause for a stay of discovery. See, e.g., United Rentals, Inc., 2013 WL 6230094 at

5

*3; Alford v. City of New York, CV 2011-0622 ERK MDG, 2012 WL 947498 (E.D.N.Y.
Mar. 20, 2012). Rather, “a court determining whether to grant a stay of discovery
pending a motion must look to the particular circumstances and posture of each
case.” Hong Leong Fin. Ltd. (Singapore), 297 F.R.D. at 72 (quoting Alford, 2012
WL 947498, *1); see also ITT Corp. v. Travelers Cas. & Sur. Co., 3:12CV38 RNC,
2012 WL 2944357, *2 (D. Conn. July 18, 2012) (same). Courts should consider
multiple factors, including the breadth of discovery sought, the burden of
responding to it, the prejudice that would result to the party opposing the stay,
and the strength of the pending motion forming the basis of the request for stay.
See ITT Corp., 2012 WL 2944357, *2; Cuartero v. U.S., 3:05CV1161 RNC, 2006 WL
3190521, *1 (D. Conn. Nov. 1, 2006); Hong Leong Fin. Ltd., 297 F.R.D. at 72. A
discovery stay may be appropriate pending resolution of a potentially dispositive
motion where the motion articulates substantial grounds for dismissal. See, e.g.,
ITT Corp., 2012 WL 2944357, at *2 (discovery stay is appropriate where the
pending dispositive motion “appear[s] to have substantial grounds or, stated
another way, do[es] not appear to be without foundation in law.”) (quoting
Johnson v. N.Y. Univ. School of Educ., 205 F.R.D. 433, 434 (S.D.N.Y. 2002));
United Rentals, Inc., 2013 WL 6230094 (quoting same); Hong Leong Fin. Ltd., 297
F.R.D. at 72-73 (“a motion for a stay [must] be supported by ‘substantial
arguments for dismissal,’ or—in what we view as an equivalent formulation—that
there has been ‘a strong showing that the plaintiff's claim is unmeritorious.’”)
(citations omitted).
b. Bifurcation of Claims
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Federal Rule of Civil Procedure 42 provides 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 thirdparty claims. When ordering a separate trial, the court must preserve any federal
right to a jury trial.” Fed. R. Civ. P. 42(b). Bifurcation is within the district court’s
discretion and is decided on a case-by-case basis. Svege v. Mercedes-Benz
Credit Corp., 329 F. Supp. 2d 283, 284 (D. Conn. 2004); Doe No. 1 v. Knights of
Columbus, 930 F. Supp. 2d 337, 379 (D. Conn. 2013). It is, however, the exception
and not the rule, and the moving party bears the burden of establishing that
bifurcation is warranted. Computer Associates Int'l, Inc. v. Simple.com, Inc., 247
F.R.D. 63, 67 (E.D.N.Y. 2007); Svege, 329 F. Supp. 2d at 284. See also Kos Pharm.,
Inc. v. Barr Labs., Inc., 218 F.R.D. 387, 391 (S.D.N.Y. 2003) (“The inconveniences,
inefficiencies and harms inherent in these probable consequences [of
bifurcation] -to the parties and third parties, to the courts, and to the prompt
administration of justice-weigh against separation of trials and suggest that, for
those probable adverse effects to be overcome, the circumstances justifying
bifurcation should be particularly compelling and prevail only in exceptional
cases”).
When considering whether to bifurcate, courts “should examine, among
other factors, whether bifurcation is needed to avoid or minimize prejudice,
whether it will produce economies in the trial of the matter, and whether
bifurcation will lessen or eliminate the likelihood of juror confusion.” Svege, 329
F. Supp. 2d at 284; Knights of Columbus, 930 F. Supp. 2d at 379 (citing same).
7

Bifurcation also “may be appropriate where, for example, the litigation of the first
issue might eliminate the need to litigate the second issue, or where one party
will be prejudiced by evidence presented against another party.” Amato v. City of
Saratoga Springs, N.Y., 170 F.3d 311, 316 (2d Cir. 1999) (citations omitted). Other
factors to consider include whether the issues are significantly different from one
another, whether the case is to be tried before a jury or to the court, whether the
posture of discovery favors a single trial or bifurcation, and whether the
evidentiary issues overlap. Knights of Columbus, 930 F. Supp. 2d at 379. See
also Computer Associates Int'l, Inc., 247 F.R.D. at 67 (“To determine whether
bifurcation is warranted, courts generally consider the following three factors: 1)
whether significant resources would be saved by bifurcation, 2) whether
bifurcation will increase juror comprehension, and 3) whether bifurcation will lead
to repeat presentations of the same evidence and witnesses.”) (citation omitted).
IV.

Discussion
New Hampshire asserts that, in the interest of judicial economy and to

prevent prejudice to the Defendant, it is appropriate to stay discovery as to count
two pursuant to Rule 26(c) and (d) until after the parties file dispositive motions
and the Court issues a determination as to New Hampshire’s coverage
obligations under the policy as related to count one, and that the Court should
accordingly bifurcate counts one and two pursuant to Rule 42. The Defendant
contends that, as the determination of coverage under an insurance policy
presents a question of law for the Court, the Club’s first count for breach of the
insurance policy is likely to be determined by a dispositive motion. The
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Defendant further contends that because the Plaintiff’s claim for breach of the
implied covenant of good faith and fair dealing is based on its claim that New
Hampshire denied insurance coverage as alleged in count one, i.e., a substantive
rather than a procedural bad faith claim, a determination as to count one for
breach of the insurance policy may eliminate the need for a determination of the
bad faith claim. In other words, according to the Defendant, if no additional
insurance coverage is owed to the Club under the policy, the Plaintiff’s claim for
breach of the implied covenant of good faith and fair dealing will fail because it is
a substantive bad faith claim rather than a procedural bad faith claim under
Connecticut law. New Hampshire also asserts that granting its motion will
“eliminate the potential for prejudice” to the Defendant in that staying discovery
as to count two will prevent New Hampshire’s “entire claims file and other
confidential information” from being the subject of discovery, as the scope of
discovery is broader in a claim for breach of the implied covenant of good faith
and fair dealing than in a claim for breach of the insurance contract. [Dkt. 21,
p.4].
The Club counters that resolution of New Hampshire’s coverage
obligations under the policy will not dispose of the Club’s claim for breach of the
implied covenant of good faith and fair dealing as its claim includes procedural
bad faith, and that counts one and two are intertwined such that bifurcating the
trials on these claims would grossly inconvenience the Court and the Club. The
Club also contends that the discovery relating to both claims substantially
overlaps and that the discovery of information in New Hampshire’s claims file is
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relevant to both counts in this action. Consequently, the Plaintiff argues that
staying discovery and bifurcating its claims would be inefficient, would not
negate any prejudice to the Defendant, and would be prejudicial to the Club.
The Court concludes that a stay of discovery pending the filing and
adjudication of a dispositive motion is inappropriate in this case. First, although
New Hampshire argues that a stay is appropriate because a future dispositive
motion will determine whether it owes further coverage to the Club under count
one and, if the Court determines that no further coverage is owed, will make
count two moot, New Hampshire has not yet filed a dispositive motion or
articulated its position such that the Court could evaluate the relative strengths
or weaknesses of its argument that the Club is entitled to no further coverage.
Rather, New Hampshire has simply stated that it owes no further coverage to the
Club without supporting its contention legally or factually, contending only that
“if [Plaintiff] does not prevail on its breach of contract claim it will not prevail on
its claim for breach of the implied covenant of good faith and fair dealing.” [Dkt.
26, D’s Reply p.5]. While it may be theoretically advantageous to bifurcate
discovery, New Hampshire provides no concrete grounds – much less substantial
grounds – for this Court to conclude that it will prevail on count one,
consequently mooting count two. It is therefore entirely probable that New
Hampshire will not prevail on count one and that, after disposition of the yetunfiled motion, counts one and two will remain extant and no discovery will have
been conducted as to count two. It is thus not possible at this juncture for the
Court to conclude that substantial grounds for dismissal of Plaintiff’s claim for
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breach of the insurance policy exist such that staying discovery as to count two
until the filing and resolution of a dispositive motion would be appropriate in this
case.
Although it is unnecessary to do so in light of New Hampshire’s failure to
demonstrate that it has significant grounds for dismissal of count one, thereby
negating count two, the Court briefly addresses New Hampshire’s argument that
the Club’s good faith and fair dealing claim must fail because it alleges only
substantive and not procedural bad faith. New Hampshire contends that the
Club’s bad faith claim is premised on New Hampshire’s denial of coverage only,
and that the failure to pay a claim is insufficient on its own to establish bad faith.
See United Tech. Corp. v. Am. Home Assur. Co., 989 F. Supp. 128, 156 (D. Conn.
1997) (“The mere failure to pay a claim is not sufficient to establish bad faith”).
The Plaintiff counters that a ruling on count one will not resolve count two
because the Club has alleged a procedural bad faith claim that does not depend
on the existence of coverage under the policy. [Dkt. 23, P’s Opp. p.4].
General principles of bad faith under Connecticut law are well-settled.
[I]t is axiomatic that the ... duty of good faith and fair dealing is
a covenant implied into a contract or a contractual
relationship.... In other words, every contract carries an
implied duty requiring that neither party do anything that will
injure the right of the other to receive the benefits of the
agreement.... The covenant of good faith and fair dealing
presupposes that the terms and purpose of the contract are
agreed upon by the parties and that what is in dispute is a
party’s discretionary application or interpretation of a contract
term.

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Renaissance Mgmt. Co., Inc. v. Conn. Hous. Fin. Auth., 281 Conn. 227, 240 (Conn.
2007) (quoting De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn.
424, 432–33 (Conn. 2004)). “To constitute a breach of [the implied covenant of
good faith and fair dealing], the acts by which a defendant allegedly impedes the
plaintiff’s right to receive benefits that he or she reasonably expected to receive
under the contract must have been taken in bad faith.” Id.; Capstone Bldg. Corp.
v. Am. Motorists Ins. Co., 308 Conn. 760, 795 (Conn. 2013) (same). “Bad faith in
general implies both actual or constructive fraud, or a design to mislead or
deceive another, or a neglect or refusal to fulfill some duty or some contractual
obligation, not prompted by an honest mistake as to one’s rights or duties, but by
some interested or sinister motive.... Bad faith means more than mere
negligence; it involves a dishonest purpose.” De La Concha, 269 Conn. at 433;
Capstone Bldg. Corp., 308 Conn. at 795 (same); TD Bank, N.A. v. J & M Holdings,
LLC, 143 Conn. App. 340, 348 (Conn. App. Ct. 2013) (same).
Bad faith is not implicated by conduct that does not impair contractual
rights. Home Ins. Co. v. Aetna Life & Cas. Co., 235 Conn. 185, 200 (Conn. 1995)
(quoting Habetz v. Condon, 224 Conn. 231, 238 (Conn. 1992)). Rather, “a bad faith
action must allege denial of the receipt of an express benefit under the
[insurance] policy.” Capstone Bldg. Corp., 308 Conn. at 794. “A bad faith cause
of action not tied to duties under the insurance policy must therefore fail as a
matter of law.” Id. at 797.
In arguing that its bad faith claim would still be cognizable as a procedural
bad faith claim even if the Court concluded that no further coverage is due to the
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Club under the policy, the Club relies on the District of Connecticut’s holding in
United Tech. Corp. v. Am. Home Assur. Co., 118 F. Supp. 2d 181 (D. Conn. 2000).
In that case, the Court (Arterton, J.) concluded that the Connecticut Supreme
Court “would not limit the tort of bad faith in the property insurance context to
claims of unreasonable or wrongful denial of claims” as an insurer’s “duty of
good faith is not triggered only when coverage is unquestioned.” 118 F. Supp. 2d
at 188. Thus, as “[t]he core of the duty of good faith and fair dealing is that the
insurer act reasonably towards its insured,” procedural bad faith claims may be
cognizable even absent a denial of coverage. Id. (quoting Deese v. State Farm
Mut. Auto. Ins. Co., 172 Ariz. 504, 508 (Ariz. 1992)). The Court accordingly
concluded that, where the insurer had taken an unequivocal “no coverage
position” as to the insured’s property damage claim for contamination of soil,
effectively delaying the determination of the insured’s claim while “misleading or
deceiving the plaintiff insured into believing that productive steps towards claims
resolution were underway,” judgment in favor of the plaintiff was proper. Id. at
184, 188 (“it makes little sense to hold insurers accountable for their bad faith
actions in wrongfully denying claims, yet immunize them from liability if they
simply refuse to issue the denials that can prompt coverage-testing litigation”).
Other courts in Connecticut have relied upon United Tech. Corp. in holding that a
procedural bad faith claim does not depend on the existence of coverage under a
policy. See, e.g., Tucker v. Am. Int'l Grp., Inc., 3:09-CV-1499 CSH, 2011 WL
6020851 (D. Conn. Dec. 2, 2011) (Haight, J.) (“A claim of procedural bad faith … is
predicated on the bad faith handling process of the claim, regardless of whether

13

coverage exists. . . . Connecticut courts have not negated the existence of an
independent tort for procedural bad faith in the absence of coverage.”); Fortin v.
Hartford Underwriters Ins. Co., X04CV030103483S, 2006 WL 3524562, *2 (Conn.
Super. Ct. Nov. 20, 2006) (noting United Techs. Corp.’s differentiation of
“substantive and procedural claims of the breach of the obligations of good faith
and fair dealing concerning insurance contracts and a company's claims
resolution procedures” and rejecting insurer’s argument that bad faith tort is only
available where the insurer has breached its contract). See also United Techs.
Corp., 118 F. Supp. 2d at 188–89 (collecting cases from other jurisdictions).
The Connecticut Supreme Court has not opined specifically on whether
claims handling misconduct not involving wrongful withholding of payment due
under an insurance policy may constitute bad faith. However, it is unclear to this
Court whether such a claim may be maintained in light of the Connecticut
Supreme Court’s decision in Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308
Conn. 760, 794, 797-98, 801 (2013) (“a bad faith action must allege denial of the
receipt of an express benefit under the [insurance] policy” and “[a] bad faith
cause of action not tied to duties under the insurance policy must therefore fail
as a matter of law.” Also holding that “in the absence of a breach of an express
duty under the insurance policy, there is no independent cause of action for
deficiencies in the insurer's investigation” but, “when accompanied by other
evidence, reflecting an improper motive, properly may be considered as evidence

14

of bad faith.”).1 Nor have other courts reached the same conclusion as the United
Tech. Corp. v. Am. Home Assur. Co. court. See, e.g., McCulloch v. Hartford Life &
Acc. Ins. Co., 363 F. Supp. 2d 169, 177 (D. Conn. 2005) (“[a]llegations of a mere
coverage dispute or a negligent investigation by an insurer will not state a claim
for bad faith. Thus, a plaintiff cannot recover for bad faith if the insurer denies a
claim that is ‘fairly debatable,’ i.e., if the insurer had some arguably justifiable
reason for refusing to pay or terminating the claim.”); Harris v. Hermitage Ins.
Co., CV085021329S, 2009 WL 3740666, *8 (Conn. Super. Ct. Oct. 13, 2009) (holding
that where policy did not require insurance company to defend or indemnify the
insured, “the failure to do so could not constitute a breach of the covenant of
good faith and fair dealing”).
While New Hampshire apparently agrees that procedural bad faith claims
remain cognizable under Connecticut law pursuant to the holding in United Tech.
Corp. v. Am. Home Assur. Co. even in the absence of an explicit denial of
coverage, it argues that the Plaintiff has failed to sufficiently plead bad faith and
that the allegations here do not rise to the level of those in United Tech. Corp..
However, this issue is a matter for a substantive motion and not appropriate for
review based only on the sparse briefing of the parties. Moreover, neither party

1

This Court, (Arterton, J.), has previously held, based on holding of United Techs.
Corp., that procedural bad faith could include the failure to reasonably
investigate. Royal Ins. Co. of Am. v. Zygo Corp., 349 F. Supp. 2d 295, 313 (D.
Conn. 2004) (“While the Connecticut Supreme Court has never squarely
addressed the issue, this Court has held … that Connecticut common law would
recognize a claim for ‘procedural bad faith,’ including failure to reasonably
investigate an insurance claim”).

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asserts that the Plaintiff would be precluded from amending its complaint to
buttress its claim for breach of the implied duty of good faith either now or if its
claim were dismissed on New Hampshire’s yet-to-be filed motion to dismiss.
Consequently, staying discovery at this juncture would be inappropriate if based
on the brief arguments of the parties presented here as to procedural bad faith.2
The Defendant has also failed to demonstrate either that discovery as to
count two would be time-consuming, burdensome, or expensive, or how the
scope of discovery required as to count two would be substantially broader than
the discovery required as to count one. The Court notes that the Defendant has
not articulated what discovery requests it has yet received such that this Court
could determine whether the breadth of discovery sought weighs in favor of
Defendant’s request to stay. Indeed, discovery regarding the insurance coverage
issue will likely overlap with the discovery necessary for the bad faith claim. New
Hampshire’s employees may possess relevant information as to both claims, i.e.,
the scope of coverage under the policy and the steps that were taken or not taken
in determining coverage for Plaintiff’s claims. The goal of judicial economy and
efficiency is furthered by deposing these witnesses once, and the benefit to both
parties and their witnesses of not duplicating discovery outweighs New
Hampshire’s arguments for a discovery stay or bifurcation of claims.

2

The Court notes that nearly the entirety of Defendant’s argument that the
Plaintiff has failed to plead a procedural bad faith claim appears in its Reply to the
Plaintiff’s Opposition to New Hampshire’s Motion to Stay, and not in the Motion to
Stay itself. Aside from the dubious propriety of making these arguments almost
solely in a reply brief, the parties simply have not briefed this issue sufficiently at
this juncture.
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Nor has New Hampshire sufficiently demonstrated that it will be prejudiced
if discovery as to its alleged bad faith claim is allowed to proceed. Rather, New
Hampshire merely asserts that prejudice “may result from a broadened scope of
discovery” necessary to the bad faith claim, including discovery of its entire
claims file, which claim Defendant contends does not exist in this case in the first
instance absent coverage. [Dkt. 21, p.4; dkt. 26, pp.5-6]. The Plaintiff responds
that the significant prejudice and expense it would incur if its witnesses were
deposed twice negates any prejudice to the Defendant of proceeding with
discovery. However, as discussed, this Court need not reach the issue of
whether the Plaintiff’s bad faith claim would be cognizable if additional coverage
is not due under the policy, both because New Hampshire has not provided
significant grounds for dismissal of Plaintiff’s breach of contract claim and
because the parties have not sufficiently addressed the issue of whether a
procedural bad faith claim is cognizable under Connecticut law at this stage.
Rule 26 entitles the parties to “obtain discovery regarding any non-privileged
matter that is relevant to any party’s claim or defense” and “need not be
admissible at the trial if the discovery appears reasonably calculated to lead to
the discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1). Moreover, as the
Defendant explicitly recognizes, a claim of bad faith may entitle the Plaintiff to
discovery of New Hampshire’s entire claims file. See, e.g., O'Leary Ltd. P'ship v.
Travelers Prop. Cas. Co., X04CV990121281S, 2001 WL 417698 (Conn. Super. Ct.
Apr. 5, 2001) (granting motion to compel production of insurance claim where bad
faith claim was alleged and noting that “other courts in Connecticut have

17

required production of insurance claims files when bad faith allegations have
been pleaded against the insurers”). Limiting the scope of discovery based on
the entirely speculative assertion of prejudice to the Defendant is inappropriate at
this juncture.
V.

Conclusion
For the foregoing reasons, the Court finds that the Defendant has failed to

satisfy its burden to establish that either a stay of discovery or bifurcation of
claims is warranted. The issue of bifurcation may be revisited, if the parties
desire, after discovery has progressed and this case is closer to its trial date.
New Hampshire’s [Dkt. 21] Motion to Stay Discovery and Bifurcate Claims is
DENIED.
Finally, as stated above the filing or a motion, even a dispositive motion
which might obviate the need to conduct any discovery altogether, is ordinarily
not a basis to stay or refuse to produce discovery absent extraordinary
circumstances. A party objecting to discovery must lodge their objection in
accordance with the rules pertaining to discovery, including supporting it with
applicable law and in the case of an assertion of privilege a rule-conforming
privilege log. Such a log must describe the nature of the documents,
communications, or tangible things not produced or disclosed—and do so in a
manner that, without revealing information itself privileged or protected, will
enable other parties to assess the claim. Fed. R. Civ. P. 26(b)(5). The Plaintiff has
moved to compel the disclosure and production of discovery which the

18

Defendant has withheld due to the pendency of the instant motion and for other
reasons not sufficiently supported legally or factually to enable the Court to
assess their merits. Accordingly, the Plaintiff’s motion to compel [Dkt. No. 37] is
granted effective August 29, 2014 and on that day the Defendant is ordered to
disclose the information sought unless and to the extent that prior to August 22,
2014 the Defendant has served on the Plaintiff an objection with supporting legal
authority and privilege log, as appropriate to any discovery not satisfied.
IT IS SO ORDERED.

________/s/______________
Hon. Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: August 8, 2014

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