State Auto Property & Casualty Insurance Company v. Burns Enterprises, Inc. et al

Filing 56

MEMORANDUM OPINION AND ORDER by Magistrate Judge Colin H. Lindsay; State Autos Motion to Bifurcate [DN52] is GRANTED. Discovery on the bad faith claim by the Burns Entities against State Auto is stayed until after the resolution of the interpleader action.cc:counsel (MLG)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:15-CV-113-DJH
STATE AUTO PROPERTY & CASUALTY
INSURANCE COMPANY
Plaintiff,
v.
BURNS ENTERPRISES, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER

Defendants, Burns Enterprises, Inc., Burns Packaging Company, Inc., Tommie Burns,
Barbara Burns, Burns Chemical and Supply Company, Inc., and TW&A of South Carolina, Inc.
(“the Burns Entities”) sustained water damage to their property after a pipe burst. The Burns
Entities held an insurance policy with Plaintiff, State Auto Property & Casualty Insurance
Company (“State Auto”), and filed a claim after the water damage occurred. Upon receiving the
claim, State Auto found numerous liens and mortgages on the Burns Entities’ property. As a
result, State Auto filed an interpleader action against the Burns Entities and other Defendants to
avoid being subject to double liability. The Burns Entities then filed a counterclaim against State
Auto for bad faith. In response, State Auto filed a motion to bifurcate the interpleader and bad
faith actions. (Docket No. 52.) The Burns Entities do not object to this motion. Because the
motion is unopposed and bifurcation will serve the interest of judicial efficiency, the Court will
grant the motion.
I.

STANDARD
A court may bifurcate “one or more separate issues, claims, cross-claims, counter claims,

or third party claims” in order to “avoid prejudice or to expedite and economize.” Fed. R. Civ.
P. 42(b). The burden of proof rests with the moving party to establish that the issues are more

appropriately adjudicated separately. Brantley v. Safeco Ins. Co. of Am., No. 1:11-CV-00054-R,
2011 WL 6012554, at *2 (W.D. Ky. Dec. 1, 2011). In analyzing such a motion, the court has
broad discretion and may consider all relevant facts. In re Benedictan Litig., 857 F.2d 290, 307
(6th Cir. 1988).
II.

DISCUSSION
Courts frequently bifurcate claims for breach of contract and bad faith against insurance

companies, as deciding the first claim may obviate the need to litigate the second. Bruckner v.
Sentinel Ins. Co., LTD, No. 09-CV-195-JBC, 2011 WL 589911, at *1 (E.D. Ky. Feb. 10, 2011);
see also Smith v. Allstate , 403 F.3d 401, 407 (6th Cir. 2005). But see Tharpe v. Ill. Nat’l Ins.
Co., 199 F.R.D. 213, 215 (W.D. Ky. 2001) (in which the court denied a motion to bifurcate
because there were only two litigants and the “usual considerations which militate in favor of
bifurcation [were] absent”). Although the original complaint in the present case was actually
filed by the insurance company in interpleader, resolution of this claim may still be dispositive
for the entire case if it is determined that the Burns Entities is not entitled to any portion of the
insurance payment. Therefore, adjudicating the interpleader claim first could save time and
resources. Additionally, including the remaining Defendants in discovery and trial for the bad
faith claim, which they have no part in, would be inefficient. For these reasons, the interpleader
and bad faith claims should be tried—and discovery should be conducted—separately.
Accordingly,
IT IS HEREBY ORDERED that State Auto’s Motion to Bifurcate (DN52) is
GRANTED. Discovery on the bad faith claim by the Burns Entities against State Auto is stayed
until after the resolution of the interpleader action.

cc: Counsel of record
August 13, 2015

Colin Lindsay, MagistrateJudge
United States District Court