G-Met LLC v. St. Paul Mercury Insurance Company
ORDER DENYING DEFENDANT'S MOTION TO BIFURCATE AND STAY DISCOVERY, 32 . Signed on 11/8/17 by District Judge Nanette K. Laughrey. (Matthes Mitra, Renea)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
as Assignee of MBT Banchares, Inc.
and Missouri Bank and Trust Company
of Kansas City,
ST. PAUL MERCURY
Case No. 17-00070-CV-W-ODS
ORDER DENYING DEFENDANT’S MOTION TO BIFURCATE
AND STAY DISCOVERY
Pending is Defendant’s motion to bifurcate and stay discovery as to Count II of
Plaintiff’s Complaint. Doc. #32. For the reasons below, the Court denies the motion.
On January 31, 2017, Plaintiff filed its Complaint, alleging Defendant breached
the terms of Financial Institution Bond No. 0480PB0628 (“the FIB” or “FIB”). Doc. #1.
Pursuant to the FIB, Defendant agreed to indemnify Plaintiff1 for a variety of potential
losses in specified amounts detailed under multiple insuring clauses. Doc. #1-2. After
suffering what it believed to be a loss covered by the FIB, Plaintiff submitted a claim, but
Defendant denied the claim after determining the FIB did not cover Plaintiff’s loss.
Plaintiff’s Complaint has two counts. Count I alleges a breach of contract, stating
that “[b]y refusing to indemnify MBT for the losses resulting from the forged, fraudulent,
and/or altered instructions, advices, withdrawal orders, receipts or security agreements
under the FIB, [Defendant] breached the terms of the FIB....” Doc. #1, at 6. Count II
Plaintiff proceeds as the real party interest following an assignment of claims from
MBT Bancshares, Inc. and Missouri Bank and Trust Company of Kansas City. See
Docs. #25-28. For simplicity, the Court uses “Plaintiff” throughout this opinion,
encompassing G-Met, LLC and entities that assigned claims to G-Met, LLC.
alleges “[Defendant’s] refusal to indemnify MBT pursuant to the FIB was vexatious and
without reasonable cause or excuse in that the plain language of the FIB
unambiguously indicates...” the FIB covered Plaintiff’s losses. Doc. #1, at 7. Plaintiff
seeks damages for Defendant’s alleged breach of contract and vexatious refusal, but
does not seek punitive damages. See generally Doc. #1.
After receiving the parties joint proposed scheduling order (Doc. #15), the Court
entered a Scheduling and Trial Order on April 19, 2017. Doc. #16. More than five
months after entry of the Scheduling and Trial Order and the commencement of
discovery, Defendant moves to bifurcate any trial on Count I from Count II, and seeks a
stay of discovery related to Plaintiff’s vexatious refusal claim in Count II.
Federal Rule of Civil Procedure 42(b) states “[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, counter-claims, or third-party claims.” Fed.
R. Civ. P. 42(b). This permissive language gives district courts broad discretion to
bifurcate issues for separate trials. O’Dell v. Hercules, Inc., 904 F.2d 1194, 1201-02
(8th Cir. 1990); Daniels v. City of Sioux City, 294 F.R.D. 509, 511 (N.D. Iowa 2013). A
case-by-case analysis of relevant facts and circumstances is required, and bright-line
rules are not appropriate. Daniels, 294 F.R.D. at 511 (citations omitted).
In addition to the considerations set forth in Rule 42(b), “district courts should
consider the preservation of constitutional rights, clarity, judicial economy, the likelihood
of inconsistent results and possibilities for confusion.” Hercules, 904 F.2d at 1202
(citing Koch Fuels, Inc. v. Cargo of 13,000 Barrels of No. 2 Oil, 704 F.2d 1038, 1042
(8th Cir. 1983)). The district court’s ruling on a motion to bifurcate is reviewed for an
abuse of discretion. Athey v. Farmers Ins. Exch., 234 F.3d 357, 362 (8th Cir. 2000).
“[T]he key issue is whether bifurcation is necessary to avoid prejudice.” Niver v.
Travelers Indem. Co. of IL, 430 F. Supp. 2d 852, 872 (N.D. Iowa 2006) (citing Athey,
234 F.3d at 362). A district court does not abuse its discretion by denying a motion to
bifurcate if the movant failed to show the denial prejudiced its case. Athey, 234 F.3d at
Federal Rule of Civil Procedure 26(c)(1)(D) authorizes the Court, for good cause,
to “limit the scope of disclosure or discovery to certain matters.” Fed. R. Civ. P.
26(c)(1)(D). Discovery is designed to be broad, and liberally construed to provide
parties with essential information relevant to issues, or potential issues, in the case.
Fed. R. Civ. P. 26(b)(1); Daniels, 294 F.R.D. at 512 (citations omitted). A district court’s
power to stay proceedings is inherent in its ability to manage its own docket, but a stay
of a civil matter is an “extraordinary remedy.” Infodeli, LLC v. W. Robidoux, Inc., 15-CV00364-BCW, 2016 WL 6920524, at *2 (W.D. Mo. Feb. 22, 2016) (citation omitted). The
party seeking a discovery stay bears the burden to establish good cause for the
requested stay. Id.
The Court finds bifurcation and a discovery stay are not warranted based on the
facts and issues of this case. Plaintiff’s two claims are based on a single act –
Defendant’s denial of Plaintiff’s insurance claim. Defendant argues these claims are not
intertwined because Count I is a question of law to be decided by the Court, while Count
II is a question of fact for the jury requiring Plaintiff to prove additional elements beyond
a breach of contract. Simply because Count II involves additional elements to be
proved at trial does not persuade the Court that the claims are so distinct and separable
as to require bifurcation. In fact, the Missouri Approved Jury Instructions, from which
the Court will formulate jury instructions per the Court’s Scheduling and Trial Order,
indicate a vexatious refusal to pay claim is tried with a breach of contract claim in an
insurance coverage case. See MAI (Civil) 10.08 (7th ed.) (providing damages
instruction for a vexatious refusal claim with reference to the jury first finding in favor of
plaintiff on insurance policy claim). That Plaintiff’s claims are based on the same
conduct weighs heavily against bifurcation and a discovery stay.
Additional considerations also weigh against bifurcation and a discovery stay.
Defendant asserts it will be prejudiced at trial by presentation of evidence related to the
vexatious refusal claim prior to a finding that Defendant breached the FIB. Curiously,
Defendant asserts the facts surrounding Count I are “largely undisputed and the
relevant Bond provisions are clear and unambiguous,” and states “Count I is a question
of law to be decided by this Court....” Docs. #33, at 4; #41, at 2. If true, Count I will be
resolved by the Court on a motion for summary judgment, rather than presented to a
jury. See Weitz v. MH Washington, 631 F.3d 510, 524 (8th Cir. 2011) (explaining that,
under Missouri law, determining the meaning of an unambiguous contract provision is a
question of law for the court to decide). If the Court finds Count I should be presented
to the jury, the Court can take measures to prevent presentation of evidence related to
Count II unless and until Plaintiff makes a submissible case on Count I. Such steps
ensure Defendant will not be prejudiced by a simultaneous trial on both claims.
The Court also believes bifurcation and a discovery stay would not “expedite and
economize” this proceeding. The parties’ deadline to complete discovery is currently
December 20, 2017. Doc. #16, at 2. To bifurcate and stay discovery as to issues
relevant to Count II would require the Court to maintain current pre-trial and trial settings
for Count I, and issue a second order setting new discovery deadlines, pre-trial, and trial
settings for Count II. Defendant references the potential for a discovery dispute related
to Count II, but any potential dispute does not establish good cause to stay discovery.
The Court stands ready to quickly and efficiently resolve any disputes prior to the close
of discovery and filing of dispositive motions. Furthermore, the Court believes evidence
and witnesses relevant to each count are likely to overlap because Plaintiff’s two claims
arise from the same underlying denial of coverage, weighing against bifurcation and a
discovery stay. Given the above, the Court finds bifurcation and a discovery stay are
not warranted, and denies Defendant’s motion.
Defendant’s motion to bifurcate and stay discovery as to Count II is denied.
IT IS SO ORDERED.
/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT
DATE: November 8, 2017
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