Tuesday, February 17, 2015

Crawford County Post-Koken Decision in Favor of Severance and Stay of Bad Faith Claims Pending Resolution of UIM Claim

In what appears to be the first such Post-Koken decision out of Crawford County, Judge Mark D. Stevens has ruled in favor of the UIM carrier's severance of and stay of bad faith claims in the combined UIM Breach of Contract and Bad Faith cause of action in the case of Rucci v. Erie Insurance Exchange, No. A.D. 2014 - 803 (C.P. Crawford Co. February 5, 2015 Stevens, J.).

In a thorough Opinion issued in the matter, Judge Stevens noted that the parties were in agreement that, in this state court action, the UIM breach of contract action was required to be decided by way of a jury trial and the bad faith claim via a bench trial.

Arguing under the doctrine of judicial economy, the Plaintiffs asserted that they should be allowed to conduct discovery relative to all claims even before the breach of contract claim was tried.  The Plaintiffs also asserted that they would be prejudiced by a refusal of the trial court to allow bad faith discovery.

The Defendant carrier argued that it would be prejudicial to allow bad faith discovery to proceed prior to the resolution of the UIM claim as such discovery would give the Plaintiff an unfair tactical advantage in that the mental impressions, conclusions, and impressions of the claims handler protected under Pa.R.C.P. 4003.3 would be disclosed prior to the resolution of the UIM claim.

The Plaintiff countered with the argument that Pa.R.C.P. 4003.3 refers to "representatives" of the Defendant and that, here, the discovery was being requested instead from the Defendant as a party.
The Plaintiff's also asserted that the Defendant carrier should be required to assert more specific objections to requested discovery rather than being allowed a blanket stay of all discovery.

Judge Stevens also reviewed a number of cases from around the Commonwealth on the same issue and noted that the other cases also emphasized the issues of judicial economy and prejudice.

On the prejudice issue, Judge Stevens agreed with those cases finding that it would be unfairly prejudicial to the UIM carrier defendant to have to provide bad faith discovery prior to the completion of the UIM matter.  Judge Stevens wrote, "The Court agrees that the information gleaned from bad faith discovery has the potential to give Plaintiffs an unfair advantage in the UIM litigation or unfair leverage in compelling settlement of the contract case."  Op. at p. 5.

On the judicial economy argument put forth by the Plaintiff, the court also noted that to allow the claims to proceed together and also allow bad faith discovery prior to the completion of the UIM claim would actually be less efficient.   More specifically, the court noted that, in such a scenario, more motions practice would result in the form of repeated motions for protective orders and the possibility of the court having to repeatedly review documents in an in camera fashion to decide the discovery disputes.  Judge Stevens noted that this could be simply avoided by severing the actions.

Judge Stevens also emphasized that UIM claims and bad faith claims are distinct and that, therefore, it was questionable as to what extent the discovery would overlap in the two claims.  As such, the Plaintiff's judicial economy argument in favor of combined discovery was rejected for this additional reason.

In this regard, Judge Stevens wrote, "The Court believes that there is little efficiency to be gained by combining discovery on these claims, and these proceedings would be more efficiently concluded if discovery advanced solely on the UIM claim until such time that that claim is resolved."  Op. at p. 7.

Judge Stevens also held that "bifurcating the claims and discovery causes Plaintiff no real harm, as the bad faith claim may continue beyond the resolution of the UIM claim."  Op. at p. 9.

In light of the above, Judge Stevens severed the UIM and Bad Faith claims and stayed discovery on the Bad Faith issues until the resolution of the UIM claim.

Anyone wishing to review this detailed Opinion by Judge Stevens in the Rucci case may contact me at dancummins@comcast.net.

I note that the Post-Koken Scorecard on the Tort Talk blog will be updated with this decision.  Here's a quick LINK to the Scorecard, which is always freely accessible by going to the Tort Talk Blog at www.TortTalk.com.

I send thanks to the prevailing defense attorney, William Wagner, Esquire of the Erie, Pennsylvania law firm of Marnen, Mioduszewski, Bordonaro, Wagner & Sinnott for bringing this case to my attention.

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