Thursday, November 16, 2017

Judge Caputo of Federal Middle District Court Denies Motion to Sever and Stay Post-Koken Bad Faith Claim

In his recent decision in the case of Mulgrew v. GEICO, No. 3:16-cv-02217 (M.D. Pa. Oct. 11, 2017 Caputo, J.), the court denied a Defendant’s Motion to Sever and Stay the Plaintiff’s bad faith claim in a underinsured motorist matter. 

 The court referred to Federal Rule of Civil Procedure 21 which grants the Federal District Courts broad discretion in deciding whether or not to sever a case.  

Judge A. Richard Caputo
M.D. PA
Judge Caputo noted that the factors used to decide a Motion to Sever under Rule 21 are the same as utilized in deciding a Motion to Bifurcate under Rule 42(b).  

The court differentiated between the two rules by indicating that a Rule 21 severance essentially creates a separate case, the disposition of which is final and appealable, whereas Rule 42(b) does not create a new case but bifurcates issues or claims within a single case for separate trials.   A claim that is bifurcated under Rule 42(b) is not final and appealable as long as the other claims in the case remain unresolved. 

The factors to be considered in deciding such motions to sever or bifurcate in Federal Court cases includes the following:

-           Convenience of the parties
-           Avoiding prejudice, and
-           Promoting expedition and economy

In denying the Motion, Judge Caputo found that both the convenience of the parties and the judicial economy weighed against severance.   The court also rejected the Defendant’s claim that the resolution of the breach of contract action could greatly impact and potentially moot the bad faith claim.  The court noted that litigation on the bad faith claim is not contingent upon the success of the breach of contract claim in that a Plaintiff could simultaneously prevail on a bad faith claim while losing the UIM claim.   The court also found that severance would hinder judicial economy by requiring separate cases and separate trials instead of handling these claims within a single action.  

The court additionally opined that the potential prejudice to the carrier of litigating the breach of contract and bad faith claims at the same time did not outweigh the countervailing goal of judicial economy in the prompt resolution of the entire matter.  

For these reasons, Judge Caputo denied the Motion to Sever and Stay the Plaintiff’s Bad Faith Claim.  

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney Lee Applebaum, the writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for bringing this case to my attention.  

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