United States District Court, W.D. Missouri, Western Division
G-MET, LLC, as Assignee of MBT Banchares, Inc. and Missouri Bank and Trust Company of Kansas City, Plaintiff,
ST. PAUL MERCURY INSURANCE COMPANY, Defendant.
ORDER DENYING DEFENDANT'S MOTION TO BIFURCATE AND
D. SMITH, SENIOR JUDGE
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.
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
Plaintiff 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.
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 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.
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.
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
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
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-CV-00364-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.
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
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.
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