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Park Plaza Condominium Association v. Travelers Indemnity Company of America

United States District Court, D. Montana, Great Falls Division

March 20, 2018

PARK PLAZA CONDOMINIUM ASSOCIATION, Plaintiff,
v.
THE TRAVELERS INDEMNITY COMPANY OF AMERICA; THE TRAVELERS INDEMNITY COMPANY; TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA; THE TRAVELERS COMPANIES, INC.; and PHOENIX INSURANCE COMPANY, Defendants.

          ORDER

          John Johnston United States Magistrate Judge.

         I. Introduction

         On January 8, 2018, Defendants The Travelers Indemnity Company of America, The Phoenix Insurance Company, The Travelers Indemnity Company, and Travelers Property Casualty Company of America (hereinafter the “Moving Defendants”) filed a Motion to Bifurcate Plaintiff's Count One and Stay Count Two. (Doc. 29). The Moving Defendants argued that bifurcating the action and staying the second count is proper to prevent undue prejudice to them. (Id.) On January 17, 2018, Plaintiff Park Plaza Condominium Association (hereinafter “Park Plaza”) filed its response brief, arguing that Courts in the District of Montana do not bifurcate trials on this issue, and that the interests of judicial expediency weigh against bifurcation. (Doc. 31). The Moving Defendants filed their reply brief on January 31, 2018. (Doc. 34).

         On January 25, 2018, Defendant Travelers Companies, Inc. (hereinafter “Travelers”) filed a Motion to Dismiss with Prejudice, arguing that the Court does not have personal jurisdiction over it, and that service upon it was improper. (Doc. 32). On February 8, 2018, Park Plaza filed its response brief, arguing that Travelers's control over its subsidiaries was sufficient to grant jurisdiction over Travelers, and that any improper service could be cured. (Doc. 37). Travelers filed its reply brief on February 21, 2018. (Doc. 39).

         On March 6, 2018, the Court held a hearing on both motions at the Missouri River Federal Courthouse in Great Falls, Montana. The issues have been fully briefed in both motions and are ripe for adjudication.

         II. Background

         Since 2009, Park Plaza has been insured by the Travelers Indemnity Company of America and Phoenix Insurance Company (“Phoenix”). (Doc. 8 at ¶2). Park Plaza alleges that during that period up to the present time, heavy winds, rain, and hail have damaged the exterior envelope of its building, for which it demands coverage under its insurance policies issued by the Moving Defendants. (Id. at ¶7). The Moving Defendants disputed the amount of damage to the building and the cause of the damage and claim that Park Plaza's demand for coverage “required further investigation.” (Doc. 30 at 3). Park Plaza filed suit against the Moving Defendants, alleging breach of contract (Count One) and various violations of the Montana Unfair Trade Practices Act (“UTPA”) (Count Two). (See Doc. 23 at ¶¶1-13).

         III. Analysis

         A. Bifurcation and stay

         Federal Rule of Civil Procedure 42(b) governs bifurcation in federal actions and states as follows:

For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims. When ordering a separate trial, the court must preserve any federal right to a jury trial.

         The UTPA also provides that claims brought under it “may be bifurcated for trial where justice so requires.” Mont. Code Ann. § 33-18-242(6)(a). Finally, the trial court has broad discretion in deciding whether to bifurcate proceedings under Rule 42(b). M2 Software, Inc. v. Madacy Entertainment, 421 F.3d 1073, 1088 (9th Cir. 2005); Hangarter v. Provident Life and Ace. Ins. Co., 373 F.3d 998, 1021 (9th Cir. 2004).

         Rule 42(b) “is intended to further many significant policies-the parties' convenience, the avoidance of delay and prejudice, and the promotion of the ends of justice.” See Wright & Miller, 9A Fed. Prac. & Proc. Civ. § 2388 (3d ed.). The party seeking bifurcation must prove “that bifurcation will promote judicial economy and avoid inconvenience or prejudice to the parties.” Spectra-Physics Lasers, Inc. v. Uniphase Corp., 144 F.R.D. 99, 101 (N.D. Cal 1992); Burton v. Mountain West Farm Bureau Mut. Ins. Co., 214 F.R.D. 598, 612 (D. Mont. 2003). It is the moving party's burden to show that bifurcation is warranted. Burton v. Mountain West Farm Bureau Mut. Ins. Co., 214 F.R.D. 598, 612 (D. Mont. 2003).

         The Moving Defendants argue that the Court should exercise its broad discretion to bifurcate the issues as is necessary to prevent prejudice to the Moving Defendants. (Doc. 30 at 5). They argue that allowing evidence of their alleged UTPA violations would prejudice a jury with respect to the alleged coverage claims. Additionally, the Moving Defendants contend that unless the case is bifurcated, the Moving Defendants may be required to divulge work product or attorney-client communications in the context of Park Plaza's bad faith claim, thereby allowing Park Plaza to use this discovery in ...


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