Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_19-cv-01778/USCOURTS-azd-2_19-cv-01778-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Sandrine Mounier, et al., 

Plaintiffs, 

v. 

RLI Corporation, et al., 

Defendants.

No. CV-19-01778-PHX-GMS

ORDER 

 Pending before the Court is the Motion to Bifurcate and Stay Discovery on Bad 

Faith and Punitive Damages Claims of Defendant RLI Corp. (Doc. 22). For the following 

reasons the motion is granted in part and denied in part. 

BACKGROUND

 Plaintiffs Sandrine and Gustav Mounier filed this action against Defendants RLI 

Corp., Four Season Travel, and GEO Tours. The Court dismissed Four Season Travel as 

a party upon its motion. (See Doc. 24.) In the Case Management Order, the Court granted 

leave for RLI to file two separate motions for summary judgment: one motion on choice 

of law and the issue of coverage, and a second regarding all other issues in the case. (Doc. 

25 at 4.) The first motion is due no later than September 27, 2019. The deadline for 

discovery regarding choice of law and coverage issues is August 30, 2019, and discovery 

for other issues is to be completed by February 14, 2020. (Id. at 2.) In the current motion, 

RLI requests that the Court bifurcate trial and discovery. 

/ / / 

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DISCUSSION

I. Legal Standard 

The Federal Rules of Civil Procedure permit a court to order a separate trial of 

separate issues for convenience, to avoid prejudice, or to expedite and economize. Fed. R. 

Civ. P. 42(b). District courts have broad discretion as to whether bifurcation is appropriate. 

Zivokic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002) (citing Exxon Co. v. 

Sofec, Inc., 54 F.3d 570, 575 (9th Cir. 1995)). “The piecemeal trial of separate issues in a 

single lawsuit . . . is not to be the usual course, however, and will be ordered only where 

the party seeking separate trials meets his or her burden of proving that bifurcation is 

necessary.” Lassley v. Secura Supreme Inc. Co., No. 14-cv-1766, 2015 WL 5634307 at *2 

(D. Ariz. Sept. 15, 2015) (internal citations and quotation marks omitted). 

II. Analysis 

Because the Court previously granted leave for RLI to file a preliminary summary 

judgment motion on the issues of choice of law and coverage, the sole issue remaining for 

decision in this motion is whether discovery and trial should be bifurcated along the same 

lines. RLI contends that bifurcation of discovery and trial is justified here because a trial 

on the choice of law and coverage issues could prevent the necessity of a second, longer, 

costlier trial on the issues of insurance bad faith and punitive damages 

Under Arizona law, an insurance bad faith claim can be brought regardless of 

whether the insurer actually denied coverage. See Deese v. State Farm Mut. Auto. Ins. Co., 

172 Ariz. 504, 510, 838 P.2d 1265, 1271 (1992) (“We hold that a plaintiff may 

simultaneously bring an action both for breach of contract and for bad faith, and need not 

prevail on the contract claim in order to prevail on the bad faith claim.”). In California, 

however, a bad faith claim cannot be brought if a putative insured was not owed coverage. 

See Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136, 1151 (1990) (“[T]here are at least two 

separate requirements to establish breach of the implied covenant [of good faith]: (1) 

benefits due under the policy must have been withheld; and (2) the reason for withholding 

benefits must have been unreasonable or without proper cause.”). 

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Thus, if California law applies, a determination that no coverage was due would 

have the effect of rendering the remainder of trial unnecessary. For that reason, the Court 

allowed RLI to file an initial motion on the choice of law and coverage issues. But the 

Court is not persuaded that the possibility of a ruling favorable to RLI on both of those 

issues outweighs the potential inefficiencies that would result from two separate trials. If 

the case was bifurcated, and RLI did not prevail on the choice of law issue, the bad faith 

and punitive damage claims would have to be tried regardless of the outcome of the breach 

of contract action. For those reasons, the Court declines to order bifurcation of the case. 

However, as the Court has previously determined to allow two rounds of briefing, 

it would be appropriate to allow only discovery related to the limited issues of choice of 

law and coverage under the policy until those issues are decided. This course will have the 

benefit of preventing extensive and expensive discovery regarding the bad faith and 

punitive damages claims until it becomes clear that those claims can be brought. And this 

approach will also avoid the potential inefficiencies of have two separate trials should the 

resolution of the choice of law issue go against RLI. Discovery on the issues of choice of 

law and coverage under the policy may proceed as outlined in the Case Management Order 

(Doc. 25). Until the Court’s resolution of those two preliminary issues, discovery on the 

bad faith and punitive damage claims is stayed. 

IT IS THEREFORE ORDERED that the Motion to Bifurcate and Stay Discovery 

on Bad Faith and Punitive Damages Claims of Defendant RLI Corp. (Doc. 22) is 

GRANTED IN PART AND DENIED IN PART. RLI shall file its preliminary motion 

regarding choice of law and coverage issues according to the schedule set forth in the 

Court’s Case Management Order (Doc. 25). Until the resolution of that motion, all 

discovery regarding the bad faith and punitive damages claims is STAYED. 

Dated this 2nd day of August, 2019. 

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