IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

GEORGIA-PACIFIC CONSUMER )

PRODUCTS LP, etc., et al., )

 )

Plaintiffs, )

 )

v. ) CIVIL ACTION 15-0342-WS-B

 )

ZURICH AMERICAN INSURANCE )

COMPANY, etc., et al., )

 )

Defendants. )

 ORDER

This matter is before the Court on the motions of two defendants (“Aspen”

and “National”) to bifurcate and to stay. (Docs. 126,129). The parties have filed 

briefs in support of their respective positions, (Docs. 126, 129, 147, 151, 153), and 

the motions are ripe for resolution. After careful consideration, the Court 

concludes the motions are due to be denied.

BACKGROUND

According to the third amended complaint, (Doc. 182) (“the complaint”), 

the entity plaintiff (“GP”) operates a paper mill facility in Choctaw County. One 

defendant (“S&S”) contracted with GP to perform work at the facility, in the 

course of which an employee of S&S was killed. S&S had agreed to obtain 

insurance in favor of GP and its officers and agents (including the individual 

plaintiff). Aspen and National issued excess/umbrella policies but refused to 

investigate the matter or provide coverage and refused to participate in the 

ultimate settlement of the underlying lawsuit. The complaint asserts claims 

against Aspen and National for: breach of contract (Count One); negligence 

(Count Two); bad faith (Count Three); abnormal bad faith (Count Four); and 

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declaratory relief (Count Nine). Aspen and National would like the Court to 

bifurcate the bad faith claims from the other claims and to stay discovery on the 

bad faith claims pending resolution, by trial or otherwise, of the other claims. 

DISCUSSION

“For convenience, to avoid prejudice, or to expedite and economize, the 

court may order a separate trial of one or more separate issues [or] claims ....” 

Fed. R. Civ. P. 42(b). The rule invests trial courts with “broad discretion” whether 

to order bifurcation. Harrington v. Cleburne County Board of Education, 251 

F.3d 935, 938 (11th Cir. 2001).

The parties agree that a breach of the insurance contract is an element of 

any bad faith claim, normal or abnormal. It is thus correct that a ruling against the 

plaintiffs on their contract claim necessarily dooms their bad faith claims. In light 

of this relationship, the movants argue that bifurcation of discovery and trial will 

both further judicial economy and avoid undue prejudice. They cite opinions from 

a number of jurisdictions that have engaged in such bifurcation in bad faith cases, 

sometimes with explanation, sometimes without, and sometimes by resort to a 

formal rule specifically addressing the issue.

1

 The plaintiffs for their part cite a 

number of cases ruling that such bifurcation is inappropriate, in general or under 

the particular circumstances.

The Court has experimented with bifurcation of bad faith claims and has 

found no improvement in judicial economy. As National concedes, (Doc. 126 at 

12), such improvement in economy is possible only if the movants ultimately 

prevail on the contract claim; otherwise, two rounds of discovery, dispositive 

motions and trial are required, rather than one – a result opposed to judicial 

economy. While the movants assure the Court they will prevail on the contract 

 1 No such rule governs this case.

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claim, their arguments, as raised in the instant motions and in their previously 

denied motions to dismiss, leave ample room for skepticism on that score. 

The movants say bifurcation promotes efficiency because there is no 

appreciable overlap in the discovery and evidence needed to resolve the contract 

and bad faith claims. The Court is not so sure. Both Aspen and National rely on 

provisions of their respective policies to make the case there is no coverage, but 

they have failed to show that these provisions unambiguously negate coverage. If 

the policies are ambiguous, the movants concede that extrinsic evidence may be 

appropriate to resolve the ambiguity, and the Court has been provided no 

assurance that such extrinsic evidence could not include evidence also relevant to 

the bad faith claims.2

Furthermore, the movants overlook that the plaintiffs also bring a claim for 

negligent failure to settle the underlying lawsuit. Under the movants’ proposal, 

discovery and resolution of that claim would proceed alongside the contract claim, 

and the movants have not even asserted, much less shown, that none of the 

discovery and evidence relevant to the bad faith claim is relevant to the negligence 

claim as well. The Court’s brief research suggests there would be extensive 

overlap.3

Finally, the movants seek to further entangle the contract and bad faith 

claims by proposing that the Court resolve, in the first phase of the bifurcated 

 2 Aspen seems to suggest that the policies cannot be ambiguous because the 

plaintiffs allege the policies are unambiguous in a manner that supports them while the 

movants maintain the policies are unambiguous in a manner that supports them. The 

Court, however, not the parties, will determine whether the policies are ambiguous.

3 See Mutual Assurance, Inc. v. Schulte, 970 So. 2d 292, 296 (Ala. 2007) (as 

between negligent failure to settle and bad faith failure to settle, “the facts necessary to 

establish these separate claims are usually closely related”); State Farm Mutual 

Automobile Insurance Co. v. Hollis, 554 So. 2d 387, 389-90 (Ala. 1989) (in a negligentfailure-to-settle case, the insurer must make a diligent investigation of the facts necessary 

to make an informed decision about whether to settle); Nationwide Mutual Insurance Co. 

v. Smith, 194 So. 2d 505, 506-07, 513 (Ala. 1966) (evidence, inter alia, that the insurer’s 

counsel advised the insurer of a reasonable possibility of a verdict in excess of policy 

limits supported a verdict in favor of the insured for negligent failure to settle). 

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proceedings, whether they had an arguable reason for denying coverage (the third 

element of a bad faith claim). 

The movants identify the relevant prejudice as the plaintiffs’ discovery of 

information and documents that were prepared in anticipation of litigation, 

constitute work product, or are subject to attorney-client or other privilege. They 

do not suggest they would lose otherwise applicable objections to discovery 

simply because the action is not bifurcated; instead, all they appear to be saying is 

that the plaintiffs would gain earlier access to certain information and documents 

that they would receive only later (or not at all, if the movants prevail on the 

contract claim) were the case bifurcated. This may be inconvenient or even

embarrassing, but it hardly seems to amount to meaningful prejudice. The 

movants remain free to seek entry of an appropriate protective order governing the 

use, sharing, return or destruction, etc., of any sensitive information and 

documents that may be produced.

The movants argue that S&S would also be prejudiced by early discovery, 

in that materials the plaintiff could not obtain on the basis of their indemnity claim 

against S&S may be obtainable on the basis of their bad faith claims. Since Aspen 

insists that all such material is irrelevant to the indemnity claim, it is unclear what 

real danger to S&S actually exists. At any rate, S&S is perfectly capable of 

protecting its own interests, and it has not seen fit to join in or to support the 

instant motions to bifurcate.

The movants do not appear to argue they would be prejudiced by a trial of 

the contract and bad faith claims together. As they repeatedly insist the contract 

claim will be resolved by the Court prior to trial, it seems clear that such prejudice 

is a remote possibility. Certainly the movants have not demonstrated that any 

prejudice from such a joint trial would be so severe as to warrant bifurcation.

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CONCLUSION

The plaintiffs assert that the movants bear the burden of persuading the 

Court that bifurcation is appropriate. (Doc. 147 at 2). The movants voice no 

disagreement with this proposition, which is supported by authority within this 

Circuit.4 The movants have failed to persuade the Court to invoke its “broad 

discretion” in favor of bifurcation. Nor is the Court persuaded to stay bad faith 

discovery pending resolution of the plaintiffs’ contract claims. For the reasons set 

forth above, the motions to bifurcate and to stay are denied.

DONE and ORDERED this 26th day of April, 2016. 

 s/ WILLIAM H. STEELE

CHIEF UNITED STATES DISTRICT JUDGE

 4 E.g., Bitpay, Inc. v. Massachusetts Bay Insurance Co., ___ F.R.D. ___, 2016 

WL 1105263 at *1 (N.D. Ga. 2016) (“The burden to show that bifurcation is warranted is 

on the party requesting bifurcation.”); accord Brown v. Toscano, 630 F. Supp. 2d 1342, 

1345 (S.D. Fla. 2008); Lankhorst v. Independent Savings Plan Co., 2013 WL 5671303 at 

*2 (M.D. Fla. 2013); Cole v. Morgan, 2010 WL 4038607 at *2 (N.D. Fla. 2010). 

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