United States District Court, D. Colorado
ORDER REGARDING SECURA'S MOTION TO STAY
P. Gallagher, United States Magistrate Judge
matter comes before the Court on Secura's motion to stay
(ECF #67), Plaintiff Salls response (ECF #68), and
Secura's reply (ECF #71). The Court has each of the
aforementioned documents and all attachments. The Court has
also considered the entire case file, the applicable law, and
is sufficiently advised in the premises. Oral argument would
not materially assist the Court in adjudicating this motion.
For the following reasons, the Court issues this ORDER
DENYING the motion to stay.
Secura moves to stay discovery related to Plaintiff's
claims for breach of the duty of good faith and fair dealing
“pending a determination that SECURA had a duty to
defend Salls . . .” (ECF #67, p. 1). Plaintiff Salls
Some regurgitation of the factual scenario is appropriate
before diving into the legal analysis necessary to resolve
this issue. On May 6, 2016, Defendant Cody Slaugh “was
hit by a piece of metal that flew off a truck owned and
driven by [Plaintiff] James Salls while Slaugh was attending
a mud-racing event at the Western Slope Motor Sports Festival
2016” (scheduling order (ECF #65, p. 4)). Salls was
participating in a “mud race.” Id. at p.
5. Slaugh sued. Id. at p. 4. Secura defended Western
Slope Motor Sports Festival, Inc. (WSMSF) but did not provide
a defense for Salls on the basis that Secura claimed he did
not qualify as an insured. Id. at pp. 4-5. Secura
claims that Salls was neither an employee or volunteer of
WSMSF and that even if he was that Salls was acting as a
participant at the time of the injury, thus not entitling him
to coverage. Id. at p. 5. Secura also claims that a
motor vehicle exclusion applies which would preclude bodily
injury coverage under this circumstance-another reason why
Secura claims it had no duty to defend Salls. Id.
Salls claims that “[a]t the time of the subject
incident . . . Salls was acting as an employee or volunteer
of [WSMSF]” (amended complaint (ECF #41, p. 5, para.
34)). In not providing a defense, Salls claims breach of
contract, breach of duty of good faith and fair dealing, and
a violation of C.R.S. § 10-3-1115 (Colorado's
improper denial of claims statute) (ECF #41, pp. 8-11).
Secura's motion is postured as merely requesting a stay
of one part of discovery while another portion proceeds, the
procedural end game of this motion is really a request for
bifurcation pursuant to Federal Rule of Civil Procedure
42(b). At this juncture in the proceedings, an answer (ECF
#56) having been filed to the amended complaint, the Court
can see no purpose in the requested stay by Secura other than
for a determination of the duty to cover issue to be provided
either through summary judgment or at trial. Secura admits as
much stating that this matter should proceed through
dispositive motions and a determination on the issue of duty
to defend prior to proceeding on the bad faith claims(s).
See motion to stay (ECF #67, p. 2). Of course,
should Secura not prevail on the duty to cover issue at the
summary judgment stage, this would then mean opening a new
discovery period and potentially additional briefing on
summary judgment as to bad faith.
Rule 42(b) of the Fed.R.Civ.P. allows a court to order
separate trials for separate claims “[f]or convenience,
to avoid prejudice, or to expedite and economize.” Fed.
R. Civ. P 42(b); accord King v. McKillop, 112
F.Supp.2d 1214, 1221 (D.Colo.2000). [A court] ha[s] wide
discretion in deciding whether to bifurcate or sever issues
for trial. Easton v. City of Boulder, Colo., 776
F.2d 1441, 1447 (10th Cir.1985); accord Gaede v. Dist.
Ct. In and For Eighth Judicial. Dist., 676 P.2d 1186,
1188 (Colo.1984) (“A trial court enjoys broad
discretion under C.R.C.P. 42(b) to order separate trials on
specific issues in appropriate civil cases.”). And
while [a court] ha[s] discretion to order separate trials,
“that does not mean that severance is the norm or even
a common occurrence.” The Marianist Province of the
United States, Inc. v. Ace USA, 2010 WL 2681760, *1
(D.Colo. July 2, 2010) (citing Fed. R. Civ. P 42(b) advis.
comm. notes (noting that bifurcation should not
“routinely be ordered”)); see also
Gaede, 767 P.2d at 1188 (explaining that the reasons
listed in C.R.C.P. 42(b) for bifurcating are
“conditions” such that, in their absence,
bifurcation is “inapplicable”).
Colorado Casualty Company v. Infinity Land., 2013 WL
5420689 *1 (D. Colo.) (not reported for official
argues that “the burden and expense of conducting
discovery as to Salls' extra-contractual claims outweigh
the benefit, taking into account the needs of the case, the
importance of the issues at stake in the litigation, and the
importance of the proposed discovery in resolving the
issues.” Motion to stay (ECF #67, p. 3). Secura argues
that “discovery on the potentially moot
extra-contractual claims [would be] onerous, burdensome, and
may encroach on trade secret and proprietary
information.” Secura's motion (ECF #67, p. 5).
Secura provides some examples of what it believes to be such
burdensome discovery, see Secura's motion (ECF
#67, pp. 5-6) and further argues that the burden of having to
respond to bad faith discovery at this time far outweighs the
benefits to be derived from bifurcation. Id. at p.
6. Secura also argues that it will be forced to get a
protective order regarding certain requests. Id. at
argues that: (1) as at least to some of the discovery there
is overlap such that the discovery would be provided anyway
in the context of the duty to defend; and (2) even if there
was ultimately no duty to defend Secura may still have
breached the covenant of good faith and fair dealing.
Sall's response (ECF # 68, pp. 3-6).
Secura's assertion that allowing discovery to proceed on
both the duty to defend and bad faith may lead to either
additional discovery disputes or a request for a protective
order, the Court finds neither reason to be compelling
arguments in favor of a bifurcation. Discovery disputes are
the bread and butter of a magistrate judge's involvement
in many civil actions and will no doubt continue to be such.
The Court assumes that many litigants will seek the
Court's direction in disputed discovery matters and
cannot find that having to afford such guidance is a valid
reason to stay one part of discovery in a particular action.
Protective orders are similarly typical in the world of civil
discovery and the specter of such an order is not a good
reason for bifurcation.
Colorado Casualty, the parties here vigorously
debate whether resolution of the duty to defend claim would
truly be the end of the litigation or whether a bad faith
claim could survive a determination that there was no duty to
defend. The parties hereto cite Dunn v. American Family
Ins. for the proposition that bad faith claims do not
necessarily depend on the existence of coverage. Dunn v.
American Family Ins., 251 P.3d 1232, 1235 (Colo.App.
2010). The Court in Colorado Casualty also relied on
Dunn on that score. Colorado Casualty, 2013
WL 5420689 *2. In this matter, Secura attempts to distinguish
Dunn from this situation on the basis that this
matter is a pure duty to defend situation rather than a
dispute over whether there was specific coverage in this
instance. Secura's reply (ECF #71, pp. 4-5). Essentially,
Secura is arguing that Salls was a member of the general
public claiming an interest in a policy having no agreement
or relationship with the carrier. Secura's reply (ECF
#71, p. 2). No. doubt, the parties will continue to dispute
this as one of the central issues of this action. However, as
the Court did in Colorado Casualty, I must recognize
that a bad faith claim does not necessarily depend on the
existence of coverage under Colorado law. That does not in
any way presuppose that a bad faith claim would survive the
postulated dismissal of a duty to defend claim-but it could.
my discretion in this matter, I conclude that a
stay/bifurcation would not necessarily be more convenient,
expeditious or economical. While Secura claims that being
forced to engage in discovery would be onerous and
burdensome, at one point claiming the task would be
herculean, Secura fails to provide any heft behind that
argument to show that there would be any meaningful savings
in time, money, or effort by way of bifurcation. I say this
acknowledging that all discovery has costs, both financial
and timewise. That being said, there would be unnecessary
duplication of effort by bifurcation, particularly with
regard to depositions. In terms of paper discovery, what is
at issue is the claims handling file, policies and
procedures, and likely interrogatories. Effort yes, herculean
no. I ultimately conclude that the speculative potential
savings of bifurcation are outweighed by costs of delay, and
the unnecessary duplication of effort-both by the parties and
the Court. It is likely that discovery will ...