In my last post titled Does an Insured Have to Wait to Pursue Bad Faith? Part II, I analyzed the issues addressed in Brethorst v. Allstate Property and Casualty Insurance Company. This week I will continue an evaluation of this case.
Allstate asked the Court to bifurcate the insured’s bad faith claim and to stay discovery. Allstate contended it would be unfairly prejudiced if the insured was entitled to discovery or used privileged material while litigating the personal injury claim.
When evaluating the issue of bifurcation, the Supreme Court of Wisconsin made reference to the Court of Appeals’ decision in Dahmen v. American Family Mutual Insurance Co., 635 N.W.2d 1:
[T]he considerations bearing on the bifurcation decision weigh in favor of bifurcation for the following reasons: (1) the failure to bifurcate a claim of bad faith from an underlying claim for UIM benefits would significantly prejudice American Family; (2) the two distinct claims present differing evidentiary requirements that increase the complexity of the issues and the potential for jury confusion; and (3) a separate initial trial on the claim of UIM benefits increases the prospect of settlement and promotes economy by narrowing the issues for the jury and potentially eliminating the need for a later trial on the bad faith claim.
The Court pointed out the primary distinction between the Dahmen decision and the facts in Brethorst. In Brethorst, the insured did not file a breach of contract claim; she only sued Allstate for bad faith.
The plaintiff absolutely insists … that it has not and does not intend to plead a cause of action for breach of the insurance [contract]. That [its] pleading be interpreted and be prosecuted solely as a bad faith claim.
The Court explained that, when evaluating whether a party must prevail upon a claim for breach of contract by establishing an inadequate offer before it can proceed on the separate and independent cause of action for bad faith, it was more appropriate to consider what relief the Court might properly grant on Allstate’s motion to bifurcate. The Court concluded that there was nothing to bifurcate because the insured only brought one claim; there was no other claim from which the bad faith claim could be bifurcated.