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Geico can’t put the brakes on a bad-faith case stemming from underinsured motorist benefits a plaintiff says they are owed as part of a rear-end collision claim, a federal judge has ruled.

U.S. District Judge Matthew Brann of the Middle District of Pennsylvania denied Geico’s motion to sever and stay the litigation filed by David Newhouse, who was rear-ended by a truck and injured while driving a rental car.

According to Brann’s opinion, Newhouse claimed he was owed the full amount of the UIM coverage offered by the Geico policy, $100,000. Geico evaluated the demand, including Newhouse’s claim that he needed surgery as a result of the accident, and offered him $10,000.

Newhouse and his wife and co-plaintiff argued his injuries exceeded the settlement amount and filed suit against Geico in the Clinton County Court of Common Pleas. The insurance company removed the case to federal court and subsequently filed a motion to dismiss, followed by a motion to stay the bad-faith claim from the Newhouses’ breach of contract claim.

The court examined four factors in considering Geico’s request to sever and stay, as presented in the 2014 Middle District case of Griffith v. Allstate: (1) whether the issues are significantly different from each other; (2) whether they require separate witnesses and documents; (3) whether the nonmoving party would be prejudiced by bifurcation; and (4) whether the moving party would be prejudiced if bifurcation is not granted.

While Geico argued the issues were distinct, as to the first factor, Brann disagreed and said bifurcation was not necessary.

Geico also claimed that the evidence in the UIM claim differs from the bad-faith claim. Again, Brann disagreed.

“Newhouse here would use similar evidence and testimony for both his breach of contract and bad-faith claims,” Brann said. “For example, documents concerning how Newhouse’s insurance claim was handled, documents reflecting the claims adjuster’s determination, and how Geico arrived at its settlement value would be relevant for both claims. Contrary to Geico’s contention, bifurcating these claims and consequently requiring two separate discovery processes would be a waste of both judicial resources and time.”

Addressing Geico’s point that bifurcation would avoid duplicative motions for protective orders on work product, Brann said Geico “has only argued that the information relating to the bad-faith claim should be submitted to a jury after the conclusion of the breach of contract litigation. Geico did not argue that this information was protected by the work-product doctrine. Absent such an objection, Geico leads the court to conclude that these documents are discoverable and would have been provided had Newhouse been successful on the underlying breach of contract claim.”

In its final claim, Geico argued it would be prejudiced by a lack of bifurcation because it will have to present information on how it values a claim before the jury assesses liability and damages. Geico argued presenting that information before the breach claim is resolved would be damaging to its case.

“For the breach of contract claim, however, Geico would have to provide information concerning how it values an insurance claim regardless of whether the bad-faith claim was severed. Such evidence is relevant for the jury to determine why Geico offered only $10,000 to settle the UIM claim,” Brann said.

Douglas N. Engelman of Lepley, Engelman & Yaw did not respond to a request seeking comment. Neither did Geico’s lawyer, Joseph A. Hudock Jr. of Summers, McDonnell, Hudock & Guthrie.

(Copies of the 14-page opinion in Newhouse v. Geico, PICS No. 17-1444, are available at http://at.law.com/PICS.) •