Tuesday, November 5, 2019

RCPR Acquisition Holdings, LLC v. Zurich American Insurance Company (Cir. Ct. Mont. Co.)

Filed: June 5, 2019

Opinion by: Judge Anne K. Albright

Facts: The defendant, an insurance company, allegedly failed to satisfy its contractual obligation to indemnify the plaintiff for property damage, business interruption, and other losses sustained as a result of Hurricane Maria. The plaintiff sought declaratory relief under §§ 3-406 and 3-1701(d) of the Courts and Judicial Proceedings ("CJP") Article, alleging that the defendant was both obligated to indemnify the plaintiff for the full amount of its losses and the defendant failed to act in good faith by refusing to pay coverage. The defendant then filed a motion to bifurcate.

Analysis: Sections 3-1701(d) and (e) of the CJP Article provide that coverage and bad faith are to be heard in an action and by a trier of fact. Specifically, § 13-1701(e) provides that ". . . Notwithstanding any other provision of law, if the trier of fact in an action under this section finds in favor of the insured and finds that the insurer failed to act in good faith, the insured may recover from the insurer . . . [actual and other damages]." Pointing to appellate Maryland precedence, the court determined that the trier of fact in an action meant one jury, not two, and an award of actual (and other damages) for bad faith could only follow from a finding of coverage and bad faith by that one trier of fact. As such, the need for one trier of fact complicated the defendant's request for bifurcation. The court noted that if the plaintiff prevailed on its claims, the jury would have to return to court in the future to hear the other claims after discovery. While such an arrangement is possible in theory, it is also inconvenient. The court acknowledged the prejudice the defendant may face by having to defend all claims concurrently, but found that the defendant did little to show why options less onerous than bifurcation, i.e. jury instructions and a special verdict sheet, would not ameliorate said prejudice. Further, even if § 3-1701 permitted bifurcation with two juries, the overlap in the plaintiff's three claims was too substantial to conclude that bifurcation would promote convenience.  Presumably, collateral estoppel might reduce some of this duplication, but identifying the factual issues to which collateral estoppel might apply was not a straightforward analysis. Therefore, bifurcation was not appropriate.

The full opinion is available in PDF.