Farwest Pump Company v. Secura Insurance ( 2021 )

1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Farwest Pump Company, et al., No. CV-20-00464-TUC-JGZ 10 Plaintiffs, ORDER 11 v. 12 Secura Insurance, 13 Defendant. 14 Farwest Pump Company, et. al. No. CV-20-00465-TUC-JGZ 15 Plaintiffs, ORDER 16 v. 17 Secura Insurance, 18 Defendant. 19 20 Plaintiffs filed two-related lawsuits against Defendant Secura Insurance 21 concerning various insurance claims Plaintiffs submitted under a policy issued by 22 Defendant: Farwest I, CV-20-00464, alleging bad faith, and Farwest II, CV 20-00465, 23 seeking declaratory judgment concerning various policy and declaration provisions, and 24 alleging breach of contract. The parties agree that Farwest I should be stayed pending 25 resolution of Farwest II. At issue is whether Farwest II should be litigated in phases. 26 For the following reasons, the Court will stay Farwest I pending resolution of Farwest II, 27 and deny the request to bifurcate discovery in Farwest II. 28 // 1 2 Background 3 In their Joint Report, the parties proposed litigating the cases in three phases with 4 the first phase addressing “the declaratory lawsuit,” the second phase determining 5 damages for alleged breach of contract, and the third phase resolving Plaintiffs’ bad faith 6 action. (Doc. 27, p. 7.1) At the April 8, 2021 scheduling conference, it became clear that 7 the parties had different ideas about what discovery would occur in the first two phases 8 and the issues those phase would encompass.2 To avoid disputes as to these issues during 9 discovery, the Court directed the parties to confer and to submit an agreed-upon 10 statement specifying the issues phase 1 would encompass. The parties met, but were 11 unable to agree, and requested that the Court make that determination. (Doc. 32.) The 12 primary source of disagreement concerned whether phase 1 would determine only 13 coverage, or would include issues pertaining to coverage and the value of damages. (Id.) 14 On April 26, 2021, the Court referred the matter to Magistrate Judge Bruce G. 15 Macdonald to meet with the parties and recommend whether the cases should proceed in 16 phases or if the cases should proceed with discovery in the usual manner. (Doc. 33.) 17 According to the docket, Magistrate Judge Macdonald conferred with the parties on two 18 occasions. Unable to reach consensus, Magistrate Judge Macdonald issued a Report on 19 June 10, 2021, recommending that the Court stay Farwest I pending resolution of 20 Farwest II, and recommending that Farwest II proceed with discovery in the usual 21 manner, without a phased approach.3 (Doc. 39.) Plaintiffs filed an Objection to the 22 1 The parties filed the documents cited in this Order in both Farwest cases. To 23 dispense with double citation to identical documents, the Court refers only to the filings in Farwest I. 24 2 At the scheduling conference, defense counsel described phase 1 as 25 encompassing coverage and condition precedent. Counsel also pointed out that although the parties contemplated that the value of damages would be addressed in phase 2, value 26 may also be touched upon in phase 1. Plaintiffs’ counsel stated that Defendant had identified an issue that Plaintiffs were not aware of as to whether phase 1 would 27 encompass “each and every item that was lost.” Plaintiffs did not “see it that way.” 28 3 The Magistrate Judge also recommended deadlines. (Doc. 39, pp. 4-6.) 1 Report and Recommendation. (Doc. 40.) Defendant filed a Response to the Objection. 2 (Doc. 42.) Upon consideration of the Report and Recommendation, the parties’ filings, 3 and the record, the Court will adopt the Magistrate Judge’s recommendation. 4 Discussion 5 Rule 26 requires the parties to state in their discovery plan “whether discovery 6 should be conducted in phases or be limited to or focused on particular issues.” Fed. R. 7 Civ. P. 26(f)(3)(B). “Parties requesting bifurcation of discovery have the burden of 8 proving the bifurcation will promote judicial economy and avoid inconvenience or 9 prejudice to the parties.” City of Sacramento v. Wells Fargo & Co., 2020 WL 6787134, 10 at *2 (E.D. Cal. Oct. 9, 2020) (citations omitted). While district courts have wide latitude 11 in controlling discovery, State of Cal., on Behalf of Cal. Dep’t of Toxic Substances v. 12 Campbell¸ 138 F.3d 772, 779 (9th Cir. 1998), the court’s application of the rules in the 13 administration of discovery matters is guided by Rule 1’s mandate “to secure the just, 14 speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 15 1. 16 Bifurcation of discovery in Farwest II will not promote judicial economy. Some, 17 or all, of the disputed issues in Plaintiffs’ proposed phases are intertwined and the parties 18 cannot agree what discovery would be produced in each phase. Defendant asserts it 19 cannot determine which policies and/or policy provisions may be relevant without a 20 complete picture of the claims and without a complete set of documents. Plaintiffs 21 acknowledge that a phased approach may not fully dispense with the issue of coverage, 22 but suggest that, at that point, the dates for discovery and dispositive motions could be 23 extended. (Doc. 40, p. 7.) Because coverage and damage issues are overlapping to some 24 extent, a phased approach would likely result in piecemeal and duplicative practice, and it 25 would delay resolution of the case as a whole. Moreover, it is likely that disputes will 26 arise over the scope of phase-1 discovery as evidenced by the parties inability to agree 27 what discovery would be included in each phase. Finally, the potential burden to 28 Plaintiffs in denying their request for bifurcation is not outweighed by the potential for delay and possible prejudice to Defendant if the request for bifurcation is granted. 2 Accordingly, IT IS ORDERED: 3 1. The Report and Recommendation (Doc. 39 in CV 20-464-TUC-JGZ; Doc. 34in CV 20-465-TUC-JGZ) to stay Farwest I and to proceed with Farwest IT in the usual || manner is ADOPTED. The Court will enter a separate scheduling order in Farwest II. 6 2. Plaintiffs’ Objection (Doc. 40 in CV 20-464-TUC-JGZ; Doc. 35 in CV 20- 7\| 465-TUC-JGZ) to the Report and Recommendation is OVERRULED. 8 3. Farwest Pump Co., et. al. v. Secura Insurance, CV 20-00464-TUC-JGZ, is 9|| STAYED until further notice. 10 Dated this 22nd day of July, 2021. 11 12 □ 13 pote Soipe 4 ; Honorable Jennife Me Zipps United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-