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Kermeen v. State Farm Insurance Co.

United States District Court, D. Nebraska

August 10, 2015



CHERYL R. ZWART, Magistrate Judge.

This matter is before the court on Defendant's Motion to Bifurcate Bad Faith and Defamation Claims for Separate Trial and to Stay All Discovery on Those Claims, (Filing No. 15) and Plaintiffs' Motion to Compel, (Filing No. 18). For the reasons set forth below the motion to bifurcate will be granted and the motion to compel denied.


Plaintiffs Ramona Kermeen and Kevin Kermeen (the "Kermeens") are husband and wife and own real property, including a residence, in Washington County, Nebraska. The property and improvements in Washington County were insured under a homeowner's insurance policy (the "Homeowner's Policy") issued by Defendant State Farm Insurance Company ("State Farm"). Plaintiffs also own an inboard/outboard boat insured by State Farm under a boatowner's policy (the "Boatowner's Policy"). Both policies were acquired through the Peleska Insurance Agency in Blair, Nebraska.

On March 7, 2014, a fire occurred at the Washington County property causing significant damage to the residence, Plaintiffs' personal property, and the Plaintiffs' boat which was stored in a garage attached to the residence. The fire rendered the residence uninhabitable. Plaintiffs gave notice of loss to State Farm via the Peleska Insurance Agency. State Farm conducted an investigation and during the pendency of the investigation paid the Kermeens a rental rate of $800 per month for temporary living expenses, but paid nothing for other property losses.

While State Farm was conducting its investigation into the loss caused by the fire, a hail storm hit Blair, Nebraska on June 3, 2014, causing further damage to the Kermeens' residence and outdoor personal property. The Kermeens timely provided notice of loss to State Farm. State Farm did not settle the claim.

Plaintiffs allege State Farm has breached the insurance contracts by failing to pay on the claims submitted by Plaintiffs for loses associated with the fire and the hail damage. Plaintiffs further allege they were not made aware of Defendant's reason for denying coverage until State Farm filed its answer in this case

The Kermeens have also asserted claims for defamation and bad faith. In support of their defamation claim the Kermeens allege the defendant, by and through its agents, contacted the Kermeens' neighbors and other individuals and "communicated that Plaintiffs... were being investigated by Defendant and were responsible for intentionally setting fire to their residence for purposes of financial gain." Filing No. 1, ¶ 34 at CM/ECF p. 10.

In support of their bad faith claim, Plaintiffs assert Defendant put its interest above Plaintiffs' interest by looking for "subrogation" potential against the manufacturer of a whirlpool tub and pump motor - the potential cause of the fire - and began searching for other reasons to improperly deny the Plaintiffs' claim. Plaintiffs further allege Defendant began an unnecessary and improperly focused investigation to prove Plaintiffs started the fire.

All of Defendant's efforts to pursue potential subrogation and to establish that Plaintiffs intentionally set the fire were in an effort to delay and avoid payment of the claim, by use of its unequal bargaining position as a large insurance company with significant economic power, which conduct intends to coerce Plaintiffs to incur significant expenses for attorney and expert fees, additional living expenses and to remain unable to repair and return to their home. Defendant has continued to refuse to settle the fire claim without a reasonable investigation and in reckless disregard for the facts leading to the loss.

Filing No. 1, ¶45 at CM/ECF p. 12.

Plaintiffs also assert Defendant has failed to pay the claim on the Boatowner's Policy without a reasonable investigation into the cause of the loss and has likewise failed to adjust and pay the hail loss under the Home Owner's policy without any reasonable justification. Plaintiffs' complaint alleges several other acts of bad faith with respect to its investigation and processing of Plaintiffs' claims. (Filing No. 1 at CM/ECF pp. 11-16).

State Farm now seeks to bifurcate the discovery and trial of these proceedings, alleging a failure to do so will subject Defendants to prejudice. Specifically, State Farm seeks to separate discovery and trial of the breach of contract claims from Plaintiffs' remaining claims of defamation and bad faith, ...

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