Client:

NorthWestern Energy

Issue:

Facing allegations of improper termination of a former employee’s benefits, NorthWestern Energy (NorthWestern) turned to Perkins Coie to recover from its insurance company for coverage under its policy and to bring claims for bad faith.

Challenge:

The insurer moved to bifurcate NorthWestern’s bad faith claim, a critical aspect of the case, from NorthWestern’s claim for breach of contract.  The insurer alleged that NorthWestern must establish its claim for coverage before it could proceed with a bad faith claim.

Solution:

Perkins Coie successfully argued against the insurance company’s motion to bifurcate coverage and bad faith claims into two separate proceedings.  We highlighted that NorthWestern’s claims for bad faith were factually interrelated with its claim for breach of contract, and refuted the insurance company’s argument that NorthWestern had to establish coverage before bad faith.

Denying the insurer’s motion, the trial court held that judicial economy would not be served by bifurcating the bad faith claims from the coverage claims and that the insurance company had not identified any prejudice to it that would justify bifurcation in the case.  In reaching the decision, the court agreed with our argument that bad faith claims can proceed simultaneously with coverage claims and that South Dakota law does not require coverage to be found before bad faith claims can be pursued.