Court of Appeals Refuses to Stay Bad Faith Action Pending Resolution of Workers' Compensation Claim

In Leliefeld v. Liberty Mutual Ins., No. 1-636 (Iowa App. Nov. 9, 2011), the Court of Appeals affirmed the district court ruling which had declined to stay a bad faith action pending resolution of the underlying workers' compensation case.  The district court had held that although it was reasonable to delay a trial in the bad faith claim until the workers' compensation claim had been resolved, there was no reason to stay discovery in the bad faith action.  The court noted that Reedy v. White Consolidated Industries, 503 N.W.2d 601 (Iowa 1993) had addressed a similar question, and had concluded that a stay was not always necessary and that the court should follow a discretionary abstention policy that would delay the consideration of the issues by the court.  This did not mean, however, that actions that were preliminary to a determination by the court should necessarily be stayed, and the Court of Appeals noted that Reedy had not mandated that a stay be granted or that all proceedings be stayed.

In Leleifeld, the action had already been presented for disposition to the agency, and the discovery granted in the civil case would not affect the workers' compensation action.  The district court ruling also assured that trial in the bad faith action would not occur before a decision in the workers' compensation case.  On these facts, the court concluded that the district court had not abused its discretion.