Motion for severance filed in overhead and profit class action

By Michelle Massey, East Texas Bureau | May 8, 2008

TEXARKANA, Ark. – Plaintiffs in a class action believe there is no additional reason to delay the case against Farm Bureau Mutual Insurance Company of Arkansas and Nationwide Insurance Companies.

The plaintiffs have filed a motion to sever, stating they are ready to certify their claims against these defendants.

The plaintiffs are arguing the motion is necessary and will further judicial economy because the other defendants refuse to cooperate in discovery and in their motion practice which has delayed the prosecution of the plaintiffs' claims.

The original lawsuit, filed Sept 8, 2004, alleges claims of civil conspiracy, unjust enrichment, fraud, and constructive fraud by accusing the insurance companies of not disclosing or paying to the insured's the general contractors' overhead and profit, whenever the repair of an insured's loss required the services of at least three trades.

Although the insurance companies paid previous damage claims, the plaintiffs argue they are entitled to the additional general contractors' overhead and profit.

The plaintiffs' motion to sever, filed on April 24, states the severance is necessary to prevent the plaintiffs from suffering "tremendous prejudice – in the form of significant and unwarranted delay."

The motion also asks the court to find that the potential severance complaint will relate back to the pre-Class Action Fairness Act filing date, so the defendants are unable to remove the case to federal court.

The Farm Bureau Mutual Insurance Company of Arkansas filed a response asking for the plaintiffs' motion to sever be denied. The defendant states the plaintiffs' actions are prejudicial to the defendant, as the proposed severed action will maintain the same conspiracy allegations related to all defendants. Further, Arkansas Farm Bureau states that while it agrees it should be severed, it should not continue to defend against an alleged nationwide and industry-wide conspiracy, when it only does business in the state of Arkansas. The defendant is asking the judge to set an evidentiary hearing for the plaintiffs to present proof regarding the effect of a severance.

The Arkansas Insurance Company believes this is a strategy by the plaintiff to force it and Nationwide Insurance to defend all of the claims against all of the defendants without the other defendants' involvement.

The plaintiffs are represented by Matt Keil and John Goodson of the Texarkana law firm Keil and Goodson, Michael B. Angelovich, Cary Patterson, Brady Paddock, Christopher Johnson, and Anthony Bruster of the Texarkana law firm Nix, Patterson and Roach, L.L.P. Other class counsel includes Jason Roselius, Derrick Morton, and Chad Ihrig of the Oklahoma City law firm Nelson, Roselius, Terry, O'Hara, and Mortion.

Circuit court Judge Kirk Johnson is presiding over the litigation.

Chivers v. State Farm. Case No: 2004-294-3.

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