A catastrophic fire erupted at a sawmill in Idaho. The lumber company turned to its Insurance Company. The lumber company sued the Insurance Company for Bad Faith after the Insurance Company's "valuation of certain property destroyed in the fire," and its handling of the lumber company's claim for losses under the Policy. Mills v. Indiana Lumbermens Mutual Insurance Co., 2012 WL 5831196 *1 (D. Idaho November 16, 2012).
This decision involved Expert Witness Testimony in the lumber company's Bad Faith case. The lumber company requested leave to amend its Complaint to add a claim for Punitive Damages. It attached an Affidavit from one of its listed Experts in support of its Motion for Leave to Amend. The Insurance Company objected and filed its objections in a Motion to Exclude the Expert's Testimony. In pertinent part, the Insurance Company's objections to the Expert Witness's Affidavit were that in the Affidavit, the Expert tried to define what the law is; that the Expert "offered legal conclusions as to compliance with, or violations of, particular statutes;" and that in the Affidavit, the lumber company's Expert offered legal conclusions "as to the meaning and application of the insurance contract". Mills v. Indiana Lumbermens Mutual Insurance Co., 2012 WL 5831196 *1 (D. Idaho November 16, 2012).
A United States Magistrate Judge granted the Insurance Company's Motion to Exclude the Expert Witness's Testimony in part, and denied it in part. The Motion was granted to the extent that Expert Testimony is not admissible in an Insurance Bad Faith case in order to "attempt to preemptively answer ultimate issues of law" such as violations of specific statutes including identified "fair claims practices" laws, all of which apparently happened to be at issue in this Bad Faith Case. Expert Opinions of this sort simply "do not constitute admissible expert testimony." Mills v. Indiana Lumbermens Mutual Insurance Co., 2012 WL 5831196 *3 (D. Idaho November 16, 2012).
However, the lumber company-Policyholder-Plaintiff in this Bad Faith Case will nonetheless be allowed to offer more generalized Expert Testimony "speaking to [the Insurance Company's] duty under the circumstances and whether, in fact, [the Insurance Company] complied with that duty of care." Mills v. Indiana Lumbermens Mutual Insurance Co., 2012 WL 5831196 *3 (D. Idaho November 16, 2012).
Accordingly, the Court denied the Insurance Company's Motion to Exclude to the extent that Expert Witnesses can still testify to the Insurance Company's more general Good Faith standard of care with respect to the lumber company's Claim, and whether the Insurance Company complied with that duty of care. The Court further held that the Insurance Company will still be free to file a Motion or Motions in Limine to challenge the Expert's Testimony, "being sure to challenge his actual report instead of affidavits offered in support of an ancillary motion." Mills v. Indiana Lumbermens Mutual Insurance Co., 2012 WL 5831196 *3 (D. Idaho November 16, 2012).
In these rulings, the Court's decision is in accord with the weight of authority that Expert Witnesses can testify to prevailing Good Faith standards to which Insurance Companies allegedly should conform their conduct and purportedly did so, or did not do so, whereas Expert Witnesses cannot permissibly Testify in Federal Court to alleged violations of particular Statutes, or of specific Administrative Rules and Regulations which have the force of law. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" ยงยง 8:17 ("Experts in Third-Party Insurance Bad Faith Cases: Specific Cases and General Rules") & 12:18 ("Experts in First-Party Insurance Bad Faith Cases: Specific Cases and General Rules") (West Publishing Company Third Edition, 2012 Supplement).
The American Conference Institute's 23rd National Advanced Forum on Bad Faith Litigation begins with a workshop on Tuesday, November 27, 2012 at the Hyatt Regency Grand Cypress Hotel at Disney World in Orlando, Florida, and continues over the following two days. I will be speaking on both of the following days. On Wednesday, November 28, 2012 I will be part of a panel addressing the handling and litigation of a typical Bad Faith Claim. I will address in particular the permissible proffers and uses of Expert Witnesses before and at Trial of the Bad Faith Case. On Thursday, November 29, 2012 I will be a co-presenter of an afternoon-long Florida Workshop. Please plan on attending. I would prefer to present these issues with you in the audience!
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