Claims and Bad Faith Law Blog

EXPERT OPINIONS ON CONTINGENCY DISQUALIFIED, BUT FACTS OBSERVED TESTIMONY ALLOWED.

 

(Galactic Storm Image by NASA)

In Midtown Inv's, LP v. Auto-Owners Ins. Co., ___ F. Supp. 3d ___, No. 20-cv-01594-PAB-STV, 2022 WL 17039225 (D. Colo. Nov. 17, 2022), a public adjuster was disqualified from testifying to opinions as an expert concerning an alleged property loss in a commercial property insurance case.

The proffered expert was retained on a contingency basis, with his payment depending on the outcome of the case.  The District Judge concluded that the danger of unfair prejudice to the defendant insurance carrier substantially outweighed the probative value of this witness's testimony.  Midtown Investments, 2022 WL 17039225, at *8.

However, this same witness was allowed to testify in this bad faith case to facts he observed, namely, "events that transpired during the claim process and his own observations, but may not offer expert opinions."  Midtown Investments, 2022 WL 17039225, at *8.  The same was held true regarding this witness's familiarity with industry practices; his testimony would be limited to what he personally observed of the defendant carrier's conduct handling this claim.  Midtown Investments, 2022 WL 17039225, at *8.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

"RISK," EXPERTS CAN TESTIFY; BUT "WHAT" WARNING, MDs CANNOT SAY.

(Sun Sentinel)

In Freeman v. Ethicon, Inc., No. 20-cv-10661 -CBM (SKx), 2022 WL 4692596 (C.D. Cal. Aug. 26, 2022), the Court ruled without hearing and without even a court reporter or a clerk present.  It appears that the Court's ruling was just even if it was not made in public.

The Court was faced with a motion in limine filed on behalf of the manufacturer and distributor (Ethicon and Johnson & Johnson, respectively) of a mesh contraceptive implant that allegedly caused horrible problems.  (This specific case was "on leave," as it were, from a Multi-District Litigation.)  The defendants wanted to bar the plaintiffs' expert medical doctors from testifying to the sufficiency of its supposed warning.  To be more exact, the defendants wanted to bar the plaintiffs' listed experts from testifying as to what should have been in the warning.

The Court formally "GRANTED" the motion, but following an earlier ruling in the MDL, in doing so the Court ruled in a way that may or will affect the reception of expert testimony in other cases including in insurance cases.

The Court ruled that the expert medical doctors could testify concerning the "risk" of the product, something about which they have relevant expertise as medical doctors.  On the other hand, the same experts could not also testify to something beyond their expertise, namely, what should have been including in the warning except that the medical doctor experts can testify whether or not the risk was in the warning.  Freeman v. Ethicon, 2022 WL 4692596, at *2.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

"QUALIFICATIONS, RELIABILITY, AND FIT."

Hurricane Seen From Space (Photo by NASA)

In Great Lakes Ins. S.E. v. Sunshine Shop. Ctr., Inc. d/b/a Sunshine Mall, Nos.  2019-0039 &  2020-0033, 2022 WL 4598829 (D.V.I. Sept. 30, 2022), the Court applied the prevailing Third Circuit test for the admission of Expert testimony following the Supreme Court's decision in Daubert:  qualifications, reliability, and fit.

Having just gone through Hurricane Ian, I chose this case because it involves a Hurricane too:  Hurricane Maria which struck the U.S. Virgin Islands and allegedly caused damage to a shopping mall.  The mall owner purchased "all risks"  commercial property insurance.

The mall owner proffered the expert opinion and testimony of a licensed professional engineer to prove its covered damages. 

This case stands at the head of a long line of cases in which Courts decline to permit proffered experts to over-reach.  The Court in this case held that the licensed professional engineer did not have the qualifications to render the opinion she reached, and her methodology was not reliable in reaching her opinion.

All in all, the lesson after a Hurricane when the skies are their bluest, it seems, is that the feeling of release and joy of at last getting to go someplace besides the inside of your house does not mean that you are freed from all constraints.  In other words, proffered experts, like the rest of us, should stay in our lane for our best chance to please the Court.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

NON-RETAINED EXPERT WITNESSES, COLORADO INSURANCE CASE: DISCLOSURE INVALID, NO SANCTIONS.

In Roof Rehab, LLC d/b/a Rhino Roofing, LLC v. Travelers Cas. Ins. Co. of Am., No. 20-cv-01863-RMR-NYW 2021 WL 5579053 (D. Colo. November 30, 2021) (Wang, USMJ), a United States Magistrate Judge wrestled with an unusual motion.  The defendant insurance carrier filed a motion to exclude the testimony of expert witnesses who had not been retained in an insurance case.  The carrier contended that the experts in question had not been disclosed as the Federal Rules of Civil Procedure require non-retained expert witnesses to be disclosed.

          The federal magistrate judge agreed that the non-retained expert witnesses in this case were not disclosed by the plaintiff as the Rules require, but that was not the only thing that the Court had to decide in order to resolve the defendant's motion to disqualify their testimony.  The Court also had to consider the Rules regarding sanctions including prohibiting an expert's testimony.

          The starting point was Federal Rule of Civil Procedure 26:

    Before considering whether Plaintiff's expert disclosures should be stricken and the experts precluded from testifying at trial, the court must first determine whether there was a Rule 26(a) violation. As set forth above, Rule 26(a) requires that expert disclosures of non-retained expert witnesses include (1) the subject matter on which the witness is expected to present evidence and (2) a summary of the facts and opinions to which the witness is expected to testify. Fed. R. Civ. P. 26(a)(2)(C)(i)-(ii).

Roof Rehab, 2021 WL 5579053, at *2.

          The non-retained expert witnesses in question were Ryan Verstreater, Kyle Larson, and Toni Morrow.  For various reasons, the plaintiff's disclosures failed to satisfy Rule 26(a) as to each of them.  For some, the plaintiffs only disclosed that the witness would testify in accordance with documents that had been produced including in one case a report; for another the plaintiffs disclosed the same thing, namely that the witness would testify according to a report, but the plaintiffs had not produced the report.

          For all these reasons, none of the non-retained trio of expert witnesses were sufficiently disclosed under Rule 26(a).  However that did not end the matter.  The Magistrate Judge went on to consider whether sanctions should be imposed under Federal Rule of Civil Procedure 37.  The defendant carrier had requested that the experts' proffered testimony be barred from this litigation.

          The Magistrate Judge ruled that prohibiting the opinion testimony of these proffered experts was too severe a sanction under Rule 37 for the plaintiff's clear noncompliance with Rule 26(a).   Instead, the Magistrate followed the Tenth Circuit's standard In exercising her discretion that when a party seeks to exclude evidence because of alleged misconduct in discovery, the misconduct at issue must be shown to substantially interfere with that party's preparation for trial, in sum and in substance.  The Court found that there was no such substantial interference here.  Roof Rehab, 2021 WL 5579053, at *8.

          "In sum," said the Court, ...

while I find that Plaintiff's affirmative expert disclosures failed to comply with the substantive requirements of Rule 26(a)(2)(C), I find that any prejudice resulting from this failure can be cured by requiring Plaintiff to supplement its disclosures. Accordingly, the Motion to Strike is DENIED insofar as it seeks to strike the expert testimony of Messrs. Verstreater and Larson and Ms. Morrow. In so ruling, the court does not pass on the admissibility of any of Plaintiff's non-retained expert testimony, a determination which is reserved for the presiding judge. In addition, Plaintiff is ORDERED to produce supplemental expert disclosures which comply with Rule 26(a)(2)(C) [i.e., "with specific information reflecting (1) the subject matter upon which the witnesses is expected to present expert testimony; and (2) a descriptive summary of the facts and opinions to which the witness is expected to testify"], no later than December 10, 2021. 

Roof Rehab, 2021 WL 5579053, at *8 (emphasis in original).

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

RELIABILITY, NOT CORRECTNESS: FEDERAL STANDARD FOR EXPERT IN INSURANCE CASE.

In Conrad v. Owners Ins. Co., No. 20–cv–02173–KMT, 2021 WL 5280188 (D. Colo. November 12, 2021) (Tafoya, USMJ), a federal Magistrate Judge applied the federal standard for admissibility of expert testimony to a proffered expert in an insurance case:  Reliability, not correctness.

          The Court described the proffered expert as an experienced attorney, and a former Colorado Insurance Commissioner.  Conrad, 2021 WL 5280188, at *1.

          The witness will be permitted to testify to insurance industry standards.  Conrad, 2021 WL 5280188, at *2.

          However, the witness will not be allowed to testify to legal conclusions.  This includes the expert's testimony about Colorado's version of the Unfair Claim Settlement Practices Act.  "While [the proffered expert] is permitted to testify as to insurance industry standards and may testify that defendant's conduct did not conform with those standards, he may not apply legal standards from caselaw or statutes to state an opinion that defendant's conduct violated caselaw or statutes."   Conrad, 2021 WL 5280188, at *3.

          Finally, the witness will be permitted to testify on the duty of good faith and fair dealing implied in the Underinsured Motorist insurance contract at bar, even though bad faith and unfair dealing was not alleged as a cause of action separate from breach of the UIM contract at issue.  Conrad, 2021 WL 5280188, at *4.

          Reliability, not correctness.  That is the standard for admitting expert opinions into evidence in federal court, including in insurance cases.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

RECONSIDERATION, EXPERTS, MOTIONS IN LIMINE, IN ONE BAD-FAITH CASE.

In an unusual development, the Federal District Judge in Rap Indy, LLC v. Zurich Am. Ins. Co., No. 1:19-cv-04657-JRS-MJD, 2021 WL 5029520 (S.D. Ind. September 15, 2021) reversed himself when he reconsidered several of his prior rulings in the case.

          Taken together, the District Judge's prior rulings excluded all expert testimony on claims handling whether proffered by the plaintiffs or by the defendant.  It was unusual for a federal judge to reverse earlier rulings he himself had made in the case, but to this judge's credit, he did.

          When the judge entered his new rulings in this first-party bad-faith case, they were not unusual.  In fact, the new rulings represent the prevailing views across the nation on the subject of admitting the opinion testimony of expert witnesses in bad-faith cases:

    Upon reconsideration, the Court finds that expert testimony as to industry standards for property claims handling practices will assist the jury to understand the evidence in this case particularly with respect to the bad-faith claim. [Citations omitted.]  The Court will not allow expert testimony as to the law governing this action, nor will the Court allow testimony as to legal duties or any opinions that a party violated (or did not violate) those legal duties; however, the Court will allow expert testimony as to customs, practices, and standards in insurance claims handling and as to how Zurich did or did [not] meet such customs, practices, and standards.

Rap Indy, 2021 WL 5029520, at *1.

            The Court was not done, however.  The Court clearly explained the purpose and function of a motion in limine in federal practice:

    Finally, the granting of a motion in limine is not a final ruling on admissibility of the evidence. An order granting a motion in limine precludes any party from eliciting testimony or otherwise mentioning an issue in the presence of the jury without first seeking leave of Court outside the jury's presence.

 Rap Indy, 2021 WL 5029520, at *2.  Candidly, that is the clearest explanation of motions in limine and orders granting them that I have read or heard in 43 years of practice.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

BAD FAITH EXPERT WITNESS, RETAINED IN EARLIER CASE, NOT DISQUALIFIED.

In Hayward Prop., LLC v. Commonwealth Land Title Ins. Co., No: 17-cv-06177 SBA, 2021 WL 4923379 (N.D. Cal. August 31, 2021), the District Court for the Northern District of California applied the same test in a bad faith case that is applied in many other United States District Courts when confronted with a motion to disqualify an expert witness:

    Generally, “disqualification of an expert is warranted based on a prior relationship with an adversary if (1) the adversary had a confidential relationship with the expert and (2) the adversary disclosed confidential information to the expert that is relevant to the current litigation.” Id. 1092-93 (citing Wang Labs, Inc. v. Toshiba Corp., 762 F. Supp. 1246, 1248 (E.D. Va. 1991)). If only one of those two factors is present, disqualification likely is inappropriate.

Hayward Properties, 2021 WL 4923379, at *2.  The same expert witness was retained in what might be called an underlying action to testify on different issues, the expert testified by declaration:

It did not concern “any issues relating to title insurance, coverage, duties to defend, breach of contract, bad faith, or ‘Brandt’ fees,” i.e., the matters at issue in this action.

Hayward Properties, 2021 WL 4923379, at *2.

          In part here pertinent, the Court found that "the two actions do not involve the same defendant, the same causes of action, or the same underlying legal issues."  Hayward Properties, 2021 WL 4923379, at *4. 

          The motion to disqualify this expert in the bad faith case was denied under the universal standard for expert witness disqualification applied to the facts in the record here.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved. 

ATTORNEY AS EXPERT WITNESS IN A BAD FAITH CASE.

The case of Kemper v. Equity Ins. Co., No. 1:15-cv-2961-MLB, 2021 WL 4134413 (N.D. Ga. August 30, 2021) is a bad faith failure-to-settle case involving Equity Insurance Company, a liability carrier.  The case arose from an automobile accident between one Amy Marie Kemper, the injured claimant and the plaintiff, and one Christopher Brown.  Mr. Brown was Equity Insurance Company's insured.

          During the course of the proceedings, the plaintiff filed a motion to bar an attorney retained by the carrier as an expert witness "from offering expert testimony about (1) 'the custom and practice of claims professionals in the insurance industry' and (2) 'establishing escrow accounts.'”   In a ruling which follows many other decisions of like kind in like circumstances, the Court in this case denied the plaintiff's motion and refused to bar the attorney-expert's testimony as to "the custom and practice of claims professionals in the insurance industry[.]"  Kemper, 2021 WL 4134413, at *1.

          In what at first glance may seem to be a case of first impression, on the other hand, the Court granted the plaintiff's motion to preclude the attorney-expert from offering opinion testimony on the subject of "establishing escrow accounts."  The Court resolved this issue by invoking the clearly settled rule that experts are not permitted to testify on issues beyond their expertise.  To put it in the vernacular, even experts have to stay in their own lanes.  See Kemper, 2021 WL 4134413, at *1.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

NO LEGAL CONCLUSIONS IN LAWYER-EXPERTS' OPINION TESTIMONY, NEITHER SIDE.

In Decamp v. State Farm Fire & Cas. Co., No. 8:20-cv-1747-VMC-TGW, 2021 WL 4059906 (M.D. Fla. September 7, 2021), the District Judge reiterated that a lawyer can be an expert witness offering testimony in an insurance case.  That case included not only insurance coverage questions, but questions surrounding fiduciary duties of the insurance carrier.

          However, the Court also reiterated that no-one, in this case not even a lawyer retained by the insurance carrier, could testify to legal conclusions in the guise of expert opinions:

    The Court agrees that [the lawyer-expert retained by the insurance carrier] may not opine as to whether payment of guardianship and special needs trust fees was required under the terms of the insurance policy. Nor may she provide other legal conclusions, such as what legal duties existed for State Farm.,,,   

    Having determined that [the lawyer-expert] may not offer such legal conclusions, the Court clarifies that not all of [her] opinions should be excluded. [Her] testimony will be helpful to the jury regarding the standards and practices of the insurance industry and whether State Farm complied with such standards.  [Citations omitted.]  This is the case even regarding Gray's opinion that State Farm exceeded industry standards in certain respects.

Decamp v. State Farm, 2021 WL 4059906, at *4-*5.

          On the same day that the District Judge entered her ruling concerning the opinion testimony of State Farm's lawyer expert in the case, she also entered her ruling concerning the opinion testimony of the plaintiffs' lawyer expert in the case.  The plaintiffs in this case are the injured claimants-assignees of the carrier's policyholder.

         The District Judge's ruling concerning the opinion testimony of their lawyer expert was to the same effect:  A lawyer-expert cannot testify to legal conclusions regardless of who proffers the testimony.  See p. 10 of Download Decamp v. State Farm Doc. 60 Order filed and entered September 7 2021 (M.D. Fla. No. 8.20.cv.1747.VMC.TGW)

To Westlaw's credit, they caught up with this ruling the next day, after they published the first ruling.  Decamp v. State Farm Fire & Cas. Co., No. 8:20-cv-1747-VMC-TGW, 2021 WL 4061010 (M.D. Fla. September 7, 2021).

 

 Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

CLAIMS HANDLING EXPERT; NO COVERAGE, NO BAD FAITH.

(Thomson Reuters)

In some cases, one of the parties may decide to retain the services of a "claims handling expert."  This was the case in Carson Cogeneration Co. v. Scottsdale Ins. Co., No. CV 19-10797 PA (JEMx), 2020 WL 7059625 (C.D. Cal. Oct. 2, 2020), which has just been reported on Westlaw.

In that case, Scottsdale was accused of delaying investigation and payment of its policyholder's coverage claim, which caused harm to the policyholder.  The policyholder, Carson, alleged claims for breach of the insurance contract and for insurer bad faith.

"Scottsdale's claims handling expert ... has opined that 'Scottsdale conducted and diligently pursued a reasonably thorough, fair and objective investigation in connection with Carson's claim pertaining to the alleged arcing event.'” Carson, 2020 WL 7059625, at *4.

The policyholder failed to rebut this evidence.  In fact, the Court viewed the entire record and concluded that there was insufficient evidence of unreasonable delay, regardless.

Since there was no evidence of a breach of the insurance contract, there was no viable claim for coverage.  In turn, there being no viable coverage claim, there could be no claim for insurer bad faith, either, under settled California law.  Carson, 2020 WL 7059625, , at *5.

The Court accordingly granted Scottsdale's motion for summary judgment based on the record in this case.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

 

 

EXPERT ADJUSTER TESTIMONY IN BAD FAITH CASE ALLOWED.

(Brennan Linsley / Associated Press)

The insurance bad faith case of Daniels v. Scottsdale Ins. Co., No. 19-10632, 2020 WL 7183363 (E.D. La. December 7, 2020), arose out of a mortgage foreclosure.

The plaintiffs in the bad-faith case were the plaintiffs in the foreclosure case. Fixtures on the property they foreclosed on were damaged.  After the insurance company investigated the resulting claim for losses, it issued a check payable to the plaintiffs as mortgagees and loss payees and, in accordance with the Commercial Lines policy involved in the matter, also made the owner a payee on the check.

The mortgagees thought that the owner, an entity called Kai Pond, was responsible for the damage.  The mortgagees even had the peril of property damage by Kai Pond made an explicit risk assumed under the policy.

It is not stated in the opinion, but apparently the check was negotiated.  In any event, the plaintiffs were not happy with the amount they received from the insurance company's payment.  The plaintiffs sued various defendants, among them the insurance company which they sued for alleged breach of contract and bad faith.

The issue at hand was whether the damage was "caused by others" within the meaning of the policy.  As the Court explained it, the issue was not whether the property owner could be one of the "others," but in basic terms the issue was instead whether the damage was caused by perils other than various natural forces which do not involve human action.

The plaintiffs produced an expert witness report by one Kotter.  Mr. Kotter's proffered expertise was in insurance adjusting.  The defendants challenged Kotter's opinions as totally inadmissible; they did not challenge Kotter's capacity to testify as an expert insurance adjuster.

A federal judge allowed the opinions in Mr. Kotter's report that the defendants found offensive, and declined to strike his report or to declare his testimony as an expert inadmissible on these points.   However, the Court went on to grant the motion as to a part of the Kotter report and some of the Kotter opinions:

    Scottsdale does not argue that Kotter is unqualified to testify as an expert insurance adjustor. Rather, Scottsdale argues that Kotter's vague statement that the damage was “caused by others” is unhelpful to determining the actual cause of the damage and that his opinions are based on unreliable evidence. After reviewing the record and Kotter's report, the Court finds that Kotter's report is reliable and relevant to the extent of most of the limited opinions it contains. Kotter's opinion that the damage was caused by others is helpful in that it excludes perils not caused by “human interaction” including fire, water, or natural disaster. Kotter also includes a cost estimate of the allegedly damaged or lost items which could be helpful to the trier of fact. Any issues Scottsdale has with these limited opinions can be addressed through cross-examination and the presentation of countervailing expert testimony. However, Kotter's report also includes an opinion that there was a “gross underpayment of the claim” that “resulted in Plaintiffs incurring the cost of litigation.” These statements are impermissible legal conclusions or factual determinations reserved for the trier of fact, which Kotter will not be permitted to offer at trial.

Daniels, 2020 WL 7183363, at *4.

This ruling is in line with the vast majority of rulings on expert witnesses and their opinion testimony in federal courts.  Most expert opinions are admissible, depending on what is in the record and what in the record the expert reviewed.  However, even the record will not permit an expert to testify to legal conclusions in the case or, as the judge ruled in this case, to "factual determinations reserved for the trier of fact[.]"

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

EXPERT TESTIMONY TO ROUND OUT THE MONTH:   NEUROSURGEON & BAD FAITH.

(Photo courtesy of NASA)

In Jarman v. American Family Ins. Co., No. CV-18-00526-PHX-SMB, 2020 WL 7013957 (D. Ariz. July 10, 2020), the Court held that a neurosurgeon could still testify to facts observed as a fact witness even though the plaintiff-policyholder did not designate the neurosurgeon as an Expert Witness.  Under Arizona law, this included testimony about delay and denial in an insurance carrier's authorization and thus in the policyholder's treatment that were perceived in the eyes of the neurosurgeon.  Jarman, 2020 WL 7013957, at *1.

    However, the Court did not permit the neurosurgeon to testify in this bad-faith case that the insurance carrier's allegedly unreasonable delays and denials were part of a habit or pattern that the carrier followed "routinely in other cases."  That calls for the opinion testimony of an Expert, and this witness was not designated as such so that such testimony from this witness was excluded.  Jarman, 2020 WL 7013957, at *1.

    That takes care of the bad-faith portion of the Court's rulings.  Another ruling is of interest, parenthetically.  The Court declined to allow the neurosurgeon who had not been designated as an Expert Witness to testify to an Expert opinion that the carrier caused post-traumatic stress in its handling of the plaintiff's claim.  Jarman, 2020 WL 7013957, at *2.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

EXPERTS' INTERPRETATIONS EXCLUDED: THE REBUTTAL EXPERIENCE.

Proffered opinions of experts based on interpretation of insurance policies may fare better when they are offered in rebuttal to the opinions of the other side's experts.

    A recent case involved "putative class action" claims that an insurance carrier allegedly and "effectively required insureds to transfer the value of their total loss vehicle when settling a claim under Defendant’s comprehensive of collision insurance coverage."  Morgan v. Progressive Select Ins. Co., No. 0:18-cv-61844-WPD, 2020 WL 3950133, at *1 (S.D. Fla. June 3, 2020).

    This is the court's entire discussion in that case, omitting only citations: 

    Finally, Defendant claims that [the expert's] rebuttal report contains numerous legal conclusions related to Plaintiff’s insurance policy. In addition, Defendant takes issue with the facts that [the expert's] rebuttal relies on information provided by counsel for then-Plaintiff Lopez. Defendant claims that [the expert's] rebuttal report also fails as it is merely based on speculation and is not based on any record evidence.  In response, Plaintiff argues that rather than presenting legal theories, [the expert] relies on the legal theories of Plaintiff’s counsel and merely testifies that the conditions of salvage auctions result in a fair market value which Plaintiff contends legally equates to Plaintiff’s compensatory damages.

    In his reports, [the expert] states that he is relying on the legal theories and factual allegations of Plaintiff’s claim provided by Plaintiff’s counsel. “[A]n expert witness may voice an opinion based on facts concerning the events at issue in a particular case even if the expert lacks first-hand knowledge of those facts.” [Citation omitted.] The Court disagrees with Defendant’s characterization that [the expert's] rebuttal report is merely a regurgitation of the opinions of Plaintiff’s counsel. [The expert's] rebuttal report rather highlights the assumptions of both Defendant’s expert analysis and his own. See, e.g. [DE 106-3] ¶¶ 7, 10.

Morgan, 2020 WL 3950133, at *3 (emphasis added).

The admissibility of expert testimony in third-party insurance bad faith cases is discussed in § 8:17, in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d Edition Thomson Reuters West and 2020 Supplements).  The admissibility of expert testimony in first-party insurance bad faith cases is addressed in § 12:18, in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

EXPERTS' INTERPRETATIONS EXCLUDED.

(Brennan Linsley / AP)

An attorney was one of several people proffered as an expert in a case.  All of them based opinions on their interpretation of the law and on their interpretation of an insurance policy or policies.

    The federal judge presiding over the case ruled that interpretation of the law and interpretation of insurance policies was up to the court, not expert witnesses.  The proffered opinion testimony of all the experts was excluded in Hansen Construction Inc. v. Everest National Insurance Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510, at *4-*5 (D. Colo. June 25, 2019).

    In his opinion, the judge also set out other drawbacks in relation to the testimony of one of the proffered experts in particular, but they concern that particular witness among the group of proffered expert witnesses addressed in the court's opinion. 

    The important point here is that interpretation of statutes and of insurance policies belongs to the judge.   Any other person's interpretation is an argument, not testimony.

    On Monday of this week, another federal judge reached the same conclusion and excluded proffered expert opinion testimony based on interpretations of the law.  Ellis v. Hobbs Police Dep't, No. 2:17-cv-01011 KWR/GBW, 2020 WL 3961079, at*3-*4 (D.N.M. July 13, 2020).  That case involved claims of alleged racial discrimination by a police department and retaliation for opposition to it.  The proffered witness in that case may not have been an attorney, parenthetically.   The court in that case described the witness only as "an expert in police procedures and practices."   Ellis, 2020 WL 3961079, at *1.

The admissibility of expert testimony in third-party insurance bad faith cases including the Hansen Construction case is discussed in § 8:17, in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d Edition Thomson Reuters West and 2020 Supplements).  The admissibility of expert testimony in first-party insurance bad faith cases is addressed in § 12:18, in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

DISCOVERING THE FINANCIAL INFORMATION OF AN EXPERT WITNESS.

"The financial information of an expert witness is squarely within the scope of discovery if its purpose is to uncover potential bias."  In re Jackson (Estate of Jackson v. Billingslea), No. 18-10400, 2019 WL 2743750, at *2 (E.D. Mich. July 1, 2019).

Discovery concerning experts in third-party insurance bad faith cases including the In re Jackson case, among other topics, is the subject of § 8:14, Considerations Applicable to Discovery by Insurers, and Expert Witnesses in Third-Party Bad Faith cases in general is the subject of § 8:17, in 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith (3d Edition Thomson Reuters West and 2020 Supplements).  Discovery by insurance carriers including concerning experts in first-party insurance cases is addressed in § 12:22, while § 12:18 features Expert Witnesses in First-Party Bad Faith cases in general, in Volume 2, id.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

EXPERT TRIAL JUDGE HELD NOT EXPERT NEGOTIATING GOOD FAITH SETTLEMENTS.

A former trial judge's expert testimony was excluded on the issue of negotiating good faith settlements in Columbia Cas. Co. v. Ironshore Specialty Ins. Co., C.A. No. 15-197 WES, 2019 WL 2176306 (D.R.I. May 20, 2019).

    To be fair, the federal court's reasoning in this case would have excluded all expert testimony regarding a civil litigant's reasonable expectations, which is how the federal judge framed the issue. Testimony on that issue was "irrelevant," said the federal judge excluding the expert testimony, "because the average civil litigant is a party representing his own interests, not a fiduciary representing the interests of another." Columbia Casualty, 2019 WL 2176306, at *5 (emphasis in original).

    The excluding judge allowed, however, that if the expert judge's testimony had been proffered differently in that case, such as addressing the expert judge's own experience "with insurance contracts and settlement negotiations of insurance claims specifically, or presented 'standards of settlement practice' that were tailored to the unique fiduciary duties imposed upon insurance companies," then the expert's testimony might have been relevant and so admissible in the courtroom of the federal judge.  Columbia Casualty, 2019 WL 2176306, at *5.

The issue of the Insured's Right to Contribute as Distinct From Insurer Insistence That the Insured Contribute to Settlement, is discussed based on the decided case law including the Columbia Casualty decision, in Section 3:13 in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (Thomson Reuters West, 3d Edition, forthcoming 2020 Supplement).

Please read the disclaimer. ©2020 Dennis J. Wall. All rights reserved.

EXPERTS AT WIND 2020 IN FIRST-PARTY INSURANCE CLAIMS -- ...

--INCLUDING IN BAD FAITH CLAIMS.

There was a difference of opinion among the presenters and among the attendees at a WIND class on experts in bad faith cases.

Some people questioned whether experts are even necessary in first-party bad faith cases.

Others look to the insurance industry for their experts in claims handling.  This may be a valid example of useful "peer review" in another context, namely, the selection and use of expert witnesses.

One attorney related his own experience that he encountered Daubert challenges to the qualifications of experts and their testimony under Federal Rule of Evidence 702(b) and (c).  For your ease of reference, here is the entire text of Federal Rule of Evidence 702 including (b) and (c), courtesy of Cornell Law School's posting of the text:

Rule 702. Testimony by Expert Witnesses

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

The class also reported that in their experience Federal Rule of Civil Procedure 26 has been used far more often to strike experts than FRE 702 has been used to disqualify experts.  (Rule 26 is one of the longer rules in the Western World, but you can read it here if you want, again courtesy of Cornell Law School.)  Rule 26 can serve as a basis for striking an expert (not often granted) because of a late report or no report, to cite perhaps the most common example.

Finally, differences between State rules and Federal rules governing the admissibility of Expert testimony produced this recognized truth:  Consult the laws of your particular jurisdiction before you retain an Expert or list them as your witness in a First-Party Insurance Bad Faith case.

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EXPERT'S FAILURE TO "REFINE OPINIONS" TO LOCAL LAW EXCLUDES THEM.

In Hamilton v. Bayer Healthcare Pharm. Inc., No. CIV-18-1240-C, 2019 WL 5295201 (W.D. Okla. Oct. 18, 2019), nationally renowned insurance expert Allen Windt was not permitted to testify to opinions on Oklahoma insurance bad faith because his opinions were not tailored to the rulings of Oklahoma law.  The Court in this case granted the non-retaining party's motion to exclude his testimony because as a result, his testimony was not reliable.  Hamilton, 2019 WL 5295201, at *1.  This ruling came despite Mr. Windt's book on insurance which included Oklahoma law cases:

Mr. Windt relies on a book he authored as the legal basis for his opinions. To be sure, that book references Oklahoma law. However, it also references the law of other states and that law often conflicts with Oklahoma law. Mr. Windt makes no effort to refine his opinions so that they are based solely on the law applicable to this matter. Accordingly, Mr. Windt will not be permitted to offer expert testimony at trial.

Hamilton, 2019 WL 5295201, at *1.

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A POX ON BOTH YOUR BAD FAITH HOUSES: EXPERT TESTIMONY UNHELPFUL.

In Hansen Constr. Inc. v. Everest Nat’l Ins. Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510 (D. Colo. June 25, 2019), a Federal Judge granted the plaintiff’s and the defendant insurance company’s motion to exclude expert witness testimony in a bad faith case.

The reason that both sides filed their motions to exclude their respective experts’ testimony was the same.  Both sides argued that testimony from  experts on the issue of insurance industry standards of good faith and bad faith would be of no help to the jury in deciding the bad faith issues in that case:

    Both parties intend to call expert witnesses at trial to offer opinions regarding insurance industry standards of care and whether Defendant’s conduct in handling Plaintiffs’ claim was reasonable. Defendants object to Plaintiffs’ proffered experts, J. Kent Miller and Garth H. Allen, on the basis that their opinions are improper and inadmissible under Fed. R. Evid. 702. (Doc. # 102.) Plaintiffs object to Defendant’s proffered expert, Jon F. Sands, on similar grounds. (Doc. # 101.)

Hansen Constr. Inc. v. Everest Nat’l Ins. Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510, at *1 (D. Colo. June 25, 2019).

The Federal Judge agreed in this case and granted both motions to exclude the expert testimony on bad faith vs. good faith industry standards applicable to this case:

    Neither party raises arguments related to the qualifications of the experts at issue. Rather, both parties assert that the expert opinions should be limited or excluded because the opinions are not helpful due to the fact that they relate to subject matter committed exclusively to the jury or to the Court. The Court agrees.

Hansen Constr. Inc. v. Everest Nat’l Ins. Co., No. 16-cv-02902-CMA-GPG, 2019 WL 2602510, at *3 (D. Colo. June 25, 2019).

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EXPERT TESTIMONY EXCLUDED ON "BAD FAITH" SETTLEMENT NEGOTIATIONS.

A trial judge's expert testimony was excluded in Columbia Cas. Co. v. Ironshore Specialty Ins. Co., C.A. No. 15-197 WES, 2019 WL 2176306 (D.R.I. May 20, 2019).  The retired judge's expert testimony was proffered on the issue of whether a liability insurance company negotiated in bad faith during settlement negotiations in the underlying case.

The federal judge presiding in this case excluded the retired judge's expert testimony.  To be fair, the federal judge's reasoning would have excluded all expert testimony on the subject of a civil litigant's reasonable expectations as the federal judge framed the issue, because testimony on that issue was "irrelevant," least of all "because the average civil litigant is a party representing his own interests, not a fiduciary representing the interests of another."  Columbia Casualty, 2019 WL 2176306, at *5.

If the retired judge had framed his expert testimony in different terms unique to insurer bad faith claims, it might have been relevant and so admissible in the eyes of the federal judge:

Had [the retired judge] cabined his opinion to address his experience with insurance contracts and settlement negotiations of insurance claims specifically, or presented “standards of settlement practice” that were tailored to the unique fiduciary duties imposed upon insurance companies, his opinion may have had more relevance.

Columbia Casualty, 2019 WL 2176306, at *5.

The issues matter.  Framing the issues matters.  More to the point of this case, framing the issues for expert testimony before an expert is even asked to address those issues, matters.

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CARRIER CHALLENGE FAILS CONTENDING EXPERT REQUIRED TO SUPPORT INSURED'S SETTLEMENT.

In Sykes v. Singh, ___ P.3d ___, No. 76009-2-I, 2018 WL 5146747 (Wash. Ct. App., Div. 1, filed August 13, 2018, publication ordered October 16, 2018), a liability carrier refused to defend its insured, the insured settled rather than face an underlying trial and verdict, and the carrier challenged the reasonableness of the insured's settlement.  Standard stuff in refusal-to-defend cases these days.

    In this particular case, the insured's settlement included what the appellate court called "general damages."  What the court meant by this phrase is explained in more detail in the quotation below.  The interesting thing about this case is the carrier's argument.

    The carrier argued in this case that the insured's settlement was not reasonable because no expert testimony was provided to support the reasonableness of the insured's settlement particularly his pain and suffering and emotional distress, and loss of consortium.

    In other words, instead of contending that experts are "hired guns" or the like when they testify about personal injury damages, in this case the carrier contended that experts are indispensable to proving personal injury damages.

    The appellate court was having none of it:

    ¶ 26 Zurich also challenges the general damages. The settlement allocated approximately $150,000 in general damages for Sykes and $30,000 for the loss of consortium by his family members. Sykes attributed his general damages to pain and suffering and the emotional trauma of the accident. Zurich objects to the absence of expert testimony but fails to show that expert testimony is needed to support an award of general damages. Support for the general damages was provided by Sykes’ own testimony along with declarations from friends and family that after the accident, Sykes became depressed and withdrawn. Zurich argues that the allocation to the Sykes children for loss of consortium was error in view of Sykes’ testimony that he spent more time with them and had greater appreciation for them as the result of the accident. But in view of the evidence that Sykes suffered from ongoing depression, it was reasonable to include loss of consortium damages in the settlement.

Sykes v. Singh, ___ P.3d ___, No. 76009-2-I, 2018 WL 5146747, at p. *5, ¶ 26 (Wash. Ct. App., Div. 1, filed August 13, 2018, publication ordered October 16, 2018).

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IN PENNSYLVANIA, DISCOVERY VIOLATIONS ARE HELD NOT BAD FAITH.

In Homer v. Nationwide Mut. Ins. Co., ___ Fed. App'x ___, No. 16-3686, 2018 WL 1081230 (3d Cir. February 27, 2018), the Third Circuit Court of Appeals refused to recognize an insurance carrier's alleged litigation conduct consisting of retaining and presenting the allegedly skewed testimony of experts, as actionable bad faith.

The Third Circuit based its holding in this case on the record facts and on the Court's understanding that even though Pennsylvania bad faith law allows evidence of litigation conduct in a bad faith lawsuit, still it does not allow "discovery disputes" to rise to the level of actionable bad faith:

Both this Court and the Pennsylvania Superior Court have, however, held that pure discovery violations cannot rise to the level of bad faith. W.V. Realty [W.V. Realty, Inc. v. Northern Ins. Co., 334 F.3d 306], 314 [(3d Cir. 2003)]; O’Donnell [O’Donnell ex rel. Mitro v. Allstate Ins. Co., 734 A.2d 901,] 908-09 [(Pa. Super. Ct. 1999)]..

Homer v. Nationwide Mut. Ins. Co., ___ Fed. App'x ___, No. 16-3686, 2018 WL 1081230, at *2 n.10 (3d Cir. February 27, 2018).

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ATTORNEYS WHO DO NOT KNOW WHAT THEY ARE TALKING ABOUT ...

MAY BE GREAT PEOPLE BUT NOT BE EXPERTS ABLE TO TESTIFY IN COURT ON THE SUBJECT OF THE LITIGATION.

Attorneys are often selected by all sides to give Expert Testimony.  However, if the proffered Expert does not know the subject matter, that witness is not an Expert in that particular case.

This is a problem in all areas including but not limited to insurance bad faith.  For example, this problem surfaced in a Wisconsin case recently reported by Westlaw:  Village of Slinger v. Polk Prop's, LLC, 2016 WL 4533623 (Wis. Ct. App. August 31, 2016) (NOTICE: FINAL PUBLICATION DECISION PENDING).

The plaintiffs in that case sued for legal malpractice.  One of the plaintiffs selected an apparently prominent attorney "as its expert witness on [the defendant's] legal malpractice."  The problem as the Wisconsin Court of Appeals saw it, however, is that the issue involved in the case is "drafting developer's agreements."  The appellate court clearly stated that the attorney proffered as an expert had "a brilliant resume."  The court went on to add, however, that the attorney-proffered-as-an-expert "has little foundation in the specialized area of drafting developer's agreements and what foundation he does have is neither recent nor extensive.  The circuit court did not err in its discretionary decision to exclude [the attorney's] testimony based on [the attorney's] insufficient qualifications."  Village of Slinger v. Polk Prop's, LLC, 2016 WL 4533623 ¶ 13 (Wis. Ct. App. August 31, 2016).

"Foundation in the specialized area" upon which the attorney was offered as an Expert.  Qualifications in that area are the ones that count.  Future articles posted here will explore the most significant recent decisions in insurance bad faith cases turning on the same points.

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WITHDRAWN EXPERT CAN BE CALLED AT TRIAL BY OPPOSING PARTY.

               In a case which involved an issue of valuing property rather than insurance bad faith, a Federal Court applied law applicable to all experts in Commonwealth Land Title Ins. Co. v. Sun Valley Credit, LLC, No. 1:13-CV-00113-EJL, 2015 WL 807055 (D. Idaho Feb. 26, 2015).

               In that case, Commonwealth identified one Janoush as an expert witness who would testify to the issue of appraisal.  Commonwealth produced Mr. Janoush’s expert report accordingly.  “By doing so, Commonwealth gave up the protections of Rule 26(b)(4)(D).”  Commonwealth Land Title Ins. Co. v. Sun Valley Credit, LLC, No. 1:13-CV-00113-EJL, 2015 WL 807055, *10 (D. Idaho Feb. 26, 2015).

            Federal Rule of Civil Procedure 26(b)(4)(D) “essentially creates a non-testifying expert privilege or safe harbor allowing a party the right to keep ‘facts known or opinions held’ by its non-testifying expert secret, i.e. protected from discovery, similar to the work product doctrine.”  Commonwealth Land Title Ins. Co. v. Sun Valley Credit, LLC, No. 1:13-CV-00113-EJL, 2015 WL 807055, *9 (D. Idaho Feb. 26, 2015).  Commonwealth attempted to sail into this safe harbor after Mr. Janoush’s report had already left the pier, so to speak, by thereafter withdrawing Mr. Janoush as a testifying expert.  This tack did not succeed.

               The Commonwealth Court treated Commonwealth’s release of Mr. Janoush’s report as a waiver of whatever “privilege” or “safe harbor” is afforded by Rule 26(b)(4)(D).  “Thus, the Court finds Rule 26(b)(4)(D) does not preclude Credit from calling Mr. Janoush at trial.”  Commonwealth Land Title Ins. Co. v. Sun Valley Credit, LLC, No. 1:13-CV-00113-EJL, 2015 WL 807055, *10 (D. Idaho Feb. 26, 2015).

               In announcing this holding, the Commonwealth Court did not mention that Commonwealth had previously identified Mr. Janoush as an expert likely to testify at trial.  The only fact that was important to this holding was that Commonwealth knowingly and voluntarily produced Mr. Janoush’s report containing his opinions.

               The central holding of this case is that the act of producing an expert witness’s report continuing the expert’s opinions is a waiver where the retaining party “knowingly and voluntarily discloses the non-testifying expert’s opinions.”  This waiver can allow the opposing party to discover facts known or opinions held by the non-testifying expert, or as in this case, allow the opposing party to call the expert at trial in its own case.  Commonwealth Land Title Ins. Co. v. Sun Valley Credit, LLC, No. 1:13-CV-00113-EJL, 2015 WL 807055, *10 (D. Idaho Feb. 26, 2015).

            This holding has application to all Federal cases in which an expert’s report is voluntarily and knowingly produced, including in insurance bad faith cases. 

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Related articles

Pay No Attention to the Settlement Behind the Curtain.

WHEN SANCTIONS MAKE LANDFALL: THE NEW YORK SANDY CASES.

The reader's appreciation of this article may benefit from also reading related earlier posts on Insurance Claims and Issues Blog.

     Failure to provide the requested production in one such case presented circumstances which famously led the Magistrate Judge presiding over discovery disputes in that Hurricane Sandy case, to conclude that the nonproduction warranted the imposition of sanctions.[1]

---

[1] In re Hurricane Sandy Cases, No. 14 MC 41 (Raimey v. Wright Nat’l Flood Ins. Co., No. 14 CV 461), 303 F.R.D. 17 (E.D.N.Y. 2014)(Brown, U.S.M.J.), affirmed “[f]or the reasons set forth in detail below,” and adopted in its entirety by United States District Judge, ___ F. Supp. 3d ___, 2014 WL 7399179, *1 (E.D.N.Y. December 31, 2014)(Bianco, U.S.D.J.).  As noted in the immediately preceding footnote, the entire Committee of Magistrate Judges managing Hurricane Sandy cases has ruled that Magistrate Judge Brown’s discovery ruling applies to all of the pending Hurricane Sandy cases.

          The District Judge listed in detail all of the many factors taken into account in the course of affirming and adopting the imposition of sanctions by Magistrate Judge Brown, factors which the District Judge summarized over the course of three (3) pages.  Raimey v. Wright Nat’l Flood Ins. Co., ___ F. Supp. 3d ___, 2014 WL 7399179, *1-*3 (E.D.N.Y. December 31, 2014).

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Reprinted with the permission of Thomson Reuters West from the manuscript of the author's 2015 Supplement chapters in “Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters” ©2015 by Thomson Reuters West.

 

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Fighting the flu and reporting from the Orlando Wind Conference.

I plan on attending the Orlando Windstorm Conference this afternoon. The sessions I would like to attend are about preparation for deposition testimony and the use of expert witnesses in windstorm claims. More to come.

7:30 P.M.:  There is more to come on the site of Insurance Claims and Issues Weblog.  Journey over there and enjoy the breaking news out of the 15th Annual Windstorm Conference in Orlando in 2014!

 

TELL YOUR TESTIFYING EXPERT WHAT THE JUDGE HAS RULED.

The first in a series of articles suggesting ways to successfully present Expert Testimony in your Insurance Case.

           It seems pretty basic to tell your own Expert, who has just arrived at the Trial in your client's case, how the Judge has ruled before the Expert arrived.  But in my experience in the rare case the retaining attorney will not think to advise the Expert about the Judge's earlier rulings in the Trial.

          The retaining attorney after all has been there from the beginning of the Trial and has attended Trial every day.  She or he knows the Judge's rulings during Trial very well.

          However, the newly arrived Expert does not know any of the  rulings which the Judge made earlier in the Trial unless the Expert is told.  It is up to the one who knows -- the retaining attorney and her or his trial team -- to advise the arriving Expert, who does not know.

          It may be another rarity, but the subject of whether the Expert was advised of the Judge's rulings at Trial has in my experience been asked during cross-examination of the Expert.  If the cross-examiner correctly states the Judge's rulings, it is important for the Expert to know them before the opposing attorney says what they are.

          The retaining attorney should of course object if the cross-examining attorney misstates the Judge's rulings.  If there is no objection, the Jury may be led to believe that the opposing attorney stated the Judge's rulings correctly even if she or he did not state them correctly.

 

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The Appraisal and The Expert.

          The case of Biscayne Cove Condo. Ass'n v. QBE Insurance Corp., 2013 WL 2646828 (S.D. Fla. June 12, 2013), presented U.S. Magistrate Judge O'Sullivan with unique opportunities for ruling.  It is a declaratory judgment action filed by a condominium association requesting a declaration that it has a right to appraisal of its Hurricane Wilma damage claim.  The condominium association bases this claim on the appraisal provision of its property insurance policy issued by the defendant.  The defendant insurance company did not dispute coverage under the policy, only the value of the damaged property.  Biscayne Cove Condo. Ass'n v. QBE Insurance Corp., 2013 WL 2646828 *3 (S.D. Fla. June 12, 2013).

          One of the opportunities to rule was presented by the condominium association's motion in limine to prevent the insurance company from putting on expert testimony in the declaratory judgment action concerning valuation.  The insurance company raised an affirmative defense of fraud in that case, and contended that it should be allowed to put on expert testimony on the fraud issue.

          The Court agreed with both positions in ruling that expert testimony was admissible on the fraud issue, but not concerning valuation, in the declaratory judgment action as distinct from the appraisal proceeding if any:

             In the instant case, the defendant will be allowed to present evidence on causation and valuation as it relates to the affirmative defense of fraud. Evidence regarding valuation and causation is necessary to determine if the plaintiff made purposeful misrepresentations to QBE. Evidence regarding causation and valuation, however, is not relevant to the other issues of this action for declaratory judgment.

Biscayne Cove Condo. Ass'n v. QBE Insurance Corp., 2013 WL 2646828 *5 (S.D. Fla. June 12, 2013).

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REVERSIBLE IMPEACHMENT OF EXPERT WITNESS.

          A physician was called to testify as an Expert Witness in a recent case.  On cross examination, the physician was asked why he did not bring payment records with him that he did not have to bring -- and that the insurance company which retained him had already produced during discovery in any case.

          Objections were made to some of the questions, and not to others.

          On appeal, the case was remanded for a new trial on these and other grounds.  In particular, it was held that this attempt at 'impeachment' was so not proper that, combined with other cumulative errors, it requires a new trial.  Allstate Ins. Co. v. Marotta, 2013 WL 2420451 *4 (Fla. 4th DCA June 5, 2013).

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TWO LAWYERS IN WISCONSIN: ONE TESTIFIED, THE OTHER DID NOT.

          Two lawyers were identified as witnesses to testify in a Wisconsin Third-Party Bad Faith case.  One of the two lawyers was identified as an Expert Witness by the Plaintiff Policyholder.  He was not allowed to testify.  The Court noted that this lawyer came into Court with "impressive legal experience".  The Court stated that it had no doubt that the proferred Expert "is well qualified to provide an opinion on issues of coverage."  Therein lies the rub, however.  "[H]is opinion is on purely legal issues and provides his subjective legal conclusions."  Cousins Submarines, Inc. v. Federal Insurance Co., 2013 WL 494163 *13 (E.D. Wis. February 8, 2013).

          When the Court ruled that this Expert could not offer his Opinions on legal conclusions, the Court in this case left little doubt who has that job:

The Court is perfectly able to analyze the law applicable to the claims in this case and the underlying claims in the prior action; it does not need a separate expert providing what is essentially a separate legal brief to make its legal determinations, here. However, the Court having decided the bad faith issue without the assistance of [the proferred Expert's] brief, and the Court granting summary judgment to Federal on that issue, the Court will deny Federal's motion to exclude [the proferred Expert's] opinion (Docket # 46) as moot.

Cousins Submarines, Inc. v. Federal Insurance Co., 2013 WL 494163 *13 (E.D. Wis. February 8, 2013).

            The second of the two lawyers fared better than the first did, at least in terms of being permitted to testify.  The other lawyer represented the Plaintiff Policyholder in the underlying action.  The second lawyer "offers his beliefs as to the reasons [that the Plaintiff] settled the prior action."  The Liability Carrier filed a Motion to Strike this lawyer's Affidavit "as offering improper expert testimony."  The Court declined the opportunity and denied the Motion to Strike.

          The Court expressly disagreed that the second lawyer's Affidavit is really an Expert Report.  The second lawyer in this case "is better classified as a fact witness.  Granted, there is a very thin line between the testimony offered by [the second lawyer] and that offered by [the first lawyer]:  both witnesses' testimony relies on subjective legal conclusions."  The testimony which the second lawyer was in a position to give, however, "derives from his position as an attorney in the prior action.   At that time, he was able to gather impressions about the prior action.  He now offers testimony regarding the conclusions he reached at that time.  To the Court, this seems to be much closer to a fact witness than to an individual offered as an expert."  Cousins Submarines, Inc. v. Federal Insurance Co., 2013 WL 494163 *14 (E.D. Wis. February 8, 2013).  [Emphasis added.]

          When legal conclusions became a matter of fact, this Court allowed evidence of them, a ruling which some would consider discerning or even courageous in the factual context of this particular case.  When legal conclusions were matters of opinion, this Court followed the universal rule and disallowed them totally.

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