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Ace American Insurance Co. v. Dish Network, LLC

United States District Court, D. Colorado

July 17, 2015



MICHAEL E. HEGARTY, Magistrate Judge.

Before the Court is Plaintiff's Motion to Exclude Dish's Belatedly Disclosed Expert George Biehl [filed May 29, 2015; docket #82]. The motion is referred to this Court for disposition (docket #86). For the following reasons, the Court denies the motion, but will permit the Plaintiff to have additional limited discovery as set forth below.

I. Background

Plaintiff Ace American Insurance Co. ("Ace") initiated this action for declaratory judgment on March 4, 2013 against Defendant Dish Network, LLC ("Dish"). Ace then filed an Amended Complaint as a matter of course on May 3, 2013, seeking a determination that it has no obligation to pay expenses incurred in the defense of underlying lawsuits pursuant to applicable insurance policies. (Docket #12.) Dish responded to the Amended Complaint by filing a Motion to Dismiss for this Court's lack of jurisdiction on June 21, 2013; at the parties' request, discovery was stayed pending resolution of Dish's motion. (Docket #32.) On March 3, 2014, the Honorable Robert E. Blackburn adopted this Court's recommendation to grant in part and deny in part the motion and dismissed Count 2 of the Amended Complaint. (Docket #44.) Thereafter, Dish filed an Answer and Counterclaim (docket #48) to which Ace responded with an Answer (docket #49).

This Court then set the matter for a Scheduling Conference to be held on May 29, 2014; at the conference, the parties informed the Court that they believed all issues remaining in the case could be resolved on summary judgment; accordingly, the Court issued a scheduling order setting only a status conference for July 10, 2014. (Dockets ##51, 52.) However, at the July 10 conference, the parties determined that discovery would be necessary, so the Court set all discovery deadlines, conference dates, and the trial before Judge Blackburn. (Docket #58.)

Again, at the request of the parties, this Court held a status conference on February 23, 2015 at which the parties requested extensions of the discovery deadlines. (Docket #80.) That same day, this Court issued a recommendation that Judge Blackburn grant the parties' request to modify the Scheduling Order, which allowed discovery to proceed first on the duty to defend claim, then later to proceed (if necessary, after a ruling on a forthcoming motion for summary judgment) on the duty to indemnify claim. (Docket #81.) That recommendation remains pending before Judge Blackburn.

On May 29, 2015, Ace filed the present motion arguing that Dish's designated "rebuttal" expert is actually an "initial" expert improperly disclosed on May 11, 2015 after the initial expert deadline of April 7, 2015. Ace contends that Dish's expert, George Biehl, did not attempt to address the primary basis for Ace's expert's opinion (applicability or operation of state statutes to Ace with respect to policies it issued to Dish) and, instead, opined as to the "standard of care' and usual business practices' of insurers in the issuance and renewal of policies generally, without regard to statutory requirements." Motion, docket #82 at 3 (emphasis in original). Ace concludes that, because Mr. Biehl did not discuss in his report or deposition testimony the applicability of, or Ace's obligations under, the state statutes, he should be characterized as an initial expert and, because his report was submitted on the date discovery closed, Ace is prejudiced and the report should be stricken as untimely. Id. at 4-6.

Dish counters that it properly designated Mr. Biehl as a rebuttal expert where Ace's expert opined that Ace's policies were "new" policies and Ace was not obliged to notify Dish of any reductions of coverage that are required in connection with "renewal" policies; Mr. Biehl then rebutted the opinion by asserting that, in the custom and practice of the insurance industry, any policy issued after the first was a "renewal" policy and, thus, Ace was obliged to notify Dish of any reductions of coverage. Response, docket #106 at 2. Dish argues that Ace's expert improperly inserted legal conclusions in his report and it is these improper conclusions Ace claims Mr. Biehl failed to rebut. Id. at 3-4.

Ace replies that Mr. Biehl's opinions concerning the standards of care and usual business practices of the insurance industry are "entirely new" and Ace is "inherently prejudiced" because it was afforded no opportunity to rebut Mr. Biehl's report before it was included in Dish's motion for summary judgment.

II. Discussion

Ace brings its motion pursuant to Rule 37(c), which states in pertinent part:

If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.

Fed. R. Civ. P. 37(c)(1). "The court has broad discretion' to determine whether to allow the late designation of experts and need not make explicit findings concerning the existence of a substantial justification or the harmlessness of a failure to disclose.'" Martinez v. Target Corp., 384 F.Appx. 840, 847 (10th Cir. 2010) (quoting Woodworker's Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir.1999)); see also Orjias v. Stevenson, 31 F.3d 995, 1005 (10th Cir.), cert. denied, 513 U.S. 1000 (1994) ("The imposition of sanctions for abuse of discovery under Fed.R.Civ.P. 37 is a matter within the discretion of the trial court."). A district court abuses its discretion if the exclusion of testimony results in fundamental unfairness in the trial of the case. Orjias v. Stevenson, 31 F.3d 995, 1005 (10th Cir. 1994) (citing Smith v. Ford Motor Co., 626 F.2d 784, 794 (10th Cir. 1980)).

Fed. R. Civ. P. 26(a)(2)(B) requires in part that an expert report contain "a complete statement of all opinions the witness will express and the basis and reasons for them;...." If the expert testimony is intended solely to contradict or rebut evidence on the same subject matter identified by the opposing party pursuant to the rule, the evidence should be disclosed within thirty days after the other party's disclosure, absent a court order or stipulation. Fed.R.Civ.P. ...

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