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O'Sullivan v. Geico Casualty Co.

United States District Court, D. Colorado

February 7, 2017




         In this insurance dispute pending under the Court's diversity jurisdiction, 28 U.S.C. § 1332, Plaintiff Donald O'Sullivan (Plaintiff, or “O'Sullivan”) brings claims for breach of contract, for breach of the duty of good faith and fair dealing, for unreasonable delay or denial of insurance benefits in violation of Colorado Revised Statutes §§ 10-3-1115 & -1116 (i.e., “statutory bad faith”), and for exemplary damages against Defendant Geico Casualty Company (Defendant, or “Geico”).

         Now before the Court are Defendant's Motion to Strike Plaintiff's Expert Witness Robert Baldwin (ECF No. 71) and Defendant's Motion to Strike Report and Exclude Testimony of Plaintiff's Expert David Torres (ECF No. 73). For the reasons set forth below, both motions are granted in part.

         I. BACKGROUND

         This case was filed in August 2015. The central claim is that at the time Plaintiff purchased his auto insurance contract, Geico did not provide adequate notification and opportunity for Plaintiff to purchase uninsured/underinsured (“UM/UIM”) motorist coverage at limits equal to the limits of his bodily injury liability coverage. See generally Colo. Rev. Stat. § 10-4-609(2); Allstate Insurance Co. v. Parfrey, 830 P.2d 905, 912-13 (Colo. 1992). Plaintiff alleges that Geico is obligated to reform its existing insurance coverage to provide him with a higher level of UM/UIM coverage and has acted unreasonably in denying his claim and/or delaying payment of his insurance benefits, contrary to §§ 10-3-1115 & -1116.

         As relevant here, the initial scheduling order set the deadline for affirmative expert disclosures at February 1, 2016, the date for rebuttal expert disclosures at March 1, 2016, the discovery cut-off date at April 22, 2016, and the dispositive motion deadline at May 24, 2016. (ECF No. 21 at 9.) Through several unopposed motions, which the Court granted, the parties mutually sought to extend the deadlines for affirmative expert disclosure and for discovery cutoff. (See ECF Nos. 25, 38, 40, 48, 51.)[1]

         The parties then timely exchanged affirmative expert disclosures on their new deadline to do so, April 18, 2016. (See ECF Nos. 51, 71-1, 71-3.) As relevant here, Plaintiff's affirmative disclosure included Mr. David M. Torres, an insurance claims consultant, and Geico's included attorney Jon F. Sands.

         However, presumably through oversight, the parties had never requested any extension of the deadline to disclose rebuttal experts before Geico filed an unopposed motion on April 22, 2016, requesting such an extension. (See ECF No. 55.) This motion came several weeks after the existing rebuttal disclosure deadline (March 1, 2016) had already passed, and after the parties had already exchanged their affirmative expert disclosures. (See id.)

         The Court granted Geico's request to reset the rebuttal disclosure deadline to May 18, 2016. (ECF No. 55.) The parties did not, however, seek any extension of the existing May 23, 2016 cutoff date for discovery, which was also the deadline to complete any experts' depositions. (See ECF Nos. 51 & 55.) Thus, by their own requests, as filed by Geico and granted by the Court, the parties set a case schedule which allowed only five days between the deadline for rebuttal expert disclosures (May 18, 2016) and the existing deadline to complete all discovery, including expert depositions (May 23, 2016).

         On the re-set deadline for rebuttal expert disclosures, May 18, 2016, Plaintiff disclosed Robert M. Baldwin as a rebuttal expert (see ECF Nos. 71-4 & 71-8), and Geico disclosed Mr. Sands as its rebuttal witness (see ECF Nos. 58 & 71-5).

         Neither party moved for any further extensions of deadlines, or for leave to complete additional discovery or supplementation of disclosures after the close of discovery. Therefore-at least so far as far as the record before the Court reveals- discovery was completed by the existing deadline of May 23, 2016. (See ECF No. 51; ECF No. 71 at 3.) Geico filed a motion for summary judgment the same day (see ECF Nos. 60 & 61), and the motions now before the Court (ECF Nos. 71 & 73) followed on June 27-28, 2016.


         The Court first addresses Geico's motion to strike Mr. Torres's report and to exclude his testimony pursuant to Federal Rule of Evidence 702. (ECF No. 73.)

         A. Legal Standard: Rule 702

         A district court must act as a “gatekeeper” in admitting or excluding expert testimony. Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2004). Admission of expert testimony is governed by Rule 702, which provides:

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.

         Fed. R. Evid. 702. The proponent of the expert testimony bears the burden of proving the foundational requirements of Rule 702 by a preponderance of the evidence. United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).

         While an expert witness's testimony must assist the jury to be deemed admissible, Fed.R.Evid. 702(a), it may not usurp the jury's fact-finding function. See Specht v. Jensen, 853 F.2d 805, 808 (10th Cir. 1988). The line between what is helpful to the jury and what intrudes on the jury's role as the finder of fact is not always clear, but it is well-settled that “[a]n opinion is not objectionable just because it em braces an ultimate issue.” Fed.R.Evid. 704(a).

         Ultimately, “the rejection of expert testimony is the exception rather than the rule.” Fed.R.Evid. 702 advisory committee's note. “[T]he trial court's role as gatekeeper is not intended to serve as a replacement for the adversary system. . . .Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Id. (citations and internal quotation marks omitted).

         B. Mr. Torres's Report & Opinions

         Plaintiff disclosed Mr. Torres to offer opinions regarding Geico's handling of Plaintiff's underinsured motorist claim. (See ECF No. 73-1 at 1.) His written report[2]indicates that he has “more than 25 years working in the insurance industry, ” evidently for State Farm. (Id.) He worked in various claims-handling roles, including “16 years overseeing the adjusting of claims, ” and managing claims handling, including litigation in Colorado, New Mexico, and Nevada. (Id. at 2.) He left State Farm in 2014 and has worked as a “claims practices consultant” since then. (Id. at 3.)

         Mr. Torres's report recites that his above “background and experience” have made him “highly familiar with insurance industry customs and practices and industry standards.” (Id.) Mr. Torres makes clear that he is not a lawyer, although his report states that he is “familiar with the Model Unfair Claims Practices Act, which has been largely adopted in Colorado at [Colorado Revised Statutes §] 10-3-1104.” (Id.) He explains that “[i]f I state an opinion that an insurer failed to follow industry standard[s] and practices, I am opining that the insurer's conduct deviated from the norms of what insurers typically do in the handling of claims.” (Id. at 3.)

         Mr. Torres indicates that he reviewed various documents, correspondence, deposition transcripts and other factual and discovery materials from this litigation, including Geico's claim notes. (Id. at 3-5.) He also reviewed certain court opinions from other insurance litigation. (Id. at 4.)

         Mr. Torres's report then includes a narrative discussion of his views of the operation of the insurance industry, including sections on “General Principles of Insurance, ” “Role of Insurance Companies, ” the “Nature of Uninsured Motorist Coverage, ” and “Claims Handling Standards.” (Id. at 5-10.) In this background discussion he includes several generic statements, such as noting that “[c]laims should be separated from profit consideration and should be handled appropriately and thoroughly” (id. at 6), and that “[i]t is well recognized in the insurance industry that often, an insured is in an especially vulnerable economic and personal position” when filing claims, and that “[c]laims personnel are trained to understand this important principle and . . . the importance of fulfilling the claims process” (id.). He notes that “[i]nsurance companies should treat its [sic] policyholder's interests with equal regard as . . . its own, ” and notes that “[i]n Colorado, the General Assembly has recognized the need to ensure reasonable and prompt handling of first party claims by enacting [§§] 10-3-1115 and 1116, which provides [sic] that an insurer will not unreasonably deny payment of a claim for first party benefits.” (Id. at 7.)

         As to uninsured motorist coverage, Mr. Torres explains that this is “first party coverage, ” and that handling such claims should be distinguished from handling third-party claims, specifically, that insurance companies should not “approach an UM claim with an adversarial eye, ” and should “promptly pay amounts due on first [party] claims.” (Id.) As to claims handling standards, he outlines certain practices prohibited under relevant model guidelines and the Colorado Unfair Claim Settlement Practices Act (Colo. Rev. Stat. § 10-3-1104(1)(h)), stating these provisions and standards “should be familiar to all claim handlers in the insurance industry. (Id. at 8-10.)

         After setting out this background, Mr. Torres's report includes a factual narrative of the accident and claims-handling at issue in this case (id. at 10-13), followed by his analysis applying the outlined standards to Geico's conduct in this case (id. at 13-17). The analysis section of Mr. Torres's report repeats generic statements of certain supposed insurance industry standards (e.g., “[t]reating their insureds with equal regard as to its own interest without turning the claims process into an adversarial process, ” and “[p]romptly and adequately communicating the basis for claims decisions”). (Id. at 14.) Mr. Torres then sets out provisions of the Colorado Unfair Claims Settlement Act which he believes Geico violated in this case. (Id.) He concludes that based on his review he believes Geico has improperly taken an adversarial approach to handling Plaintiff's claim and has “refused to issue Underinsured Motorists Benefits without clear explanation.” (Id. at 15.)

         Relevant to Plaintiff's claim that he is entitled to uninsured/underinsured coverage at a $100, 000 policy limit, Mr. Torres opines that Geico's claims representative “was unaware if the limits . . . [were] explained to [Plaintiff], ” and that she had a duty “to investigate whether [Plaintiff] was offered such higher limits.” (Id.) Given his understanding of industry standards calling for coverage in cases of ambiguity or confusion, Mr. Torres further opines that Geico's claims representative should “err on the side of her insured, ” and contrasts Geico's handling here with what he himself had done in similar cases and what the “leader in the insurance industry” (presumably he means his former employer, State Farm) does in a similar situations. (Id. at 15-16.)

         Mr. Torres also includes several concluding opinions. (Id. at 16-17.) Here, he opines that “[i]t appears GEICO may be basing . . . denial . . . on their own interpretation of the current claims environment in Colorado and this is egregious”; that insurance companies “do not get the choice of spinning current laws in Colorado to their own advantage”; and when faced with “different interpretations of the current claims environment, GEICO should err on the side of their insured, which is common practice in the insurance industry.” (Id. at 16.) Noting Plaintiff's injuries and medical bills, Mr. Torres objects to Geico's requests for “prior records/bills” as “possibly” an effort to “devalue [Plaintiff's] claim.” (Id. at 17.)

         Finally, noting that Plaintiff “was forced into litigation” in this case, Mr. Torres opines that Geico's conduct “constitutes an unreasonable delay and/or denial of [Plaintiff's] policy benefits, ” that Geico was aware of Colorado case law and “knew or should have known that it was disregarding [Plaintiff's] rights under his policy, ” and that “this claim was not adjusted consistent with GEICO's duty of Good Faith and Fair Dealing.” (Id. at 17.)

         C. Analysis

         Geico argues that Mr. Torres's anticipated expert testimony and opinions should be excluded under Rule 702 and Daubert v. Merrell Dow Pharmaceutical, 509 U.S. 579 (1993), for three reasons: (1) because he is insufficiently qualified (ECF No. 73 at 5-7); (2) because his opinions are not based on a reliable application of sound principles to the facts of this case (id. at 7-11); and (3) because certain of ...

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