United States District Court, D. Colorado
TBL COLLECTIBLES, INC., d/b/a Colorado Coins, Cards & Comics, Plaintiff,
OWNERS INSURANCE COMPANY, Defendant.
A. BRIMMER, United States District Judge
matter is before the Court on Plaintiff's Motion for
Partial Summary Judgment on Its First Claim for Declaratory
Relief [Docket No. 62], Defendant Owners Insurance
Company's Motion for Summary Judgment [Docket No. 63],
Plaintiff's Motion to Exclude Certain Opinions and
Testimony of Defendant's Expert, John P. Craver, Esq.
[Docket No. 54], and Owners' Motion to Exclude Certain
Opinions and Testimony of Plaintiff's Expert David Young
[Docket No. 83]. This Court has jurisdiction pursuant to 28
U.S.C. § 1332.
case involves a dispute between the parties regarding payment
of an insurance claim for stolen coins. Plaintiff TBL
Collectibles, Inc. owns and operates Colorado Coins, Cards
& Comics, a retail coin and collectibles store in Arvada,
Colorado. Docket No. 62 at 2, ¶ 1; Docket No. 63 at 3,
¶ 2. At all times relevant to this action, plaintiff
held an insurance policy with defendant Owners Insurance
Company, that provided commercial property insurance
coverage. Docket No. 63 at 3, ¶ 1. On August, 30, 2015,
plaintiff's store was burglarized after hours. Docket No.
62 at 3, ¶ 4. The only items stolen were a floor safe
and its contents. Id. at 3, ¶ 6. Plaintiff
alleges that the safe contained $31, 800 in cash and $81, 317
in bullion coins. Id.
reported the loss to the Arvada Police Department
(“APD”) on August 30, 2015. Docket No. 62-19 at
7. As part of its investigation into the incident, the APD
prepared an Incident/Investigation Report containing a list
of the stolen items as reported by Bruce Wray, the co-owner
and manager of the store. Docket No. 1 at 3, ¶ 11;
Docket No. 62-18 (APD Report); Docket No. 62-19 (APD Report
continued); Docket No. 75 at 3 (stating that the “APD
generated an Incident and Investigation Report (‘APD
Report'), which also lists the coins Mr. Wray asserts
were taken during the burglary”); Docket No. 62 at 3,
¶ 2 (stating that store is managed by owner of TBL,
Bruce Wray). On August 31, 2015, plaintiff informed defendant
of the loss and submitted a claim under the insurance policy.
Docket No. 62 at 3, ¶ 5. Defendant immediately assigned
the claim to an adjuster, Jayme Larson. Docket No. 63 at 5,
¶ 9. Ms. Larson contacted Mr. Wray on September 1, 2015.
Id. On September 2, 2015, Ms. Larson visited the
store, where she “confirmed placement of the safe that
was stolen by left over marks on the carpet.” Docket
No. 1 at 6, ¶ 17; Docket No. 12 at 5, ¶ 17; Docket
No. 67-11 at 20 (September 8, 2015 claims note).
defendant's request, plaintiff provided the following
documentation to substantiate the loss: (1) a handwritten
list of the stolen items, which included the description and
cost of each coin; (2) the APD Report; (3) invoices and
deposit slips from Cornerstone Bullion, from which plaintiff
had purchased coins prior to the theft; and (4) check copies,
cash receipts, and bank statements reflecting plaintiff's
coin purchases in the four years prior to the theft.
See Docket No. 62 at 6, ¶¶ 17-18; Docket
No. 67 at 8-9, ¶¶ 1, 5; Docket No. 62-24 at 6,
23:18-25 (discussing Cornerstone Bullion invoices and deposit
slips); 62-25 (handwritten list of stolen items); Docket No.
62-26 at 2 (discussing invoices for coin purchases from
Cornerstone Bullion); Docket No. 62-32 at 2 (discussing check
copies and bank statements); Docket No. 67-2 at 3, 47:21-25
(noting that plaintiff purchased certain coins from
Cornerstone Bullion); Docket No. 67-4 (APD Report).
November 6, 2015, defendant authorized a policy limit payment
of $15, 000 for the stolen cash. Docket No. 1 at 7, ¶
22; Docket No. 67-11 at 11. According to defendant, the
Cornerstone Bullion invoices confirmed the existence of the
cash in the safe. Docket No. 63 at 5, ¶¶ 9-10;
Docket No. 62-24 at 6, 23:14-24:8.
Larson continued her investigation of the stolen coins.
See Docket No. 63-13 at 1; Docket No. 67-11 at 11.
After discussions with the Home Office claims department, Ms.
Larson ultimately concluded that the coins would be
considered business personal property under the terms of
plaintiff's insurance policy. See Docket No.
63-13 at 1; Docket No. 67-11 at 9-10. She determined, however,
that the documentation provided did not adequately
substantiate plaintiff's loss. Docket No. 62-29 at 2;
Docket No. 63-13 at 2-3; Docket No. 67-11 at 5-7. Ms. Larson
assigned a forensic accounting firm - RGL Forensics - to
inspect plaintiff's business records. Docket No. 63-13 at
2. The accountant who reviewed the records, Paul DeBoer,
determined that, although the records demonstrated a pattern
of coin purchases, they did not prove the ownership or
existence of the specific coins allegedly kept in the safe.
Docket No. 63 at 6, ¶ 15; Docket No. 68 at 5-6, ¶
15; Docket No. 62-32 at 2; Docket No. 67-11 at 3 (2/1/16
claims note). Mr. Wray was unable to provide further
documentation because he did not keep written records of the
coins he bought and sold. Docket No. 63 at 4-5, ¶ 8;
Docket No. 68-5 at 9, 12. In addition, plaintif f admitted
that many of the stolen items were purchased with cash and it
did not have receipts. Docket No. 68-5 at 12-14.
March 16, 2016, defendant sent plaintiff a letter denying its
claim for the stolen coins. Docket No. 63-13. The letter
states: “The documentation you have provided has show a
pattern of purchasing coins, however it has not substantiated
the specific coins you are claiming.” Id. at
2. The letter then quotes from the “Duties In the Event
of Loss or Damage” provision of plaintiff's
insurance policy and explains that, based on the policy
language, plaintiff has “a duty to provide complete
inventories of damaged and undamaged property” and to
“prove the loss.” Id. at 3. Citing
plaintiff's failure to comply with that duty, the letter
states that defendant is “unable to issue any further
payments on [plaintiff's] claim.” Id.
March 16, 2016 letter does not reference fraud as a basis for
defendant's denial of payment. See Id. Moreover,
Ms. Larson's claims notes indicate that she found Mr.
Wray believable and perceived his continued purchasing
activities after the loss to be “an indication that the
loss [was] legitamite [sic].” Docket No. 67-11 at 4
(2/1/16 claims notes entry). Both Ms. Larson and Donald
Gibson, a representative in the Home Office claims
department, see Docket No. 62-24 at 7, 28:4-6;
Docket No. 62-32, testified that they never determined Mr.
Wray's claim was false or fraudulent. Docket No. 62-24 at
6-7, 24:14-25:4; Docket No. 77-4 at 3, 15:6-13.
filed this lawsuit on July 13, 2016, asserting three claims
for relief: (1) declaratory judgment as to whether plaintiff
fulfilled its post-loss obligations under the insurance
policy; (2) breach of contract; and (3) unreasonable delay or
denial of benefits under Colo. Rev. Stat. § 10-3-1115.
Docket No. 1. On July 5, 2017, plaintiff moved for partial
summary judgment on its first claim for a declaratory
judgment. Docket No. 62. On July 6, 2017, defendant moved for
summary judgment on all claims. Docket No. 63. Both parties
have also filed motions to exclude certain expert opinions
under Fed.R.Evid. 702. See Docket No. 54
(plaintiff's motion to exclude opinions of John Craver);
Docket No. 83 (defendant's motion to exclude opinions of
MOTIONS TO EXCLUDE
Court will begin by addressing the parties' motions to
exclude certain opinions of expert witnesses given that the
outcome of those motions may affect the Court's
resolution of the pending summary judgment motions.
admissibility of expert testimony is governed by Federal Rule
of Evidence 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. As the rule makes clear, while required,
it is not sufficient that an expert be qualified based upon
knowledge, skill, experience, training, or education to give
opinions in a particular subject area. Instead, the Court
must “perform a two-step analysis.” 103
Investors I, L.P. v. Square D Co., 470 F.3d 985, 990
(10th Cir. 2006). After determining whether the expert is
qualified, the Court must assess whether the specific
proffered opinions are reliable. See id.;
Fed.R.Evid. 702 (requiring that the testimony be “based
on sufficient facts or data, ” be the “product of
reliable principles and methods, ” and reflect a
reliable application of “the principles and methods to
the facts of the case”).
702 thus imposes on the district court a “gatekeeper
function to ‘ensure that any and all scientific
testimony or evidence admitted is not only relevant, but
reliable.'” United States v. Gabaldon, 389
F.3d 1090, 1098 (10th Cir. 2004) (quoting Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993)). To
perform this role, the Court must “assess the reasoning
and methodology underlying the expert's opinion, and
determine whether it is both scientifically valid and
applicable to a particular set of facts.” Dodge v.
Cotter Corp., 328 F.3d 1212, 1221 (10th Cir. 2003)
(citing Daubert, 509 U.S. at 592-93). The Supreme
Court in Daubert identified four non-exclusive
factors a court may consider in assessing reliability;
however, those factors are not applicable in every case.
See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141,
150-53 (1999). Indeed, the trial court has “the same
kind of latitude in deciding how to test an
expert's reliability . . . as it enjoys when it decides
whether or not that expert's relevant testimony
is reliable.” Id. at 152. Regardless of the
specific factors applied, the objective of
Daubert's gatekeeping requirement is to ensure
that an expert “employs in the courtroom the same level
of intellectual rigor that characterizes the practice of an
expert in the relevant field.” Id.
the proponent of the challenged testimony has the burden of
establishing admissibility, United States v.
Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009) (citing
Ralston v. Smith & Nephew Richards, Inc., 275
F.3d 965, 970 n.4 (10th Cir. 2001)), the reliability standard
does not require proof “that the opinion is objectively
correct, but only that the witness has sufficient expertise
to choose and apply a methodology, that the methodology
applied was reliable, that sufficient facts and data as
required by the methodology were used and that the
methodology was otherwise reliably applied.” United
States v. Crabbe, 556 F.Supp.2d 1217, 1221 (D. Colo.
2008) (internal citation omitted).
the standard for reliability is met, the Court must also
ensure that the proffered testimony will assist the trier of
fact. See Kumho Tire, 526 U.S. at 156; United
States v. Rodriguez-Felix, 450 F.3d 1117, 1122-23 (10th
Cir. 2006). “Relevant expert testimony must logically
advance[ ] a material aspect of the case and be sufficiently
tied to the facts of the case that it will aid the jury in
resolving a factual dispute.” United States v.
Garcia, 635 F.3d 472, 476 (10th Cir. 2011) (internal
quotation marks and citations omitted). In assessing whether
expert testimony will assist the trier of fact, the Court
should also consider “whether the testimony ‘is
within the juror's common knowledge and experience, and
‘whether it will usurp the juror's role of
evaluating a witness's credibility.'”
Id. at 476-77 (quoting Rodriguez-Felix, 450
F.3d at 1123).
Plaintiff's Motion to Exclude Testimony of John
has designated John P. Craver, an attorney who practices in
the field of insurance law, as an expert witness. Docket No.
54-1 at 3, 6. In his expert report, Mr. Craver concludes that
defendant had a “reasonable basis to deny portions of
[plaintiff's] claim based on the evidence they had in
their claim file at the time of the denial.”
Id. at 10. Plaintiff does not challenge Mr.
Craver's qualifications as an expert witness.
See Docket No. 61 at 1. Instead, plaintiff seeks to
exclude a number of his statements and opinions on grounds
that: (1) they are irrelevant, (2) they improperly usurp the
function of the trial judge, (3) they are conclusory, and (3)
they are factually erroneous. See generally Docket
No. 54; Docket No. 61.
argues that the following opinions and statements expressed
in Mr. Craver's expert report are irrelevant and that the
Court should order that Mr. Craver not state them at trial:
(1) Mr. Craver's references to Colo. Rev. Stat. §
13-17-101; (2) Mr. Craver's references to Colorado
Division of Insurance Regulation 5-1-14; (3) Mr. Craver's
opinions regarding defendant's prompt handling of
plaintiff's claim; and (4) Mr. Craver's opinions
regarding insurance fraud. See Docket No. 54 at
first argues that Mr. Craver's references to Colo. Rev.
Stat. § 13-17-101 are irrelevant and misleading because
plaintiff may prevail on its bad faith claim under §
10-3-1115 merely by showing that defendant acted unreasonably
in denying plaintiff's claim for insurance benefits.
See Docket No. 54 at 9; Docket No. 61 at 4. Section
13-17-101 is a legislative declaration explaining that the
general assembly has “set[ ] forth provisions for the
recovery of attorney fees . . . when the bringing or defense
of an action . . . is determined to have been substantially
frivolous, substantially groundless, or substantially
vexatious.” In his expert report, Mr. Craver states
that “[t]he absence of a reasonable basis [standard
under § 10-3-1115] . . . . is quite similar to the proof
required for attorney's fees awards under C.R.S. §
13-17-101”; under the latter provision, “fees are
awarded if the claim is frivolous, groundless or lacking a
rational basis.” Docket No. 54-1 at 7. Defendant argues
that these statements are admissible because they were only
meant to illustrate that the “absence of a reasonable
basis” standard under § 10-3-1115 is not a novel
legal concept. Defendant also disavows any implication that
plaintiff faces a higher burden under § 13-17-101.
Defendant's arguments do not rebut plaintiff's
contention that the statute is irrelevant to any issue in
this case. Moreover, Mr. Craver's point that the absence
of a reasonable basis is not a novel legal concept is neither
relevant to the issues in this case nor likely to assist a
jury in its resolution of the parties' factual disputes.
Mr. Craver's statements and opinions regarding §
13-17-101 are therefore excluded as irrelevant. See
United States v. Sparks, 8 F. App'x 906, 912 (10th
Cir. 2001) (unpublished) (“The district court has been
charged by the Supreme Court with the responsibility of
acting as a gatekeeper to exclude unreliable and irrelevant
expert testimony.”) (citing Daubert, 509 U.S.
at 597); A-W Land Co., LLC v. Anadarko E&P Co.
LP, No. 09-cv-02293-MSK-MJW, 2017 WL 4161278, at *9 (D.
Colo. Sept. 20, 2017) (excluding expert testimony as
irrelevant under Fed.R.Evid. 702(a) and 401).
next challenges Mr. Craver's references to Colo. Code
Regs. § 702-5:5-1-14 (“Regulation 5-1-14”).
That regulation prescribes certain penalties for an
insurer's failure to make timely decisions and/or payment
on first-party claims. See Colo. Code Regs. §
702-5:5-1-14(4)(A)(1). Specifically, the statute imposes a
monetary fine if an insurer “fails to make a decision
and/or pay benefits due under the policy within sixty (60)
days after a valid and complete claim has been received, and
there is not a reasonable dispute between the parties.”
§ 702-5:5-1-14(4)(A)(1)(b). A “valid and complete
claim” has been “received” by an insurer
(1) All information and documents necessary to prove the
insured's claim have been received by the insurer; . . .
3) The terms and conditions of the policy have been complied
with by the insured; . . . (5) There are no indicators on the
claim requiring additional investigation before a decision
can be made; and/or . . . (7) Negotiations or appraisals to
determine the value of the claim have been completed; and/or
(8) Any litigation on the claim has been finally and fully
§ 702-5:5-1-14(4)(A)(2)(a). The statute further provides
that a “reasonable dispute” may exist when: (1)
information necessary for a determination on the claim has
not been submitted; (2) conflicting information has been
submitted and additional investigation is needed; (3) the
insured has failed to comply with the terms of the insurance
policy; or (4) litigation has commenced regarding the claim.
expert report, Mr. Craver states that: (1) the regulation
“provides guidance to insurers on when the [sic] have a
duty to pay first party claims” in Colorado, Docket No.
54-1 at 9; (2) “[in] reviewing these . . . regulations,
it does not appear that there is a valid and complete claim
that Owners Insurance owes at this time, ”id.;
(3) the regulation “would indicate that Owners
Insurance had a reasonable basis for not paying”
plaintiff's claim, id.; and (4) defendant's
handling of the claim complied with the regulation.
Id. at 10.
contends that Mr. Craver's discussion of the regulation
“provides context for the parameters of insurance
claims handling.” Docket No. 60 at 5. In response,
plaintiff claims that at least two cases have specifically
held that Regulation 5-1-14 is irrelevant in bad faith
actions brought pursuant to Colo. Rev. Stat. §
10-3-1115. See Docket No. 54 at 9-10; Docket No. 61
at 5. The cases plaintiff cites do not support this
Fisher v. State Farm Mutual Automobile Insurance
Co., 2015 WL 2198515 (Colo.App. 2015), the Colorado
Court of Appeals held that Regulation 5-1-14 did not support
the insurer's argument that “it is not
unreasonable, as a matter of law, to deny or delay payment on
anything less than an entire [underinsured motorist]
claim.” Id. at *5. In reaching that
conclusion, the court reasoned that “the regulation and
its authorizing statute simply have no application to the
civil action established by section 10-3-1115. Rather, the
regulation applies to administrative penalties assessed by
the Commissioner of Insurance pursuant to the
Commissioner's statutory authority to regulate the
insurance industry.” Id. at *6. The court
further stated that, “although administrative
regulations ‘may be used as valid . . . evidence of
industry standards, ' when a statute defines a standard
of reasonableness, as it does here, an administrative
regulation may not modify or contradict that standard.”
Id. At first glance, these statements seem to
support plaintiff's contention that Mr. Craver's
references to Regulation 5-1-14 are irrelevant in this case.
When read in context, however, it is clear that the
statements were made in conjunction with the Fisher
court's determination that the regulation's reference
to a “valid and complete claim” does not preclude
an insured from asserting a bad faith claim based on the
unreasonable delay or denial of only a portion of his claim
for benefits. See Id. at *6 (stating issue as
“whether an insured's demand for payment on one
component of a UIM claim is sufficient in and of itself such
that an insurer has an obligation to not unreasonably delay
or deny paying benefits for it under section 10-3-1115);
see also Id. (“[T]he plain language of section
10-3-1115 does not preclude a determination that an insurer
unreasonably denied or delayed payment of part of an
insured's UIM claim. Thus, even if the regulation
addressed this issue, it could not modify or contradict the
plain language of the statute.” (emphasis added)).
Fisher thus does not stand for the proposition that
the regulation is never relevant to the reasonableness
inquiry under § 10-3-1115.
citation to Etherton v. Owners Insurance Co., 829
F.3d 1209 (10th Cir. 2016), is similarly unavailing. There,
the court stated that an insurer does not necessarily act
“reasonably if it meets the regulation's minimum
standards.” Etherton, 829 F.3d at 1228 n.7.
But even if compliance with the regulation is not conclusive
of liability under § 10-3-1115, it may still be
relevant. See Am. Family Mut. Ins. Co. v. Allen, 102
P.3d 333, 343-44 (Colo. 2004) (“[W]here the legislative
enactment or administrative rule is not conclusive of the
standard of care, the statute or rule may be used as evidence
of the standard of care from which the trier of fact may
evaluate the defendant's conduct.”). The court in
Etherton recognized as much when it stated that
“regulations . . . provide minimum standards, ”
and “an insurer may act unreasonably it if violates the
regulation.” Etherton, 829 F.3d at 1228 n.7.
Consistent with other decisions in this district, the Court
finds that defendant's references to the Department of
Insurance regulations are relevant to plaintiff's
statutory bad faith claim. See Stamey v. Nat'l Gen.
Ins. Co., No. 15-cv-0560-WJM-MJW, 2016 WL 8540310, at *
(D. Colo. Sept. 22, 2016) (stating that Regulation 5-1-14
“provides evidence of what is reasonable, but is not
conclusive of the statutory standard of reasonableness under
§ 10-3-1115”); Spendrup v. Am. Family
Mut. Ins. Co., No. 13-cv-00513-KLM, 2014 WL
321155, at *4 (D. Colo. Jan. 29, 2014) (finding that
Regulation 5-1-14 provided evidence that “genuine
disagreement” as to amount of compensable damages
existed, such that defendant's failure to advance payment
of insurance claim did not constitute an unreasonable denial
of benefits under § 10-3-1115).
also challenges the relevance of Mr. Craver's opinions on
the timeliness of defendant's claims handling. Docket No.
54 at 10. Mr. Craver states in his report that (1)
“there were no substantial delays in the
adjustment” of plaintiff's claim, Docket No. 54-1
at 9; (2) defendant's investigation of the claim was
“prompt and proactive, ” id.; and (3)
the policy benefits determined to be owed have been paid in a
timely manner. Id. at 10. Plaintiff contends that
these opinions are irrelevant because its bad faith claim is
predicated on defendant's unreasonable denial of
benefits, not its failure to conduct an adequate or timely
investigation. Docket No. 54 at 10. Defendant responds that the
opinions regarding defendant's prompt claims handling
“support the position that Owners' basis for
denying the safe claim was justified, because it illustrates
Owners' claim handling practices with regard to related
portions of the claim.” Docket No. 60 at 6. The Court
is not persuaded by this asserted connection. The fact that
defendant timely investigated plaintiff's claim and
awarded benefits on a portion of the loss does not make it
any more likely that defendant had a reasonable basis for
denying payment for the stolen coins. Accordingly, Mr.
Craver's opinions regarding the timeliness of
defendant's claims handling are irrelevant to
plaintiff's bad faith claim and will be excluded.
lastly requests that the Court exclude Mr. Craver's
opinions regarding fraudulent insurance claims and Special
Investigation Unit (“SIU”) investigations. Docket
No. 54 at 11-12. In his report, Mr. Craver states:
It should also be noted that the Colorado legislature,
through C.R.S. § 10-1-128, makes it clear that there is
a strong public policy within the state wherein the state is
critically interested in investigating and stopping insurance
fraud. The General Assembly has stated that insurance fraud
is expensive and that it increases premiums and places
businesses at risk. Insurance fraud reduces the
customer's ability to raise their standard of living and
decreases the economic vitality of the state. I am not
suggesting here that Owners Insurance has alleged its insured
is committing insurance fraud. I think it is simply important
for a jury to know that a critical investigation into theft
claims and the amount of the damages sustained, including the
use of SIU departments to investigate background, credit and
financial issues, is clearly authorized and in fact
encouraged by the state's statutes and regulations. There
was nothing unusual in an insurer conducting an SIU
investigation in a claim of this nature.
Docket No. 54-1 at 9. Plaintiff contends that these opinions
are irrelevant and prejudicial because there is no evidence
that defendant suspected Mr. Wray of reporting a false or
fraudulent claim. Docket No. 54 at 11. The Court agrees.
Although plaintiff's claim was initially referred to the
SIU for investigation, see Docket No. 60-4 at 2-5,
34:1-35:23, 40:1-41:1, there is no evidence that anyone at
Owners suspected Mr. Wray of lying about the stolen coins.
See Docket No. 62-24 at 6-7, 24:14-25:4; Docket No.
67-11 at 4 (2/1/16 claim note); Docket No. 77-4 at 3,
15:6-13. The sole reason defendant gave for denying
plaintiff's claim was that plaintiff had failed to
provide adequate documentation of the stolen coins.
See Docket No. 63-13. Any statements or opinions
regarding insurance fraud and SIU investigations will
therefore be excluded as irrelevant.
Statements Regarding Applicable Law
identifies nineteen statements in Mr. Craver's expert
report which allegedly constitute impermissible statements of
law. See Docket No. 54 at 6-7. These statements
appear to set forth the various legal standards Mr. Craver
applied in reaching his conclusions. According to defendant,
the statements were meant to “provide context as to the
legal parameters for insurance industry standards.”
Docket No. 60 at 9-10. The Court notes that statements eleven
through thirteen and nineteen, as identified in
plaintiff's motion, see Docket No. 54 at 7, have
already been excluded as irrelevant. However, the Court
agrees with plaintiff that statements one through eight and
fourteen and fifteen should also be excluded.
Tenth Circuit has held that “a witness may refer to the
law in expressing an opinion” or “aid the jury in
understanding the facts in evidence even though reference to
those facts is couched in legal terms.” Specht v.
Jensen, 853 F.2d 805, 809 (10th Cir. 1988). However,
witness testimony that aims to “direct the jury's
understanding of the legal standards upon which [its] verdict
must be based” improperly usurps the role of the trial
judge and is therefore inadmissible. Id. at
810. The Court finds that the first eight
statements challenged by plaintiff fall within this
prohibition. These statements do nothing more than rephrase
the legal standard under § 10-3-1115 and express Mr.
Craver's beliefs as to the legal rights and obligations
of the parties. Although Mr. Craver may certainly
refer to the law in stating his opinions, he may not
“define the legal parameters within which the jury must
exercise its fact-finding function.” Id. at
argues that industry standards in Colorado are defined by
state statute and case law and thus it is impossible for Mr.
Craver to express any opinion that defendant complied with
those standards without citing to the relevant legal
authorities. Docket No. 60 at 10. But defendant's
argument fails to distinguish between those statements of Mr.
Craver that merely rephrase the determinative legal standard
in this case - whether defendant acted reasonably in denying
plaintiff's claim - and Mr. Craver's references to
statutory and regulatory provisions that, though not
conclusive of liability, may illustrate what constitutes
“reasonable” conduct in the insurance industry.
See Hangarter v. Provident Life & Accident Ins.
Co., 373 F.3d 998, 1017 (9th Cir. 2004) (holding that
expert witness did not “usurp the court's
role” where his references to California statutory
provisions, which informed his understanding of insurance
industry norms, were “ancillary to the ultimate issue
of bad faith”). Pursuant to this distinction, the Court
finds that statements sixteen through eighteen regarding
Regulation 5-1-14 are admissible. In contrast to the other
challenged statements, Mr. Craver's reference to the
regulation is not an attempt to “define the legal
parameters within which the jury must exercise its
fact-finding function.” Specht, 853 F.2d at
809-10. Mr. Craver merely seeks to identify certain
regulatory standards that may bear on the reasonableness of
defendant's conduct for purposes of § 10-3-1115.
summary, the Court will permit testimony as to Regulation
5-1-14. All other statements identified by plaintiff,
see Docket No. 54 at 6-7, will be
also argues that the following statements and opinions
contained in the expert report are unsupported: (1)
defendant's claim handling complied with industry
practices, Docket No. 54-1 at 10; (2) defendant acted in
compliance with the Unfair Claims Practices Act,
id.; (3) defendant fully complied with the
requirements of § 10-3-1104, id.; (4)
defendant's denial of the claim cannot “fairly be
considered willful, ” id.; (5)
“businesses of this nature are required, by statute, to
keep receipts and records of purchases of valuable
commodities such as gold coins, ” id.; (6)
“[b]usinesses are required for tax purposes to maintain
an accurate inventory of the purchase date for items
purchased, as well as the amount paid for the items
purchased, ” id.; and (7) a “business is
expected to have some proof of purchase or ownership of
valuable inventory of this nature for numerous legal
reasons.” Id.; see also Docket No. 54
at 12-13 (listing challenged opinions). Defendant contends
that these statements “are supported by [Mr.
Craver's] review of all relevant documents” and
that the “expert report specifically connects [Mr.
Craver's] specialized knowledge to the facts at issue in
this case.” Docket No. 60 at 14. With the exception of
the first statement challenged by plaintiff, the Court
Evid. 702(b) requires that expert testimony be “based
on sufficient facts or data.” Thus, a district court is
not required “to admit opinion evidence that is
connected to existing data only by the ipse dixit of
the expert.” Etherton, 829 F.3d at 1218
(quoting General Elec. Co. v. Joiner, 522 U.S. 136,
146 (1997)). Mr. Craver asserts that businesses are legally
obligated to maintain records of purchased items. His report,
however, contains no reference to legal authorities
supporting this conclusion. While Mr. Craver may be correct,
defendant bears the burden of establishing the admissibility
of an expert's opinion and Mr. Craver's opinion is
mere ipse dixit. Accordingly, the Court finds that
Mr. Craver's opinions regarding businesses'
record-keeping obligations lack a sufficient basis to satisfy
the requirements of Fed.R.Evid. 702.
Court also agrees that Mr. Craver does not adequately support
his opinions concerning defendant's compliance with the
“Unfair Claims Practices Act.” Most notably, Mr.
Craver does not specify the portions of the Act to which his
second and fourth opinions pertain. If the opinions relate to
§ 10-3-1115, Mr. Craver's statement that defendant
acted in compliance with the Act goes to the ultimate legal
issue in this case. See Specht, 853 F.2d at 808
(“[T]estimony which articulates and applies the
relevant law . . . circumvents the jury's decision-making
function by telling it how to decide the case.”).
Although Mr. Craver may “testify about how the law
applies to a certain set of facts, ” he may not offer
opinions on ultimate issues without explaining how he reached
his conclusions. United States v. Richter, 796 F.3d
1173, 1195-96 (10th Cir. 2015) (“[A]n expert may not
simply tell the jury what result it should reach without
providing any explanation of the criteria on which that
opinion is based or any means by which the jury can exercise
independent judgment.”). To the extent that Mr. Craver
is relying instead on § 10-3-1113, his opinion is both
unreliable and irrelevant. See Vaccaro v. Am. Family Ins.
Grp., 275 P.3d 750, 756 (Colo.App. 2012) (recognizing
that “the standard contained in § 1115 arguably is
less onerous on the insured” than the standard for
common law bad faith claims under § 10-3-1113 (internal
quotations and brackets omitted)). Mr. Craver's first,
second, and fourth statements, identified above, are
therefore excluded to the extent that they rely on §
10-3-1113 or express an unsupported opinion as to the
reasonableness of defendant's actions under §
Court reaches a different conclusion, however, insofar as Mr.
Craver opines as to defendant's compliance with Colo.
Rev. Stat. § 10-3-1104 and “industry
practices.” As this Court has previously recognized,
conduct of the kind set forth in § 10-3-1104 is
“relevant to determining whether an insurer's delay
or denial was reasonable” for purposes of a statutory
bad faith claim because “§ 10-3-1115 disclaims
only the intent requirement, and not the definition of
reasonableness, under a common law claim.” Etherton
v. Owners Ins. Co., No. 10-cv-00892-PAB-KLM, 2013 WL
68702, at *5 (D. Colo. Jan. 7, 2013) (internal quotation
marks omitted). Although Mr. Craver's explanation for
these conclusions is thin, he references particular
requirements of § 10-3-1104, see, e.g., Docket
No. 54-1 at 9 (“The statute also provides insurers
should consider all available information in making claims
decisions.”), and identifies specific actions by
defendant that purportedly complied with those requirements.
See Id. at 10 (stating that defendant
“investigated coverage promptly” and
“proactively looked for coverage to assist the
insured”). As to the claim that defendant complied with
“industry practices, ” the Court agrees that Mr.
Craver should have clarified the particular practices to
which he refers. Nevertheless, he does address
defendant's compliance with § 10-3-1104 and
Regulation 5-1-14, both of which provide some evidence of
applicable “industry standards.” The Court
therefore declines to exercise its gatekeeping role to
exclude Mr. Craver's opinions on defendant's
compliance with (1) § 10-3-1104 and (2) Regulation
Erroneous Statements of Fact
contends that Mr. Craver's expert report contains the
following erroneous factual statements: (1) plaintiff
submitted no documentary or independent proof of ownership;
(2) the only evidence submitted supporting ownership is the
statement of the insured that he owned his property; (3) the
insured's lack of proof supports an inference that he did
not own or purchase the coins; (4) there is no regulation,
statute, or formula to determine the adequacy of proof of
ownership to substantiate a loss; and (5) an insurer does not
act unreasonably in seeking resolution through the courts.
Docket No. 54 at 14. Defendant argues that these facts are
simply Mr. Craver's “observations” based on
the evidence he reviewed. Docket No. 60 at 12.
extent these statements constitute mere factual assertions
based on the evidence reviewed, the Court finds that
Fed.R.Evid. 702 is an inappropriate vehicle for challenging
them. Although the accuracy of the facts and assumptions
underlying an expert opinion may impact the reliability of
that opinion, see Crabbe, 556 F.Supp.2d at 1224, the
accuracy of the facts themselves is an issue more
appropriately reserved for trial. See Id.
(“The accuracy of the assumption is an issue for trial
because it affects the weight of the opinion.”);
see also United States v. Crabbe, No.
06-CR-00294-MSK, 2007 WL 1704138, at *2 (D. Colo. June 11,
2007) (“The 702 Hearing is not intended to address the
weight or persuasiveness of a proffered opinion, nor the
accuracy or assumptions upon which an opinion is based. These
issues are more appropriately addressed at trial.”).
Contrary to plaintiff's assertion, however, statements
three through five appear to be statements of opinion, not
fact. Nevertheless, the Court agrees with plaintiff that
statements three and five are both unsupported and
irrelevant. As previously noted, there is no evidence that
defendant suspected plaintiff's claim as being false or
fraudulent. And defendant did not “seek resolution
through the courts” - it was plaintiff that initiated
this lawsuit. Because these opinions lack a basis in
fact and are irrelevant to the issues in this case, they will
be excluded. Mr. Craver will, however, be permitted to opine
on the absence of standards governing the adequacy of
documentation proving a loss, as this opinion is relevant to
the reasonableness of defendant's conduct.
Defendant's Motion to Exclude Testimony of David
has designated David Eugene Young, a certified professional
public adjuster, as an expert witness. Docket No. 83-1 at 1.
Mr. Young opines that Mr. Wray complied with his obligations
under the terms of the insurance policy and that
defendant's denial of insurance benefits was
unreasonable. Docket No. 83-1 at 8-9; Docket No. 84 at 3. In
particular, his report concludes that: “[t]he Home
Office blocked [Jayme Larson] from paying [plaintiff's
claim] and forced her to throw every possible argument not to
do so to the insured”; Owners made up requirements not
found in the insurance policy; Owners “has attempted to
create a level of ownership proof that the insured cannot
meet when in fact, the insured HAS complied with the Duties
After Loss provision of his policy”; Owners has failed
to effectuate a prompt, fair, and equitable ...