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Hansen Construction Inc. v. Everest National Insurance Co.

United States District Court, D. Colorado

June 25, 2019

HANSEN CONSTRUCTION INC. and STEVEN A. HANSEN, Plaintiffs,
v.
EVEREST NATIONAL INSURANCE COMPANY, Defendant.

          ORDER GRANTING MOTIONS TO EXCLUDE EXPERT TESTIMONY

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiffs' Motion to Exclude or Limit Expert Testimony by Jon F. Sands, Esq. Pursuant to FRE 702 (Doc. # 101) and Defendant's Motion to Exclude Expert Testimony Pursuant to Fed.R.Evid. 702 (Doc. # 102). Both Motions have been fully briefed.[1] (Doc. ## 103-106.) Based on the reasons that follow, the Court grants both motions.

         I. BACKGROUND

         In 2010, Plaintiffs were sued for damages that arose from an alleged construction defect. After attending arbitration proceedings, Plaintiffs Steven Hansen and Hansen Construction Inc. were found liable for the damages, and judgment was entered against them in Colorado state court. During the course of the underlying litigation, Plaintiffs were defended by three separate insurance carriers pursuant to various primary commercial general insurance policies. (Doc. # 102 at 2.)

         One of the insurance carriers-Maxum Indemnity Company-issued two primary policies to Plaintiffs. One policy covered the period of 2006-2007 (“2006 Maxum Policy”), and the other policy covered the period of 2007-2008 (“2007 Maxum Policy”). Defendant issued Plaintiffs a single excess liability policy (“Everest Policy”), which covered the period of 2007-2008. The Everest Policy was written to correspond to the 2007 Maxum Policy, and a prerequisite for coverage under the Everest Policy is exhaustion of the 2007 Maxum Policy. (Id. at 3.)

         In November 2010, Maxum denied Plaintiffs coverage under the 2007 Maxum Policy. However, Maxum agreed to defend Plaintiffs in the underlying litigation pursuant to the 2006 Maxum Policy. When Maxum denied coverage under the 2007 Maxum Policy, Defendant subsequently denied coverage under the Everest Policy.

         However, in 2016, Maxum retroactively reallocated funds it owed Plaintiffs from the 2006 Maxum Policy to the 2007 Maxum Policy pursuant to a settlement agreement between Plaintiffs and Maxum. Thereafter, Plaintiffs demanded coverage from Defendant. When Defendant did not provide the coverage that Plaintiffs sought, Plaintiffs initiated the instant case, raising inter alia, a claim of bad faith breach of contract. See (Doc. # 4).

         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.)

         II. LEGAL STANDARD

         Under Daubert, the trial court acts as a “gatekeeper” by reviewing a proffered expert opinion for relevance pursuant to Federal Rule of Evidence 401, and reliability pursuant to Federal Rule of Evidence 702. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-95 (1993); see also Goebel v. Denver & Rio Grande W. R.R. Co., 215 F.3d 1083, 1087 (10th Cir. 2000). The proponent of the expert must demonstrate by a preponderance of the evidence that the expert's testimony and opinion are admissible. United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009); United States v. Crabbe, F.Supp.2d 1217, 1220-21 (D. Colo. 2008); Fed.R.Evid. 702 advisory comm. notes. This Court has discretion to evaluate whether an expert is helpful, qualified, and reliable under Rule 702. See Goebel, 214 F.3d at 1087; United States v. Velarde, 214 F.3d 1204, 1208-09 (10th Cir. 2000).

         Federal Rule of Evidence 702 governs the admissibility of expert testimony. Rule 702 provides that a witness who is qualified as an expert by “knowledge, skill, experience, training, or education” may testify 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 ...

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