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Lua v. QBE Insurance Corp.

United States District Court, D. Colorado

October 11, 2019

JUAN CARLOS LUA, as assignee of David Bowser, Plaintiff,
v.
QBE INSURANCE CORPORATION, a foreign corporation, Defendant.

          ORDER

          Kristen L. Mix United States Magistrate Judge

         This matter is before the Court on Defendant QBE Insurance Company's Motion to Exclude Expert Testimony Pursuant to Fed.R.Evid. 702 [#34][1] (the “Motion”). The Court has reviewed the Motion [#34], the Response [#39], the Reply [#42], the case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#34] is GRANTED IN PART, DENIED IN PART, AND DENIED AS MOOT IN PART.

         I. Background

         This is a breach of insurance contract and bad faith lawsuit arising out of an underlying lawsuit and arbitration (the “Underlying Case”) involving, inter alia, claims of fraud, intentional misrepresentation, and the failure to disclose known defects by David Bowser (“Bowser”) in the sale to Plaintiff Juan Carlos Lua (“Plaintiff”) of a residential home. Motion [#34] at 1. Mr. Bowser was the listing agent for the Home. Id. Upon being served with the underlying complaint, Mr. Bowser tendered the matter to QBE Insurance Company (“Defendant”) pursuant to the claims-made Errors & Omissions liability insurance policy (the “Policy”) issued to him. Id. at 1-2. Defendant denied coverage for the underlying matter. Id. at 2.

         Thereafter, Plaintiff and Mr. Bowser entered into an agreement in which Mr. Bowser admitted liability in the Underlying Case and assigned to Plaintiff his rights under the Policy. Motion [#34] at 2. Plaintiff and Mr. Bowser agreed to have the amount of damages determined in binding arbitration. Id. Plaintiff presented an uncontested case in support of his alleged damages, and called three witnesses to testify: Plaintiff; Plaintiff's spouse, Perla Gonzalez; and Plaintiff's expert witness, Robert H. Pratt. Id. Plaintiff was awarded $594, 132.85 on the claim for intentional misrepresentation. Id.

         Following the arbitration award, Plaintiff, as assignee of Mr. Bowser, filed the instant lawsuit against Defendant for breach of contract, common law bad faith, and statutory damages under Colo. Rev. Stat. §§ 10-3-1115 and 1116. Motion [#34] at 3.

         The Motion [#34], pursuant to Fed.R.Evid. 702, asserts that Plaintiff's expert Zachary Warzel's opinions concerning the purported standards of care applicable to Mr. Bowser's claim under the professional liability policy and the reasonableness of Defendant's conduct under those standards should be stricken as unreliable and as improper legal conclusions. Id. at 3. The Motion also seeks to strike experts Peter Marxenhausen and Bernard Kintnerfor, [2] endorsed to testify as to the reasonableness of the arbitration award, because they did not testify at the arbitration and their opinions are not relevant to the coverage dispute. Id.

         Relevant to the Motion [#34], on October 8, 2019, the Court granted Plaintiff's Motion for Partial Summary Judgment [#40], finding that Defendant had a duty to defend the Underlying Case. Order on Summary Judgment [#64], at 27. The Court granted in part and denied in part Defendant's Motion for Summary Judgment [#35], finding that there was no coverage under the Policy under the agent-owned property and fraud exclusions, but that the lack of coverage under these exclusions did not excuse Defendant's duty to defend. Id.

         II. Legal Standard

         Admission at trial of expert testimony is governed by Fed.R.Evid. 702 and requires a two-step analysis. 103 Investors I, L.P. v. Square D Co., 470 F.3d 985, 990 (10th Cir. 2006). “First, the court must determine whether the expert is qualified by ‘knowledge, skill, experience, training, or education' to render an opinion.” Id. (citation omitted). “Second, if the expert is sufficiently qualified, the court must determine whether the opinion is reliable under the principles set forth in Daubert. Id. (citing Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)).

         A judge thus has a “gatekeeping role” in deciding whether to admit or exclude expert testimony, and must determine that the testimony is both reliable and relevant. Daubert, 509 U.S. at 589, 597. An opinion is reliable if the reasoning or methodology of the expert is valid and “can be applied to the facts in issue.” Id. at 592.[3] An opinion is relevant if it “‘will assist the trier of fact to understand the evidence or to determine a fact in issue.'” Id. (citation omitted).

         Ultimately, the determination of whether expert testimony should be admitted is within the sound discretion of the trial court. Vining v. Enterprise Fin. Group, 148 F.3d 1206, 1218 (10th Cir. 1998). “‘[T]he rejection of expert testimony is the exception rather than the rule.'” O'Sullivan v. Geico Cas. Co., 233 F.Supp.3d 917, 922 (D. Colo. 2017) (quoting 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. (citing id.)

         III. Analysis

         A. Expert Zachary Warzel

         Defendant asserts that Zachary Warzel (“Warzel”) is endorsed by Plaintiff to provide opinions concerning the purported standards of care applicable to Mr. Bowser's claim under the professional liability policy and the reasonableness of Defendant's conduct under those alleged standards. Motion [#34], at 2-3, Ex.3. Defendant first seeks to strike a number of opinions of Mr. Warzel (opinions a. through w.) on the basis that they are “nothing more than a recitation of Colorado law” and encroach “‘on the trial court's authority to instruct the jury as to the applicable law.'” Motion [#34] at 4-8 (quoting Specht v. Jensen, 853 F.2d 805, 807 (10th Cir. 1988)). Rather than “parse” through the opinions in paragraphs a. through w. or other disputed paragraphs “line-by-line”, the Court sets forth guidelines that will govern Mr. Warzel's testimony at trial regarding the disputed issues. See King v. Allstate Ins. Co., No. 11-cv-00103-WJM-BNB, 2013 WL 3943607, *5 (D. Colo. July 31, 2010). As noted in King, “an expert's testimony at trial rarely mirrors the precise wording, structure or organization of his expert report.” Id.

         The Court finds that many of the opinions of Mr. Warzel that Defendant seeks to exclude are now moot in light of the Court's Order on Summary Judgment [#64]. These include any opinions regarding: (1) coverage and the duty to indemnify under the Policy; (2) whether the duty to defend was breached; and (3) whether the complaint rule applies to the duty to defend and the applicability of any exceptions. Related to the latter argument, Defendant's argument that Mr. Warzel's opinions in paragraphs (n), (o), (p), (r), and (v) are incomplete and/or inaccurate under Colorado law because they do not take into account the exceptions to that complaint rule is also moot. Motion [#34] at 9-10. Similarly, ...


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