Experts in Idaho Title Insurance Litigation Challenged

In this title insurance dispute involving the construction of a ski resort in Idaho, the plaintiffs challenged the expert witness testimony of two experts.  The court granted one motion to exclude in part and denied the other in full.

Facts: This case (Stewart Title Guaranty Company v. Credit Suisse – United States District Court – District of Idaho – July 13th, 2015) involves a title insurance bad faith litigation.  The plaintiff filed a declaratory judgment in this court seeking an opinion from the court that it does not need to indemnify Credit Suisse for losses due to mechanics’ and vendees’ liens.  The defendant then filed a motion for partial summary judgment, which was granted in part.  The parties have now filed motions to exclude numerous experts.  We will focus on the two that relate to escrow/title insurance expert witnesses.

The plaintiff challenges the testimony of Albert Rush, an attorney with experience in the title insurance industry, on the basis that they for legal opinions, which is not admissible.  In addition, the plaintiff challenges the testimony of Kenneth Franklin, an expert on title insurance underwriting and insurance practices in Idaho on the same grounds.

Discussion:  Before going into detailed analysis for the basis of each motion, the court discussed, in general, what types of expert testimony is allowed in bad faith title insurance cases, especially when it comes to forming legal opinions.  For example the court stated that expert testimony is admissible in a bad faith insurance action if it 1) identifies specific content of the insurer, 2) explained how the insured was affected, and 3) how this conduct deviated from the industry standards.  If this type of testimony can be generated without forming a legal conclusion, then it will be granted.   Any reference to the law and how it is applied will result in it not being admitted.

Also, within the framework of title insurance litigation, experts may testify that 1) certain terms in the policy are standard in the industry; 2) title insurance companies usually interpret portions of the policy in certain ways; 3) the insurer conformed with, or deviated from, these standards. Experts will not be able to testify on what certain terms in the policy means and whether or not the respective parties violated, or followed, those terms.

In the present case, the court points to many instances where Mr. Rush goes over the line and formed a legal conclusion.  For example, on numerous occasions, he opines on Idaho law and that Stewart violated the law.  He is not using the law to explain industry standards.  To be sure, there are sections of his testimony that are admissible as he explained industry standards and how Stuart Title fell short of those standards.

In terms of Mr. Franklin, the plaintiff challenges his testimony of Stewart Title’s intent in this case, which, they argue, is based on conjecture and speculation.  The plaintiff’s argue that it is impossible for Mr. Franklin to know what was going on inside of the heads of the executives at Stewart Title.  While this is true, experts are sometimes called upon to extrapolate information from existing data, and that, in this case, the testimony is admissible.

Held:  The motion to exclude the testimony of Mr. Rush was granted in part and dismissed in part.  The motion to exclude the testimony of Mr. Franklin was denied.