Insurance Expert Testimony Partially Allowed in Coverage Dispute

Insurance expert’s testimony in breach of contract and bad faith action were partially allowed (based on industry customs and practice) and partially denied (based on pronouncements of law).

Facts: This case (Gebremedhin et al v. American Family Mutual Insurance Company – United States District Court – District of Colorado – August 21st, 2015) involves a coverage dispute that will be of interest to liability insurance expert witnesses.  American Family Mutual Insurance Company insured the Turners, who were foster parents. After an infant suffered brain injuries after being placed at the Turners, they were sued by the birth parents.  The Turners then filed a claim with their homeowner’s insurance policy, which was subsequently denied by American (stating that the underlying litigation triggered the business pursuits exclusions as well as the intra-insured bodily injury exclusion in the policy).

In order to assist in proving their case, the plaintiff’s hired Garth Allen, who is a professor of insurances at the University of North Colorado.  In his report, Professor Allen stated that references in his report to caselaw, regulations, and statutes are intended as a description of insurance standards and not as statements of the law (which would not be proper under the Rule 702 of the Federal Rules of Evidence).  American Family filed a motion to strike 40 statements in Professor Allen’s testimony stating that he improperly interpreted the legal standards of the contract and improperly seeks to instruct the fact finder of the legal standards.  They also state that some of his opinions, specifically those that opine that it is Colorado standard industry practice to defend almost all insurance claims, are inadequate.  The plaintiff respond that expert testimony in bad faith cases are not barred by the Daubert rule.

Discussion: The court first looks at Rule 702 in conjunction with Rule 704.  It states that expert testimony is not accepted when the testimony seeks to move the jury’s knowledge of the legal standards of which the case is based.   Experts are generally not allowed to state a legal opinion in their expert testimony.  In addition, the court stated that the 10th circuit has consistently stated that, in insurance coverage disputes, trial courts can exclude testimony that put forth the “industry standard” as it may not assist the trier of fact.

In the instant case, plaintiffs contend that Professor Allen is not instructing the jury on what result to reach, but he is analyzing the facts using his knowledge of industry standards.  the court disagree, stating that, in many instances, the professor’s opinions are blatant pronouncements of law.  In addition, there are a few opinions stated by Professor Allen that are not based on his experience and are improper and prejudicial.  The court also states that most of the statements made in his testimony will not be helpful to a jury.

Held: The court excludes all but 11 of the 40 statements that were challenged by the defense for failing to demonstrate their helpfulness and/or admissibility to the case.  For those statements that were allowed, there cannot be any reference to the law or the broad discretion of a defense obligation.