Sipes v. Allstate Indemnity Company

Filing 179

ORDER granting in part and denying in part 41 Allstate Indemnity Company's Motion to Partially Exclude Expert Opinions of Everette Herndon. Everette Herndon may testify as to opinions 11, 21, 27, 28, 57, 58, 68, 69, 78, and 80. Allstate's motion is granted as to opinion 79. By Judge Philip A. Brimmer on 8/15/13.(mnfsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 11-cv-02369-PAB-KMT
LARRY SIPES,
Plaintiff,
v.
ALLSTATE INDEMNITY COMPANY, an Illinois corporation,
Defendant.

ORDER

This matter is before the Court on the Motion to Partially Exclude the Expert
Opinions of Everette Herndon [Docket No. 41] filed by defendant Allstate Indemnity
Company (“Allstate”).
On March 30, 2010, a fire destroyed plaintiff Larry Sipes’ rental house located at
413 30 1/4 Rd., Grand Junction, Mesa County, CO (the “Rental Property”). Docket No.
132 at 2.1 Plaintiff filed a claim for insurance benefits with Allstate, which was denied
on September 23, 2010. Id. As a result of Allstate’s denial, plaintiff filed this case
asserting claims against Allstate for breach of contract and unreasonable delay or
denial of insurance benefits in violation of Colo. Rev. Stat. §§ 10-3-1115 and 10-31116. Docket No. 1. On January 25, 2013, Allstate agreed to pay plaintiff’s insurance

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The following facts are taken from the Second Amended Final Pretrial Order
[Docket No. 132]. See Wilson v. Muckala, 303 F.3d 1207, 1215 (10th Cir. 2002) (noting
that “‘[w]hen an issue is set forth in the pretrial order, it is not necessary to amend
previously filed pleadings’ because ‘the pretrial order is the controlling document for
trial’”) (citation omitted); Fed. R. Civ. P. 16(e).

benefits. Docket No. 132 at 2. On March 9, 2013, Allstate paid plaintiff’s insurance
claim, id. at 3, and the Court dismissed plaintiff’s breach of contract claim as moot. See
Docket No. 155; Docket No. 159 at 21-22. On June 7, 2013, the Court denied Allstate’s
motion for summary judgment against plaintiff’s claim of unreasonable delay or denial
of insurance benefits. Docket No. 153. Accordingly, the only remaining issue for trial is
whether Allstate unreasonably delayed or denied payment of plaintiff’s insurance claim
in violation of the statutes.
In this case, plaintiff retained Mr. Herndon as an expert on the insurance industry
and Mr. Herndon issued an expert report on April 6, 2012. See Docket No. 41-1. To
formulate his opinions, Mr. Herndon reviewed the pleadings in this case, plaintiff’s
insurance documents, and several publications on insurance law. Id. at 18-19. In the
present motion, Allstate seeks to exclude eleven opinions proffered by Mr. Herndon on
the grounds that these opinions are not relevant to plaintiff’s only remaining claim. See
Docket No. 41 at 3-5 (listing Mr. Herndon’s opinions). Allstate, however, does not
challenge Mr. Herndon’s qualifications, methodology, or the reliability of his opinions.
Accordingly, the Court will limit its analysis to Allstate’s challenges on the grounds of
relevance.
I. Federal Rules of Evidence
Admission of expert testimony is governed by Rule 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
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expert has reliably applied the principles and methods to the facts of the
case.
Fed. R. Evid. 702. Rule 702 assigns district courts a gatekeeper function to “ensure
that any and all scientific testimony or evidence admitted is not only relevant, but
reliable.” Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993). The district
court’s role as a gatekeeper applies regardless of whether the proffered testimony
concerns “scientific, technical, or other special[ized] knowledge.” Bitler v. A.O. Smith
Corp., 400 F.3d 1227, 1232-33 (10th Cir. 2004) (citing Kumho Tire Co. v. Carmichael,
526 U.S. 137, 149 (1999)). To determine whether expert testimony is admissible, a trial
court must examine “whether the reasoning or methodology underlying the testimony is
scientifically valid and [ ] whether [the expert’s] reasoning or methodology properly can
be applied to the facts in issue.” Daubert, 509 U.S. at 592-93. The proponent of the
expert testimony bears the burden of proving the foundational requirements of Rule 702
by a preponderance of the evidence. United States v. Nacchio, 555 F.3d 1234, 1241
(10th Cir. 2009).
An expert’s testimony must also be relevant, meaning that it must assist the fact
finder in understanding the evidence or determining a fact at issue. Daubert, 509 U.S.
at 591; Hoffman v. Ford Motor Co., 493 F. App’x 962, 975 (10th Cir. 2012). In diversity
cases, federal law generally governs the admissibility of evidence challenged on the
basis of relevance. See Sims v. Great Am. Life Ins. Co., 469 F.3d 870, 880 (10th Cir.
2006); Romine v. Parman, 831 F.2d 944, 945 (10th Cir. 1987).
Pursuant to Rule 401 of the Federal Rules of Evidence, evidence is relevant if “it
has any tendency to make a fact more or less probable than it would be without the
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evidence.” Fed. R. Evid. 401(a). Rule 401 establishes only a minimal level of
probability, meaning that the evidence must render the asserted fact of consequence
more probable than it would be without the evidence. United States v. Leonard, 439
F.3d 648, 651 (10th Cir. 2006). The Supreme Court has described the consideration of
relevant evidence as one of “fit.” Daubert, 509 U.S. at 591; Bitler, 400 F.3d at 1234.
Thus, district courts must look at the logical relationship between the evidence proffered
and the material issue in the case in order to determine whether the evidence proffered
will assist the trier of fact. Id.
II. ANALYSIS
Allstate seeks to preclude Mr. Herndon from testifying at trial with regard to
opinions that fall into four categories: (1) the purpose of insurance; (2) the duties and
standards of an insurer; (3) the insurance company’s job; and (4) Allstate’s investigation
of plaintiff’s insurance claim. Docket No. 41 at 3-5.
A. Colo. Rev. Stat. §§ 10-3-1115 and 10-3-1116
Plaintiff’s remaining claim is brought pursuant to Colo. Rev. Stat. §§ 10-3-1115
and 10-3-1116. Under § 10-3-1115, an insurer may not “unreasonably delay or deny
payment of a claim for benefits owed to or on behalf of any first-party claimant.” Colo.
Rev. Stat. § 10-3-1115(1)(a). Similarly, § 10-3-1116 states that “[a] first-party claimant
as defined in section 10-3-1115 whose claim for payment of benefits has been
unreasonably delayed or denied may bring an action in a district court to recover
reasonable attorney fees and court costs and two times the covered benefit.” Colo.
Rev. Stat. § 10-3-1116(1). An insurer’s delay is unreasonable “if the insurer delayed or

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denied authorizing payment of a covered benefit without a reasonable basis for that
action.” Colo. Rev. Stat. § 10-3-1115(2) (emphasis added). Moreover, an insurer
breaches its duty under these statutes if it engages in continuous “acts of unreasonable
delay or denial regardless of when an insured originally made a claim for benefits under
his or her insurance policy.” Kisselman v. Am. Fam. Mut. Ins. Co., 292 P.3d 964, 976
(Colo. App. 2011).
The determination of whether an insurer has breached its duties to the insured is
one of reasonableness under the circumstances. Estate of Morris v. COPIC Ins. Co.,
192 P.3d 519, 523 (Colo. App. 2008). In other words, the question is whether a
reasonable insurer under similar circumstances would have denied or delayed payment
of the claim. Id. The reasonableness of an insurer’s conduct is determined
objectively, based on proof of industry standards. Travelers Ins. Co. v. Savio, 706 P.2d
1258, 1274 (Colo. 1985).
Under common law bad faith principles, a finding that an insurer’s justification for
denying or delaying payment of a claim is “fairly debatable” typically weighs against
finding that an insurer acted unreasonably. Sanderson v. Am. Fam. Mut. Ins. Co., 251
P.3d 1213, 1218 (Colo. App. 2010) (citation omitted). Because the statutes at issue
here create a right of action that is different from the common law tort of bad faith
breach of an insurance contract, the “burden of proving th[e] statutory claim is less
onerous than that required to prove a claim under the common law for breach of the
duty of good faith and fair dealing.” Kisselman, 292 P.3d at 975. Thus, even if a
defendant’s denial was “fairly debatable” in the common law context, that alone would

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not establish that the defendant’s actions were reasonable as a matter of law under the
statutes. Vaccaro v. Am. Fam. Ins. Grp., 275 P.3d 750, 760 (Colo. App. 2012).
As noted above, the “threshold requirement for the admission of evidence is that
it have some probative value.” Leprino Foods Co. v. Factory Mut. Ins. Co., 653 F.3d
1121, 1132 (10th Cir. 2011); United States v. Oldbear, 568 F.3d 814, 820 (10th Cir.
2009). To determine whether evidence is relevant, courts conduct a dual inquiry into:
“(1) whether the evidence is probative or factually relevant to the proposition asserted
(i.e., whether the evidence tends to make the existence of that fact more or less
probable), and (2) whether the proposition for which the evidence is offered is properly
provable in the case (i.e., the fact is material-of-consequence-to the question of state
law).” Sims, 469 F.3d at 881 (emphasis in original).
The consequential facts at issue in this case pertain to whether Allstate
unreasonably denied or delayed paying plaintiff’s insurance claim.2 With regard to
plaintiff’s unreasonable denial claim, the issue presented is whether it was reasonable
for Allstate to deny plaintiff’s insurance claim on September 23, 2010 based on the
results of its investigation which Allstate contends “revealed [that] the fire was
intentionally caused by or at the direction of” plaintiff, that plaintiff “had a financial
motive including the presence of mold on the property that caused him to lose tenants,
and [that] there was unexplained circumstantial evidence implicating” plaintiff. Docket

2

Although Allstate claims that plaintiff raises only an unreasonable delay claim,
Docket No. 132 at 3, the Court notes that plaintiff asserts both that Allstate
unreasonably denied and delayed payment of his insurance benefits. Id. at 2 (“[t]he
remaining issue for trial is whether Allstate unreasonably denied and delayed payment
of insurance benefits for the fire loss”).
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No. 132 at 2. With regard to plaintiff’s unreasonable delay claim, the issue presented is
whether it was reasonable for Allstate to delay payment of plaintiff’s claim until March 9,
2013. Id. at 3.
B. The Purpose of Insurance: Opinion No. 11
Allstate argues that the Court should exclude as irrelevant Mr. Herndon’s
eleventh opinion in his report discussing the reasons why an insured purchases
insurance coverage. Mr. Herndon’s eleventh opinion states that “[t]he policyholder
should receive prompt payment for a covered loss in order to minimize the loss and
reduce or eliminate further injury or loss.” Docket No. 41-1 at 7. To reach this opinion,
Mr. Herndon relied on an insurance law publication, which states that “[a] substantial
part of the protection purchased by an insured is the right to receive policy benefits
promptly. Unwarranted delay [of insurance payments] can precipitate the precise
economic hardship that the insured sought to avoid by the purchase of the policy.” See
Allan D. Windt, Insurance Claims & Disputes: Resolution of Insurance Companies and
Insureds at 74 (3d ed. 1995).
One issue the jury will have to decide in this case is whether it was reasonable
for Allstate to delay payment of plaintiff’s claim until March 9, 2013. As noted above,
the reasonableness of an insurer’s delay or denial depends on proof of industry
standards. Savio, 706 P.2d at 1274. Given that Mr. Herndon opines that an
unwarranted delay on the part of the insurer may be unreasonable according to general
insurance industry standards, Docket No. 41-1 at 7, Mr. Herndon’s eleventh opinion is
relevant because it is probative of the reasonableness of Allstate’s handling of plaintiff’s

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insurance claim. See COPIC, 192 P.3d at 523 (noting that an insurer’s actions must be
viewed in light of the circumstances at the time). Because the balance between an
insured’s right to receive a prompt payment of insurance benefits and the insurer’s right
to investigate claims that are fairly debatable is an issue of consequence in this case,
Mr. Herndon’s eleventh opinion is factually relevant and admissible because it will
assist the jury in determining whether Allstate’s actions in this case were consistent with
industry standards. Sims, 469 F.3d at 881.
C. The Duties and Standards of an Insurer: Opinion No. 21
Allstate challenges Mr. Herndon’s twenty-first opinion in his report on the
grounds that it is irrelevant, but does not otherwise specify why it is irrelevant. Mr.
Herndon’s twenty-first opinion states that “[f]ailing to adopt and implement reasonable
standards for the prompt investigation of claims arising under insurance policies” is an
unfair claim settlement practice. Docket No. 41-1 at 9 (citing Colo. Rev. Stat. § 10-31104(1)(h)(II)).
In Colorado, the common law tort of bad faith breach of an insurance contract is
codified at Colo. Rev. Stat. § 10-3-1113 and provides that willful violations of the
Colorado Unfair Claims– Deceptive Practices Act (“UCDPA”), Colo. Rev. Stat. § 10-31101 et seq., are relevant to “determining whether an insurer’s delay or denial was
reasonable.” Colo. Rev. Stat. § 10-3-1113(4); see Am. Fam. Mut. Ins. Co. v. Allen, 102
P.3d 333, 344 (Colo. 2004) (noting that, while the UCDPA does not establish a
standard of care for bad faith claims, it may be used as valid, but not conclusive,
evidence of industry standards in an insured’s bad faith suit against an insurer).

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Section 10-3-1115 does not contain a similar provision, and instead states only that an
insurer’s delay or denial is unreasonable “if the insurer delayed or denied authorizing
payment of a covered benefit without a reasonable basis.” Colo. Rev. Stat.
§ 10-3-1115(2). Although § 10-3-1115 disclaims the intent requirement of a § 10-31113 violation, the definition of reasonableness is comparable under both statutes.
See Vaccaro, 275 P.3d at 758 (noting that common law bad faith precedent is helpful,
but not dispositive, when interpreting a right of action under the statutes); Erin Robson
Kristofco, CRS §§ 10-3-1115 and -1116: Providing Remedies to First-Party Claimants,
39 COLO . LAW . 69, 71 (July 2010) (“the insured’s burden [under § 10-3-1115] remains
the same as bad faith with regard to proving that the delay or denial was
unreasonable”). Because the standard for reasonableness is similar under both the
common law and the statutory claim, Mr. Herndon’s twenty-first opinion regarding
Allstate’s potential violations of the UCDPA is factually relevant and admissible since it
will assist the jury in determining whether Allstate’s investigation was consistent with
industry standards. Sims, 469 F.3d at 881.
D. The Insurance Company’s Job
Allstate argues that the twenty-seventh and twenty-eighth opinions in Mr.
Herndon’s report should be excluded from trial because they are irrelevant to the issues
presented in this case. Docket No. 41 at 3-4.
1. Opinion No. 27
Mr. Herndon’s twenty-seventh opinion states that “[o]nce a policyholder suffers a
loss and reports the loss to the insurance company, the company normally assigns an

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experienced and competent adjuster to handle the claim.” Docket No. 41-1 at 9-10. To
reach this opinion, Mr. Herndon relied on an insurance law publication which states that
“[a] claims adjuster’s job is to handle claims quickly and fairly. This means that the
adjuster should contact claimants promptly in order to pay covered claims as soon as
possible.” See Barry D. Smith & Eric A. Wiening, How Insurance Works at 68 (2d ed.
1994).
Based on the final pretrial order, both parties have indicated that they will call
Stephanie Littleton to testify regarding the “decision making processes, [and] the
circumstances attending Allstate’s decision to deny Plaintiff’s” insurance claim.3 Docket
No. 132 at 6. Given that Ms. Littleton will testify about her decision-making process in
denying and handling plaintiff’s claim, the jury will have to determine whether Ms.
Littleton had enough experience handling fire coverage claims to investigate properly
plaintiff’s insurance claim. Moreover, Ms. Littleton’s experience is relevant to whether
she handled plaintiff’s insurance promptly and fairly in accordance with industry
standards. Although there is somewhat of a disconnect between this opinion and the
citation used to support it, this opinion is factually relevant and admissible to the
question of whether Allstate’s denial was reasonable given Ms. Littleton’s experience in
handling fire coverage claims. Sims, 469 F.3d at 881.
Second, because an insurer breaches its duty under the statutes if it engages in
continuous “acts of unreasonable delay or denial [even after] an insured originally made
a claim for benefits under his or her insurance policy,” all evidence related to Allstate’s
3

On June 10, 2013, the Court excluded the live testimony of Rita Booker. Docket
No. 155 at 2.
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handling of plaintiff’s claim until March 9, 2013 is relevant. Kisselman, 292 P.3d at 97576. Thus, because plaintiff asserts that Allstate unreasonably delayed payment of his
insurance claim, Mr. Herndon’s opinion regarding an insurer’s duty to pay an insured’s
claim soon as possible is probative of whether the amount of time it took for Allstate to
investigate plaintiff’s claim was reasonable. Sims, 469 F.3d at 881.
2. Opinion No. 28
Mr. Herndon’s twenty-eighth opinion states that “[t]he insurance company has a
duty to advise the first party insured of the benefits available under the policy. The
insurance company is operating from a position of superior knowledge and deals with
claims and policy provisions on a daily basis. The insurance company wrote the policy
and the policyholder generally has no ability to negotiate the policy provisions. The
individual policyholder must take the policy as is or not at all.” Docket No. 41-1 at 10.
Because the reasonableness of an insurer’s conduct depends on proof of
industry standards, Savio, 706 P.2d at 1274, the Court finds that Mr. Herndon’s twentyeighth opinion is relevant and admissible as it will aid the jury in determining whether
Allstate fulfilled its duty to advise plaintiff of his benefits under the policy when it
investigated his claim. Sims, 469 F.3d at 881.
E. Allstate’s Investigation of Plaintiff’s Insurance Claim
Allstate challenges Mr. Herndon’s fifty-seventh, fifty-eighth, sixty-eighth, sixtyninth, seventy-eighth, seventy-ninth, and eightieth opinions in his report as irrelevant.
Docket No. 41 at 4-5.

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1. Opinion No. 57
Although Allstate does not challenge Mr. Herndon’s fifty-sixth opinion, because
his fifty-seventh opinion relies on Mr. Herndon’s fifty-sixth opinion, the Court will
consider both opinions. In his fifty-sixth opinion, Mr. Herndon states:
Allstate’s claims handling and training manuals do have sections on the
investigation of cause and origin of fires with a fairly heavy emphasis
concerning “V” shaped burn patterns as being indicative of the cause and
origin locations of a fire. Allstate adjuster training coupled with the fire
investigation reports may have mis-led the adjuster into too easily
accepting the “V” shaped burn patterns as being strongly indicative of
arson, when as Mr. Lentini points out, the burn patterns may not point to
the cause and origin at all.4
Docket No. 41-1 at 14. Mr. Herndon’s fifty-seventh opinion states that “Allstate should
revisit the reasoning (training) process and re-evaluate [plaintiff’s] claim. Failure to do
so would be unreasonable in light of what I understand Mr. Lentini’s findings are.” Id.
The Court finds that Mr. Herndon’s fifty-sixth and fifty-seventh opinions are
factually relevant and admissible because they speak directly to a matter of
consequence in the case, namely, whether Ms. Littleton received sufficient training to
investigate fire coverage claims. The sufficiency of the training Allstate’s adjusters
received bears directly on whether Allstate’s denial or delay of plaintiff’s insurance
coverage claim was based on adequate and reliable grounds.

4

John J. Lentini is plaintiff’s fire origin and cause expert who issued an expert
report on April 30, 2012. Docket No. 47-7. Although Mr. Herndon discusses Mr.
Lentini’s conclusions, Mr. Herndon does not explain how he acquired knowledge of Mr.
Lentini’s conclusions. Moreover, the basis of Mr. Herndon’s knowledge is not evident
given that Mr. Lentini’s expert report is not listed as one of the documents Mr. Herndon
reviewed, see Docket No. 41-1 at 18-19, and Mr. Lentini issued his expert report after
Mr. Herndon issued his expert report. See also id. at 15-16, ¶ 68 (“From my preliminary
understanding of what Mr. Lentini’s report will show, . . .”).
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2. Opinion No. 58
In his fifty-eighth opinion, Mr. Herndon states that “[w]hile Allstate had a
reasonable basis for initiating an investigation and withholding payment until the
investigation was completed, Allstate also has a duty to make an objective decision
based on the consideration of all reasonably available information, regardless of when
the information becomes available.” Docket No. 41-1 at 14.
As noted in the summary judgment order, there remain genuine disputes of
material fact about whether it was reasonable for Allstate to infer that mold or plaintiff’s
financial situation were motives to set fire to the Rental Property. See Docket No. 153
at 17-20. Because the jury will have to decide whether Allstate’s reliance on the
financial and mold motives was reasonable, Mr. Herndon’s testimony that Allstate had a
“duty to make an objective decision based on the consideration of all reasonably
available information” is factually relevant because it is probative of whether it was
reasonable for Allstate to disregard evidence providing an alternative explanation for
the mold and plaintiff’s financial situation.5 Sims, 469 F.3d at 881.
3. Opinion No. 68
Mr. Herndon’s sixty-eighth and sixty-ninth opinions in his report discuss Allstate’s
fire origin and cause reports. As part of its investigation of the fire at the Rental
Property, Allstate reviewed the fire origin and cause report prepared by Chris Rowland,
a firefighter with the Clifton Fire Department. Docket No. 153 at 2. Mr. Rowland’s

5

Moreover, to the extent Mr. Herndon’s fifty-eighth opinion relies on Mr. Lentini’s
conclusions, this opinion is also relevant to whether it was reasonable for Allstate to
delay payment of plaintiff’s insurance claim until March 9, 2013.
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investigation concluded that the fire at the Rental Property was incendiary because
there were (1) multiple areas of origin, (2) insufficient fuel loads in the areas of origin,
(3) no accidental or natural ignition sources, and (4) the Rental Property was unlocked
before the fire. Docket No. 42-7 at 7-8; Docket No. 153 at 2. Allstate also retained
Phoenix Investigations for a second opinion on the origin and cause of the fire. Docket
No. 42-8 at 1; Docket No. 153 at 3. Jason Kramarczyk, a certified fire and explosion
investigator, prepared Phoenix Investigations’ fire origin and cause report. Mr.
Kramazrcyk concluded that the fire originated near the floor area surrounding the north
wall of the kitchen or west of the cabinets and that the fire was likely caused by an
unidentified human act. Docket No. 42-8 at 1.
After filing the case, plaintiff retained the services of John J. Lentini, who issued
a fire origin and cause report on April 30, 2012. Docket No. 47-7. In his report, Mr.
Lentini concluded that the origin and cause of the fire at the Rental Property was
inconclusive and that the fire could have originated near the furnace. Docket No. 47-7
at 2-8; Docket No. 132 at 10.
Because the conclusion in Mr. Herndon’s sixty-eighth opinion relies on Mr.
Herndon’s sixty-seventh opinion, the Court will consider both opinions. In his sixtyseventh opinion, Mr. Herndon states that:
The conclusions reached on the basis of the reports of Clinton Fire and Mr.
Kramarczyk are questionable as a basis for Allstate’s decision that Mr. Sipes
intentionally set the fire. The reports concluded incendiary origins as a “fallback” theory, primarily on the basis that the investigators did not find an
accidental cause. My preliminary understanding of the findings of Mr. Lentini,
the plaintiff’s fire expert, is that there is a possible accidental cause and that the
conclusions reached by Mr. Kramarczyk and Clinton Fire are in error and may
not be sufficient to support a conclusion of incendiary origin.
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Docket No. 41-1 at 15. Mr. Herndon’s sixty-eighth opinion states that:
Further investigation is needed by Allstate (or Mr. Kramarczyk or Clinton
Fire) wherein they take into account recent scientific testing and research
(according to Mr. Lentini) into Post-Flashover Fire Behavior. This will
require that Allstate reconsider their conclusions. From my preliminary
understanding of what Mr. Lentini’s report will show, Allstate fails to have
a reasonable basis for claiming that there was an incendiary cause and
origin of the fire or that the fire originated at the base of the “V” burn
patterns in the kitchen. Allstate should not rely on the defense of an
intentional or incendiary cause without additional investigation and
consideration of Mr. Lentini’s report and findings.
Docket No. 41-1 at 15-16.
Mr. Herndon’s sixty-seventh and sixty-eighth opinions suggest that, after
Allstate received Mr. Lentini’s report, Allstate should have continued to
investigate plaintiff’s insurance claim because Mr. Lentini’s report called into
question Mr. Kramarczyk and Mr. Rowland’s conclusion that a human actor set
the fire at the Rental Property. As noted in the Court’s summary judgment order,
because Allstate did not have the benefit of Mr. Lentini’s report when it denied
plaintiff’s insurance claim on September 23, 2010, Mr. Lentini’s report is
irrelevant to the issue of the reasonableness of Allstate’s September 23, 2010
denial. Docket No. 153 at 16; see also Pham v. State Farm Mut. Auto. Ins. Co.,
70 P.3d 567, 572 (Colo. App. 2003). Accordingly, to the extent Mr. Herndon’s
sixty-seventh and sixty-eighth opinions rely on Mr. Lentini’s report, they are
irrelevant and inadmissible if offered to opine on the reasonableness of Allstate’s
denial of plaintiff’s claim on September 23, 2010.
However, because the jury will have to determine whether it was
reasonable for Allstate to delay payment of plaintiff’s insurance claim until March
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9, 2013, Mr. Herndon’s sixty-seventh and sixty-eighth opinions are relevant and
admissible if offered to establish that Allstate unreasonably delayed payment of
plaintiff’s insurance benefits. Sims, 469 F.3d at 881; Colo. Rev. Stat. § 10-31115(2). In other words, whether Allstate should have continued its investigation
of plaintiff’s claim upon receipt of Mr. Lentini’s report is factually relevant and
probative of a matter of consequence in this case.
4. Opinion No. 69
Mr. Herndon’s sixty-ninth opinion states that “[g]iven the fairly recent (last
5 to 15 years) research into Post-Flashover Fire Behavior, it is unreasonable for
Allstate to continue to rely on the reports of Clinton Fire and Mr. Kramarczyk
without specific consideration by Allstate’s experts into this phenomenon.”
Docket No. 41-1 at 16. Mr. Herndon does not explain the basis for his
knowledge of post-flashover fire behavior. See id. Assuming Mr. Herndon’s
knowledge of post-flashover fire behavior is based on a review of Mr. Lentini’s
expert report, this opinion is relevant to the issue of whether it was reasonable
for Allstate to delay payment of plaintiff’s insurance claim. See Sims, 469 F.3d
at 881. However, if based on Mr. Lentini’s opinions, Mr. Herndon’s sixty-ninth
opinion is inadmissible to the extent it is proffered to opine on the
reasonableness of Allstate’s denial of plaintiff’s claim on September 23, 2010.
5. Opinion No. 78
Mr. Herndon’s seventy-eighth opinion discusses Allstate’s reliance on
plaintiff’s financial situation at the time of the fire and states that “[w]hile Mr.

16

Sipes’ reported income may be borderline for maintenance of himself and his
properties, the Allstate [claims] file and the information from the investigation by
Allstate’s attorney into Mr. Sipes’ financial condition do not include any detailed
investigation into possible unreported income from his odd jobs and other
possible income sources. A further investigation into Mr. Sipes’ finances should
be conducted before Allstate relies on a defense that Mr. Sipes was in
sufficiently bad financial shape as to constitute a motive for arson.” Docket No.
41-1 at 17.
As noted in the summary judgment order, one issue that the jury will have
to determine is whether it was reasonable for Allstate to rely on the evidence of a
financial motive to deny plaintiff’s insurance claim. Docket No. 153 at 17-18.
Because the jury will have to consider whether Allstate reasonably relied on
plaintiff’s financial situation at the time it denied his insurance claim on
September 23, 2010, Mr. Herndon’s opinion that Allstate should have “further
investigat[ed] [ ] Mr. Sipes’ finances” before denying his claim, Docket No. 41-1
at 17, is factually relevant and admissible because it will assist the jury in
determining a fact of consequence in the case, namely, whether Allstate
reasonably denied plaintiff’s coverage claim. Sims, 469 F.3d at 881; Oldbear,
568 F.3d at 820. Accordingly, the Court finds that Mr. Herndon’s seventy-eighth
opinion is relevant and admissible.
6. Opinion No. 79
Mr. Herndon’s seventy-ninth opinion discusses plaintiff’s polygraph test
and states that “[i]t is my understanding from Mr. Kaye, attorney for Mr. Sipes,
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that Mr. Sipes took and passed a polygraph test. While such a test may or may
not be admissible in court, Allstate can and should take the results of the test
into consideration when trying to assess the credibility of Mr. Sipes, as opposed
to the suspicions and conjecture made by Allstate, in attempting to make a
decision on coverage. The results of the polygraph test are consistent with the
information from Allstate’s attorney following the EUO which indicated credibility
on the part of Mr. Sipes.” Docket No. 41-1 at 17.
As noted in the order on summary judgment, results of “polygraph tests
are generally inadmissible in the Tenth Circuit.” Docket No. 153 at 21 n. 15
(citing Palmer v. City of Monticello, 31 F.3d 1499, 1506 (10th Cir. 1994)). Thus,
because plaintiff has not endorsed an expert to testify about the admissibility of
his polygraph under Daubert, 509 U.S. 579, plaintiff may not submit his actual
polygraph results. See United States v. Call, 129 F.3d 1402, 1404 (10th Cir.
1997). In addition, plaintiff may not introduce evidence that he took a polygraph
and submitted the results to Allstate because this is an impermissible end run
around the general inadmissibility of polygraph results. See Jones v. Geneva
Pharms., Inc., 132 F. App’x 772, 776 (10th Cir. 2005). Accordingly, because
plaintiff cannot introduce any evidence regarding his polygraph test or what the
results of this test were, Mr. Herndon’s seventy-ninth opinion discussing
plaintiff’s polygraph test is inadmissible. See id.

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7. Opinion No. 80
Mr. Herndon’s eightieth opinion states that “[w]ith the conclusions drawn
from the two fire investigation reports being brought into question and the
apparent good credibility of Mr. Sipes[,] the decision of Allstate to deny coverage
is unreasonable and should be revisited.” Docket No. 41-1 at 17, ¶ 80. Mr.
Herndon does not explain what evidence he relies upon to find that Allstate’s fire
investigations were called into question. Regardless of this fact, for the same
reasons discussed with regard to Mr. Herndon’s sixty-eighth and sixty-ninth
opinions, the Court finds that Mr. Herndon’s eightieth opinion is relevant and
admissible because it will assist the jury in determining whether Allstate
unreasonably delayed payment of plaintiff’s insurance claim. Sims, 469 F.3d at
881. However, depending on the purpose of the proffered opinion, Mr. Herndon
may not be permitted to express an opinion on the credibility of any of the
witnesses. See United States v. Charley, 189 F.3d 1251, 1267 (10th Cir. 1999)
(noting that it is well established that “expert testimony which does nothing but
vouch for the credibility of another witness encroaches upon the jury's vital and
exclusive function to make credibility determinations, and therefore does not
‘assist the trier of fact’ as required by Rule 702”); United States v. Adams, 271
F.3d 1236, 1245 (10th Cir. 2001) (noting that “a proposed expert’s opinion that a
witness is lying or telling the truth might be ‘inadmissible pursuant to Rule 702
because the opinion exceeds the scope of the expert’s specialized knowledge
and therefore merely informs the jury that it should reach a particular
conclusion”).
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III. CONCLUSION
For the foregoing reasons, it is
ORDERED that Allstate Indemnity Company’s Motion to Partially Exclude
Expert Opinions of Everette Herndon [Docket No. 41] is GRANTED in part and
DENIED in part. It is further
ORDERED that Everette Herndon may testify as to opinions 11, 21, 27,
28, 57, 58, 68, 69, 78, and 80. Allstate’s motion is granted as to opinion 79.

DATED August 15, 2013.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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