Chateau Village North Condominium Association v. American Family Mutual Insurance Company

Filing 112

ORDER. ORDERED that defendant's Motion to Strike the Expert Opinions of Plaintiff's Expert Mr. Garth Allen is GRANTED in part and DENIED in part. Signed by Judge Philip A. Brimmer on 04/13/16.(jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 14-cv-01583-PAB-NYW
CHATEAU VILLAGE NORTH CONDOMINIUM ASSOCIATION,
a Colorado corporation,
Plaintiff,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY,
a Wisconsin corporation,
Defendant.

ORDER

This matter is before the Court on defendant’s Motion to Strike the Expert
Opinions of Plaintiff’s Expert Mr. Garth Allen [Docket No. 55].
I. BACKGROUND
This case arises out of an insurance coverage dispute. Plaintiff is responsible
for the operation, maintenance, preservation, and control of the Chateau Village North
Condominiums (“Chateau Village Condos”) in Boulder, Colorado. Docket No. 3 at 2,
¶ 4. Defendant provided insurance coverage to plaintiff pursuant to a one-year
commercial property and liability policy effective February 1, 2013. Id., ¶ 6. Following
severe rainstorms in September 2013 in Boulder, on September 12, 2013 Chateau
Village Condos sustained water damage. Id., ¶ 8. Plaintiff made a claim under the
policy. Id., ¶ 9. On September 20, 2013, defendant denied plaintiff’s claim. Id., ¶ 10.
Plaintiff has designated Professor Garth Allen as an insurance expert to support

its breach of contract and bad faith claims. See Docket No. 55 at 2. Prof. Allen has
written a report interpreting the policy and opining that the Condominium Enhancement
Endorsement is not subject to the anti-concurrent causation clause in the policy .
Docket No. 55-1 at 6-7. Prof. Allen also opines that defendant’s conduct in
investigating plaintiff’s claim was unreasonable and contrary to insurance industry
practices. Id. at 8-11. Finally, Prof. Allen opines that defendant’s conduct satisfies the
standards for claims of common law and statutory bad faith denial of insurance
benefits. Id. at 11.
II. FEDERAL RULE OF EVIDENCE 702
Rule 702 of the Federal Rules of Evidence provides that:
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 expert has reliably applied the
principles and methods to the facts of the case.
Fed. R. Evid. 702. As the rule makes clear, while required, it is not sufficient that an
expert be qualified based upon knowledge, skill, experience, training, or education to
give opinions in a particular subject area. Rather, the Court m ust “perform[] a two-step
analysis.” 103 Investors I, L.P. v. Square D Co., 470 F.3d 985, 990 (10th Cir. 2006).
After determining whether the expert is qualified, the specific proffered opinions must
be assessed for reliability. See id.; Fed. R. Evid. 702 (requiring that the testimony be
“based on sufficient facts or data,” be the “product of reliable principles and methods,”
and reflect a reliable application of “the principles and methods to the facts of the

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case”). Where an expert relies on experience, the expert “must explain how that
experience leads to the conclusion reached, why that experience is a sufficient basis for
the opinion, and how that experience is reliably applied to the facts.” United States v.
Medina-Copete, 757 F.3d 1092, 1104 (10th Cir. 2014) (quoting Fed. R. Evid. 702,
advisory committee notes). In examining an expert’s method, however, the inquiry
should not be aimed at the “exhaustive search for cosmic understanding but for the
particularized resolution of legal disputes.” Daubert, 509 U.S. at 597. It is the specific
relationship between an expert’s method, the proffered conclusions, and the particular
factual circumstances of the dispute that renders testimony both reliable and relevant.
While plaintiff, as the proponent of the challenged testimony, has the burden of
establishing admissibility, the proffer is tested against the standard of reliability, not
correctness; it need only prove that “the witness has sufficient expertise to choose and
apply a methodology, that the methodology applied was reliable, that sufficient facts
and data as required by the methodology were used and that the methodology was
otherwise reliably applied.” Crabbe, 556 F. Supp. 2d at 1221.
In sum, assuming an objection is properly made, expert testimony must be
excluded if the expert is unqualified to render an opinion of the type proffered, if the
opinion is unreliable, if the opinion will not assist the trier of fact, or if the opinion is
irrelevant to a material issue in the case.
III. ANALYSIS
Defendant challenges Prof. Allen’s opinions on two grounds: (1) Prof. Allen’s
“opinions in Section 1 of his Report regarding the construction of the insurance policy to

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include coverage for sewer back-up damages are legal opinions and therefore
inadmissible”; and (2) Prof. “Allen’s opinions in Sections 2, 3 and 4 of his Report are
also inadmissible as a matter of law” because they are “his own factual conclusions
based on his application of the available evidence to his own construction of the Policy.”
Docket No. 55 at 2-3. Defendant does not challenge Prof. Allen’s qualifications.
A. Prof. Allen’s Policy Interpretation
Defendant argues that Prof. “Allen’s construction of the policy language and
resulting coverage opinion for sewer back-up are legal opinions” and are thus not
helpful to the trier of fact. Docket No. 55 at 8. See generally Docket No. 55-1 at 4-9.
Plaintiff does not dispute that contract interpretation is a leg al question for the Court.
See Docket No. 71 at 2. In its order on the parties’ cross-motions for summary
judgment, Docket No. 97, the Court construed the relevant portions of Section I.B of the
policy, the anti-concurrent causation clause, and the Condom inium Enhancement
Endorsement. Accordingly, Prof. Allen may not offer any coverage opinions that are
contrary to the Court’s construction of the policy or offer an opinion that defendant’s
interpretation of the policy, to the extent adopted by the Court, was unreasonable. See
Auto-Owners Ins. Co. v. Summit Park Townhome Ass’n, 100 F. Supp. 3d 1099, 1101
(D. Colo. 2015) (“Under Colorado law, questions of coverage under an insurance policy
are generally matters of law reserved for the court.”) (citing Fire Ins. Exch. v. Bentley,
953 P.2d 1297, 1300 (Colo. App. 1998)).
B. Prof. Allen’s Reasonableness Opinion
Defendant contends that Prof. Allen’s opinions regarding the reasonableness of

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defendant’s conduct in investigating and denying plaintiff’s claims will not be helpful to
the jury because they are based on his interpretation of the policy, which is incorrect.
Docket No. 55 at 8; Docket No. 81 at 4-5. See generally Docket No. 55-1 at 9-11.
Plaintiff, however, correctly notes that “[c]ourts in this jurisdiction have consistently
allowed expert testimony regarding the reasonableness of an insurer’s conduct in light
of industry standards.” Docket No. 71 at 4. Defendant replies that “[Prof.] Allen’s
opinions stated in his report establish that he has no opinions independent of his
coverage opinions” and that “[p]laintiff identifies no specific, industry standard-based
opinions of [Prof.] Allen that are independent of his coverage opinions.” Docket No. 81
at 4.
The Court’s practice standards require that a Rule 702 motion “shall identify with
specificity each opinion the moving party seeks to exclude.” Practice Standards (Civil
Cases), Judge Philip A. Brimmer, § III.G (emphasis in original). The burden is on
defendant to identify the specific opinions it seeks to exclude regarding the
reasonableness of defendant’s conduct in its investigation in relation to industry-based
standards. Defendant, however, fails to direct the Court’s attention to specific opinions
it challenges. Moreover, a review of Prof. Allen’s report reveals that he includes
opinions not based solely on his construction of the policy. For example, Prof. Allen
opines that American Family failed to consider physical and eyewitness testimony and
instead relied on “general knowledge of a storm in the area, evidence of high water in
the geographical area, and some physical evidence of water intrusion to deny the
claim.” Docket No. 55-1 at 8. Prof. Allen then asserts that “[t]he standard in the
insurance industry is to devote at least as much energy, time, and attention to finding
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ways to pay a claim as is devoted to finding a way to deny a [claim],” and ultimately
opines that American Family’s investigation in this case was “unreasonable and
contrary to insurance industry standards.” Id. These opinions regarding defendant’s
fact-finding investigation do not depend on Prof. Allen’s policy interpretation. Because
defendant fails to specifically identify opinions in Sections 2, 3, and 4 of Prof. Allen’s
report that arguably do not comply with Rule 702, the Court will deny defendant’s
motion to exclude such opinions. However, as previously discussed, Prof. Allen may
not offer opinions that conflict with the Court’s interpretation of the policy.
IV. CONCLUSION
For the foregoing reasons it is
ORDERED that defendant’s Motion to Strike the Expert Opinions of Plaintiff’s
Expert Mr. Garth Allen is GRANTED in part and DENIED in part.

DATED April 13, 2016.
BY THE COURT:

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

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