Home Owners Insurance Company v. Moffitt et al

Filing 332

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
HOME OWNERS INSURANCE
COMPANY,
Plaintiff,
File No. 1:11-cv-517
v.
HON. ROBERT HOLMES BELL
RONALD MOFFIT, et al.,
Defendants.
/
OPINION
This case is, as Magistrate Judge Scoville noted during the discovery hearing held January
23, 2013, a “simple little fire insurance case that has become way more complicated and rancourous
than virtually any 17 other insurance case[s] that I’ve seen in this court in 25 years” (Tr., Dkt. No.
215 at 23). That rancor continues—and the case becomes ever more complicated—with the filing
of Defendants A&P Enterprises Ronald Moffit, Cathleen Moffit’s (Defendants1) six motions in
limine, five of which are relevant to the first trial in this case (Dkt. Nos. 304, 306 , 309, 311, and
315). Plaintiff has filed responses to these motions (Dkt. Nos. 323, 324, 325, 326, 327, and 328). For
the reasons that follow, Defendants’ First, Second, Third, and Sixth motions in limine are denied and
their Fourth motion is granted.
I.

FIRST MOTION: TO PRECLUDE TESTIMONY OF WITNESSES
ARMBRUSTMACHER AND MASSEY

Defendants argue the Witnesses Armbrustmacher and Massey should be precluded from

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Defendant United States Department of Treasury – Internal Revenue Service, took no
part in the briefing of these motions.

testifying because Plaintiff failed to submit to the Court an Expert Report under Fed. R. Civ. P.
26(a)(2). Plaintiff argues that neither witness is required to submit a report because neither was
retained specially to give testimony, but rather both are full-time employees of Plaintiff.
A proposed expert must file a report if “the witness is one retained or specially employed to
provide expert testimony in the case or one whose duties as the party’s employee regularly involve
giving expert testimony.” Fed. R. Civ. P. 26(a)(B)(2). The report must include the signature of the
expert and contain:
(i) a complete statement of all opinions the witness will express and the basis and
reasons for them;
(ii) the data or other information considered by the witness in forming them;
(iii) any exhibits that will be used to summarize or support them;
(iv) the witness’s qualifications, including a list of all publications authored in the
previous 10 years;
(v) a list of all other cases in which, during the previous four years, the witness
testified as an expert at trial or by deposition; and
(vi) a statement of the compensation to be paid for the study and testimony in the
case.
Id. A primary purpose of a Rule 26(a)(2)(B) report is to put opposing counsel on notice of an
expert’s proposed testimony so as “to avoid an ambush at trial.” R.C. Olmstead, Inc., v. CU
Interface, LLC, 606 F.3d 262, 271 (6th Cir. 2010).
At the January 23, 2013 Discovery Motion Hearing, Magistrate Judge Scoville noted that,
with regard to Witnesses Armbrustmacher and Massey
26(a)(2)(B) does not require production of an expert witness report by these two
people because they were not retained or specially employed to provide expert
testimony, nor is giving expert testimony a regular part of what they do, their duties.
So they’re experts for the purpose of identification but not for the purpose of a report.
Sixth Circuit has recognized this distinction in Felden v. CSX Transport, 42 F.3d
866, 869 (6th Cir. 2007)
(Tr., Dkt. No. 215 at 34). Defendants made no objection to this determination at the hearing, nor did
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they timely file an appeal to this Court.
Magistrate Judge Scoville also noted “the rule does require identified experts . . . to at least
identify their opinions and the basis therefore—that’s subsection (c)—so that the other side is not
left completely in the dark” (Tr., Dkt. No. 215 at 34). Magistrate Judge Scoville concluded that
Witness Armsbrustmacher’s disclosure satisfied this requirement “regarding the application,
insurance policy, the lack of insurable interest, claim and payments made, coverage, underwriting
issues and standards. It’s clear enough that this is the guy who was going to testify about
underwriting, and the defendants chose not to depose him and that’s on them” (id.).
With regard to Witness Massey’s disclosures, he concluded, “Massey's disclosure again is
focused on underwriting issues, and to the extent that he was going to talk about lack of insurable
interest, coverage under the policy, underwriting issues and standards, defendants were on notice that
this is what Massey was going to talk about and if they wanted to depose him they should have” (id.
at 35).
Plaintiff, therefore, was justified in relying on Magistrate Judge Scoville’s determination, and
should not be precluded from presenting these witnesses in the absence of an expert report.
However, even if Magistrate Judge Scoville’s determination is not controlling, Plaintiff’s
submissions have satisfied Rule 26’s requirements. Plaintiff satisfied the disclosure requirements
in its Disclosure of Expert Witnesses (Dkt. No. 38), which went through the enumerated
requirements line-by-line. Although this disclosure did not include the experts’ signatures, Witnesses
Armbrustmacher and Massey later submitted signed affidavits adopting the disclosures (Dkt. Nos.
192-2 and 192-4, respectively). See Jenkins v. Barlett, 497 F.3d 482, 488 (7th Cir. 2007) (“the
plaintiffs cured the main defect in the expert report, the absence of the physicians’ signatures, by
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submitting sworn affidavits from the physicians adopting the contents of the October 1, 2003 letter”).
Magistrate Judge Scoville already determined this issue. Defendants’ motion seems to be an
attempt to take another bite at the apple, wasting this Court’s valuable time. In any event, the Court’s
independent evaluation of the arguments reveals that Defendants are wrong on the application of the
law to these witnesses, even if the witnesses are treated as ones required to submit a report under
Rule 26. For these reasons, the motion is properly denied.
II.

SECOND MOTION: TO DISQUALIFY WITNESSES ARMBRUSTMACHER AND
MASSEY AS EXPERTS
Defendants argue that Armbrustmacher and Massey should be disqualified as Expert

Witnesses because they fail to pass the four factors suggested for evaluating proposed expert
testimony set out in Daubert v. Merrell Dow Pharms., 509 U.S. 579 (1993). Despite the Supreme
Court’s admonition that inquiry into expert testimony under Daubert is “flexible,” Defendants
suggest a mechanical application of the four factors to Witnesses Armbrustmacher and Massey.
Although the Supreme Court has endorsed the use of Daubert’s general principles to
evaluating nonscientific expert testimony, the ultimate undertaking is for “the trial judge [to]
determine whether the testimony has ‘a reliable basis in the knowledge and experience of [the
relevant] discipline.’” Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 149 (1999) (quoting
Daubert, 509 U.S. at 592).
The affidavits of both witnesses (Dkt. Nos. 192-2 and 192-4) clearly establish that these
witnesses are qualified to testify as experts in the field of insurance underwriting and that their
testimony will be relevant and reliable, the cornerstone of evaluating expert testimony. Defendants’
argument rigidly applying Daubert, to the contrary, stretches credulity and borders on frivolous. This
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motion is therefore properly denied.
III.

THIRD MOTION: TO EXCLUDE EVIDENCE THAT DEFENDANTS MADE

MISREPRESENTATIONS ON THEIR INSURANCE APPLICATION REGARDING
THEIR RETIREMENT STATUS OR THAT THEY HAD BEEN DENIED INSURANCE
COVERAGE
Defendants argue that Plaintiff failed to include as an allegation on the First Amended
Complaint that Defendants made material misrepresentations on their initial insurance application
about Defendants’ retirement status or previous denials of insurance coverage. Defendants argue that
because these facts were never pleaded, Plaintiff should be precluded from introducing evidence or
testimony related to this allegation. Defendants argue in a conclusory manner that even if such
evidence is relevant, it should be excluded under FRE 403.
Although these specific material misrepresentations were never pleaded, they do fall under
the umbrella of the general claim of material misrepresentations that Plaintiff argues voids the
contract. Further, Plaintiff included as an exhibit the original application for insurance coverage,
which states that both Defendants are retired (Amend. Compl., Ex. 1, Dkt. No. 19 at 10). Defendants
also checked “no” to a question that asked “Has any company canceled, refused to write or declined
renewal for this applicant?” (id. at 11). Therefore, as Plaintiff argues in its response, Defendants have
been on notice for a long time that this may be an issue.
Testimony that these misrepresentations (if they prove to be false) would have affected the
underwriting process is relevant. Defendants have not convincingly argued that allowing this
evidence would result in “unfair prejudice, confusing of issues, misleading the jury, and causing
undue delay or waste of time during trial.” In fact, Defendants’ statement that “there is no factual or
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expert support” for this evidence is itself misleading. This motion, therefore, is properly denied.
IV.

FOURTH MOTION: TO EXCLUDE EVIDENCE OF FRAUD IN THE CLAIMS
PROCESS
Defendants move to exclude evidence/preclude the defense of arson/fraud in the claims

process. Defendants’ overly lengthy brief could have been avoided by simple reference to Magistrate
Judge Scoville’s January 23, 2013 Order (Dkt. No. 203) denying Plaintiff’s motion to amend its
complaint to include defenses of arson/fraud in the claims process. Plaintiff never appealed this
decision to this Court. Plaintiff concedes as much in its response. Per Magistrate Judge Scoville’s
order, Plaintiff cannot now raise arson/fraud in the claims process as a defense, and this motion,
though unnecessary, is properly granted.
V.

SIXTH MOTION: TO EXCLUDE HOME OWNERS’ EXHIBIT 1 AND OTHER
EXHIBITS OR WITNESSES NOT DISCLOSED DURING DISCOVERY
Defendants’ final motion deals with Plaintiff’s Exhibit 1 (the March 2007 application for

insurance on the property in question) and applications for three additional policies: one issued in
March 2006 and two issued in 2007. Defendants state, “[t]here is no doubt that Home Owners has
these applications in its possession. However, Home Owners’ [sic] has refused to produce them . .
.” (Br., Dkt. No. 317 at 4). Defendants go on to state
Home Owners’[sic] knows these applications are significant because they contain
data and information that is essential to the Moffits’ case. Rather, Home Owners
wants this Court and other parties to believe that the March 2007 insurance
application is the controlling application, even though clear evidence shows that it
was sent to Citizens Insurance Company and not Home Owners Insurance Company
(id.). Defendants argue that because Plaintiff has willfully disobeyed a discovery order to produce
these documents, Rule 37(b) sanctions are in order (id. at 3-6).
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First, it is noted that in reviewing all of the discovery orders in this case (Dkt. Nos.
136, 137, 169, 173, 205, 206, and 225) as well as the transcript of the discovery hearing (Dkt. No.
215), there is no Court order specifically dealing with these documents, and thus it is unclear why
Rule 37(b) would apply. It does appear that some discovery took place between Plaintiff and ThirdParty Defendants, but that all the documents exchanged between Plaintiff and Third-Party
Defendants (which would presumably include these applications, if they exist) has been surrendered
to Defendants (Dkt. No. 205 at 1).
The “clear evidence” that purportedly shows that the March 2007 application was sent to
Citizens Insurance and not Home Owners is a ledger from Third-Party Defendant’s insurance agency
that lists Citizens as the company to which the application would be sent. However, Plaintiff’s
Exhibit 1 (Dkt. No. 19 at 10) clearly shows that this application was received by Home Owners.
Further, because a policy did issue from Home Owners, it seems disingenuous for Defendants to
argue that an application for such insurance was never submitted. The policy Defendants have
attached as an exhibit (Dkt. No. 315-1) clearly expired in March 2007, so it is not unreasonable to
conclude that Defendants applied for a new policy.
Whatever happened in 2006, it is clear that in 2007, Defendants submitted an application for
insurance upon which a policy issued. This policy was renewed and was in force when the house on
the property burned to the ground in 2010. Defendants never moved for an order regarding these
documents, but had it so moved, Magistrate Judge Scoville likely would have denied such a request
under Rule 26(b)(2)(C), as the March 2007 application is the one Plaintiff put in controversy.
Plaintiff has clearly relied on the representation made in the March 2007 application (Ex. 1,
Dkt. No. 19 at 10) as the basis for its recision claim. The Court never specifically ordered that other
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insurance applications be produced, therefore Rule 37(b) sanctions are not warranted. Neither is
exclusion of Plaintiff’s exhibit evidencing Defendants alleged misrepresentations. This motion is
therefore properly denied.
VI.

CONCLUSION

These motions border on being frivolous and misleading. They were also difficult for the
Court to evaluate because the citations of the record were either non-existent or very vague. In
addition, the strong, strident language is unfitting of professional lawyers, and inappropriate to the
controverted facts. Counsel are reminded they are officers of this Court, and while they (or their
clients) may disagree, that does not provide license to be disagreeable.
The Court will issue an Order consistent with this Opinion

Dated: September 30, 2013

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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