Century Indemnity Company v. The Marine Group, LLC et al

Filing 820

OPINION and ORDER - Third-Party Plaintiffs' Motion 714 to Strike Expert Report of Allan Windt is GRANTED. The court strikes the Windt report and precludes all parties from using that report in this case. Windt is precluded from testifying at trial. IT IS SO ORDERED. DATED this 21st day of September, 2015, by United States Magistrate Judge John V. Acosta. (peg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION

CENTURY INDEMNITY COMPANY,
a Pennsylvania Corporation,
Plaintiff,

v.
THE MARINE GROUP, LLC, a California
limited liability company, as affiliated with
Northwest Marine, Inc.; et al.,
Defendants.
THE MARINE GROUP, LLC, a California
limited liability company, as affiliated with
Northwest Marine, Inc.; et al.,
Third-Party Plaintiffs,

v.
AGRICULTURAL INSURANCE
COMPANY and AGRICULTURAL EXCESS
AND SURPLUS INSURANCE COMPANY,
each an Ohio Corporation,
Third-Party Defendants.

Page I - OPINION AND ORDER

3:08-cv-1375-AC
OPINION AND
ORDER

ACOSTA, Magistrate Judge:

Introduction
This lawsuit concerns the alleged obligations of numerous insurance companies to defend
and indemnify third-party plaintiffs The Marine Group, LLC; Northwest Marine, Inc.; Northwest
Marine Iron Works; and BAE Systems San Diego Shop Repair, Inc. ("Third-Party Plaintiffs");
for costs incurred in connection with the assessment, removal, and remediation of hazardous
materials released at the Portland Harbor Superfnnd Site.

Phase I of trial in this case is

scheduled to occur in November 2015. The Phase I trial will resolve each identified party's duty
to defend. To determine each patiy's duty to defend the court must identify specific insurance
policies, construct lost policies and construe their terms, fix the time period for which each
policy provided coverage, establish the existence and applicability of exclusions, and determine
the obligations of excess and umbrella insurers.
In accordance with the court's prior scheduling orders, the parties identified expert
witnesses, exchanged expert witness reports, and deposed experts regarding the Phase I Trial
issues. Thereafter, Third-Party Plaintiffs and four insurers - Granite State Insurance Company,
Insurance Company of the State of Pennsylvania ("ICSOP"), Centmy Indemnity, and St. Paul
Fire & Marine Insurance Company - each filed motions to exclude some or all of one or more
expert witness's testimony. Collectively, the motions put in issue the testimony of five expert
witnesses: Dennis Connolly, Robert Hughes, Barry Lapidus, James Robertson, and Allan Windt.

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This opinion and order resolves the pending motion to strike the testimony of expert
witness Allan Wind!. The specific motion is Third-Patty Plaintiffs' Motion to Strike Expert
Report of Allan Wind! (Dkt. No. 714). 1 The motion is GRANTED.

Discussion
Granite State and ICSOP hired Windt to provide rebuttal expert opinion to the expert
opinion of Third-Party Plaintiffs' expert Robert Hughes.2 Third-Party Plaintiffs ask the court to
strike Wind!' s report and preclude him from testifying at trial because "Mr. Windt' s expert
report is a legal analysis of the ICSOP and Granite State policies, followed by a legal conclusion
on the ultimate issue of whether or not either insurer owes TPPs a duty to defend in this case."
(See Dkt. No. 714, at p. 3.) Granite State and ICSOP do not argue Windt's report is proper

expert testimony. Instead they respond that Windt's report is "virtually identical" to Hughes's
report in its content and conclusions; thus, if Windt's report is excluded, then Hughes's repott
also must be excluded. (See Dkt. 735, at pp. 2-3.)
Expert testimony is admissible if it "will help the trier of fact to understand the evidence
or determine a fact in issue[.]" FED. R. Evrn. 702(a). Thus, for example, expert testimony
usually is admitted - and sometimes necessaty - in cases involving claims of professional
negligence, product defect, and business interruption damages, to prepare the jury to
1

The court has issued an opinion (Dkt. No. 818) which resolved one other motion (Dkt.
No. 705), and it will resolve the remaining pending motions to strike or exclude expert witnesses
(Dkt. Nos. 681, 683, and 709), in a separate opinion.
2

Windt's repott, however also includes references to the report of Third-Party Plaintiffs'
other expert, Dennis Connolly, and contests his opinions as well as Hughes's.
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knowledgeably evaluate a party's actions against an applicable standard of care, to aid the jury's
understanding of engineering data, and to help the jury evaluate complex financial records. But
experts may not give opinions on legal questions:
As a general rule, "testimony in the form of an opinion or inference othe1wise
admissible is not objectionable because it embraces an ultimate issue to be
decided by the trier of fact." Fed. R. Evid. 704(a). "That said, an expert witness
cannot give an opinion as to her legal conclusion, i.e., an opinion on an ultimate
issue of law. Similarly, instructing the jury as to the applicable law is the distinct
and exclusive province of the court." Hangarter v. Provident Life & Accident Ins.
Co., 373 F.3d 998, 1016 (9th Cir. 2004) (internal citations and quotation marks
omitted); see also Fed. R. Evid. 702 (requiring that expert opinion evidence
"assist the trier of fact to understand the evidence or to determine a fact in issue").
Nationwide Transport Finance v. Cass Information Systems, Inc., 523 F.3d 1051, 1058 (9th Cir.

2008) (italics in original). "Resolving doubtful questions of law is the distinct and exclusive
province of the trial judge." United States v. Weitzenhoff, 35 F.3d 1275, 1287 (9th Cir.1993)
(internal quotation marks omitted).
The court's task at Phase I trial is contract interpretation, which is a question of law for
the court to decide. Specifically, the comt will decide the legal question whether any of the
insurance policies at issue obligate one or more of the insurers to provide a defense to ThirdParty Plaintiffs in the underlying Portland Harbor Superfund Site litigation. In this context the
question Third-Pmty Plaintiffs' motion raises is whether under Rule 702 Windt's expert report
contains opinion that will aid the comt' s understanding of any fact at issue. It does not.
Windt's 17-page report sets forth the law pertaining to excess insurance and the duty to
defend, a discussion distilled from sections of the most recent edition of his insurance law
treatise, Wind!, Insurance Claims and Dfaputes (West 2013). In his report Wind! cites his book
Page 4 - OPINION AND ORDER

more than 30 times and includes dozens of case citations and extensive discussions of cases; the
report's occasional mention of this case's facts are pretext for his legal analysis. Conclusions of
law appear throughout Windt's report, some examples of which are:
1.

Windt rejects Connolly's report because it "contravenes fundamental rules of

insurance contract construction" and is "not supported by the analysis adopted in
analogous case law." (Dkt. No. 715-2, at p. 13)
2. Windt appears to reject Hughes's report for the same legal reasons used to reject
Connolly's report. (See Dkt. No. 715-2, at p. 16.)
3. Windt declares the "Granite State and [ICSOP] policies at issue are all true excess
policies." (Dkt. No. 715-2, at p. 7.)
4. Windt opines that under the Home (primary) insurance policies, Home "is obligated to
pay all the defense costs." (Dkt. No. 715-2, at p. 10.)
5. Windt concludes "[ICSOP] is not presently obligated to pay any defense costs" and
"Granite State is not obligated pay any of the defense costs." (Dkt. No. 715-2, at p. 16.)
In essence, Windt's report is an amicus curiae brief on insurance contract interpretation.
In Mirarchi v. Seneca Specialty Ins. Co., Civil Action No. 10-3617, 2013 WL 1187065, at *6
(E.D. Pa. March 22, 2013), the court reached a similar conclusion in striking almost all of
Windt's report in that case:
In this case, Mr. Windt' s report does contain a good deal of contract
interpretation, and is written by someone arguably with expertise in insurance
law, but not in actual claims handling or adjusting. Indeed, the report is seasoned
throughout with legal conclusions based on Mr. Windt's insurance treatise (which
is, in turn, based on case law from many jurisdictions outside of Pennsylvania).
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In short, the bulk of the expert report would not be admissible, and Mr. Mirarchi
may not rely on Mr. Windt's report to the extent that it intrudes upon the province
of the Court and the jury because it contains long passages of legal arguments and
contract construction and does not deal with complex coverage issues that would
arguably assist the fact-finder.
See also McCrink v. Peoples Benefit Life Ins. Co., No. 2:04-CV-01068-LDD, 2005 WL 730688,

at *4 (E.D. Pa. 2005) ("The report of Mr. Windt is littered with impermissible legal conclusions
on the issue of contract construction."). The couti recognizes, as the parties appear to do,
Windt's expertise in insurance law, but his repo1t in this case provides no opinions about facts.
Under Rule 702, therefore, his repo1t is not admissible because it will not assist the court's
understanding of the facts at issue.
Granite State and ICSOP contend that if the court excludes Windt's report it also must
exclude the Hughes report (and Connolly's, the court assumes) because of their similarity, but
this contention overlooks two material distinctions between Windt's rep01t and the repo1ts
Connolly and Hughes submitted. First, both Hughes and Connolly discuss at length in their
respective reports facts that assist the comt's understanding of industry practice, the purpose of
specific insurance policy provisions, underwriting and claims handling, methodology for
constructing lost policies, and other facts key to resolving questions about the existence and
content of the insurance policies at issue. Windt's report discusses none of these topics or any
other facts. Second, both Connolly and Hughes have extensive background and experience in
the insurance industry, which equips them to explain and opine on the factual topics underlying
the pmties' lost-policy dispute.

Windt is a lawyer who has never worked in the insurance

industry. See also Mirarchi, 2013 WL 1187065, at *5 (observing that "Mr. Windt is an attorney
Page 6 - OPINION AND ORDER

with experience handling insurance coverage claims but with no professional insurance
experience as an adjustor, appraiser, umpire or other direct indushy involvement[.]"). Although
po1iions of Connolly's and Hughes's respective repmis might be inadmissible because they
contain impermissible legal conclusions, certainly most of their repmis' content sets forth
admissible expe1i testimony and opinion grounded on the facts of this case and their experience
in the insurance indushy. In sum, the Hughes and Connolly reports are not "virtually identical"
or even similar to Windt's under a Rule 702 analysis.
Conclusion

Third-Pmiy Plaintiffs' Motion to Strike Expert Report of Allan Windt (Dkt. No. 714) is
GRANTED. The comi strikes the Windt report and precludes all parties from using that report

in this case. Windt is precluded from testifying at trial.
IT IS SO ORDERED.

J;:;f
DATED thisc2,/

day of September, 2015

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fJ

LJJr\Jf___

~~-l-4---~~~~~~~~~~~~

j JOHN V. ACOSTA
· nited States Magistrate Judge

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