Century Indemnity Company v. The Marine Group, LLC et al
Filing
848
OPINION and ORDER - Granite State and ICSOP's motion 681 to exclude experts Robert Hughes and Dennis Connolly, Century Indemnity's motion 683 to exclude expert Robert Hughes and St. Paul's motion 709 to exclude experts Robert Hug hes and Dennis Connolly are GRANTED IN PART and DENIED IN PART. The portions of Connolly's and Hughes's respective reports described in the Opinion and Order (document attached to this ECF entry) are excluded, all parties are precluded from using at trial the excluded portions of their reports, and both witnesses are precluded from giving testimony on the excluded portions at trial. IT IS SO ORDERED. DATED this 13th day of October, 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-Paiiy Plaintiffs,
v.
AGRICULTURAL INSURANCE
COMPANY and AGRICULTURAL EXCESS
AND SURPLUS INSURANCE COMP ANY,
each an Ohio Corporation,
Third-Party Defendants.
Page 1 - 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 Superfund Site.
Phase I of trial in this case is
scheduled to occur in November 2015 and will resolve each identified paiiy's duty to defend.
To determine each party's duty to defend the comi 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.
As required by the court's prior scheduling orders, the parties identified expert witnesses,
exchanged expe1i witness reports, and deposed expetts 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"), Century 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, Robeti Hughes, Barry Lapidus, James Robertson, and Allan Windt.
This opinion and order resolves the remaining pending motions to strike the repo1ts of
expert witnesses Dennis Connolly and Robeti Hughes. The specific motions are:
Page 2 - OPINION AND ORDER
1. Granite State and ICSOP's Motion to Exclude Experts Robert Hughes and
Dennis Connolly (Dkt. No. 681 );
2. Centmy Indemnity's Motion to Exclude Expert Robert Hughes (Dkt. No. 683);
and
3. St. Paul's Motion to Exclude Experts Robert Hughes and Dennis Connolly
(Dkt. No. 709). 1
Granite State and ICSOP's motion, Centmy Indemnity's motion, and St. Paul's motion
each ask the court to strike the Connolly and Hughes reports because both experts' repotts
consist of inadmissible legal conclusions. St. Paul's motion also asserts the court should strike
Connolly's and Hughes's testimony because neither expert has the requisite experience or
background to give opinions on the policies at issue, and because their opinions are speculative
and thus umeliable.
The court finds Connolly and Hughes qualified to give the opinions
contained in their reports but concludes that pottions of their respective reports contain
inadmissible legal conclusions that invade the province of the comt. Therefore, those portions of
Connolly's and Hughes's opinions specifically identified below must be excluded. Accordingly,
Granite State and ICSOP's motion, Century Indemnity's motion, and St. Paul's motion are
GRANTED IN PART and DENIED IN PART.
\\ \ \ \
1
The comt previously issued two opinions (Dkt. Nos. 818 and 820) which resolved
motions (Dkt. Nos. 705 and 714, respectively) to strike or exclude the expert reports and
testimony of James Robertson, Barry Lapidus, and Allan Wind!.
Page 3 - OPINION AND ORDER
Standards
Federal Rule of Evidence 702 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;
© the testimony is the product of reliable principles and methods; and
(d) the expe1i has reliably applied the principles and methods to the facts of the
case.
Rule 702 "contemplates a broad conception of expe1i qualifications.'' Thomas v. Newton
Int 'l Enters., 42 F.3d 1266, 1269 (9th Cir. 1994) (emphasis added). Moreover, "the adviso1y
committee notes emphasize that Rule 702 is broadly phrased and intended to embrace more than
a narrow definition of qualified expe1i." Id.
Experience alone can be the basis of admissible expe1i testimony:
Nothing in this amendment is intended to suggest that experience alone - or
experience in conjunction with other knowledge, skill, training or education may not provide a sufficient foundation for expe1i testimony. To the contrary, the
text of Rule 702 expressly contemplates that an expert may be qualified on the
basis of experience. In ce1iain fields, experience is the predominant, if not the
sole, basis for a great deal of reliable expert testimony.
FED. R. Evrn. 702 advisoty committee notes, 2000 Amendment. Where an expe1i witness relies
primarily on experience for his or her qualifications, then 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." Id.
Page 4 - OPINION AND ORDER
Under Rule 702 the district court is tasked with the gate-keeping function assigned by
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) (Daubert I), to determine
the admissibility of expert witness testimony. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S.
137, 141, 147 (1999). "Faced with a proffer of expe1t scientific testimony, then, the trial judge
must determine at the outset ... whether the expert is proposing to testify to (1) scientific
knowledge that (2) will assist the trier of fact to understand or determine a fact in issue. This
usually entails a preliminary assessment of whether the reasoning or methodology underlying the
testimony is scientifically valid and of whether that reasoning or methodology properly can be
applied to the facts in issue." Daubert I, 509 U.S. at 592-93 (footnote omitted). Daubert applies
to the testimony of engineers and other expe1ts who possess technical and other specialized
knowledge.
Kumho Tire, 526 U.S. at 141. An expert's "bald assurance of validity is not
enough." Daubert v. Merrell Dow Phann., Inc., 43 F.3d 1311, 1316 (9th Cir. 1995) (Daubert
II).
Factors to be considered when determining if the testimony is reliable scientific
knowledge are whether the theory or technique is generally accepted in the relevant scientific
community, whether it has been subjected to peer review and publication, whether it can be and
has been tested, whether standards exist to control the technique's operations, and whether the
known or potential rate of error is acceptable. Daubert I, at 593-94. The inquiry, however, is a
flexible one, with the focus solely on the principles and methodology used, not on the
conclusions they generate. Id. at 594. See also Claar v. Burlington Northern R. Co., 29 F.3d
499, 502 (9th Cir. 1994) (the district court is "both authorized and obligated to scrutinize
Page 5 - OPINION AND ORDER
carefully the reasoning and methodology" underlying the expert's testimony); Tyson v. Oregon
Anesthesiology Group, P.C., Case No. 03-1192-HA, 2008 WL 2371420, at *15 (D. Or. June 6,
2008) (finding inadmissible expert conclusions that were "vague and inadequately supported
with specific, relevant statistical analysis"). Other relevant factors may be considered, and the
factors listed in Daubert may not be reasonable measures of the reliability of expert testimony in
a particular case. Id. at 594; Kumho Tire, 526 U.S. at 147-153. As the Supreme Court observed,
Daubert 's factors "may or may not be pertinent in assessing reliability. . . . The conclusion, in
our view, is that we can neither rule out, nor rule in, for all cases and for all time the applicability
of the factors mentioned in Daubert . . . . Too much depends upon the particular circumstances
of the particular case at issue." Kumho Tire, 526 U.S. at 150 (citations and internal quotations
omitted).
A threshold question in determining the admissibility of expert testimony is whether the
proffered testimony will assist the trier of fact. Daubert I, 509 U.S. at 592. Expett witness
testimony is unnecessary unless the subject matter "is beyond the common knowledge of the
average lay person." United States v. Hanna, 293 F.3d 1080, 1086 (9th Cir. 2002) (quotation
omitted). Thus, "even if [the expert] testimony may assist the trier of fact, the trial court has
broad discretion to admit or exclude it." Beech Aircraft Corp. v. United States, 51 F.3d 834, 842
(9th Cir. 1995) (per curiam) (quotation omitted).
Expert testimony that offers legal conclusions rather than opinions about facts generally
does not "help the trier of fact to understand the evidence or to determine a fact in issue."
Although "[i]t is well-established ... that expett testimony concerning an ultimate issue is not
Page 6 - OPINION AND ORDER
per se improper", Mukhtar v. Cal. State Univ., Hayward, 299 F.3d 1053, 1066 n.10 (9th Cir.
2002), and Federal Rule of Evidence 704(a) provides explicitly that expert testimony that is
"otherwise admissible is not objectionable because it embraces an ultimate issue to be decided
by the trier of fact," nonetheless "an expert witness cannot give an opinion as to her legal
conclusion, i.e., an opinion on an ultimate issue of law." Mukhtar, 299 F.3d at 1066 n.10. The
Ninth Circuit has observed:
As a general rule, "testimony in the form of an opinion or inference otherwise
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 oflaw. Similarly, instructing the jmy 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). Because interpretation of insurance contracts present questions of law
for the court to decide, see, e.g., McHugh v. United Service Auto. Ass'n, 164 F.3d 451, 454 (9th
Cir. 1999) ("the interpretation of the insurance policy is a question of law for the court"); St.
Paul Fire & Marine Ins. Co., Inc., v. McCormick & Baxter Creosoting Co., 324 Or. 184, 192
(1996) ("The interpretation of the terms of an insurance policy is a question of law."), expert
opinion interpreting an insurance contract or its terms is not admissible. See, e.g., McHugh, 164
F.3d at 454 ("[expert] testimony cannot be used to provide legal meaning or interpret the policies
as written"); Maffei v. Northern Ins. Co. of New York, 12 F.3d 892, 898-99 (9th Cir. 1993)
Page 7 - OPINION AND ORDER
(affirming trial comt's exclusion of expe1t declaration that interpreted meaning of policy
endorsement rather than opined on "custom and usage" in the industly).
Rulings on the admissibility of expert testimony under Rule 702 are committed to the
sound discretion of the trial court. Gen. E/ec. Co. v. Joiner, 522 U.S. 136, 141-42 (1997).
Discussion
The court's task at Phase I trial is contract interpretation, which is a question of law for
the court to decide. Specifically, the court will decide the legal question whether any of the
insurance policies at issue obligate one or more of the insurers to provide or pay for Third-Pmty
Plaintiffs' defense in the underlying Portland Harbor Superfund Site litigation. The moving
pmties' motions challenge Com1olly's and Hughes's testimony primarily because both witnesses
offer legal opinions on the meaning of the insurance policies at issue.
St. Paul's motion
advances two additional challenges to Connolly's and Hughes's testimony: that both lack the
qualifications to give opinions in this case and both experts render opinions that are speculative
and thus unreliable.
I. Qualifications and Reliability.
A. Connolly.
1. Arguments.
St. Paul observes that Connolly's report describes the "creation of the field of insurance
archaeology" and relies on its methods to reconstruct "missing" St. Paul policies, but Connolly
admits he is not a member of this field. Connolly relies on six documents and interprets them
"through the prism of an 'experienced claim handler,' rather than an underwriter." (Dkt. No.
Page 8 - OPINION AND ORDER
709, p. 6.) The distinction deprives Connolly of the requisite experience to offer opinions in this
case because "an underwriter may be qualified to opine as to certain facts concerning the
issuance or terms of an insurance contract; a claim handler is not." (Id. at 11.)
In addition, St. Paul asserts Connolly's opinions about Ship Repairer's Liability ("SRL")
policies should not be admitted because he "lacks any background in SRL policies on which he
can rely to offer helpful, admissible expe1t opinions." (Id. at 12.) St. Paul points out: "Nowhere
in his report does Connolly identify any relevant experience in reviewing or interpreting SRL
policies, for reasons that became obvious at his deposition - he has no such experience." (Id. at
6.) St. Paul cites Connolly's admissions at deposition that he has never written - never even
seen - before this case a SRL policy and knows nothing about the development of the language
contained in SRL policies.
(Id. at 12-13.)
St. Paul concludes that Connolly's "general
knowledge about insurance does not qualify him to provide expe1t opinion on SRL policies[.]"
(Id. at 13.)
Great American defendants2 respond Connolly's testimony is not speculative or based on
conjecture.
They argue St. Paul's motion conflates the standard for admissibility of expert
testimony with the standard for proving the existence of the policies at issue. They further point
to a 1980 insurance ledger created by a Northwest Marine employee that documents St. Paul
policies issued to Third-Patty Plaintiffs during the 1963-64 and 1966-67 policy years. Great
American defendants finally note that Connolly also relied on a certificate of insurance St. Paul
2
Third-Patty Plaintiffs' opposition brief does not respond to St. Paul's qualification
arguments asserted against Connolly.
Page 9 - OPINION AND ORDER
issued to Northwest Marine for the period February 1957 to February 1960, and observes
Connolly applied his fifty years of experience in the insurance indusliy to explain how this
evidence supports his opinion that St. Paul policies covered Third-Party Plaintiffs during the
period at issue.
2. Analysis.
Connolly is qualified to render opinions in this case and his opinions are not speculative.
First, Connolly has based his opinions in part on specifically identified, existing, and relevant
documents, and in patt on his decades of experience in the insurance industry. Notably, nowhere
in St. Paul's motion does it challenge Connolly's general qualifications to provide expett
testimony in insurance coverage lawsuits involving business liability insurance policies, their
issuance and renewal, or the content of CGL policies available during the 1940s, 50s, and 60s,
the time period that includes the years the policies at issue are alleged to have been issued.
Second, Connolly's opinions regarding the SRL policies turn not on that specific form of
policy but instead on two larger points: insurance industty practices pertaining to the issuance
and renewal of liability policies to businesses, and coverage for environmental liabilities. The
factual issue here is whether the insurance policies at issue existed and, if so, their contents.
Connolly's report details his long and extensive experience in the insurance industty, including
significant and diverse experience with CGL policies, environmental insurance policies, and
coverage issues. (See Dkt. No. 682-1, pp. 1-5. 3) In his report Connolly sufficiently explains
3
Page citations to the Connolly repott and the Hughes report reference the electronic
docket pagination and not the original pagination of the reports.
Page 10- OPINION AND ORDER
how his experience supports his opinions (see Dkt. No. 682-1, pp. 17-19), and he makes clear in
his deposition that environmental liability coverage provisions are part of SRL policies. (See
Dkt. No. 710-7, p. 18.) St. Paul fails to identify or explain how SRL policies are unique or even
sufficiently distinct from CGL policies such that Connolly's long experience and extensive
knowledge do not equip him to render his opinions in this case.
In summary, under Rule 702, Connolly's insurance indust1y experience is sufficient to
qualify him to give his opinions in this case, including opinions SRL policies.
St. Paul's
challenges to Connolly's opinions more appropriately go to the weight to be given his opinions
and not to their admissibility.
B. Hughes.
1. Arguments.
St. Paul asse1ts Hughes's opinion is based on speculation and conjecture.
St. Paul
observes that Hughes relies on two insurance policies issued to an entirely different company,
Electrical Construction Company of Oregon ("ECCO"), which merged into Third-Party Plaintiff
Northwest Marine after the date the two insurance policies had expired. St. Paul contends
Hughes thus has "invented coverage" for the period at issue in this case, without citation to or
reliance upon any document that predates ECCO's merger into Northwest Marine. Third-Party
Plaintiffs respond that St. Paul mistakes Hughes's use of "illustrative hypotheticals" for
speculation when, in fact, Hughes's repo1t makes clear he relies on his decades of experience in
Page 11 - OPINION AND ORDER
the insurance industty to explain why policyholders purchase and maintain umbrella insurance
policies. 4
2. Analysis.
Hughes's opinions are not based on speculation or conjecture.
St. Paul does not
challenge Hughes' s general qualifications to provide expert testimony in insurance coverage
lawsuits involving business liability insurance policies. Hughes's report describes in detail both
his extensive experience in the insurance industty and the methodology he used to opine on the
existence, issuance, and terms of the St. Paul policies at issue. (See Dkt. No. 682-2, pp. 2-13,
42-49.) Hughes's report also identifies and describes the documents he reviewed from a variety
of sources and the significance of those documents and sources in supporting his opinions, and
relying on those documents he explains with specificity the basis of his opinions on the existence
of each St. Paul policy he concludes existed during the periods in question. (See id. at pp. 1330.)
St. Paul's challenges go to the weight to be given Hughes's opinions and not their
admissibility.
II. Legal Conclusions.
Granite State and ICSOP's motion and St. Paul's motion challenge the admissibility of
both Connolly's and Hughes's testimony, and Century Indemnity's motion challenges Hughes's
testimony. Specifically, the moving parties assett Connolly and Hughes improperly offer legal
conclusions concerning the ultimate issues in dispute: the formation, issuance, and existence of
4
Great American defendants' opposition brief does not respond to St. Paul's reliability
arguments asse1ted against Hughes. St. Paul does not challenge Hughes's qualifications.
Page 12 - OPINION AND ORDER
the policies at issue, The moving patties further contend Connolly and Hughes improperly opine
that the policies' terms impose either a duty to defend or a duty to pay defense costs. These are
legal opinions on questions of law and not testimony that assists the court in determining facts at
issue, the moving parties argue.
Because legal opinions invade the province of the court,
Connolly's and Hughes's testimony should be excluded.
Century supports its motion with
citations to three decisions from other courts that excluded Hughes's testimony as improper legal
conclusions, and St. Paul cites in its motion one decision that excluded Connolly's testimony as
improper legal conclusions.' In addition, the moving parties contend Connolly's and Hughes's
testimony also should be excluded to the extent it constitutes extrinsic evidence of the
contracting patties' intent, because extrinsic evidence of intent is inadmissible under Oregon
contract law.
Third-Patty Plaintiffs and Great American oppose Granite State and ICSOP's motion and
St. Paul's motion, and Third-Party Plaintiffs oppose Centuty Indemnity's motion. They rely on
Connolly's and Hughes's unchallenged decades-long insurance industty experience and
background as predicate for their contention these expetts offer factual opinions on insurance
industty practices in issuing or renewing policies, for including specific terms and conditions, for
reconstructing lost policies, for understanding and processing claims under the terms contained
5
Century cites North American Specialty Insurance Company v. Myers, 111 F.3d 1273
(6th Cir. 1997); Plantation Pipeline Company v. Continental Casualty Company, Civ. Action
No. 1:0-CV-2811-WBH, 2008 WL 4737163 (N.D. Ga. July 31, 2008); and Canal Insurance
Company v. Montello, Inc., No. 10-CV-411-JHP-TLW, 2012 WL 4891699 (N.D. Okla. Oct. 15,
2012). St. Paul cites Travelers Indemnity Co. v. Northrop Grumman Corp., No. 12 Civ. 3040
(KBF), 2014 WL 464769 (S.D.N.Y. Jan. 28, 2014).
Page 13 - OPINION AND ORDER
in the policies at issue, and for determining the coverage for which specific types of policies and
particular provisions contained within those policies are issued and obtained. They fmther argue
that if the court determines Connolly or Hughes offer legal opinions, the court should exclude
only the improper portions of their testimony and leave in place the remainder of their opinions.
The court finds that the Connolly report and the Hughes repot1 each contain both
inadmissible legal conclusions and admissible testimony that will assist the court in
understanding the factual contentions in this case. The admissible and inadmissible portions of
the Connolly report and the Hughes are identified below.
A. Connolly.
Connolly states Great American retained him to "present expert testimony regarding the
issuance, limits, terms and conditions of certain comprehensive general liability ("CGL'') and
shiprepairer's liability ("SRL") insurance policies at issue in this case." (Dkt. No. 682-1, p. 9.)
Subsections III.A. and III.B. of Connolly's repot1 contain foundational context for Connolly's
specific opinions is this case: he describes his experience in the insurance industry; the origin
and development of CGL policies; the general purposes of CGL policies; and the general
structure and interaction of primary, excess, and umbrella insurance policies. (Dkt. No. 682-1,
pp. 5-7 .) In subsection III.C. Connolly identifies the types of documents used to establish
"missing" CGL policies. (Dkt. No. 682-1, pp. 7-8.) In subsection III.D. Connolly sets out
insurance industry practices in developing and using "form language" in CGL policies. (Dkt.
No. 682-1, pp. 9-10.) Finally, Connolly describes in subsection III.E. the available standardized
form CGL policies developed during the 1940s, 50s, and 60s, and how those form policies are
Page 14 - OPINION AND ORDER
used to establish the coverage terms and exclusions of "missing or incomplete" policies. (Dkt.
No. 682-1, pp. 10-11.) All of this factual or fact-based opinion testimony is admissible, because
it will help the court understand the parties' competing evidence and determine the contested
facts.
Connolly's opinions specific to this case are contained in Section IV (Dkt. No. 682-1, pp.
11-26) of his report, and Section IV sets forth a series of inadmissible legal conclusions. Here
Connolly goes beyond merely describing the "issuance, limits, terms and conditions of certain
comprehensive general liability ("CGL") and shiprepairer's liability ("SRL") insurance policies
at issue in this case.'' Instead, he interprets policy provisions and gives legal opinions that those
provisions impose upon St. Paul, The Water Quality Insurance Syndicate ("WQIS"), and ICSOP
a duty to defend and a duty to pay defense costs. These interpretations and conclusions are the
court's to make, not Connolly' s, and his testimony in these areas is inadmissible.
Proof of this fact is evidenced in the very first subheading of Section IV: "St. Paul Has a
Duty to Defend Pursuant to Comprehensive General Liability Policies it Issued to Northwest
Marine Iron Works[.]" (Dkt. No. 682-1, p. 11.) The decision whether St. Paul or any other
insurer in this case has a duty to defend under any insurance policy is the province of the court;
the Ninth Circuit has clearly so held.
See, e.g., Nationwide Transport Finance v. Cass
Information Systems, Inc., 523 F.3d at 1058 (an expert witness cannot give an opinion on an
ultimate issue of law); and Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d at 1016
(same). Each of the other three subheadings in Section IV announce more inadmissible legal
opinions: "St. Paul is Obligated to Pay Defense Costs .. .," "The [WQIS) Issued Policies that
Page 15 - OPINION AND ORDER
Covered Northwest Marine Iron Works ... and Obligate [WQIS] to Pay Defense Costs,'' and
"[ICSOP] Owes a Share of [Third-Patty Plaintiffs'] Defense Costs". (Dkt. No. 682-1, pp. 17, 20,
and 24.) Simply put, Connolly may not testify to his opinions on which insurers owe a duty to
defend, a duty to pay or share in defense costs, the meaning of insurance policies generally or
their specific provisions, the scope of coverage under a policy, or other similar legal opinions.
The nature of Connolly's opinions here parallels from those found inadmissible in
Travelers Indemnity Co. v. Northrop Grumman Corp., No. 12 Civ. 3040 (KBF), 2014 WL
464769 (S.D.N.Y. Jan. 28, 2014). There Connolly had offered among other opinions that the
insured's notice to the insurer was sufficient, the insured's notice did not prejudice the insurer,
and the insured was entitled to coverage. Id. at *5. The court excluded ten of Connolly' s twelve
opinions because they "impermissibly invade[ d] the provinces of the judge and jmy, and
observed there was "no way [it] could allow a proposed expe1t" to give these and other proffered
opinions. Id. After concluding Connolly' s remaining opinions were irrelevant, confusing, or
unnecessary and a waste of time, the court precluded him from testifying altogether. Id. at 5-6.
Connolly's opinions in Section IV of his report suffer from the same problems as the opinions he
proffered in Travelers Indemnity.
Although most of Connolly's testimony in Subsection IV is inadmissible, some portions
are admissible. Connolly relies on his experience and industry practice to describe the process
of constructing the content of lost policies; the probable policy limits of those policies; the
probability that policies were issued for ce1tain years or time periods; the industry practice of
maintaining, continuing, and renewing insurance with the same carrier; replaced policy
Page 16- OPINION AND ORDER
practices; and insurers' document retention policies. This testimony is admissible because it will
assist the court in determining the factual disputes in this case, and the court will allow Connolly
to testify at trial on these topics.
B. Hughes.
Hughes states Third-Party Plaintiffs and Argonaut Insurance retained him "to determine,
if possible, the terms and conditions of liability insurance policies issued to Northwest Marine
Iron Works between 1957 and 1972 by St. Paul Fire & Marine Insurance Company." (Dkt. No.
682-2, p. 2.) Hughes adds his task is to also address these specific issues:
Whether or not the 7/1/82-8/1/85 Century Indemnity policies provide
coverage that is equal to "an occurrence based COL policy that defense or pays
defense costs;"
Whether or not the Granite State policies have a drop-down defense
obligation;
Whether or not the Granite State policies have a pollution exclusion and,
if so, what is the breadth of the exclusion; and,
Whether or not the Insurance Company of the State of Pennsylvania
policies have a drop-down defense obligation in the event of the insolvency of the
Home Indemnity Company.
(Dkt. No. 682-2, p. 2.) As these assigned tasks demonstrate, Hughes's opinions are not limited
to finding the existence of insurance policies he contends St. Paul, Centmy Indemnity, Granite
State, and ICSOP issued; he also presents legal conclusions and interpretations about those
opinions. (See Dkt. No. 682-2, pp. 14-39.) As to Centmy Indemnity, Granite State, and ICSOP,
Hughes concludes his analysis of each of these insurers' policies with a similar conclusion: that
each insurer's policy or policies provide both coverage and a defense obligation. (See Dkt. No.
Page 17 - OPINION AND ORDER
682-1, p. 31 (expressing opinion the Century Indemnity policy "provides comprehensive general
liability insurance" including "Environmental Impairment Liability coverage"); Dkt. No. 682-1,
pp. 34-35 (expressing opinions the Granite State policies require payment of defense costs and a
contingent duty to defend obligation, and the environmental liability exclusion does not apply);
and Dkt. No. 682-1, pp. 39-40 (expressing opinions the ICSOP policies require payment of
defense costs, "continue in force" if the underlying insurance is exhausted, impose a duty to
defend if no underlying insurance exists, and a contingent obligation to "indemnify the insured"
in the same manner as the underlying insurance).) The court's previous analysis of Connolly's
opinions applies equally to Hughes's proffered opinions: as are Connolly's legal conclusions,
Hughes's legal conclusions are inadmissible because his opinions improperly invade the
province of the court.
Not all of Hughes's testimony is inadmissible, however. Hughes's analysis of the St.
Paul policies also concludes that St. Paul issued five policies collectively covering the period
from 1957 to 1972, inclusive. (Dkt. No. 682-2, pp. 14-25.) Hughes's testimony reconstructing
the St. Paul policies is admissible, because it will assist the court in understanding the facts
underlying a key factual dispute: whether St. Paul issued one or more policies which cover
Third-Party Plaintiffs for environmental liability during all or some of the relevant time period.
Also helpful in understanding the facts at issue is Hughes's discussion of the interrelationship
between primary, excess, and umbrella policies, including "drop down" functions; his discussion
of the origin of policy wording;, and his testimony about industry practice in structuring CGL
policies on a "vertical" basis. This testimony is admissible as well.
Page 18 - OPINION AND ORDER
Conclusion
Granite State and ICSOP's Motion to Exclude Experts Robett Hughes and Dennis
Connolly (Dkt. No. 681), Centmy Indemnity's Motion to Exclude Expert Robert Hughes (Dkt.
No. 683), and St. Paul's Motion to Exclude Expetts Robert Hughes and Dennis Connolly (Dkt.
No. 709) are GRANTED IN PART and DENIED IN PART. The portions ofConnolly's and
Hughes's respective reports described above are excluded, all parties. are precluded from using at
trial the excluded portions of their reports, and both witnesses are precluded from giving
testimony on the excluded pottions at trial.
IT IS SO ORDERED.
/ 2cf.{_
DATED this ;t._.:..J
day of October, 2015.
Page 19- OPINION AND ORDER
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?