Manpower Inc v. Insurance Company of the State of Pennsylvania

Filing 175

DECISION AND ORDER as to defense issue and setting status conference for 6/23/11 at 1:30 p.m. signed by Judge Lynn Adelman on 6/9/11. The court will initiate the call. (cc: all counsel)(dm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MANPOWER INC.,
Plaintiff,
v.

Case No. 08C0085

INSURANCE COMPANY OF
THE STATE OF PENNSYLVANIA,
Defendant.

DECISION AND ORDER
Plaintiff Manpower, Inc. brings this insurance-coverage action against the Insurance
Company of the State of Pennsylvania (“ISOP”) over losses sustained when a building
containing the offices of Manpower’s French subsidiary, Right Management (“Right”),
partially collapsed.

In ruling on the parties’ various summary judgment motions, I

determined that as a matter of law Manpower is entitled to coverage for businessinterruption losses, extra-expenses, and loss of business personal property and
improvements and betterments. I also determined that the measure of Manpower’s loss
of business personal property and improvements and betterments is the cost of replacing
the property. This case is scheduled for trial, at which the only issue will be the amount of
Manpower’s loss. ISOP has filed motions on two issues relating to the trial – whether
Manpower can call ISOP’s expert witness during its case-in-chief, and whether evidence
that Manpower has a “local French policy” will be admitted at trial.
The first issue relates to Manpower’s claim for business-interruption coverage.
During earlier proceedings, I ruled that the opinion of Manpower’s forensic accountant as

to the amount of the business-interruption loss is inadmissible because it does not meet
the requirements of Federal Rule of Evidence 702. This prompted ISOP to move for
summary judgment on the ground that, without an expert, Manpower cannot prove its
business-interruption damages to a reasonable certainty. Although Manpower agrees that
without expert testimony it cannot establish its damages to a reasonable certainty, it
contends that summary judgment is inappropriate because it can establish the amount of
its damages by calling ISOP’s expert witness, Clifton Lewis, adversely. ISOP responds by
arguing that Manpower should not be permitted to call Lewis adversely during its case-inchief.
There is no hard-and-fast rule forbidding a party from calling an opposing party’s
expert during his case-in-chief, see Kerns v. Pro-Foam of S. Ala., Inc., 572 F. Supp. 2d
1303, 1309 (S.D. Ala. 2007), and so ISOP argues that I should prohibit Manpower from
calling Lewis under Federal Rule of Evidence 403, which gives me discretion to exclude
relevant evidence when “its probative value is substantially outweighed by the danger of
unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of
undue delay, waste of time, or needless presentation of cumulative evidence.” ISOP
contends that allowing Manpower to call Lewis would result in unfair prejudice because it
would allow Manpower to free-ride on ISOP’s efforts in retaining Lewis and having him
form opinions in this case. This is a misunderstanding of “unfair prejudice” as used in Rule
403, which means an “undue tendency to suggest decision on an improper basis,
commonly, though not necessarily, an emotional one.”

Fed. R. Evid. 403 advisory

committee’s note (1972). ISOP does not contend that Manpower’s calling Lewis at trial
would have a tendency to suggest to jurors that they render a decision on an improper
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basis, and Rule 403 is not meant to exclude relevant evidence on the ground that the
proponent of the evidence procured it through arguably unfair means. Thus, I will not
prevent Manpower from calling Lewis at trial during its case-in-chief.
As an alternative argument, ISOP contends that Lewis’s testimony would not allow
a jury to determine the amount of Manpower’s business-interruption loss to a reasonable
certainty. ISOP tells us that if called by Manpower at trial Lewis will testify that it is his
opinion that the amount of Manpower’s business-interruption loss is zero. However, in one
of his reports, Lewis appears to value Manpower’s business-interruption loss at
$1,036,043. Although Lewis’s report would likely be hearsay and not itself admissible for
the truth of the matter asserted, the report raises questions as to what Lewis would actually
say if called by Manpower during its case-in-chief. Because when ruling on a motion for
summary judgment the evidence must be viewed in the light most favorable to the
nonmovant, I cannot assume that Lewis’s testimony will be that the amount of the loss is
zero.
Still, Lewis’s conclusion in his report about the amount of the business-interruption
loss was tentative, and he later prepared a report in which he stated that the amount of the
loss was zero. Although for purposes of summary judgment I cannot assume that Lewis’s
trial testimony will be consistent with his later report, I find it hard to believe that Manpower
wants to prepare for a trial on the business-interruption claim when the most likely outcome
is that I direct a verdict for ISOP after Lewis testifies that the amount of the loss is zero.
Thus, I will hold a status conference to discuss whether Manpower insists on having a trial
on the business-interruption claim and, if it does, determine exactly what Manpower
intends to do when it gets Lewis on the witness stand.
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The second issue raised by ISOP’s motions is its intent to introduce evidence at trial
that Manpower has a French insurance policy that may need to be exhausted before
coverage under the ISOP policy is available.

The ISOP policy is a “difference in

conditions” policy, which means that it is a form of “wrap around” or “gap” insurance
designed to cover risks not fully insured under other policies. Under such a policy,
coverage is not available when one of the insured’s other policies covers the loss.
The other policy at issue in the present case is a French policy issued by AIG
Europe to Right Management. Following the collapse, Right filed a claim with AIG Europe.
When AIG Europe denied the claim, Right initiated coverage litigation in France. That
litigation is ongoing. ISOP’s position in its present motion is that recovery under the
difference-in-conditions policy will not be triggered until the extent of coverage available
to Right under the French policy has been resolved through the French litigation.
Manpower seems to concede that it cannot recover the same loss under both the ISOP
difference-in-conditions policy and the AIG Europe primary policy, and that therefore any
loss recovered in this case will have to be reduced by any amounts recoverable under the
primary policy. However, Manpower contends that because AIG Europe has already
denied coverage under the primary policy, Manpower can recover the entire amount of its
loss under the ISOP policy. But as noted, Manpower and Right are continuing to seek
coverage under the primary policy, and so at this point I cannot conclude that recovery
under the primary policy is impossible.
Manpower also contends that ISOP has raised the availability of coverage under the
primary policy too late, and it seems to suggest that ISOP has forfeited its right to a
reduction in damages to the extent of any recovery available under the primary policy.
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However, ISOP pleaded the primary policy as an affirmative defense (Second Amended
Answer [Docket #72] ¶¶ 30-34), and Manpower has not moved for summary judgment on
that affirmative defense. So the defense has not been forfeited, and it will need to be
addressed before entry of final judgment. The parties should be prepared to discuss how
to handle this defense at the status conference scheduled below.
THEREFORE, IT IS ORDERED that a status conference regarding the two issues
discussed in this order will be held on June 23, 2011 at 1:30 p.m.
Dated at Milwaukee, Wisconsin, this 9th day of June, 2011.

/s_______________________
LYNN ADELMAN
District Judge

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