Fiserv Solutions Inc v. Westchester Fire Insurance Company et al
Filing
182
DECISION ans ORDER signed by Judge Charles N Clevert, Jr on 4/14/2014 Granting in Part and Denying in Part Motions in Limine to Preclude Testimony of Kochenburger 104 105 , Granting Motions in Limine to Preclude Testimony of Newman 103 107 , and Granting Motions in Limine to Preclude Testimony of Lavelle 105 107 . (cc: all counsel)(nts)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
FISERV SOLUTIONS, INC.,
Plaintiff,
v.
Case No. 11-C-0603
ENDURANCE AMERICAN SPECIALTY
INSURANCE COMPANY, XL SPECIALTY
INSURANCE COMPANY, NATIONAL UNION
FIRE INSURANCE COMPANY OF PITTSBURGH PA,
and CONTINENTAL CASUALTY COMPANY,
Defendants.
DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTIONS IN
LIMINE TO PRECLUDE TESTIMONY OF KOCHENBURGER (DOCS. 104, 105),
GRANTING MOTIONS IN LIMINE TO PRECLUDE TESTIMONY OF NEWMAN
(DOCS. 103, 107), AND GRANTING MOTIONS IN LIMINE TO PRECLUDE
TESTIMONY OF LAVELLE (DOCS. 105, 107)
Policyholder Fiserv Solutions, Inc. sues four insurers under various claims-made
policies for an amount paid to settle North Carolina litigation. In the North Carolina action,
Bank of America sued First American Title Insurance Company, which then sued Fiserv
in a third-party claim.
Before this court are four motions in limine concerning the testimony of three
proposed expert witnesses. The defendants comprise two groups based on when they
provided insurance to Fiserv. Fiserv hired one expert witness and each group of insurers
hired an expert to rebut Fiserv’s.
As relevant to this case, Fiserv purchased various insurance policies as part of its
insurance programs (or insurance “towers”) for two contiguous policy years: (1) July 1,
2008, to July 1, 2009 (“Tower 1"), and (2) July 1, 2009, to July 1, 2010 (“Tower 2").
Defendants National Union Fire Insurance Company of Pittsburgh, PA, and Continental
Casualty Company provided excess insurance policies as part of Tower 1. These insurers
will be referred to as the “Tower 1 Insurers.” Defendants Endurance American Specialty
Insurance Company and XL Specialty Insurance Company provided excess insurance
policies as part of Tower 2. These insurers will be referred to as the “Tower 2 Insurers.”
Each group’s expert is challenged by the other group.1 The court will address the
arguments respecting each expert sequentially, as the issues raised by the two opposing
groups often overlap.
BACKGROUND
As pertinent to this case, Towers 1 and 2 each consisted of three insurers—one
primary-level and two excess level. Tower 1 contained Hiscox Syndicates Limited, whose
$20 million in limits under the primary policy were exhausted by other claims, and now
consists of National Union and Continental, the second and third excess layers
respectively, with limits of $10 million each. Tower 2 contained Westchester Fire Insurance
Company with a $10 million primary policy, plus Endurance and XL Specialty, which
issued, respectively, second and third-layer excess policies with limits of $15 million each.
Westchester has settled with Fiserv and has been dismissed from this case.
In a letter dated June 25, 2009, just prior to the expiration of the Tower 1 policy
period, Fiserv submitted to the Tower 1 Insurers a notice of potential claims (the “June
2009 notice”). In the June 2009 notice, Fiserv alerted the Tower 1 Insurers to
circumstances involving Fiserv’s home equity loan program, QuickClose. Through
QuickClose, Fiserv provided title-related services for lenders who originated home equity
1
The Tower 2 Insurers filed a separate m otion as to each opposing expert, while Fiserv and the Tower
1 Insurers filed one m otion attacking both of the opposing experts, resulting in four m otions regarding three
experts.
2
loans without a full title search. In that role, Fiserv acted as a title agent for First American,
which issued a form of limited title insurance on such home equity loans.
In April 2010, after expiration of the Tower 1 policies, First American filed a thirdparty suit against Fiserv in a North Carolina case brought by Bank of America against First
American (the “North Carolina action”). First American claimed negligence by Fiserv
respecting the QuickClose program. Fiserv provided notice of the North Carolina action to
the Tower 1 Insurers, to which it had submitted the June 2009 notice, as well as the Tower
2 Insurers, whose policies were in effect when the claim against Fiserv in the North
Carolina action was filed. The Tower 1 Insurers did not accept the North Carolina action
claim under their policies. On the other hand, primary Tower 2 insurer, Westchester,
agreed to defend Fiserv in the North Carolina action. However, a dispute subsequently
arose as to whether the North Carolina action was a claim first made within the Tower 2
policy period or a claim that falls back to the Tower 1 policy period under the June 2009
notice. In the present case, Fiserv seeks coverage under one or both towers.
DISCUSSION
Expert testimony is governed by Fed. R. Evid. 702, which reads:
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.
Thus, under Rule 702 the court must engage in a three-step analysis: (1) whether the
witness qualifies as an expert; (2) whether the expert’s methodology is reliable; and (3)
3
whether the testimony will assist the trier of fact to understand the evidence or determine
a fact in issue. Myers v. Ill. Cent. R.R. Co., 629 F.3d 639, 644 (7th Cir. 2010). The
proponent of the expert’s testimony bears the burden of proving admissibility of the
testimony by a preponderance of the evidence. Lewis v. CITGO Petro. Corp., 561 F.3d
698, 705 (7th Cir. 2009).
The district court is to act as a “gatekeeper,” ensuring that expert testimony satisfies
Rule 702’s requirements. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999);
Stollings v. Ryobi Techs., Inc., 725 F.3d 753, 765 (7th Cir. 2013); see Daubert v. Merrell
Dow Pharms., Inc., 509 U.S. 579 (1993). But that role does not render the district court the
trier of all facts relating to expert testimony; the jury must be allowed to play its essential
role in assessing the expert’s credibility and weighing the expert testimony. Stollings, 725
F.3d at 765.
Regarding reliability, an expert should “employ[] in the courtroom the same level of
intellectual rigor that characterizes the practice of an expert in the relevant field.” Kumho
Tire Co., 526 U.S. at 152. The district judge must ensure that the expert used a valid
methodology, sufficient data justified the use of the methodology, and the expert applied
the methodology appropriately. Stollings, 725 F.3d at 765. The district judge has
considerable leeway in determining whether particular expert testimony is reliable.
Manpower, Inc. v. Ins. Co., 732 F.3d 796, 806 (7th Cir. 2013). However, there must be a
“link between the facts or data the expert has worked with and the conclusion the expert’s
testimony is intended to support.” United States v. Mamah, 332 F.3d 475, 478 (7th Cir.
2003). Various factors for consideration, to the extent they apply in the particular context,
include whether a theory or technique can be and has been tested, subject to peer review
4
and publication, or generally accepted, but no definitive checklist exists; the inquiry is
flexible. See Daubert, 509 U.S. at 593-94.
Nevertheless, the district judge’s gatekeeping role does not extend to the reliability
of the conclusions those methods produce; that the conclusions can be impeached does
not mean the testimony is unreliable. Stollings, 725 F.3d at 765; see Daubert, 509 U.S. at
595. “An expert may provide expert testimony based on a valid and properly applied
methodology and still offer a conclusion that is subject to doubt. It is the role of the jury to
weigh these sources of doubt.” Stollings, 725 F.3d at 766. The district court should not bar
an expert because the judge questions the quality of the data used in applying the
methodology; the factual underpinnings of the expert’s analysis are factual matters for the
trier of fact, so long as the methodology is sound. Manpower, Inc., 732 F.3d at 806-08.2
Rule 702 allows an expert to educate the factfinder about general principles, without
applying the principles to the specific facts of the case. Fed. R. Evid. 702 advisory
committee notes 2000 amendments. However, when expert testimony does not rely on
anything like a scientific method, the district judge should evaluate whether the testimony
is “properly grounded, well-reasoned, and not speculative . . . . The expert’s testimony must
be grounded in an accepted body of learning or experience in the expert’s field, and the
expert must explain how the conclusion is so grounded.” Id.
2
In Stollings, for instance, the Seventh Circuit held that the district court violated the province of the
jury by barring an expert’s testim ony because the am ount of one input in his data was uncertain. 725 F.3d at
766. The appellate court found that the judge should have let the uncertainty of the input and, thus, the
expert’s conclusion, be subject to cross-exam ination and the jury’s determ ination. Id. at 766-67. Sim ilarly, the
court found in Manpower, Inc. that the district court abused its discretion in barring expert testim ony about
business interruption loss because the expert used a business growth rate that the court questioned. 732 F.3d
at 801-02, 807-10.
5
Experience alone may provide a sufficient foundation for expert testimony, but the
expert “must explain how that experience leads to the conclusions reached, why that
experience is a sufficient basis for the opinion, and how that experience is reliably applied
to the facts.” Id.; see Metavante Corp. V. Emigrant Sav. Bank, 619 F.3d 748, 761 (7th Cir.
2010). The trial court’s gatekeeping function requires more than simply taking the expert’s
word for it; expert testimony is not admitted merely because an expert gives it. See Fed.
R. Evid. 702 advisory committee notes 2000 amendments; Gen. Elec. Co. v. Joiner, 522
U.S. 136, 146 (1997) (“[N]othing in either Daubert or the Federal Rules of Evidence
requires a district court to admit opinion evidence which is connected to existing data only
by the ipse dixit of the expert.”).
As to relevance, testimony is excludable if it cannot help the trier of fact to
understand the evidence or determine a fact in issue or fails to make a fact more or less
probable. Fed. R. Evid. 401, 702(a). Expert testimony is not relevant if the expert’s opinions
are legal opinions that usurp the role of the court. Good Shepherd Manor Found., Inc. v.
City of Momence, 323 F.3d 557 (7th Cir. 2003) (“[E]xpert testimony as to legal conclusions
that will determine the outcome of the case is inadmissible.”); see Scottsdale Ins. Co. v.
City of Waukegan, 689 F. Supp. 2d 1018, 1022 (N.D. Ill. 2010). Although experts may
provide opinions on the ultimate factual issues in a case, Scottsdale Ins. Co., 689 F. Supp.
2d at 1022; see Fed. R. Evid. 704, they may not testify as to determinative legal
conclusions, see Good Shepherd Manor Found., Inc., 323 F.3d at 564.
Under Wisconsin law, the construction and interpretation of an insurance policy is
a question of law for the court. Kremers-Urban Co. v. Am. Emp’rs Ins. Co., 119 Wis. 2d
722, 735-36, 351 N.W.2d 156, 163 (1984). Further, for a claims-made policy, the notice
6
requirement is a material part of the contract, and what constitutes proper notice is a
question of law for the court to decide. Koransky, Bouwer & Poracky, P.C. v. Bar Plan Mut.
Ins. Co., 712 F.3d 336, 342 (7th Cir. 2013).
Arguments about the meaning of insurance policies or other contracts belong in
briefs, not in expert reports. RLJCS Enters., Inc. v. Prof’l Benefit Trust Multiple Emp’r
Welfare Benefit Plan & Trust, 487 F.3d 494, 498 (7th Cir. 2007). In Scottsdale Insurance
Co., for example, the district court barred opinions addressing the limitations of coverage
based on terms of an insurance policy, interpretation of terms in a policy, whether bodily
or personal injury occurred to trigger coverage, and whether an insurer denied coverage
unjustifiably, among other things. 689 F. Supp. 2d at 1023-25.
Neither tower nor Fiserv challenges the credentials or qualifications of the others’
experts; no one argues that an expert lacks knowledge, skill, experience, training, or
education. Thus, the court will deem that requirement met as to each proffered expert. See
United States v. Moore, 521 F.3d 681, 685 (7th Cir. 2008) (“A judge is not obliged to look
into the questions posed by Rule 702 when neither side either requests or assists.”).
Instead, the towers and Fiserv argues that the others’ experts provide impermissible
legal opinions and unreliable testimony.3 Interestingly, each party challenges the others’
experts as providing impermissible legal opinions while defending its own expert against
a similar challenge. The court will assess each expert individually. The admissibility of one
expert’s testimony does not impact the admissibility of another’s.
3
Kochenburger and Newm an are attorneys, but Lavelle is not. (See Doc. 103 Park Decl. Ex. A at 1;
Doc. 106 Ex. D at 2; Doc. 110 Carleton Decl. Ex. C at 2.)
7
A.
Peter Kochenburger (Fiserv’s Expert)
In his report, Peter Kochenburger identifies three formal opinions:
(a)
(b)
(c)
Claims-made policies purchased in successive years are intended to
provide continuous coverage for covered claims, such that the
interworking of multiple insurance towers should not serve to deny
coverage to an insured.
Exclusions or terms such as the prior notice, prior wrongful acts, prior
interrelated wrongful acts, and prior claims provisions are not
designed to be read so expansively (i.e., so that future claims are
deemed to relate back simply because they arise out of a particular
service provided by the insured) that they reduce or eliminate the
policyholders’ incentives to purchase claims-made policies.
When two towers of insurers disagree as to which of them is
responsible for coverage, it is appropriate industry practice that the
two towers should make the insured whole and then work out any
differences they may have regarding who has responsibility for
coverage, particularly where some of the insurers in both towers are
the same.
(Doc. 110 Carleton Decl. Ex. A ¶ 6.) At deposition, Kochenburger amended opinion (c) to
replace “make the insured whole” with “protect the policyholder from a third-party claim.”
(See Doc. 110 Carleton Decl. Ex. C at 111.)
In addition to these three labeled opinions, Kochenburger’s report contains several
pages of background statements, some of which include descriptions of customs and
practices in the insurance industry. (Doc. 110 Carleton Decl. Ex. A at ¶¶ 7-29.) For
instance, he describes how series of primary and excess insurance are often referred to
as towers and how excess insurers may issue “follow-form policies,” “meaning they
incorporated some of the essential elements of the primary policies, including coverages
and exclusions.” (Id. ¶ 9.) He describes the differences between claims-made policies and
occurrence policies. (Id. ¶ 12.) And he discusses the history of claims-made policies, why
8
they offer advantages for insurers and policyholders, and safeguards to protect insurers’
and policyholders’ interests. (Id. ¶¶ 13-17.)
Both towers challenge Kochenburger’s expert report and testimony. They focus their
attack on Kochenburger’s three formal opinions and a few other statements rather than his
statements about background. Tower 2 does argue briefly that these background facts are
not relevant because the instant dispute can be resolved simply by enforcing the contracts
as written. (Doc. 110 at 10 n.4.) But at least at this stage the court finds that this
background information could be helpful to a factfinder.
The court sees no issue with Kochenburger’s statements based on customs and
practices of the insurance industry. Rule 702 allows an expert to educate the factfinder
about general principles, without applying the principles to the specific facts of the case.
Fed. R. Evid. 702 advisory committee notes 2000 amendments. The background
statements are not legal opinions and rest on methodology, though they do not require
vigorous testing. Kochenburger indicated that in preparing his report he relied on
“[n]umerous industry materials, including treatises, textbooks, underwriting guides, journal
articles, statutes and case law.” (Doc. 110 Carleton Decl. Ex. A ¶ 5(g).) Throughout his
background statements Kochenburger provides twenty-five footnotes in which he cites
supporting materials for these opinions or knowledge of customs and practices, and the
insurers do not attack his sources. The sources include publications regarding
Kochenburger’s opinions or theories. Therefore, Kochenburger may testify as to the
opinions included in his report regarding insurance industry customs and practices.
As for Kochenburger’s three opinions that are summarized in paragraph 6 of his
report, both towers attack them as legal opinions. Tower 1 also raises concerns concerning
9
reliability. With regard to all three opinions, Kochenburger states that he is providing “an
industry perspective on the nature of claims-made policies.” (Doc. 110 Carleton Decl. Ex.
A ¶ 6).
The court finds that the opinion in paragraph 6(a) is based on insurance industry
customs and practices rather than law. The Tower 2 Insurers contend that the intent of the
parties must be derived from the language of the contract, which is a matter of contract
interpretation for the court. But Kochenburger’s opinion in paragraph 6(a) does not
address the particulars of the contracts in this case. Instead, he describes the intent of
insurers and policyholders generally respecting the purchase and sale of claims-made
policies in successive years and how claims-made coverage is designed to operate.
The Tower 1 Insurers contend that whether continuous coverage exists is a legal
question based on policy language. That is true, but Kochenburger does not opine that
coverage exists under the policies. He opines only as to what parties buying or selling
claims-made policies generally intend respecting back-to-back years of coverage.
Kochenburger’s deposition testimony supports the court’s conclusion. In discussing
the opinion expressed in paragraph 6(a) he stated that he was “looking at the development
of claims-made policies, the reasons why they were made, the reasons they should work,
the concerns that the policyholders and insurers have.” (Doc. 110 Carleton Decl. Ex. C at
92-93.) Moreover, Kochenburger is not opining on the ultimate legal questions of whether
either of the towers before the court should pay up and, if so, which one; he focuses on
how the insurance industry works in general.
The Tower 1 Insurers attack as a legal opinion Kochenburger’s related statement,
in the analysis section of his report, that “by purchasing claims-made insurance year after
10
year, a policyholder can maintain continuous liability coverage without gaps or fear that it
did not have insurance when the act occurred.” (Doc. 110 Carleton Decl. Ex. A ¶ 15.)
However, Kochenburger does not purport to opine on what the policies require in this case
but rather as to what the general practice is in the insurance industry. In doing so, he
avoids stating a legal opinion.
This aspect of Kochenburger’s opinion is reliable, as he reviewed industry customs
and practices and took into account the history and purposes of claims-made policies in
reaching his conclusion. Further, he supported his review with citations to particular
authorities. (See, e.g., Doc. 110 Carleton Decl. Ex. A ¶¶ 11-18 & nn.3-16.)
Reliable methodology can be based on experiences, treatises, and articles. See
Metavante Corp., 619 F.3d at 761. At deposition, Kochenburger indicated that in arriving
at his opinions he considered
the development of the claims-made policies, what the concerns were and
how they’re supposed to work together. So that, you know, the commentary,
much of it written by, you know, insurers or their agents, you know, forms
part of that custom and practice. . . . [T]he materials talk about, for example
. . . prior acts coverage, and the need for awareness clauses, notice of
potential claims. And how that, you know, sometimes how that might interact.
And how – so much of the material that talks about not only the history of
claims-made policies but . . . they don’t talk about these policies in one year,
they talk about how claims-made coverages work year after year.
(Doc. 106 Ex. C at 100.)
The Tower 1 Insurers contend that Kochenburger cites no specific custom or
practice and conceded that custom or practice was a “nebulous concept” in the insurance
industry. (See Doc. 106 Ex. C at 99.) However, customs and practices do not have to be
formally adopted or named to be recognized. Hence, the court notes that Kochenburger
admitted in response to a question that industry custom and practice “can” be a nebulous
11
concept, but also explained what he considered in determining industry custom and
practice:
[Y]ou consider the policy language, yes, you consider what insurance
companies, some insurance companies may do, some may not do. But you
also have to look at it from a broader angle in a sense of what a policyholder
should expect, what do agents and brokers do, what, you know, what do
regulators do, and what is the public policy behind it. All of that forms custom
and practice of the industry. . . . I think sometimes it’s too narrowly focused
on, Well, this is what a couple of insurance companies do when they handle
these claims, so that must be the way that it is. That’s certainly relevant, but
insurance for good reason in highly regulated as an important public function,
and you can’t look at – you know, you have to look at those issues,
particularly in the context of liability, to also understand what is the custom
and practice.
(Doc. 106 Ex. C at 98-99.) Thus, Kochenburger provides a reliable methodology for his
opinions, regardless of whether others could come to different conclusions looking at the
same information.4
Both towers’ insurers argue that Kochenburger’s opinion is unreliable and wrong
because he admitted at deposition that it is possible that the North Carolina action claim
may not fall within either tower’s policies if notice was not made properly. But
Kochenburger made such an allowance in his opinions, footnoting that for purpose of his
analysis he assumed no other exclusions or unsatisfied conditions eliminated coverage.
(Doc. 110 Carleton Decl. Ex. A ¶ 6 n.2.) He reiterated that qualified opinion in his rebuttal
report, stating that “[a]ssuming no relevant exclusions in either year of coverage,” a
covered claim that was noticed as a potential claim in one year and subsequently made
and reported in the subsequent year should not result in a situation in which the insurers
4
Moreover, the Tower 1 Insurers’ own expert, Thom as Newm an, stated som ething sim ilar at
deposition— that a policyholder expects that if it has successive claim s-m ade polices, a claim will not fall
between two policy years so long as the policyholder com plies with notice requirem ents in the policies. (See
Doc. 109 Ex. C at 93, 107.)
12
for both years successfully deny the claim by pointing at each other. And he explained why
insurers avoid such a situation. (Doc. 110 Carleton Decl. Ex. B ¶¶ 2-3.) Thus, his opinion
is based on the situation of all other requirements for coverage being met; although there
may be situations where exclusions apply or certain requirements — such as giving notice
— are not met, in general coverage should fall within one of the two subsequent towers.
Kochenburger’s acknowledgment that there may be specific situations where coverage
under both towers fails does not make his opinion unreliable.
Whether Kochenburger is wrong about specific customs and practices of the
insurance industry is not the test for this court. The two towers may disagree with
Kochenburger’s conclusions and challenge them at trial, but at this stage his report goes
through a methodology that the court finds acceptable. If Kochenburger’s opinion is wrong,
a party who disagrees may attack at trial; an order barring the testimony is not the proper
remedy.
However, while the opinion in paragraph 6(b) is admissible, Kochenburger does
venture elsewhere in his report into a couple legal opinions that must be excluded. The
Tower 1 Insurers attack the statement related to paragraph 6(a), which Kochenburger
made in his rebuttal to Newman’s report: “If the First American Action does not fall within
the 2009/10 tower then, based at least on the Notice of Potential Claims, it should within
the 2008/09 tower.” (Doc. 110 Carleton Decl. Ex. B ¶ 7.) This statement appears in
Kochenburger’s discussion of a Third Circuit case cited by Newman and distinguishing the
present case. Contrary to all of the above-discussed opinions by Kochenburger, this is
legal opinion. Whether the present case is distinguishable from the Third Circuit case and
whether the North Carolina action indeed falls within Tower 1 or Tower 2 based on the
13
June 2009 notice and the policies’ terms are questions of law for the court. Tower 1's
motion in limine will be granted as to this statement alone.
The Tower 2 Insurers attack a statement that follows Kochenburger’s citation to and
quoting of various policy provisions: “These provisions should work together to provide
seamless coverage so long as the policyholder maintains its claims-made policies over the
relevant policy years.” (Doc. 110 Ex. A ¶ 22.) This statement does venture into a legal
opinion on the contracts at issue in this case. Thus, these two statements from paragraph
22 and rebuttal paragraph 7 must be excluded.
The opinion in paragraph 6(a) appears closer to a legal opinion, at first glance, as
Kochenburger discusses the interpretation of policy terms or exclusions regarding prior
notice and prior interrelated wrongful acts and other terms. However, his statement is not
a legal opinion because Kochenburger does not opine on specific interpretation of the
terms but rather on the general intent of insurers and policyholders regarding claims-made
policies. His opinion concerns the effect of interpretation of policy terms on a policyholder’s
incentive to purchase a claims-made policy—that at some point if terms are read
expansively, the incentive for acquiring a claims-made policy disappears.
Again, the opinion is reliable, for reasons similar to those discussed above.
Kochenburger reviewed industry customs and practices in general and regarding claimsmade insurance, reviewed the history of claims-made policies, discussed relevant policy
language, assessed policy language as well as claims and related practices to come to his
conclusion regarding the incentives underlying claims-made policies. (Doc. 110 Carleton
Decl. Ex. A ¶¶ 11-25.) Again, the two towers may disagree with his conclusions, but his
report goes through a methodology that the court finds acceptable.
14
The Tower 2 Insurers point to paragraphs 23 through 25 of Kochenburger’s analysis
section as venturing into legal opinion again. However, the court concludes they do not.
Paragraph 23 discusses claims generally, and paragraph 24 is offered as an example of
the point in paragraph 23. Similarly, paragraph 25 discusses claims and “relating back”
generally. Although Kochenburger states that if “insurers interpreted the prior notice
exclusion and other exclusions and terms as expansively as insurers appear to do here,
there would be far less need (and premium) for subsequent years of claims-made
coverage,” his statement is not a direct interpretation of the contracts and is qualified by
the word “appear.” The court will allow the statement for now, but notes that any attempt
at trial to have Kochenburger interpret the contracts at issue will not be allowed.
Next, the court finds that the opinion in paragraph 6(c), is not a legal opinion.
Kochenburger opines on what he believes to be “appropriate industry practice,” not on
what is required by any policy language. Kochenburger’s opinions on best practices are
acceptable. At deposition, he did not refer to policy language as the basis for this opinion
but instead said the issue “gets back to again the basic principles of liability insurance.”
(Doc. 110 Carleton Decl. Ex. C at 159.) The opinion is based on Kochenburger’s review
of industry customs and practices and the history of claims-made policies, with citations
to supporting authorities. Kochenburger stated at deposition that he had seen many
situations where insurers “step up” and eliminate the claim against the policyholder and
“then work it out” between themselves. (Id. Ex. C at 156.) The Tower 1 Insurers argue that
Kochenburger admitted at deposition that he had never seen a situation between two
towers exactly like that in this case. (Doc. 106 (citing Doc. 106 Ex. C at 156).) But the fact
15
that an expert has not seen a situation identical to that on which he opines is not a basis
for excluding his testimony as unreliable.
The Tower 1 Insurers contend that Kochenburger is wrong (and thus his opinion is
unreliable) because he admitted at deposition that insurers can and do file declaratory
judgment lawsuits and because he assumes that one or the other tower is responsible. But,
again, whether Kochenburger’s conclusion is correct is not a basis for striking his opinion.
See Stollings, 725 F.3d at 765 (providing that the impeachability of an expert’s conclusions
does not make the testimony unreliable). Whether Kochenburger’s assumptions are correct
does not impugn his methodology and the towers can attack his conclusion at trial.
In sum, Kochenburger’s opinions in paragraphs 6(a), (b), and (c) do not interpret the
policies at issue. Instead, they address general practices in the insurance industry.
Although two statements that venture into legal opinion must be excluded, the bulk of
Kochenburger’s reports is admissible.
B.
Thomas Newman (the Tower 1 Insurers’ Expert)
Thomas Newman, the Tower 1 Insurers’ expert, describes the scope of his report
as opinion on (1) insurance industry custom and practice regarding claims reporting and
handling under claims-made policies in successive years and (2) Kochenburger’s expert
report on that topic. (Doc. 103 ¶ 6.) Newman describes his methodology as setting forth
relevant terms of the Tower 1 Insurers’ policies, discussing claims-made coverage and
notices of claims, setting forth the relevant facts as he understood them, and applying the
general principles governing claims-made coverage to the facts of the case. (Doc. 103 ¶ 9.)
Newman states that in reaching his opinions he relied on the Tower 1 and Tower 2
insurance policies, the pleadings in the North Carolina action, certain correspondence
16
between Fiserv and its insurers, certain responses to discovery in this case, and certain
deposition testimony. Further, he relied on his general knowledge of insurance industry
custom and practice, gained from his representation of insurance companies and extensive
dealing with insurers, underwriters and claims handlers. Finally, he based his views on
books and articles he authored on the subject of liability insurance, legal education
programs regarding insurance that he attended or participated in, as well as law and
professional journals dealing with liability insurance and claims handling. (Doc. 103 ¶ 58.)
In his report, Newman provides six paragraphs on claims-made coverage and notice
provisions. (Id. ¶¶ 13-18.) Then, after setting forth what he considered the relevant facts
and quoting from the June 2009 notice, he opines that “the 08-09 Tower insurers do not
cover claims made during the 09-10 policy period unless sufficient notice of a potential
claim was made during the 08-09 policy period under the terms of the 08-09 policies.”
(Doc. 103 heading before ¶ 32.) Newman follows that statement with twenty-five
paragraphs of opinions and comments. (Doc. 103 ¶¶ 32-56.)
The Tower 2 Insurers ask that Newman’s testimony be barred completely. (See Doc.
103 at 1.) They challenge whether he can provide opinions interpreting the terms and
conditions of certain insurance policies and concerning the sufficiency of the June 2009
notice letter under policy notice requirements. The Tower 2 Insurers argue that these
opinions are conclusions of law within the province of the court rather than an expert.
According to the Tower 2 Insurers, Newman’s opinions “are rife” with such legal
conclusions. (Doc. 103 Br. at 5.) They point to his principal opinion that the June 2009
notice was insufficient to trigger coverage for the North Carolina action under Tower 1 and
17
specific statements in paragraph 36 of his report as well as at deposition. (Doc. 103 Br. at
5-6.)
At one point Fiserv argues broadly that Newman should be completely precluded
from testifying at trial. (See Doc. 108 at 2.) However, Fiserv’s motion and brief seek to
prevent any opinion or testimony that (1) a strict compliance standard is to be used when
interpreting an insurance claim provision; (2) Fiserv’s notice in June 2009 was insufficient
to capture the North Carolina action; (3) a provision in the Tower 1 excess policies “follows
form” to a provision in the primary policy; and (4) Fiserv’s claim for the North Carolina
action may not be covered by either tower. (Doc. 107 at 1-2; Doc. 108 at 5-6.) Similar to
the Tower 2 Insurers’ arguments, Fiserv contends that Newman impermissibly seeks to
interpret the policies and to apply that interpretation to the facts at hand to reach legal
conclusions. Further, Fiserv invokes Fed. R. Evid. 403, arguing that the danger of the jury
seeing Newman as more knowledgeable than the judge regarding the law and the danger
of confusion between his testimony and jury instructions outweigh the value of his
proposed testimony. Additionally, Fiserv argues that Newman’s testimony is unreliable
because it is unsupported by the factual record or industry practice and reflects views that
are inconsistent with his conclusions outside of this litigation.
The motions will be granted, due in large part to Newman’s venturing into legal
opinion. Indeed, chunks of his report read like a brief by legal counsel. First, Newman’s
opinion indicates that a strict compliance standard is to be used. He states that a “notice
of a claim or potential claim must comply strictly with the policy terms governing such
notice” and that coverage “will depend on the insured’s strict compliance with all terms and
conditions of the policies.” (Doc. 103 Park Decl. Ex. A ¶¶ 14, 39.) That the use of this
18
standard may be based on policy terms is suggested in paragraph 15 of Newman’s expert
report, where Newman references language from the National Union policy. But in
paragraph 39, after mentioning the strict compliance standard, Newman states that under
industry “custom and practice, if the insured fails to give the timely notice of circumstances
and particulars of a potential claim that is required by the policies, it will result in no
coverage.” (Doc. 103 Park Decl. Ex. A ¶ 39.) The court cannot discern the basis for
Newman’s use of this standard; Newman fails to set forth the basis for or a methodology
underlying his application of this standard by citing his authorities or particulars respecting
industry custom and practice.5 He merely says that it is so, and that is not enough.
Paragraph 36 of Newman’s report is blatant legal opinion and must be excluded.
Newman states:
In my opinion, Fiserv’s notice was specifically limited to notice of potential
claims by its lender customers and does not “identify the particulars of the
potential claim, including identifying the potential claimant(s), [the] likely basis
for liability [and] the likely demand for relief” (Hiscox Policy, NU/FISERV
001312), subsequently made by First American, a title company and not one
of Fiserv’s lender customers.
(Doc. 103 Park Decl. Ex. A ¶ 36.) In reaching this opinion Newman assessed the June
2009 notice under the terms of the Hiscox policy. The opinion reaches beyond industry
custom and practice to a legal conclusion regarding a determinative issue in this case. The
Tower 1 Insurers argue that Newman opines based on his claims-handling experience, but
the paragraph quotes policy language. Furthermore, the paragraph immediately preceding
discusses Fiserv’s entitlement to coverage if the June 2009 notice constituted sufficient
5
In its opening and reply briefs, Fiserv argues that Newm an’s use of “strict com pliance” differs from
his previous writings, legal treatises, and case law. (See Doc. 118 at 9.) W hether Newm an’s use of a strict
com pliance standard is correct is not a basis for barring his testim ony. The court’s focus is on reliability;
accuracy is a m atter for cross-exam ination.
19
notice “under the terms of the 08-09 policies.” (Doc. 103 Park Decl. Ex. A ¶ 35.) Paragraph
36 provides Newman’s opinion on the issue discussed in paragraph 35; both speak of the
June 2009 notice’s sufficiency under policy provisions, not industry custom or practice.
The Tower 1 Insurers argue that the way in which a notice is interpreted by a liability
insurance claim handler is not a legal conclusion. (Doc. 112 at 4.) But again, Newman’s
opinion is not limited to discussing industry custom and practice regarding claims handling;
it addresses whether the June 2009 notice was sufficient under the language of the Hiscox
policy. Thus, paragraph 36 must be excluded as improper legal opinion. Related opinions
at deposition (see, e.g., Doc. 109 Ex. C at 49 (agreeing that the June 2009 notice was
“insufficient to capture” the North Carolina action) must be excluded as well.
Next, the Tower 2 Insurers and Fiserv challenge Newman’s testimony at deposition
that the National Union policy “incorporates the Hiscox policy” (or “follows form”) (Doc. 109
Ex. C at 62, 111) as involving a legal opinion regarding the terms of the National Union
policy. The Tower 1 Insurers point out that Newman did not offer that opinion in his report;
instead, it was elicited by Fiserv’s counsel during deposition questioning. The Tower 1
Insurers agree that whether the National Union policy incorporates the Hiscox policy is a
question of contract interpretation for the court. They state that they will not offer such an
opinion at trial. (Doc. 112 at 5.) Hence, this challenge is moot.
The Tower 2 Insurers contend that Newman offers contract interpretation when he
says the phrase “to the extent possible” is given a “plain English meaning.” (Doc. 109 Ex.
C at 60.) However, Newman points to industry custom on this point. What that plain
meaning is is a legal interpretation or opinion, but the industry custom itself is not.
20
Nevertheless, Newman cites to no source or methodology for determining this industry
custom. He just says it is so, and that is not enough to make it reliable.
Further, Fiserv attacks as unreliable Newman’s opinions that pursuant to industry
custom and practice, coverage under the Tower 1 excess policies does not depend on and
is not affected by subsequent policies (Doc. 103 Park Decl. Ex. A ¶ 33) and that
“successive policies do not guarantee that the insured will be entitled to coverage under
either year’s policy” (Id. ¶ 38). According to Fiserv, Newman relies solely on an unpublished
Third Circuit case, which at deposition he acknowledged had different facts than the
present matter. The court reads the reference to the Third Circuit case in Newman’s report
as his support for the opinion in paragraphs 38 and 39, illustrating that circumstances may
exist in which a policyholder is left without coverage even with successive claims-made
policies. Nevertheless, the opinion is not otherwise supported, and the Tower 1 Insurers
have not persuaded the court that this opinion is reliably made.
Many statements by Newman are unsupported—the statements are merely his sayso. (See, e.g., Doc. 103 Park Decl. Ex. A ¶ 33 (discussing industry custom and practice but
pointing only to policy language as support), ¶ 41 (discussing industry custom and practice
without any noted support), ¶ 49 (disagreeing with Kochenburger’s opinion without any
cited support), ¶ 53 (stating that a claim can be “first made” during only one policy period
without any cited support).) Some of Newman’s opinions, like Kochenburger’s, are about
industry custom and practice, but they are not supported. The report lacks sufficient
explanation of why Newman’s experience or reliable, tested sources validate his
conclusions. Newman cannot merely state his bare opinion to meet Rule 702's requirement
21
of reliability; his qualifications as an expert do not alone make his statements admissible
at trial.
The Tower 1 Insurers contend that if Kochenburger’s opinions are admissible at trial,
then Newman’s rebuttal opinions should be as well. However, the court notes
Kochenburger, in the main, stayed on the firm ground of industry custom and practice and
refrained from jumping into legal waters, while Newman did not, and Kochenburger
supported his opinions with specific references.
The Tower 2 Insurers are correct that Newman’s expert opinion is “rife” with legal
conclusions and argument. For instance, the heading before paragraph 32 of Newman’s
report constitutes argument, paragraphs 35 and 56 read like a brief, paragraph 36 is legal
opinion, paragraph 40 is legal opinion interpreting the Third Circuit case, paragraph 43 is
legal opinion and argument, paragraphs 44 and 47 are legal opinions based on policy
interpretation, and paragraph 45 is legal opinion regarding case law. Other legal opinions
are expressed also, and they are too numerous for the court to parse out. Similarly, the
unsupported statements are numerous. Consequently, the court will not scrutinize each
sentence of the report and edit with a red pen. Therefore, Newman’s entire report must be
stricken.
C.
Paul Lavelle (the Tower 2 Insurers’ Expert)
The Tower 2 Insurers named Paul Lavelle as their expert to rebut Kochenburger’s
and Newman’s opinions. In separate sections of his report, Lavelle summarizes the policies
in the two towers, quotes what he sees as pertinent policy language, and describes the
June 2009 notice and the positions of the parties in this case. He then provides his “Expert
Rebuttal” and five bullet-pointed “Conclusions.”
22
The Tower 2 Insurers’ first argument for admission of Lavelle’s opinions is not
persuasive. The insurers submit that if Kochenburger and Newman are allowed to testify,
Lavelle should be too. However, as stated above, the court does not view the admissibility
of each expert’s testimony as affected by the admissibility of the others’. That one expert
avoided legal interpretation does not justify admission of another’s improper legal opinions.
The Tower 1 Insurers attack Lavelle’s opinion in its entirety, citing impermissible
legal conclusions and unreliability. Fiserv’s motion points to Lavelle’s opinions that (1) the
North Carolina action relates back to the June 2009 notice, thereby precluding coverage
under Tower 2; (2) an argument can be made that Fiserv was aware prior to the Tower 2
policy period of matters that could give rise to the claim; (3) insurers never satisfy the
claims of an insured and later determine among themselves which tower is ultimately
responsible; and (4) carriers in Tower 2 would have relied on the June 2009 notice during
underwriting of the Tower 2 policies.
In supporting their attack on the ground that Lavelle is expressing a legal opinion,
Fiserv and the Tower 1 Insurers highlight the following paragraphs:
It is my expert opinion that Fiserv properly followed the terms of the
Hiscox primary policy and had sufficient information to notify the 2008-2009
insurance tower of “claims” and “potential claims” that would likely lead to a
“Loss” under the Hiscox primary policy.
....
Clearly the Bank of America v. First American Title Insurance v. Fiserv
matter submitted on August 18, 2010 (first notice to the 2009-2010 policy)
concerns facts, allegations and wrongful acts that have as “a common nexus
ANY (emphasis added) fact, circumstance, situations.......series of related
facts” to the claims and potential claims noticed in the June 25, 2009 letter.
In fact, it is my opinion, that the Bank of America v. First American Title
Insurance v. Fiserv matter is related to the “claims” and “potential claims”
noticed in the June 25, 2009 letter.
23
(Doc. 106 Ex. D at 8, 14-15 (latter alterations in original).) Also, they challenge Lavelle’s
related concluding statement that “[s]ubsequent claim submissions, including the Bank of
America v. First American Title Insurance v. Fiserv matter, relate to the June 25, 2009
claim notice.” (Doc. 106 Ex. D at 15.)
Like Newman’s opinion regarding the June 2009 notice, these statements cross the
line into legal opinion and interpretation of insurance policies.6 Whether coverage exists
under the Tower 1 or Tower 2 policies will depend upon the court’s interpretation of the
various policies’ provision and whether the June 2009 notice was sufficient to meet the
requirements of the Tower 1 policy regarding potential claims. Whether Fiserv met the
requirements of the Hiscox policy depends on a legal interpretation of that policy and an
assessment of the June 2009 notice in light of that legal interpretation. Lavelle’s opinion
is not grounded in customs and practices of the insurance industry. Instead, it rests on the
language of the Hiscox policy. His support for the concluding statement quoted above
indicates his reliance on policy terms: “The breadth of definition of ‘potential claims’ in the
Hiscox policy, ‘Interrelated Wrongful Act’ in the ACE policy, Exclusion K and L of the ACE
policy and the ‘first made and reported’ language support this conclusion.” (Doc. 106 Ex.
D at 15.) Expert testimony on interpretation of the policy is impermissible.
The Tower 2 Insurers maintain that Lavelle’s opinion, unlike Newman’s, should be
admitted because it has evidentiary support, i.e., letters from Fiserv or its attorney to
Hiscox (Tower 1 primary insurer) in the spring of 2010, in which Fiserv explained how
6
The Tower 2 Insurers adm it the sim ilarity of the Newm an and Lavelle opinions on this point: “[F]or
the 08-09 Insurers to legitim ately argue that Mr. Lavelle’s opinion is im perm issible legal opinion, they would
have to concede that by Mr. Newm an opining that the June 25 Notice did not capture the First Am erican
Action, Mr. Newm an is also attem pting to usurp the role of the Court.” (Doc. 113 at 8.) The court finds that
both experts are providing legal opinions.
24
numerous claims and the North Carolina action related back to the June 2009 notice. But
in this court’s view, the arguments by Fiserv’s counsel to Fiserv’s insurers in no way alter
the conclusion that Lavelle is opining on whether the contents of the June 2009 notice
sufficiently captured the North Carolina action under the terms of the Tower 1 policies.
Because the court finds that these statements are legal opinion, and, therefore, excludable,
arguments regarding unreliability and Fed. R. Evid. 403 need not be addressed.
Next, Fiserv seeks to exclude Lavelle’s statement that “[a]rguments could be made”
that Fiserv was aware of matters that could give rise to the claim prior to the Tower 2 policy
period, and possibly the Tower 1 policy period. The body of Lavelle’s report includes the
following statement:
Further, an argument can be made that the initial notice of the acts
underlying the Bank of America v. First American Title Insurance v. Fiserv
matter may go back to notices submitted prior to the 2008-2009 policy
period.
....
Additionally, upon review of several underlying letters to Fiserv from
lenders and lender clients, an argument can be made that Fiserv clearly
knew of claims or potential claims prior to the 2008-2009 policy period and,
thus, Fiserv could reasonably expect further litigation.
(Doc. 106 Ex. D at 11.) The statements fall in a section titled “The Parties’ Positions” in a
subsection titled “Tower Carrier Response.” Based upon the language actually used in the
paragraphs, it is unclear whether Lavelle is stating his own view as to available arguments,
or restating the various insurers’ arguments. However, Lavelle repeats in his “Conclusions”
section that “[a]rguments could be made that Fiserv was aware prior to the 2008-2009
policy period of matters that could give rise to a claim, but was certainly aware prior to the
2009-2010 policy period.” (Doc. 106 Ex. D at 15.) Hence, these statements appear to be
25
Lavelle’s personal views, which expound on arguments that may be raised by counsel.
Consequently, they are not matters at to which Lavelle may testify at trial.
The Tower 2 Insurers contend that the statements are not speculation because they
are supported by various letters, such as one from counsel for Hiscox addressing prior
knowledge by Fiserv as possibly excluding coverage under Tower 1, and emails from
Fiserv’s Director of Risk Management expressing concern about litigation over QuickClose.
But support for an argument does not transform it into an admissible opinion. If Lavelle
cannot actually give an opinion but instead merely identify arguments, the testimony adds
nothing useful for the trier of fact.
Next, Fiserv challenges as unreliable Lavelle’s opinion that insurers never satisfy
the claims of an insured and later determine among themselves which tower is ultimately
responsible. As noted earlier, Fiserv’s expert, Kochenburger, opines that it is appropriate
industry custom and practice that two towers work together to make an insured whole (or
protect the insured against a third-party claim) and then determine among themselves
which tower was responsible. Lavelle disagrees in rebuttal:
It is not the practice or custom in the professional liability discipline for two
successive policy towers to agree to pay a claim “then work out any
differences.” This does not happen and is not the process for addressing a
situation where two towers disagree about which tower should cover a Loss.
Instead, if no agreement can be reached between the towers as to
which carrier or tower owes coverage, a declaratory judgment action will
normally be filed. In some instances a carrier or carriers may agree to fund
a defense or settlement subject to a ruling or the insured may fund the
defense until a determination is made. There is no practice of successive
towers working out their disputes and making the insured whole.
(Doc. 106 Ex. D at 13.)
26
Fiserv contends that the opinion is not based on objective criteria. It indicates that
other evidence regarding the practices at the Tower 2 Insurers (who hired Lavelle)
contradicts Lavelle’s opinion and that Lavelle had no good explanation at deposition for the
contradiction. According to Fiserv, when an expert cherry-picks the material advantageous
to his side’s claims, his opinions are not based on good grounds. See, e.g., Fail-Safe LLC
v. A.O. Smith Corp., 744 F. Supp. 2d 870, 891 (E.D. Wis. 2010) (Stadtmueller, J.) (stating
that an expert’s “cherry-picking” of evidence, without an explanation of why he chose the
data he did, makes his methodology unreliable).
Fiserv’s argument respecting a contrary view (Kochenburger’s) does not make
Lavelle’s opinion unreliable, nor does it mean Lavelle cherry-picked the evidence. Whether
the opinion is wrong is not the question at this time—reliability, not unassailability, is the
requirement. Nevertheless, Lavelle fails to set forth any basis for this opinion in his report.
He provides no explanation of the basis for his position; he describes no particular
examples and he cites no literature on the matter. The statement is merely his bare
conclusion and thereby unreliable.
Next, Fiserv challenges as unreliable Lavelle’s opinion that carriers in Tower 2 would
have relied on the June 2009 notice during underwriting of the Tower 2 policies. Lavelle
stated:
A critical factor . . . when discussing successive insurance towers is
the underwriting process. A new carrier on a risk (the second year in
successive towers) insists on reviewing claim histories on insureds they wish
to underwrite and potentially insure. A claim history is a key factor in helping
assess future risk. In fact, both Endurance and XL requested and received
a claims bordereau report from Fiserv prior to agreeing to bind coverage in
the 2009-2010 policy period. This bordereau report identified the claims and
potential claims noticed in the June 25, 2009 letter.
27
Having a claim or potential claim previously reported will give the
carriers in the second year comfort that claims or potential claims reported
under the previous policy cannot be first made and reported in the second
year. Additionally, an Insured could potentially gain relief in the form of
decreased premiums because subsequent matters will stay under the first
reported tower due to their relation to a prior notice given to the preceding
tower.
(Doc. 106 Ex. D at 13.) These statements discuss insurance industry customs and
practices, which appear at first glance to be acceptable, but Lavelle concludes in particular
as to this case: “Carriers in the 2009-2010 towers of insurance would have relied on the
June 25, 2009 letter as a broad notice of acts and claimants in the underwriting of the
2009-2010 policy, which letter was consistent with the bordereau information provided to
those insurers.” (Doc. 106 Ex. D at 15.)
According to Fiserv, the final opinion is speculation; moreover, the Tower 2 Insurers
were aware of the June 2009 notice yet specifically included QuickClose in covered
services. Relatedly, the Tower 1 Insurers attack Lavelle’s opinion of underwriting as being
a “critical factor” as irrelevant because at deposition Lavelle admitted that the underwriting
process was not relevant in this particular case to the issue of whether the June 2009
notice was sufficient to trigger coverage under Tower 1.
Lavelle gave no support for his conclusion in the written report. Further, he admitted
at deposition that he did not work to gather information to determine whether the Tower 2
underwriters relied upon the June 2009 notice:
Q
A
Q
When you say the ‘09-‘10 Tower insurers would have relied on the
June 25, 2009 letter, are you saying that they did rely?
I don’t know if they did, I don’t know what the underwriters were
looking at.
Did you, in the course of your work in this case, ask to speak with any
of the underwriters who were responsible for the ‘09-‘10 policies at
issue?
28
A
No, I did not.
(Doc. 109 Ex. E at 120-21.) Moreover, Lavelle testified that although information from the
underwriting process is often critical in a claims analysis, it actually had no effect on his
evaluation of the June 2009 notice in the present case. (Id. at 288-289.) Therefore, the
court agrees with Fiserv and the Tower 1 Insurers that the opinion specific to the facts of
this case is unsupported and unreliable. Similarly, the general statements about
underwriting are not supported by any explanation of the basis for the opinion other than
that the Tower 2 Insurers asked for a bordereau report (and Lavelle does not describe what
that is). Reliable methodology for these opinions has not been tendered to the court.
The Tower 1 Insurers cite as irrelevant Lavelle’s opinion about multiple retentions.
In the section of “The Parties’ Positions” under the subtitle of “The Reed Smith Coverage
Letter,” Lavelle discussed a March 2010 letter from Fiserv’s counsel, Matthew Schlesinger,
to Hiscox, in which Schlesinger made certain statements regarding relation back of certain
claims to the June 2009 letter. Lavelle then wrote:
It is my opinion that Mr. Schlesinger’s statements were to assure that
Hiscox did not take the position that the claims submitted in the June 25,
2009 letter and subsequently noticed matters were unrelated so that his
client, Fiserv, would face a situation where Hiscox applies a separate
Retention ($5,000,000—Hiscox policy) for each and every matter. I concur
with Mr. Schlesinger’s conclusion that the claims submitted in the June 25,
2009 letter and subsequent submissions should not be subject to separate
Retentions because they are related. Mr. Schlesinger correctly stated that “in
actuality, all the claims are related.”
(Doc. 106 Ex. D at 10.)
The Tower 2 Insurers concede that the number of retentions has no bearing on
whether the June 2009 notice was sufficient to provide notice of the North Carolina action
under the Tower 1 policies. Thus, the opinion regarding multiple retentions will be
29
excluded. Regardless, the Tower 2 Insurers maintain that Lavelle’s agreement with
Schlesinger as to the claims being related is permissible. However, this position relates to
the sufficiency of the June 2009 notice and is impermissible legal opinion.
Like Newman’s report, Lavelle’s report is “rife” with legal opinions, unsupported, and
unreliable. Moreover, the problem opinions in the report are too numerous to parse.
Therefore, the entire report will be excluded.
CONCLUSION
For the reasons set forth above,
IT IS ORDERED that the motions in limine challenging the testimony of Peter
Kochenburger (Docs. 104, 105) are granted in part and denied in part as set forth above,
the motions in limine challenging the testimony of Thomas Newman (Docs. 103, 107) are
granted, and the motions in limine challenging the testimony of Paul Lavelle (Docs. 105,
107) are granted.
Dated at Milwaukee, Wisconsin, this 14th day of April, 2014.
BY THE COURT
/s/ C. N. Clevert, Jr.
C. N. CLEVERT, JR.
U. S. DISTRICT JUDGE
30
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