Commercial Litigation and Arbitration

Expert Report Consisting of Nothing More Than Conclusory Statements Supporting a Party’s Position Rejected — “Bad Faith” Insurance Expert Testimony Inadmissible (Caselaw Split)

From Imperial Trading Co. v. Travelers Prop. Cas. Co. of Am., 2009 U.S. Dist. LEXIS 105927 (E.D. La. July 31, 2009):

[D]efendant challenges Mr. Knowe's testimony on the grounds that plaintiffs seek to introduce him as a "bad faith expert," which a number courts have excluded. This Court, in Marketfare Annunciation, LLC v. United Fire & Cas. Co. , No. 06-7232, 2008 WL 1924242 (E.D. La. Apr. 23, 2008), excluded testimony from a bad faith expert because the claims in the case were not "overly complicated," and the issues in the case could be understood by the jury without the assistance of expert testimony.... Several other courts have reached the same conclusion. See Crow v. United Benefit Life Ins. Co. , No. 03:00CV1375G, 2001 WL 285231, at *2-3 (N.D. Tex. Mar. 16, 2001) (excluding expert testimony regarding defendant's breaches of the duty of good faith and fair dealing because such opinion "invades both the province of the court and the jury"); Thompson v. State Farm Fire & Cas. Co., 34 F.3d 932, 941 (10th Cir. 1994) (excluding bad faith expert on grounds that it is "expert testimony . . . offered on an issue that the jury is capable of assessing for itself" and that "it would not even marginally 'assist the trier of fact'"). The courts, however, are not unanimous on the issue. In Hangarter v. Paul Revere Life Ins. Co. , 236 F. Supp. 2d 1069, 1089-91 (N.D. Cal. 2002) (Magistrate order), overruled on other grounds sub nom. Hangarter v. Provident Life & Acc. Co., 373 F.3d 998 (9th Cir. 2004), the district court allowed testimony from a bad faith expert because he was amply qualified, would assist the trier of fact, and would not render an opinion on the ultimate issues of the case.

Although courts have ruled different ways on this issue, this Court will exclude Mr. Knowe's expert testimony regarding whether defendant's actions were unreasonable, arbitrary and capricious, in bad faith, or without probable cause. The issue of whether defendant's actions are unreasonable or in bad faith under La. Rev. Stat. Ann. §§ 22:1892 and 1973 is not unusually complicated and is well within the comprehension of the average juror. The jurors must determine whether plaintiffs provided defendant with satisfactory proof of loss, which, in order to be considered "satisfactory," must inform the insurer of the facts underlying the claims and provide enough information to allow the insurer to act. They will then determine whether defendant failed to tender payment within the thirty- or sixty-day period after receiving the proof. The jury will then address whether failure to do so was arbitrary, capricious, or without probable cause. In so doing, it will assess whether defendant, under the facts known at the time of its action, denied the claim without a reasonable basis. Mr. Knowe's testimony on these issues will thus not assist the jury in determining the facts in issue. FED. R. EVID. 702; Daubert, 509 U.S. at 592. See also Peters v. Five Star Marine, 898 F.2d 448, 449-450 (5th Cir. 1990) (holding that trial court's exclusion of expert testimony because "the jury could adeptly assess th[e] situation using only their common experience and knowledge," and thus "[e]xpert testimony was unnecessary"). ***

This case presents a few technical issues that would benefit from expert testimony, such as causation. The Knowe Report, however, will not assist the jury in assessing these issues. This Court's review of the report indicates that most of the proffered opinions are nothing more than a series of conclusory statements supporting plaintiffs' view of the factual and legal issues in this case. These conclusions do not reflect the application of technical expertise. The report reads more like a closing statement delivered by a trial attorney than a technical analysis provided by an expert witness. Most of Mr. Knowe's conclusions are unmoored to any analysis or method, and his report sheds woefully little light on why the jury should accept his conclusions. It also offers numerous commonplace observations, such as that the insurer must inform the insured why it is denying a claim, or that it must adjust all claims presented. These observations are well within the comprehension of the average juror and will not provide any assistance in understanding the facts at issue.

***[T]he Knowe Report provides no indication as to how Mr. Knowe's methods or analysis led to the factual conclusions he provides. As such, his opinion is little more than an ipse dixit directive to the jury to believe the plaintiffs' evidence.

The report is also rife with legal conclusions, which are inadmiss[i]ble in this court. See Estate of Sowell v. United States, 198 F.3d 169, 171-72 (5th Cir. 1999); Askanase v. Fatjo, 130 F.3d 657, 673 (5th Cir. 1997). In addition to numerous declarations of the parties' legal duties, it states that "Travelers has failed and refused to fulfill its obligations to provide full coverage for Imperial's claim clearly as required by the policy . . ." ... It opines that "Travelers' refusal to reopen [the] adjustment is arbitrary and capricious conduct." ... In fact, the majority of the substantive pages in the report contain a statement declaring that defendant's conduct was in bad faith, arbitrary, or capricious. ***

Lastly, several of Mr. Knowe's opinions are legally incorrect. *** Finally, Mr. Knowe's view of the rental value provisions in the policy ... conflicts with the analysis in this Court's ruling, as well as the position put forth by plaintiffs [the party proffering him].

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