Portions of Insured’s Expert’s Opinions Stricken
The court granted in part, denied in part, the insurer's motion to strike the expert report submitted by the insured's expert expressing opinions on coverage. Allied World Nat'l Assurance Co. v. MNS's Expert NHC, Inc., 2024 U.S. Dist. LEXIS 220680 (D. Haw. Dec. 5, 2024).
Allied World denied coverage to MNS Ltd., a retailer, for liability stemming from MNS's settlement of a separate class action lawsuit. The present lawsuit presented two sets of claims: first, whether Allied World owed MNS a duty of coverage under the relevant policies; and second, whether Allied World acted in bad faith. The first set of claims involved legal questions of contract interpretation, which were likely to be resolved through cross-motions for summary judgment. The second set of claims were less specific and potentially raised a host of factual questions about the behavior of the parties and their agents. For these reasons, the court previously granted Allied World's motion to bifurcate the proceedings, allowing the contract questions to go forward first while staying all proceedings on the bad faith claims until after resolution of the coverage issues.
MNS disclosed the expert report of David A. Gauntlett, an insurance coverage attorney. His report touched on both the contract interpretation claims and the bad faith claims. Allied World filed the pending motion to strike portions of Gauntlett's report i.e.,those portions addressing the contract interpretation or coverage claims. Allied World contended that Sections I, II, III, IV, and portions of Section VI of Gauntlett's report should be stricken because they related to Gauntlett's coverage opinions, as opposed to his bad faith opinions.
The court noted it was black letter law that an expert could not testify to a matter of law amounting to a legal conclusion. Section I of Gauntlett's report acknowledged that it contained "legal research and analysis." Section II was entitled "Allied World's Problematic 'Exhaustion' Position." Gauntlett argued that Allied World's first amended complaint misconstrued the policy and contended that as defined by the policy and interpreted by applicable case law, the policy must be read in Gauntlett's preferred manner. In Section III, Gauntlett argued that in light of his preferred reading of case law, the policy's "First Publication exclusion" should be interpreted as limiting coverage in a manner he proposed. In Section IV, he argued that while there was a dearth of case law on a point of interpretation, one Hawaii case supported his preferred reading and a number of other cases were in accord. He therefore opined that, "Hawaii law will not enforce Allied World's 'exhaustion' claim." In Section VI, Gauntlett opined that under Hawaii law, MNS should be able to recover attorney's fees and was entitled to prejudgment interest.
The court determined that none of these legal conclusions were proper subjects for expert testimony. While it was sometimes appropriate for an expert to discuss legal materials to lay the groundwork for non-legal opinions about industry customs and practices, Gauntlett's expert report did not fall within this principle because his report – at least as far as coverage was concerned – merely discussed and critiqued the case law and then simply stopped there.
Accordingly the court granted Allied World's motion to the extent it sought to strike Sections I, II, III, IV, and portions of Section VI of Gauntlett's expert report in connection with the coverage claims. The court did not strike any aspect of Gauntlett's report as to the bad faith claims that were currently stayed.
