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Arizona District Court Strikes Most of Plaintiff's Expert Opinion in Insurance Bad Faith Case

Categories: Insurance Litigation, Blog

Ensure Expert Opinions are within bounds in Bad Faith cases

City of Phoenix v. First State Ins Co., 2016 WL 4592906 (D. Ariz. Sept. 2, 2016)

(Order), a coverage and bad faith case arising from an Insurer denying an Insured, the City of Phoenix, defense and indemnity from a personal injury claim resulting from asbestos exposure, the Arizona District Court held that the opinion of the Insured’s bad faith expert “will be excluded to the extent that it asserts legal principles, reaches legal conclusion, or asserts facts contrary to or unsupported by the record.”

The Insured’s expert was a law professor who had published books and articles on insurance law. Nonetheless, the Arizona District Court stated his “report extends far beyond the range of admissible expert opinions” because it “consists largely of legal opinions,” including opinions regarding “interpretations of the language in [the Insurer’s] policies,” “assertions of Arizona insurance law,” and “applications of Arizona law to the facts of this case.”

The Arizona District Court held that such a bad faith expert opinion is inadmissible for two primary reasons:

  1. it invades “the province of the court by expounding on law,” and
  2. it invades “the province of the jury by resolving facts.”

First, “instructing the jury on the applicable law is the exclusive province of the court.” Consequently, an expert “cannot give an opinion as to her legal conclusion, i.e., an opinion on an ultimate issue of law.”

Second, “Federal Rule of Evidence 702 permits an expert to testify only if the testimony ‘will help the trier of fact to understand the evidence or to determine a fact in issue.’” The Insured’s expert testimony did not help the jury understand the evidence because some of his “opinions [were] incorrect under Arizona law” and not supported by the evidence. Furthermore, the Insured’s expert testimony did not help the jury “determine a fact in issue”; rather, the Insured’s expert attempted to determine fact issues for the jury.

The Arizona District Court also reasoned that the subject Insured’s expert testimony was dissimilar to expert testimony admitted in Hangarter v. Provident Life & Accident Insurance Co., 373 F.3d 998, 1016–17 (9th Cir. 2004). In Hangarter,the expert “merely made passing ‘references’ to legal provisions and never actually ‘reached a legal conclusion.’” Indeed, in Hangarter,the insured’s expert testimony that the Insurer “deviated from industry standards supported a finding of bad faith,” but the expert “never testified that…[the insurer] actually acted in bad faith (i.e. an ultimate issued of law).” Hangarter,373 F.3d at 1016 (parentheses in original). In City of Phoenix v. First State Ins. Co., however, the Insured’s expert did “not just ‘refer’ to legal provisions; he spent pages detailing insurance law, complete with case citations” and offered “to testify that [the Insurer:] [a] breached the terms of its policies, [b] acted in bad faith, and [c] deserves punitive damages.” The Arizona District Court reiterated that “None of that is admissible.”

Ultimately, the Arizona District Court granted, in part, the Insurer’s Motion to Exclude Expert Testimony and granted the Insurer’s Motion for Summary Judgment on both coverage and bad faith.

What are the primary takeaways from the City of Phoenix v. First State Ins. Co for insurer’s defending bad faith claims in Arizona District Court?

First, an Insurer should be vigilant that its own claims handling expert does not extend beyond the range of permissible expert opinions by stating the applicable law, resolving fact issues, and rendering an opinion on the ultimate issue—whether the Insurer acted in bad faith. 

Second, an Insurer in Federal Court should likewise move to strike the opinions of an Insured’s claims handling expert that makes similar transgressions.


About the Author: Nathan D. Meyer is a Partner at the Phoenix law firm of Jaburg Wilk. One of his specialties is insurance coverage and bad faith. Nate advises and represents insurance clients in coverage, bad faith, contribution and liability matters.