Allstate Indemnity Company v. Lindquist et al, No. 2:2020cv01508 - Document 223 (W.D. Wash. 2022)
Court Description: ORDER granting in part and denying in part Defendant's 202 Motion to Exclude expert testimony. Signed by Judge James L. Robart. (LH)
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Allstate Indemnity Company v. Lindquist et al Doc. 223 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 1 of 11 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 ALLSTATE INDEMNITY COMPANY, CASE NO. C20-1508JLR ORDER 11 Plaintiff, 12 13 v. RANDY LINDQUIST, et al., 14 Defendants. 15 I. 16 INTRODUCTION 17 Before the court is Defendant and Third-Party Plaintiff Randy Lindquist’s motion 18 to exclude portions of expert reports prepared by Plaintiff Allstate Indemnity Company’s 19 (“Allstate”) claims-handling expert witness, Dannette K. Leonhardi. (Mot. (Dkt. # 202); 20 2/16/22 O’Neill Decl. (Dkt. # 139) ¶ 1, Ex. A (“Leonhardi Report”); 3/16/22 O’Neill 21 Decl. (Dkt. # 153) ¶ 1, Ex. A (“Leonhardi Rebuttal Report”); Reply (Dkt. # 215).) 22 Allstate opposes the motion. (Resp. (Dkt. # 212).) The court has considered the parties’ ORDER - 1 Dockets.Justia.com Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 2 of 11 1 submissions, the relevant portions of the record, and the applicable law. Being fully 2 advised, 1 the court GRANTS Mr. Lindquist’s motion in part and DENIES it in part. 3 4 II. BACKGROUND This case stems from a fire that burned down Mr. Lindquist’s house at 6920 Fisher 5 Road in Edmonds, Washington (the “Fisher Road House”) on December 25, 2019. 6 (Compl. (Dkt. # 1) ¶¶ 3.12.) The Fisher Road House was insured by a homeowner’s 7 insurance policy that Allstate issued in 2004 and renewed on an annual basis thereafter. 8 (See Argiannis Decl. (Dkt. # 72) ¶ 3, Ex. A; see also 10/25/21 Ruiz Decl. (Dkt. # 104) 9 ¶ 2, Ex. A at 121:6-122:11.) The court incorporates by reference the summation of the 10 factual background contained in its November 24, 2021 order (see 11/24/21 Order (Dkt. 11 # 117) at 2-5), and discusses below the specific facts pertinent to the current motions in 12 its analysis of the issues presented therein. 13 14 III. ANALYSIS Mr. Lindquist does not generally contest Ms. Leonhardi’s qualifications to serve 15 as an expert witness or the relevance of her proposed testimony (see generally Mot.; 16 Reply), but rather moves to exclude the portions of her report and rebuttal report that 17 purportedly contain “instructions to the jury as to the applicable law” or “opinions on 18 ultimate issues of law” (see Mot. at 2). After considering whether Ms. Leonhardi is able 19 1 20 21 22 Neither party has requested oral argument (see Mot. at 1; Resp. at 1) and the court concludes that oral argument is not necessary to its disposition of the motion. See Local Rules W.D. Wash. LCR 7(b)(4); see also Tubar v. Clift, No. C05-1154JCC, 2009 WL 1325952, at *2 (W.D. Wash. May 12, 2009) (“The trial court's gatekeeping role under Daubert is satisfied, even without a formal hearing, by the court’s probing of the expert’s knowledge and experience” (citing Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1017 (9th Cir. 2004))). ORDER - 2 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 3 of 11 1 to present relevant and reliable testimony, the court turns to consider Mr. Lindquist’s 2 arguments that portions of her report and rebuttal report should nevertheless be excluded 3 as containing inadmissible testimony on legal issues. 4 A. 5 The Relevance and Reliability of Ms. Leonhardi’s Proposed Testimony “Before admitting expert testimony into evidence, the district court must perform a 6 ‘gatekeeping role’ of ensuring that the testimony is both ‘relevant’ and ‘reliable’ under 7 Federal Rule of Evidence 702.” United States v. Ruvalcaba-Garcia, 923 F.3d 1183, 1188 8 (9th Cir. 2019) (quoting Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 9 597 (1993)); see also Fed. R. Evid. 702(a). “Relevancy simply requires that ‘the 10 evidence logically advance a material aspect of the party’s case.’” Ruvalcaba-Garcia, 11 923 F.3d at 1188 (quoting Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 463 12 (9th Cir. 2014) (citation and internal alterations omitted)). Reliability “requires that the 13 expert’s testimony have ‘a reliable basis in the knowledge and experience of the relevant 14 discipline.’” Id. (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999)). 15 Ms. Leonhardi testifies that she has “direct claim handling experience” that “spans 16 44 years in various capacities,” and that, over that time, she has “audited the claim 17 handling work of approximately fifty different insurers.” (See Leonhardi Report at 1.) 18 She further testifies that she is familiar with the applicable laws and regulations in 19 Washington that “pertain to the subjects of claim handling [and] settlement standards, 20 trade practices, regulations, policy provisions, claim communications and claim 21 investigations.” (Id. at 2.) She also has substantial experience as an expert witness, 22 having been retained by insurance companies for that purpose on fifteen occasions, ORDER - 3 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 4 of 11 1 including in four matters that apparently went to trial. (See Leonhardi Report at 17-18.) 2 Ms. Leonhardi intends to testify about, among other topics, the applicable “industry 3 standards for proper insurance claim handling”; “the complex nature of property damage 4 claim handling” for fire losses; and Allstate’s claim handling in this matter. (See 5 Leonhardi Report at 2-15.) Accordingly, the court finds that Ms. Leonhardi is qualified, based on her 6 7 knowledge and experience, to give reliable expert testimony. See Hangarter, 373 F.3d at 8 1018 (affirming that a district court's “probing” of an expert’s “knowledge and 9 experience was sufficient to satisfy its gatekeeping role under Daubert”); see also id. at 10 1017 (noting that, in the context “of non-scientific testimony . . . ‘reliability depends 11 heavily on the knowledge and experience of the expert, rather than the methodology or 12 theory behind it’” (emphasis in original) (quoting United States v. Hankey, 203 F.3d 13 1160, 1169 (9th Cir. 2000)). Moreover, the topics on which Ms. Leonhardi intends to 14 testify are directly relevant to Mr. Lindquist’s counterclaims and will, therefore, 15 “logically advance a material aspect of” Allstate’s defense of those counterclaims. See 16 Ruvalcaba-Garcia, 923 F.3d at 1188. Accordingly, the court finds that Ms. Leonhardi is 17 qualified to provide reliable testimony and intends to testify on topics that are relevant to 18 this matter. 19 Having fulfilled its gatekeeping function under Daubert, the court turns to 20 consider whether portions of Ms. Leonhardi’s intended testimony contain inadmissible 21 legal conclusions. 22 // ORDER - 4 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 5 of 11 1 B. Whether Ms. Leonhardi’s Reports Contain Inadmissible Testimony on the Law 2 Mr. Lindquist argues that, notwithstanding Ms. Leonhardi’s undisputed 3 qualifications as an expert witness, certain portions of her intended testimony must 4 nevertheless be excluded as containing inadmissible “instructions to the jury as to the 5 applicable law” or “opinions on an ultimate issue of law.” (Mot. at 7.) Mr. Lindquist 6 objects to four categories of Ms. Leonhardi’s testimony, including: (1) “that RCW 7 48.01.030 imposes ‘reciprocal duties’ on both the insurer and insured” (id. at 2 (quoting 8 Leonhardi Report at 2, 11)); (2) “that RCW 48.18.460 gives insurers the right to demand 9 a ‘proof of loss’ and that state law allows insurers to conduct an [examination under oath 10 (“EOU”)] as part of a ‘proof of loss’” (id. (quoting Leonhardi Report at 9)); (3) testimony 11 regarding “the history of Washington’s legal enactments relating to claims handling (id. 12 at 3 (citing Leonhardi Report at 3, 10 n.14)); and (4) testimony regarding specific 13 instances in which Ms. Leonhardi opines, in some fashion, “that Allstate acted reasonably 14 and in ‘good faith’” (see id. at 3-4 (first quoting Leonhardi Report at 6, 9-12, 14-15; and 15 then quoting Leonhardi Rebuttal Report at 2, 5-7)). 16 Federal Rule of Evidence 704(a) specifically provides that an expert witness’s 17 “opinion is not objectionable just because it embraces an ultimate issue.” Fed. R. Evid. 18 704(a). However, the Ninth Circuit “has repeatedly affirmed that ‘an expert witness 19 cannot give an opinion as to her legal conclusion, i.e., an opinion on an ultimate issue of 20 law.’” United States v. Diaz, 876 F.3d 1194, 1197 (9th Cir. 2017) (emphasis in original) 21 (quoting Hangarter, 373 F.3d at 1016). “This prohibition of opinion testimony on an 22 ORDER - 5 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 6 of 11 1 ultimate issue of law recognizes that, ‘[w]hen an expert undertakes to tell the jury what 2 result to reach, this does not aid the jury in making a decision, but rather attempts to 3 substitute the expert’s judgment for the jury’s.’” Id. (emphasis in original) (quoting 4 United States v. Duncan, 42 F.3d 97, 101 (2d Cir. 1994)). Accordingly, numerous courts in this district have prohibited expert witnesses 5 6 from “opin[ing] on the reasonableness of [an insurer’s] actions with respect to [an 7 insured’s] claim.” See Liu v. State Farm Mut. Auto. Ins. Co., No. C18-1862BJR, 2021 8 WL 717540, at *4 (W.D. Wash. Feb. 24, 2021); see also United States Fid. & Guar. Co. 9 v. Ulbricht, No. C20-0369JLR, 2021 WL 6050171, at *4-5 (W.D. Wash. Dec. 21, 2021) 10 (striking statements that insurance company behaved reasonably in processing claim from 11 expert witness’s report); Ledcor Indus. (USA) Inc. v. Virginia Sur. Co., No. 12 C09-1807RSM, 2012 WL 254251, at *2 (W.D. Wash. Jan. 26, 2012) (holding that an 13 insurer’s expert witness may “opine as to whether [the insurer] complied with industry 14 standards on the issue of bad faith, but may not reach an actual legal conclusion regarding 15 this issue”). Thus, an expert witness “can discuss the industry standards and whether [the 16 insurer’s] actions conformed with those standards, but it will be left to the jury to 17 determine whether [the insurer] acted reasonably.” Liu, 2021 WL 717540, at *4; see also 18 Ledcor Indus. (USA) Inc., 2012 WL 254251, at *2 (“While an expert witness may testify 19 that an insurer deviated from industry standards on the issue of bad faith, he may not 20 reach an actual legal conclusion that the insurer did so.”) (citing Hangarter, 373 F.3d at 21 1016). 22 // ORDER - 6 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 7 of 11 1 The court first considers whether Ms. Leonhardi should be allowed to testify 2 concerning (1) “reciprocal duties” imposed by RCW 48.01.030; (2) an insurer’s right to 3 demand a proof of loss and conduct an EOU under RCW 48.18.460; and (3) the history 4 of Washington’s claim handling legal requirements. (See Leonhardi Report at 2, 3, 9, 5 10 n.14, 11.) Mr. Lindquist does not argue that Ms. Leonhardi incorrectly summarizes 6 the law through these statements (see Mot. at 2-3; Reply at 4), and the court concludes 7 that such testimony appears in her reports as background context, not as an “‘attempt to 8 define the legal parameters within which the jury must exercise its fact-finding 9 function,’” see Preston v. Boyer, No. C16-1106JCC-MAT, 2019 WL 5425342, at *4 10 (W.D. Wash. Oct. 23, 2019) (quoting Specht v. Jensen, 853 F.2d 805, 809-10 (10th Cir. 11 1988) and declining to exclude testimony summarizing legal requirements as background 12 context where the accuracy of the summary was not in dispute). Accordingly, the court 13 declines to exclude those portions of Ms. Leonhardi’s report and would allow her some 14 leeway during trial to summarize uncontested legal principles as “background fact[s].” 15 See id. 16 Mr. Lindquist also identifies numerous instances in which Ms. Leonhardi testifies 17 “that Allstate acted reasonably and in ‘good faith.’” (See Mot. at 3-4 (first quoting 18 Leonhardi Report at 6, 9-12, 14-15; and then quoting Leonhardi Rebuttal Report at 2, 19 5-7)). These include the following thirteen statements: 20 • “This was a justifiable and reasonable investigative avenue for [Allstate employee Nicole] Diedrich to take.” (Leonhardi Report at 6.) 21 • “This was a completely reasonable and justified investigative step for Allstate’s investigation.” (Id. at 9.) 22 ORDER - 7 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 8 of 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 • “Converse to the allegations of Mr. Lindquist, it is my opinion Allstate investigated, handled, and evaluated Mr. Lindquist’s claim in a good faith, fair, reasonable, timely, responsive, thorough, and well-ordered fashion, completely complying with the statutory and legal requirements in the State of Washington as well as in accordance with industry claim handling standards.” (Id. at 10-11.) • “It is unequivocal that this is a disagreement over coverage of Mr. Lindquist’s claim arising from reasonable, justifiable and concrete questions posed by Allstate.” (Id. at 12.) • “It is my opinion the decision to have the policy coverage issues adjudicated is a good faith, reasonable, timely and responsive method for resolving the questions of coverage for damages to Mr. Lindquist’s property . . . .” (Id. at 12.) • “This is a case that exemplifies those differences and cannot be construed as a lack of good faith on the part of Allstate and does not mean Allstate’s coverage evaluation is wrong, frivolous, unjustified or unreasonable. It is unequivocal that this is a disagreement over coverage of Mr. Lindquist’s claim arising from a reasonable, justifiable, and concrete investigation and policy analysis.” (Id. at 14.) • “Allstate has evaluated the coverage of this claim on a good faith belief that no coverage for this claim exists under their policy with respect to developed facts and has asked the court to decide on coverage.” (Id. at 14 (emphasis omitted).) • “I found no instances, in the material submitted to me, wherein Allstate Indemnity Company’s actions were anything other than reasonable and justified and in good faith.” (Id.) • “Based upon my 44 years of claim experience coupled with my experience in the insurance industry as a consultant and expert witness, I see no definitive instance or evidence in the claim handling of the claim presentation at issue in this action . . . wherein Allstate Indemnity Company or any of its representatives, took any action or inaction, that was anything less than good faith towards its insured, Mr. Randy Lindquist.” (Id. at 15 (omitting case caption).) 21 • “All parties have a right to turn to the courts for a precise ruling on policy verbiage. It is unequivocal that this is a disagreement over coverage of Mr. Lindquist’s claim arising from reasonable, justifiable and concrete questions posed by Allstate.” (Leonhardi Rebuttal Report at 2.) 22 • “By filing a [declaratory action], if anything, it is an acknowledgment 20 ORDER - 8 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 9 of 11 1 that the insurer and insured are conflicted and this is a good faith effort to resolve the differences.” (Id. (emphasis omitted).) 2 • “Based on this information and the information obtained from Ms. Grondahl, alone, it was an exceptionally reasonable decision by Ms. Diedrich to refer this matter to [the special investigations unit].” (Id. at 5.) 3 4 5 6 • “It is my continued opinion Allstate Indemnity company endeavored to provide quality claim handling to meet industry claim standards and the standards outlined in the Washington State Administrative Code and the Revised Code of Washington under the Insurance Fair Conduct Act.” (Id. at 6-7.) 7 Allstate contends that “[t]hese statements are presented to the [c]ourt without the 8 benefit of the context of Ms. Leonhardi’s report” (Resp. at 2) and argues that, when 9 viewed in their full context, Ms. Leonhardi’s opinions are admissible because they are 10 “tied to facts and stop short of expressing legal conclusions” (id. at 4 (citing Ramirez11 Yanez v. Allstate Ins. Co., No. C12-732MJP, 2013 WL 1499199, at *2 (W.D. Wash. Apr. 12 11, 2013)). In making this argument, Allstate relies on Ramirez-Yanez v. Allstate 13 Insurance Company, a case in which Judge Marsha J. Pechman allowed an insurer’s 14 expert witness to testify that he had “concluded from a factual standpoint that Allstate 15 acted with due care and reasonable justification, and not in an unfounded or frivolous 16 manner, in its interpretation of the policy, investigation of the claim, and communications 17 with the insureds.” See Ramirez-Yanez, 2013 WL 1499199, at *2 (emphasis in original). 18 Judge Pechman allowed that testimony to proceed, however, only because the expert 19 made clear that his conclusion was drawn “from a factual standpoint,” which Judge 20 Pechman found stopped the testimony “short of making legal conclusions.” See id. 21 (emphasis in original). Ramirez-Yanez is therefore distinguishable from this case because 22 ORDER - 9 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 10 of 11 1 the contested portions of Ms. Leonhardi’s reports do not contain the same kind of 2 limiting language and, instead, proceed to impermissibly draw legal conclusions. 3 Moreover, contrary to Allstate’s assertion that Ms. Leonhardi’s testimony is 4 appropriately cabined (see Resp. at 4), her reports either fail to make clear that her 5 conclusions relate only to insurance industry standards (see, e.g., Leonhardi Report at 14 6 (finding “no instances, in the material submitted to [Ms. Leonhardi], wherein Allstate 7 Indemnity Company’s actions were anything other than reasonable and justified and in 8 good faith”)), or to conclude the testimony once that limitation has been established (see, 9 e.g., Leonhardi Rebuttal Report at 6-7 (opining that Allstate “endeavored to provide 10 quality claim handling to meet industry claim standards” as well as those “outlined in the 11 Washington State Administrative Code and the Revised Code of Washington under the 12 Insurance Fair Conduct Act”)). 2 13 Accordingly, with respect to the thirteen statements excerpted above, the court 14 concludes that Ms. Leonhardi goes beyond discussing whether Allstate “deviated from 15 industry standards on the issue of bad faith,” and “reach[es] an actual legal conclusion,” 16 see Ledcor Indus., 2012 WL 254251, at *2; see also Liu, 2021 WL 717540, at *3-4. 17 These statements are, therefore, properly excluded and may not be offered by Ms. 18 Leonhardi in their current form if she is called to testify at trial. As Mr. Lindquist rightly 19 2 20 21 22 Ms. Leonhardi is plainly able to provide opinion testimony that avoids this issue. For example, she opines that Allstate “has acted in accordance with industry and Washington State claim handling standards in approaching its investigation obligations to Mr. Lindquist and moving his claim toward resolution.” (See Leonhardi Report at 14.) By confining her testimony to Allstate’s compliance with industry standards in this instance, Ms. Leonhardi stops short of offering “an actual legal conclusion.” See Ledcor Indus. (USA) Inc., 2012 WL 254251, at *2. ORDER - 10 Case 2:20-cv-01508-JLR Document 223 Filed 06/17/22 Page 11 of 11 1 notes (see Reply at 5 3), however, Ms. Leonhardi’s opinion testimony will likely be 2 admitted through her live examination at trial. See Hunt v. City of Portland, 599 F. 3 App’x 620, 621 (9th Cir. 2013) (concluding “that [an expert’s] report is hearsay to which 4 no hearsay exception applies”). Thus, although these statements are deemed excluded 5 and may not be considered for any pretrial purpose, the court’s ruling is perhaps more 6 important as an instruction to Ms. Leonhardi to avoid drawing any legal conclusions if 7 she is called to testify about Allstate’s conduct at trial. 4 8 9 10 11 IV. CONCLUSION For the foregoing reasons, Mr. Lindquist’s motion to exclude portions of Ms. Leonhardi’s expert reports (Dkt. # 202) is GRANTED in part and DENIED in part. Dated this 17th day of June, 2022. 13 A 14 JAMES L. ROBART United States District Judge 12 15 16 17 18 19 20 21 22 3 Aside from noting that an expert report likely contains inadmissible hearsay and its contents should generally be admitted through live testimony, the court need not decide now whether Ms. Leonhardi’s report could be entered into evidence at trial. (See id.) As Mr. Lindquist acknowledges, he did not request that relief in his motion. (Id.) Moreover, consideration of this hypothetical issue is premature and can be better addressed at trial, should it arise. 4 Indeed, the issue raised by Mr. Lindquist’s motion could have been raised through a motion in limine. See, e.g., Liu, 2021 WL 717540, at *3-4; Ledcor Indus. (USA) Inc., 2012 WL 254251, at *2. ORDER - 11
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