Bethel v. Berkshire Hathaway Homestate Ins. Co.

596 F.Supp.3d 1260

Michael BETHEL, Plaintiff,

v.BERKSHIRE HATHAWAY HOMESTATE INSURANCE COMPANY, Defendant.

Civil Action No. 17-cv-01456-CMA-KLM

United States District Court, D. Colorado.

Signed April 1, 2022

Roy W. Penny, Jr., Roy W. Penny, Jr. P.C., Denver, CO, for Plaintiff.

Kelly L. Kafer, Peter J. Morgan, Morgan Rider Riter Tsai, P.C., Denver, CO, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO EXCLUDE OR LIMIT EXPERT TESTIMONY

CHRISTINE M. ARGUELLO, United States District Judge

This matter is before the Court on Plaintiff Michael Bethel's Motion to Exclude or Limit Expert Testimony by Jon F. Sands, Esq. Pursuant to Federal Rule of Evidence 702 (the "Motion"). (Doc. # 161.) For the following reasons, the Court grants in part and denies in part the Motion.¹

I. BACKGROUND

This is a property insurance dispute. Plaintiff Michael Bethel owned an apartment building in Rocky Ford, Colorado ("the Property"). The Property was insured by Defendant Berkshire Hathaway Homestate Insurance Company ("Berkshire"). In 2016, the Property was destroyed in a fire, and Bethel filed an insurance claim under his Berkshire policy (the "Policy"). Berkshire paid Bethel the full market value of the Property at the time of the fire: $109,000.

Bethel sued, claiming that he had been underpaid. Both parties moved for summary judgment. The parties agree that, under the insurance policy, Berkshire was obliged to pay Bethel the "actual cash value" ("ACV") of the Property. They disagree, however, as to the meaning of "actual cash value." Berkshire argues that the ACV of the building should be calculated based on its market value as determined by a real estate appraisal. Bethel argues that ACV is calculated based on replacement cost minus depreciation. Accordingly, Bethel argues he is entitled to $407,000 in insurance benefits based on the Policy.

In its first summary judgment order, the Court agreed with Berkshire. Bethel v. Berkshire Hathaway Homestate Ins. Co. , 17-cv-01456-CMA-KLM, 2019 WL 339782, at *1 (D. Colo. Jan. 28, 2019), aff'd in part, rev'd in part and remanded, 822 F. App'x 835 (10th Cir. 2020). However, the Court of Appeals reversed in part. Bethel v. Berkshire Hathaway Homestate Ins. Co. , 822 F. App'x 835, 840 (10th Cir. 2020). Though the Court of Appeals agreed that "actual cash value" is distinct from "replacement cost," it found that, under this particular Policy, the term "actual cash value" might mean "replacement cost without depreciation." Id. at 840. Therefore, it concluded, "the meaning of ‘actual cash value’ is ambiguous," as it is used in this particular Policy. Id. at 841. The Court of Appeals remanded the case to this Court "for full consideration of extrinsic evidence bearing on the parties’ intended meaning of ‘actual cash value.’ " Id.

On remand, and upon consideration of the renewed motions for summary judgment briefing, the Court determined that there are genuine disputes of material fact that preclude summary judgment. (Doc. # 145.) Specifically, because an ambiguity was found in the insurance policy, the ambiguity must be resolved by giving effect to the parties’ intent, which is a question of fact.

Bethel v. Berkshire Hathaway Homestate Ins. Co. , 17-cv-01456-CMA-KLM, 2021 WL 4307075, at *2 (D. Colo. Sept. 21, 2021) (quoting Ad Two, Inc. v. City & Cty. of Denver , 9 P.3d 373, 381 (Colo. 2000) ; Moland v. Indus. Claim Appeals Off. of State , 111 P.3d 507, 510 (Colo. App. 2004) ). Accordingly, in this particular case, it is a question of fact for the jury to decide how the parties intended to calculate ACV and the meaning of ACV within the Policy.

Plaintiff filed his Motion on February 11, 2022.² Plaintiff seeks to exclude or limit opinion testimony by Berkshire's expert, Jon F. Sands ("Mr. Sands"). (Doc. # 161.) Notably, Plaintiff challenges Mr. Sands's rebuttal report. (Doc. # 161-1.) Based on the rebuttal report, it appears that Mr. Sands authored another report in this matter, dated July 26, 2018. (See Doc. # 161-1 at 2.) Further, it appears that Plaintiff has his own expert who authored an expert report, dated April 20, 2021. (Id. ) Given that Mr. Sands's report is offered in rebuttal to Plaintiff's expert's opinion, Plaintiff's expert has apparently offered opinions based on the same topics Plaintiff challenges in the Motion. (Id. ) However, these reports are not currently before the Court.

II. LEGAL STANDARD

The trial court acts as a "gatekeeper" by reviewing a proffered expert opinion for relevance pursuant to Federal Rule of Evidence 401, and reliability pursuant to Federal Rule of Evidence 702. See Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 589–95, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ; see also Goebel v. Denver & Rio Grande W. R.R. Co. , 215 F.3d 1083, 1087 (10th Cir. 2000). The proponent of the expert must demonstrate by a preponderance of the evidence that the expert's testimony and opinion are admissible. United States v. Nacchio , 555 F.3d 1234, 1241 (10th Cir. 2009) ; United States v. Crabbe , 556 F. Supp. 2d 1217, 1220–21 (D. Colo. 2008) ; Fed. R. Evid. 702 advisory comm. notes. The Court has discretion to evaluate whether an expert is helpful, qualified, and reliable under Rule 702. See Goebel , 215 F.3d at 1087 ; United States v. Velarde , 214 F.3d 1204, 1208–09 (10th Cir. 2000).

Federal Rule of Evidence 702 governs the admissibility of expert testimony. Rule 702 provides that a witness who is qualified as an expert by "knowledge, skill, experience, training, or education" may testify 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.

Fed. R. Evid. 702.

In deciding whether expert testimony is admissible, the Court must make multiple determinations. First, it must first determine whether the expert is qualified "by knowledge, skill, experience, training, or education" to render an opinion. Nacchio , 555 F.3d at 1241. Second, if the expert is sufficiently qualified, the Court must determine whether the proposed testimony is sufficiently "relevant to the task at hand," such that it "logically advances a material aspect of the case."

Norris v. Baxter Healthcare Corp. , 397 F.3d 878, 884, 884 n.2 (10th Cir. 2005). "Doubts about whether an expert's testimony will be useful should generally be resolved in favor of admissibility unless there are strong factors such as time or surprise favoring exclusions." Robinson v. Mo. Pac. R.R. Co. , 16 F.3d 1083, 1090 (10th Cir. 1994) (quotation omitted).

Third, the Court examines whether the expert's opinion "has ‘a reliable basis in the knowledge and experience of his [or her] discipline.’ " Norris , 397 F.3d at 884, 884 n.2 (quoting Daubert , 509 U.S. at 592, 113 S.Ct. 2786 ). In determining reliability, a district court must decide "whether the reasoning or methodology underlying the testimony is scientifically valid." Id. (quoting Daubert , 509 U.S. at 592–93, 113 S.Ct. 2786 ). In making this determination, a court may consider: "(1) whether a theory has been or can be tested or falsified, (2) whether the theory or technique has been subject to peer review and publication, (3) whether there are known or potential rates of error with regard to specific techniques, and (4) whether the theory or approach has general acceptance." Norris , 397 F.3d at 884 (citing Daubert , 509 U.S. at 593–94, 113 S.Ct. 2786 ).

The Supreme Court has made clear that this list is neither definitive nor exhaustive. Kumho Tire Co. v. Carmichael , 526 U.S. 137, 150, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). In short, "[p]roposed testimony must be supported by appropriate validation—i.e., ‘good grounds,’ based on what is known." Daubert , 509 U.S. at 590, 113 S.Ct. 2786.

The requirement that testimony must be reliable does not mean that the party offering such testimony must prove "that the expert is indisputably correct." Bitler v. A.O. Smith Corp. , 400 F.3d 1227, 1233 (10th Cir. 2005) (quoting Mitchell v. Gencorp Inc. , 165 F.3d 778, 781 (10th Cir. 1999) ). Rather, the party need only prove that "the method employed by the expert in reaching the conclusion is scientifically sound and that the opinion is based on facts which sufficiently satisfy Rule 702 ’s reliability requirements." Id. Guided by these principles, this Court has "broad discretion" to evaluate whether an expert is helpful, qualified, and reliable under the "flexible" standard of Fed. R. Evid. 702. Velarde , 214 F.3d at 1208–09 ; Daubert , 509 U.S. at 594, 113 S.Ct. 2786.

III. ANALYSIS

Plaintiff does not raise arguments related to Mr. Sands's qualifications. Plaintiff also does not argue that the entire opinion should be excluded. Rather, Plaintiff argues that certain opinions should be excluded because they are not helpful to the jury, are not reliable, or are not relevant. Further, Plaintiff argues that the Tenth Circuit's opinion is the "law of the case," and therefore Mr. Sands's opinions should not be allowed. (Doc. # 161 at 3.) Plaintiff also argues that Mr. Sands's opinions are not helpful to the jury, are not reliable, and are not relevant. This matter is now ripe for review. (Doc. ## 162, 171.)

The Court addresses each challenged opinion in turn.

A. OPINIONS RELATED TO CONTRACT INTERPRETATION

First, Plaintiff challenges opinions offered by Mr. Sands that allegedly attempt to interpret the contract. (Id. at 3–5.) Specifically, Plaintiff challenges the following statements contained in Mr. Sands's report:

• "The plain language in the insurance policy provides Berkshire with the option to pay either the value of the property or the cost of replacement." (Doc. # 161-1 at 3.)

• "Suffice to say that the policy says what it says and the insurer is given the option to

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