United States v. Higgins

UNITED STATES OF AMERICA, Plaintiff, v. BRIAN HIGGINS, Defendant.

No. 3:18-cr-186

United States District Court, S.D. Ohio, Western Division, Dayton

January 4, 2022

ENTRY AND ORDER GRANTING IN PART AND DENYING IN PART GOVERNMENT'S MOTION TO EXCLUDE TESTIMONY OF PROPOSED DEFENSE EXPERT (DOC. NO. 91)

THOMAS M. ROSE, UNITED STATES DISTRICT JUDGE.

Pending before the Court is the United States of America's (the “Government”) Motion to Exclude Testimony of Proposed Defense Expert (Doc. No. 91) (the “Motion”). In the Motion, the Government moves to exclude the proposed testimony of Chris A. Johnson (“Johnson”), pursuant to Federal Rules of Evidence 402, 403, 702, and 704 and the Supreme Court's decision in Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993). (Doc. No. 91.) The Government argues that Defendant Brian Higgins (“Higgins”) has failed to establish the admissibility of the testimony of his expert, Johnson, because “(1) the proposed expert lacks the qualifications to opine on key matters in the report and (2) the proffered testimony is irrelevant otherwise unhelpful to the jury, unreliable, and prejudicially confusing.” (Id. at PageID 852.) For the reasons explained below, the Court GRANTS IN PART and DENIES IN PART the Motion.

I. BACKGROUND

a. Higgins' Alleged Conduct

A federal grand jury charged Higgins with three counts of mail fraud in violation of 18 U.S.C. § 1341 and 2; two counts of witness tampering in violation of 18 U.S.C. § 1512(d)(1); and two counts of witness retaliation in violation of 18 U.S.C. § 1513(e).^[1] (Doc. No. 95.) The charged crimes stem from his alleged participation in a scheme to defraud his mortgage holder, Nationstar Mortgage, LLC (“Nationstar”), between 2014 and 2015. (Id.)

The Government's Fourth Superseding Indictment (the “Indictment”) alleges that Higgins' former home in Dayton, Ohio (the “Meeker Residence”) was financially distressed. (Doc. No. 95 at PageID 897.) No. mortgage payments were made on the Meeker Residence for a number of years. (Id.) Higgins held an interest in the Meeker Residence with his ex-wife, Chonda Higgins, who did not reside there during the times relevant to the Indictment. (Id. at PageID 895.) Nationstar serviced the mortgage on the Meeker Residence and obtained insurance on the residence from Assurant, through a related entity named Standard Guaranty Insurance Company, to protect its interest in the residence. (Id. at PageID 897-98.)

According to the Indictment, in July 2014, Higgins submitted an insurance claim with Assurant related to property damage caused by a leak in a large fish tank at the Meeker Residence. (Id. at PageID 898.) In response, Assurant disbursed the insurance claim funds to Nationstar. (Id.) Nationstar decided to release the funds through a series of draws. (Id. at PageID 899.) Nationstar required the claimant to provide paperwork regarding arrangements with the contractor, such as the relevant contracts and summaries of the repairs to be completed. (Id.) Moreover, Nationstar sought written assurances from the claimant that they intended to use all the funds to repair the property and required the claimant to submit invoices documenting the repair work. (Id. at PageID 900.)

The Indictment alleges that Higgins retained Company A as the contractor, but he did not intend to have Company A perform the bulk of the needed repairs. (Id. at PageID 901.) Instead, Higgins had Company A divert insurance funds for his personal use. (Id. at PageID 902.) Higgins further had Company A complete cosmetic repairs in order to convince Nationstar to authorize further disbursals of the claim funds. (Id. at PageID 902-03.) Company A subsequently withdrew as the contractor, and Higgins retained Protech to serve as the new contractor. (Id. at PageID 903.) Higgins allegedly concealed that he owned or otherwise controlled Protech and that the company was not a licensed contractor. (Id. at PageID 903-04.) The Government alleges that Higgins took these actions in an effort to divert the claims funds for his own personal use. (Id.) The Government also alleges that Higgins submitted, and caused to be submitted, paperwork that materially misrepresented repairs performed or intended to be performed on the Meeker Residence- including that he falsely submitted paperwork asserting to Nationstar that he intended to use all claim funds held by Nationstar to repair the Meeker Residence. (Id.)

b. Johnson's Expert Report

On March 31, 2021, Higgins provided the Government with Johnson's expert report. (Doc. No. 91 at PageID 856.) Higgins further provided the Government with Johnson's Curriculum Vitae, a list of documents Johnson relied on in reaching his opinions, and a list of cases Johnson had previously participated in. (Id.) Johnson's expert report states a total of nine opinions:

1. Mr. Higgins had an insurable interest in the Meeker Residence;

2. Nationstar and Assurant should have included Mr. Higgins as a Borrower on the Assurant Certificate along with Chonda Higgins, but they neglected to do so;

3. Because of Mr. Higgins' insurable interest, and for other reasons, Mr. Higgins had a reasonable expectation to receive portions of the Actual Cash Value (ACV) payment made by Assurant;

4. The estimate of repairs to the Meeker Residence follows the form and style of other property damage repair estimating tools found in the insurance industry, similar to Xactimate, and cannot be relied upon as an EXACT repair cost for this claim;

5. Assurant and Nationstar knew that Chonda Higgins had abandoned the Meeker Residence and was living in another state. Without the cooperation of Chonda Higgins, Assurant could only rely upon Nationstar, the NAMED INSURED, to manage the claim and repairs to the Meeker Residence; both Nationstar and Assurant were reckless in their handling of this claim and disbursement of funds to others not insured under the Certificate;

6. Assurant and Nationstar's inspection of on-going repairs indicated the work was being done and that they were satisfied with the work;

7. Mr. Higgins followed the Terms and Conditions of the Nationstar Mortgage documents;

8. Any inference that Mr. Higgins was involved in insurance fraud isn't supported by the records reviewed; and

9. The Certification of Intent to Repair was null, void, defective and unauthorized - Assurant and Nationstar had no contractual relationship with Mr. Higgins and no authorization to transact business with him, therefore all communications, written and verbal, with Mr. Higgins, were voluntary.

(Doc. No. 76-1.)

The Government requested a Daubert hearing on April 30, 2021 (Doc. No. 76), and the Court held such a hearing on October 6, 2021. The Government then filed the present Motion on November 8, 2021 (Doc. No. 91) and Higgins responded on December 13, 2021 (Doc. No. 94). The Government filed its reply on December 23, 2021. (Doc. No. 98). This issue is fully briefed and ripe for review.

II. OVERARCHING STANDARD FOR ADMISSION OF EXPERT TESTIMONY

Under Federal Rule of Evidence 702, a witness “who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion” if four requirements are met:

(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.

The Court plays a “gatekeeping” role with respect to expert testimony regarding scientific, technical or other specialized knowledge. Kumho Tire v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999); Gen. Elec. Co. v. Joiner, 522 U.S. 136, 142, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). “As gatekeeper, the trial judge has discretion in determining whether a proposed expert's testimony is admissible based on whether the testimony is both relevant and reliable.” Palatka v. Savage Arms, Inc., 535 Fed.Appx. 448, 453 (6th Cir. 2013) (internal quotation marks and citation omitted). Put simply, for expert testimony to be admissible, the court must find: (1) the expert is qualified; (2) the testimony is relevant; and (3) the testimony is reliable. Daubert, 509 U.S. at 589; In re Scrap Metal Antitrust Litig., 527 F.3d 517, 529 (6th Cir. 2008). The party offering the expert testimony has the burden of establishing its admissibility by a preponderance of the evidence. Pride v. BIC Corp., 218 F.3d 566, 578 (6th Cir. 2000); Nelson v. Tenn. Gas Pipeline Co., 243 F.3d 244, 251 (6th Cir. 2001).

III. ANALYSIS

a. Qualifications

To qualify as an expert under Rule 702, a witness must first establish their expertise by reference to “knowledge, skill, experience, training, or education.” Fed.R.Evid. 702; Pride, 218 F.3d at 577. Moreover, the expert's training and qualifications must relate to the subject matter of the proposed testimony. Smelser v. Norfolk Southern Railway Co., 105 F.3d 299, 303 (6th Cir. 1997), cert. denied, 522 U.S. 817, 118 S.Ct. 67, 139 L.Ed.2d 29 (1997); U.S. Diamond & Gold v. Julius Klein Diamonds LLC, No. C-3-06-371, 2008 U.S. Dist. LEXIS 116112, at *7, 2008 WL 4116090 (S.D. Ohio Aug. 28, 2008).

The Government argues that Johnson should be excluded because he has never testified in a criminal trial before and he lacks familiarity with the federal mail fraud statute. (Doc. No. 91 at PageID 861.) In response, Higgins argues that Johnson “is eminently qualified to opine on insurance claims and insurance industry practices” and that his testimony “will assist the jury in understanding the complex insurance issues...