United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
CHRISTINA ARMIJO CHIEF UNITED STATES DISTRICT JUDGE
MATTER is before the Court on AAIC's Motion
to Exclude Expert Testimony [Doc. 114] and First
Mercury's Motion to Exclude Expert Testimony
[Doc. 118]. The Court has considered the parties'
submissions and the relevant law, and is otherwise fully
informed. For the following reasons, the Court GRANTS
in part and DENIES in part both
Motions, and sets forth the permissible parameters
of the experts' testimony.
details of the underlying action and insurance policies at
issue are described more fully in this Court's rulings on
the parties' cross motions for summary judgment. In
March, 2010, Kevin Udy was killed in an accident in which his
pickup truck collided with a trailer being hauled by a
tractor driven by Monte Lyons. Lyons was an employee of
Standard E & S, LLC (Standard) and the tractor and
trailer were owned by Zia Transport, Inc. (Zia). A year
later, the personal representative of Udy's estate, along
with Udy's wife and eight children, filed a wrongful
death action against Lyons, Standard, and Zia (the Udy
Action). The plaintiffs also named Defendant Bergstein
Enterprises, Ltd (Bergstein), the management company for
Standard and Zia, as a defendant in the Udy Action. [Doc.
117-1 (Udy Action Complaint)]
insurance policies are at issue. Two were issued by AAIC and
one by First Mercury. First, the AAIC Standard Policy had a
limit of $1 million and covered Standard as a named insured.
Second, the First Mercury Policy was an excess policy and had
a limit of $4 million. The AAIC Standard Policy was named as
“underlying insurance” to the First Mercury
Standard Policy. Third, the AAIC Bergstein Policy had a limit
of $1 million and covered Bergstein as a named insured.
the parties disagree as to whether AAIC properly tendered the
policy limits on the AAIC Standard Policy to First Mercury,
they agree that First Mercury took the lead in settlement
negotiations with the Udy plaintiffs. [Doc. 116, ¶¶
18-19, 21 (asserting that AAIC tendered its limits on the
AAIC Standard Policy to First Mercury and that First Mercury
“took control” of the negotiations); Doc. 131,
¶¶ 18-21 (disputing that AAIC properly tendered its
limits but agreeing that First Mercury “took over the
primary role” in negotiations); Doc. 116-2, Exh. H
& I, pgs. 25-27] During the negotiations, First Mercury
offered the Udy plaintiffs the $1 million available under the
AAIC Standard Policy, but did not offer the entire $4 million
available under the First Mercury Standard Policy. [Doc. 116,
¶ 27 (asserting these facts); Doc. 131, ¶ 27 (not
disputing these facts); Doc. 116-2, Exh. J, pg. 29; Doc.
116-6, Exh. 133, pg. 20] No funds from the AAIC Bergstein
Policy were offered during negotiations. [Doc. 131, pg. 11,
¶ Y (stating that AAIC offered the Bergstein Policy
limit after the verdict); Doc. 138, pg. 6, ¶ Y (not
disputing this assertion); Doc. 131-9]
jury trial, judgment was entered against Standard, Zia, and
Bergstein for a total of $58 million, including $30, 300, 000
against Standard and $22, 050, 000 against Bergstein. [Doc.
116, ¶ 29 (asserting these facts); Doc. 131, ¶ 29
(not disputing these facts); Doc. 116-3, Exhs. 1-2] The case
was then settled for $43 million, which was paid as follows:
$1 million by AAIC pursuant to the AAIC Standard Policy; $4
million by First Mercury pursuant to the First Mercury
Standard Policy; $1 million by AAIC pursuant to the AAIC
Bergstein Policy; $4 million by Commerce and Industry
pursuant to an excess policy to the AAIC Bergstein Policy,
which is not at issue here; and $33 million by First Mercury
and its liability insurers. [Doc. 116, ¶ 30 (asserting
these facts); Doc. 131, ¶ 30 (not disputing these
filed a Complaint for Declaratory Judgment, Bad Faith,
and Equitable Subrogation against First Mercury,
Standard, Zia, and Bergstein, as well as the Udy plaintiffs.
[Doc. 1] The Complaint alleged that First Mercury
breached its duty of good faith and fair dealing by failing
to settle with the Udy plaintiffs within policy limits, and
that AAIC is entitled to equitable subrogation and
declaratory relief. [Doc. 4] In its suit, AAIC seeks $1
million, which represents the amount of the AAIC Bergstein
Policy that AAIC paid as a result of First Mercury's
failure to settle the Udy Action within the limits of the
AAIC Standard Policy and First Mercury Standard Policy. [Doc.
4, ¶¶ 30-32] In the First Amended Complaint for
Declaratory Judgment, Bad Faith, and Equitable
Subrogation (First Amended Complaint), AAIC
dismissed the Udy plaintiffs, leaving First Mercury,
Standard, Zia, and Bergstein as defendants. [Doc. 4]
Standard, Zia, and Bergstein were then dismissed from the
suit for failure to state a claim against them. [Doc. 33]
Thus, First Mercury is the only remaining defendant.
Mercury answered the First Amended Complaint and
counterclaimed against AAIC, alleging that AAIC acted in bad
faith by, inter alia, failing to notify First
Mercury of the AAIC Bergstein Policy. [Doc. 13] First Mercury
maintains that, if AAIC had disclosed the AAIC Bergstein
Policy earlier in the negotiations, “the Udy Action
likely would have settled prior to trial within policy
limits.” [Doc. 13, ¶ 25] First Mercury seeks
equitable and punitive damages. [Doc. 13, ¶¶ 28,
32] Both parties now move to exclude the other's expert
witness. [Doc. 114, 118]
Rule 702 and Expert Testimony
702 imposes a special gatekeeping obligation on this Court to
ensure that expert testimony is not admitted at trial unless
it is both relevant and reliable. See Kumho Tire Co., Ltd
v. Carmichael, 526 U.S. 137, 141 (1999); Daubert v.
Merrell-Dow Pharm., Inc., 509 U.S. 579, 592-93 (1993).
The relevance of such testimony also must be weighed against
“the danger of unfair prejudice, confusion of the
issues, or misleading the jury” as well as
“considerations of undue delay, waste of time, or
needless presentation of cumulative evidence.”
Federal Rules of Evidence provide that:
If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to
determine a fact in issue, a witness qualified as an expert
by knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise, if
(1) the testimony is based upon sufficient facts or data, (2)
the testimony is the product of reliable principles and
methods, and (3) the witness has applied the principles and
methods reliably to the facts of the case.
Fed. R. Evid. 702 (2000).
two-part test applies to determine admissibility. First, the
district court must determine “whether the expert is
qualified ‘by knowledge, skill, experience, training,
or education' to render an opinion.” Conroy v.
Vilsack, 707 F.3d 1163, 1168 (10th Cir. 2013) (internal
quotation marks and citation omitted); see Fed. R.
Evid. 702). Second, the court “must satisfy itself that
the proposed expert testimony is both reliable and relevant,
in that it will assist the trier of fact, before permitting a
jury to assess such testimony.” Id. (internal
quotation marks and citation omitted).
the Court is not required to consider any particular set of
factors or utilize a particular procedure in making such
determinations with respect to expert testimony, the Court
must make some kind of determination on the record
in order to demonstrate that it has performed its gatekeeping
function. See United States v. Velarde, 214 F.3d
1204, 1209 (10th Cir. 2000); Goebel v. Denver & Rio
Grande W. R.R. Co., 215 F.3d 1083, 1088 (10th Cir.
2000). “The proponent of expert testimony bears the