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Hibbett Patient Care, LLC v. Pharmacists Mutual Insurance Co.

United States District Court, S.D. Alabama, Southern Division

May 12, 2017

HIBBETT PATIENT CARE, LLC, et al., Plaintiffs,



         This matter comes before the Court on Plaintiffs' Motion to Strike Opinions of Defendant's Experts Joseph Cowan and Michael T. Ryan (doc. 51). The Motion has been briefed and is now ripe for disposition.[1]

         I. Background.

         Plaintiffs, Hibbett Patient Care, LLC and Hibbett Patient Care II, LLC (collectively, “Hibbett”), brought this action against their general liability insurer, Pharmacists Mutual Insurance Company (“PMIC”), asserting claims of breach of insurance contract, bad faith failure to investigate, and bad faith denial of claim. All such claims arise from PMIC's denial of coverage, including defense and indemnification, to Hibbett with respect to an underlying lawsuit styled Hibbett Sporting Goods, Inc. et al. v. Hibbett Patient Care, LLC, et al., filed in the U.S. District Court for the Northern District of Alabama (the “Hibbett Sporting Goods case”).[2]

         Hibbett maintains that the centerpiece of its action against PMIC is “whether PMIC owed Plaintiffs a defense for the claims asserted” in the Hibbett Sporting Goods case. (Doc. 51, at 1-2.) To address that issue, PMIC has designated two attorneys, Joseph Cowan and Michael Ryan, as expert witnesses. Cowan's report reflects that he is a partner at the Hand Arendall firm in Birmingham, Alabama, and that he intends to offer the following expert opinions, among others: (i) PMIC “acted reasonably and properly investigated the claim” prior to denying it; (ii) PMIC reasonably relied on Ryan's analysis in denying Hibbett's claim for defense and indemnity; (iii) none of the information provided to PMIC triggered a duty to defend; (iv) Hibbett's coverage arguments are “incorrect or inapplicable;” (v) PMIC's coverage counsel's analysis “was fair, competent and correct;” (vi) the Hibbett Sporting Goods complaint did not assert a trade dress claim; (v) the policy's trademark exclusion (exclusion m) excludes all claims arising out of allegations of trademark violations; (vii) a summary/synopsis of decisional authority on certain legal issues; (viii) opinions as to how Alabama courts would decide certain purely legal questions; and (ix) opinions as to the customary fees charged by Alabama firms in the Birmingham area for intellectual property litigation. (Doc. 51, Exh. 1, at Exh. A.) As for Ryan, he is a Michigan lawyer who served as coverage counsel for PMIC on the Hibbett claim and who authored the May 2014 letter to Hibbett denying all defense and indemnification coverage for the Hibbett Sporting Goods action. (Doc. 51, Exh. 1, at Exh. B.) Defendant has not submitted a separate expert report for Ryan; however, it has identified him as an expert witness in this matter and has explained that his May 2014 letters “regarding his coverage opinion … contain an outline of his opinions and the bases therefor.” (Doc. 51, Exh. 1, at 2.) Thus, it appears that PMIC intends to call Ryan at trial to testify as an expert to the opinions set forth in the denial-of-coverage letter he wrote to Hibbett in his capacity as PMIC's coverage counsel.

         Plaintiffs now request that the opinions of both Cowan and Ryan be excluded on four separate grounds, to-wit: their opinions are improper legal conclusions, they do not satisfy Daubert reliability principles, Ryan's expert opinions amount to unauthorized practice of law in Alabama, and PMIC is barred from contesting Hibbett's damages.

         II. Analysis.

         A. Objections to Cowan Expert Report.

         Beginning with the Cowan report, Hibbett's initial objection is that Cowan's opinions are inadmissible legal conclusions. The Eleventh Circuit has remarked that “the law in this circuit pertaining to the admissibility of an expert's opinion couched in legal terms is not crystal clear.” Hanson v. Waller, 888 F.2d 806, 811 (11th Cir. 1989) (citation omitted). Nonetheless, there are several well-defined guideposts to shape the analysis. The Federal Rules of Evidence specify that “[a]n opinion is not objectionable just because it embraces an ultimate issue.” Rule 704(a), Fed.R.Evid. That said, the general rule is that “testifying experts may not offer legal conclusions.” Cook ex rel. Estate of Tessier v. Sheriff of Monroe County, Fla., 402 F.3d 1092, 1112 n.8 (11th Cir. 2005).[3] After all, “[e]ach courtroom comes equipped with a ‘legal expert, ' called a judge, and it is his or her province alone to instruct the jury on the relevant legal standards.” Burkhart v. Washington Metropolitan Area Transit Authority, 112 F.3d 1207, 1213 (D.C. Cir. 1997); see also Carrier Exp., Inc. v. Home Indem. Co., 860 F.Supp. 1465, 1476 (N.D. Ala. 1994) (“Professor Hamilton's expected testimony was a dissertation of the law as it related to this case. … As such, this testimony was properly excluded. … The court instructs the jury regarding the applicable law; the witnesses do not.”).

         In light of these principles, expert opinions are inadmissible to the extent that they contain legal conclusions regarding the expert's interpretation of contracts, insurance policies, or other legal documents.[4] The Eleventh Circuit's decision in Montgomery v. Aetna Cas. & Sur. Co., 898 F.2d 1537 (11th Cir. 1990), is instructive. In Montgomery, an insured sued his insurance carrier for breaching its contractual duty to defend by not hiring tax counsel to represent the insured in the underlying suit. The insured offered expert testimony “that Aetna had a duty under the policy to provide counsel for the tax matter.” Id. at 1540. The panel explained that an expert may not “merely tell the jury what result to reach, ” and construed the proffered expert opinion to be “a legal conclusion, and therefore should not have been admitted. The district court abused its discretion by allowing [the expert] to testify about the scope of Aetna's duty under the policy.” Id. at 1541 (footnote omitted). District courts in this circuit have reached similar conclusions in analogous circumstances. See FNB Bank v. Park Nat'l Corp., 996 F.Supp.2d 1187, 1192 (S.D. Ala. 2014) (excluding expert testimony that a “construction loan agreement requires an increase in construction costs to be borne by the developer” and “that the plaintiff breached its contractual duty by failing to monitor the loan” where it is improper for witness to posit “as an expert, an interpretation of what the contract requires”); Rosen v. Protective Life Ins. Co., 817 F.Supp.2d 1357, 1385 (N.D.Ga. 2011) (“The proposed testimony seeks to displace the role of the Court by offering Dr. Reavis's opinion on the scope of the obligations described by the unambiguous language of the Settlement Agreement, which is not allowable under the Rules of Evidence.”); North American Specialty Ins. Co. v. Wells, 2013 WL 4482455, *3 (S.D. Ga. Aug. 19, 2013) (excluding expert's “legal conclusions regarding the interpretation of the insurance policy terms, ” and particularly his opinion that the insurer “has a duty to provide coverage for the event in question, ” where such opinion “is nothing more than a reiteration or recasting of Defendant Wells's interpretation of the insurance contract”).

         Notwithstanding the foregoing, it is proper for a qualified expert witness to testify about insurance industry practices and procedures. See, e.g., Camacho v. Nationwide Mut. Ins. Co., 13 F.Supp.3d 1343, 1366 (N.D.Ga. 2014) (“[B]ecause the average juror is not likely to be familiar with the practices and procedures involved in insurance claims handling, expert testimony on these matters is admissible to assist the trier of fact. … An insurance expert may testify regarding what duties are owed by an insurance company during the claims handling process and whether the actions of the insurance company complied with those duties without offering improper legal conclusions.”); Royal Marco Point 1 Condominium Ass'n v. QBE Ins. Corp., 2011 WL 470561, *4 (M.D. Fla. Feb. 2, 2011) (allowing expert opinions comparing defendant insurer's claims handling practices to what is standard and typical in the industry).[5] And an expert may properly testify as to facts that relate to a legal standard, so long as he or she does not offer opinions as to whether that legal standard has been met. See, e.g., Cordoves v. Miami-Dade County, 104 F.Supp.3d 1350, 1365 (S.D. Fla. 2015) (“[A]n expert may offer his opinion as to facts that, if found, would support a conclusion that the legal standard at issue was satisfied, but he may not testify as to whether the legal standard has been satisfied.”); Camacho, 13 F.Supp.3d at 1366 (citing as an example of proper testimony an attorney expert opinion that a statement in a prospectus was standard language, because such information helped the jury evaluate defendants' scienter).

         In large part, Cowan's proffered expert opinions “merely tell the jury what result to reach” and recast PMIC's own interpretation of the relevant documents. He interprets various aspects of the insurance policy as well as the Hibbett Sporting Goods complaint.[6] He opines that PMIC's interpretations are correct and that Hibbett's interpretations are incorrect.[7] In this manner, Cowan simply reiterates PMIC's interpretations of what the Hibbett Sporting Goods complaint means and what the insurance policy's various coverages and exclusions require. Such legal conclusions are unhelpful to the jury and are inadmissible. See Cook, 402 F.3d at 1111 (“Proffered expert testimony generally will not help the trier of fact when it offers nothing more than what lawyers for the parties can argue in closing arguments.”) (citations omitted). Cowan's expert report is also replete with analysis of what he believes applicable law says (including lengthy citations to published decisions from other jurisdictions), and his repeated forecasts that, “[i]n my opinion, an Alabama court deciding these issues would reach the same conclusion.” (Cowan Report, at 5, 7, 10.) Such a dissertation on the law and how the witness thinks Alabama courts would decide certain legal questions improperly invades the province of this Court. Witnesses do not instruct juries on the law. Courts do. These aspects of the Cowan report are not proper expert opinions for trial.

         However, several aspects of the Cowan report do not simply parrot PMIC's interpretation of the policy and the Hibbett Sporting Goods complaint, and do not invade the province of the Court by instructing the jury as to the law. In particular, Cowan's report includes opinions concerning PMIC's claims handling procedures, such as where he opines that PMIC “acted reasonably and properly investigated the claim by requesting information from [Hibbett] in addition to the [Hibbett Sporting Goods] Complaint and obtaining a coverage opinion from competent legal counsel prior to denying the claim.” (Cowan Report, at 3.) As noted by the authorities cited supra, expert testimony may permissibly be used to assist the jury in understanding insurance claims handling procedures. The Court notes that Hibbett has raised a Daubert objection; however, nothing in Hibbett's Daubert analysis would impugn the reliability of this aspect of Cowan's report. Accordingly, the Motion to Strike is denied insofar as it would preclude Cowan from offering expert opinions as to the reasonableness and thoroughness of PMIC's investigation and claims handling procedures utilized in this case, relative to standard industry practices.

         Another portion of Cowan's expert report that does not run afoul of the proscription against legal conclusions and telling the jury what result to reach is the section in which he offers opinions as to the customary fees charged by proficient lawyers at Alabama firms for intellectual property litigation in the Birmingham legal market. (Cowan Report, at 11.) PMIC apparently intends to use these opinions to show that the more than $160, 000 in legal fees incurred by Hibbett in defending the Hibbett Sporting Goods action are excessive and unreasonable, such that any legal fees awarded to Hibbett as damages herein should be discounted to reflect customary rates in the appropriate legal market. In its Motion to Strike, Hibbett insists that PMIC “is barred from contesting Plaintiffs' damages” (doc. 51, at 6); however, the authorities it cites do not support that proposition. Where a party seeks recovery of attorney's fees for a breach of contract claim, Alabama law imputes a reasonableness limitation to the resulting fee award, as a matter of law.[8] And Alabama law imposes a duty to mitigate damages on an aggrieved party in the breach-of-contract context. See Whitney Bank v. Point Clear Development, LLC, 2012 WL 2277597, *3 (S.D. Ala. June 18, 2012) (“As a general matter, Alabama courts have recognized a duty to mitigate in the breach of contract context.”); see also Wells Fargo Bank, N.A. v. Trotman, 940 F.Supp.2d 1359, 1368 (M.D. Ala. 2013) (similar). In light of these well-entrenched legal principles, and movants' ...

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