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Adams Craig Acquisitions LLC v. Atain Specialty Insurance Co.

United States District Court, D. Arizona

August 2, 2019

Adams Craig Acquisitions LLC, et al., Plaintiffs,
Atain Specialty Insurance Company, et al., Defendants.



         Pending before the Court is the Motion to Preclude Expert Testimony (Doc. 52) of Defendant Atain Specialty Insurance Company. For the following reasons the motion is denied.


         This case is a dispute over an insurance claim. Plaintiff Adams Craig Technology (“ACT”), a Nevada LLC, contracted for the construction of a residence in Paradise Valley, Arizona in 2014. In August 2016, the homeowners noticed a leak in the garage of the home, which ultimately led to the discovery of problems with the construction. Defendant Specialty Insurance Company Atain determined that it would cover $36, 416 in costs associated with work undertaken by Plaintiff Adams Craig Acquisitions, LLC (“ACA”) to resolve the issues in the home. But Atain denied coverage for $42, 900 in property damage. Atain similarly declined to cover ACA's management and overhead costs associated with the repairs. A few months after the initial coverage decision, Atain readjusted the amount they were willing to pay downward to $27, 362.97. ACA was dissatisfied with that outcome and filed suit in the Superior Court for Maricopa County. Atain timely removed the action to this court in March 2018.


         I. Standard

         Federal Rule of Evidence 702 governs the admissibility of expert testimony, and permits the presentation of “scientific, technical, or other specialized knowledge” by a qualified expert if it will “assist the trier of fact to understand the evidence or to determine a fact in issue, ” it is “based on sufficient facts or data, ” it is “the product of reliable principles and methods, ” and “the expert has reliably applied the principles and methods to the facts of the case.” Expert testimony must be relevant and reliable to be admitted. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993).[1] “Rule 702 contemplates a broad conception of expert qualifications.” Hangarter v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1015 (9th Cir. 2004) (internal quotation marks omitted) (emphasis in original).

         “[T]he test under Daubert is not the correctness of the expert's conclusions but the soundness of his methodology.” Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010), as amended (Apr. 27, 2010). Offering “only the expert['s] qualifications, [her] conclusions[, ] and [her] assurance of reliability” is insufficient. Daubert v. Merrell Dow Pharmaceuticals, Inc., 43 F.3d 1311, 1319 (9th Cir. 1995). Criteria for reliability of methodology include “testability, publication in peer reviewed literature, and general acceptance, but the inquiry is a flexible one.” Primiano, 598 F.3d at 564; see also Daubert, 509 U.S. at 592-94. Other criteria may include how often the methodology produces erroneous results and whether the testimony is based on “legitimate, preexisting research unrelated to the litigation.” In re Apollo Grp. Inc. Sec. Litig., 527 F.Supp.2d 957, 961 (D. Ariz. 2007) (internal citation omitted). However, these factors are neither exhaustive nor applicable to every case. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999); United States v. Hankey, 203 F.3d 1160, 1168 (9th Cir. 2000). Trial courts have broad discretion in performing their gatekeeping function under Daubert. United States v. Alatorre, 222 F.3d 1098, 1101 (9th Cir. 2000) (citing Hankey, 203 F.3d at 1168).

         II. Analysis

         A. ACT's expert is sufficiently qualified.

         Atain first asserts that ACT's expert, Kirk Hays, is not qualified to offer testimony. Rule 702 contemplates expertise resulting from multiple areas: “knowledge, skill, experience, training, or education.” Fed.R.Evid. 702. “In certain fields, experience is the predominant, if not sole, basis for a great deal of reliable expert testimony.” Hangarter, 373 F.3d at 1015 (quoting Fed.R.Evid. 702 advisory committee's note) (quotation marks omitted).

         Hays is an attorney with experience in legal fields related to “construction-related insurance claims.” (Doc. 58 at 3.) He has represented clients in proceedings regarding insurance coverage for construction-related claims; the adequacy of insurance coverage and coverage decisions by insurance carriers; and subrogation cases that included insurance investigations. (Doc. 58-1 at 2-4.) Hays also states that he has participated in site inspections, construction investigations, and insurance investigations, during which he has apparently worked closely with claims adjusters regarding coverage decisions. (Id. at 3.) Although he has never actually worked for an insurance company, as had the expert in Hangarter, Hays' experience with the insurance industry in the context of construction is sufficient to meet “the minimal foundation of knowledge, skill, and experience required in order to give ‘expert' testimony on the practices and norms of insurance companies in the context of a bad faith claim.” Hangarter, 373 F.3d at 1016 (quotation marks omitted) (emphasis in original) (quoting Thomas v. Newton Int'l Enters., 42 F.3d 1266, 1269 (9th Cir. 1994)).

         B. Hays' opinions in the report do not exceed the identified scope for his opinions.

         Atain next argues that Hays' opinions exceed the scope identified by ACT in its expert witness disclosure. Under the Federal Rules of Civil Procedure, parties “must disclose to the other parties the identity of any witness it may use at trial to present [expert] evidence.” Fed.R.Civ.P. 26(a)(2)(A). Additionally, parties must accompany their expert disclosures with written reports from the expert witness. Id. (B). As relevant here, such a report must contain “(i) a complete statement of all opinions the witness will express and the basis and reasons for them; (ii) the facts or data considered by the witness in forming them; . . . [and] (iv) the witness's qualifications.” Id. (B)(i)-(iv). Evidence beyond the scope of the opinions identified in the disclosure and expert report is subject to exclusion under Federal Rule of Civil Procedure 37(c)(1) (“If a party fails to provide ...

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