Blues To You, Inc. v. Auto-Owners Ins. Co.

Decision Date17 October 2022
Docket Number1:21-CV-00165
PartiesBLUES TO YOU, INC., doing business as Wilbert's Plaintiff, v. AUTO-OWNERS INSURANCE COMPANY Defendant. Cost
CourtU.S. District Court — Northern District of Ohio

Thomas M. Parker United States Magistrate Judge

It's an old adage that “you can't make an omelet without breaking eggs.”[1] In this action, plaintiff felt betrayed when it thought its insurance carrier mishandled two separate property loss claims. And the insurance company and plaintiff were unable to arrive at a negotiated compromise before or after suit was filed. So, they decided to endure an expensive trial in order to vindicate their positions. Unfortunately for the parties, their efforts did not produce an omelet, but left us with only a few cracked shells.

On April 12, 2022, following a six-day trial, a jury returned verdicts in favor of Blues To You, Inc. on breach of contract and bad faith claims arising from the handling of two separate claims Blues To You made on 2019 and 2020 insurance policies issued by the defendant, Auto-Owners (Mutual) Insurance Company. On April 14, 2022, a final judgment was entered. ECF Doc. 150. Subsequently, Blues To You timely moved for attorney's fees (ECF Doc. 153) and prejudgment interest (ECF Doc. 154). Further, on May 12 2022, Auto-Owners separately moved for judgment as a matter of law under Fed.R.Civ.P. 50(b) (ECF Doc. 163); for a new trial or, alternatively, remittitur under Fed.R.Civ.P. 59 (ECF Doc. 164); and for remittitur (ECF Doc. 165). All of the motions are ripe for decision.

Upon consideration, the court finds that a new trial on the issue of compensatory damages should be granted unless plaintiff accepts a remittitur of its compensatory damages to the sum of $231,374.23.

I. Background

On September 26, 2019, Wilbert's, a bar operated by Blues To You, a corporation wholly owned by Michael Miller, suffered damage from a fire in its kitchen. Blues To You rented the space for Wilbert's in the Caxton Building in downtown Cleveland. The next day, Miller began the claim-filing process with Auto-Owners. After initial direct interactions with an Auto-Owners' adjuster, Miller hired a public adjuster, Robert McEaneney, to represent Blues To You.

Auto-Owners agreed that the fire damage was covered under the 2019 policy and that Blues To You had fully paid its insurance premiums for that policy year. Auto-Owners' claims agent, Wade Feielin, hired an independent adjuster, Michael Coduto, to adjust the loss. In March 2020, while the 2019 claim was still open, Auto-Owners renewed Blues To You's insurance policy for Wilbert's at Miller's request. The 2019 and 2020 policies had nearly identical terms.

By September 29, 2020, Auto-Owners and Blues To You still had not resolved the claim regarding the 2019 loss. But that day, a fire broke out in an apartment above the bar's leasehold space, causing water damage in Wilbert's. Blues To You filed a new claim based on the water damage (the 2020 claim). After Auto-Owners informed Blues To You that it was investigating the claim and would require a further 45 days before deciding whether it would accept or reject the 2020 claim, the insurer never followed up. As a result, Blues To You filed this action.

The case proceeded to trial, and the jury returned a verdict of $716,668 in compensatory damages and $154,665 in consequential damages on claims of breach of contract and bad faith related to each insurance claim filed. The aggregate compensatory and consequential damage award was $871,333. The jury also awarded punitive damages of $375,000 and determined that Blues To You was entitled to an award of attorney's fees. Blues To You claims a right to $293,161.02 in attorney's fees and costs.

II. Motion for a New Trial[2]

A. Arguments

Auto-Owners contends that a new trial should be granted for the same reasons asserted in its motion for judgment as a matter of law - primarily because “the verdict was against the weight of the evidence and controlling law and agreements between the parties.” ECF Doc. 164 at 2. And it offered three additional reasons: first, it contends that the court erred in admitting portions of Robert McEaneney's testimony, which it argues constituted unqualified expert testimony on whether there was reasonable justification for Auto-Owners' actions. ECF Doc. 164 at 2-5. Second, it argues that the court erred in prohibiting witness Katie Dugan from testifying. ECF Doc. 164 at 11-13. Third, it asserts that the court erred by failing to instruct the jury on the content of and/or how to interpret specific provisions in the insurance policies. ECF Doc. 164 at 5-11. Blues To You opposes the motion. See ECF Doc. 173. B. Legal Standard

Federal Rule of Civil Procedure 59 provides that, after a jury trial, a new trial may be granted “for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a)(1)(A). Generally, ‘a new trial is warranted when a jury has reached a ‘seriously erroneous result' as evidenced by: (1) the verdict being against the weight of the evidence; (2) the damages being excessive; or (3) the trial being unfair to the moving party in some fashion, i.e., the proceedings being influenced by prejudice or bias.' Mosby-Meachem v. Memphis Light, Gas & Water Div., 883 F.3d 595, 606 (6th Cir. 2018) (quoting Holmes v. City of Massillon, Ohio, 78 F.3d 1041, 1045 (6th Cir. 1996)). [I]n finding that a jury's verdict was against the weight of the evidence, the judge must, to some extent at least, substitute[] his judgment of the facts and the credibility of the witnesses for that of the jury.” Id. (Internal quotation marks omitted and alterations in original). However, the court may not set aside the verdict “simply because it believes that another outcome is more justified.” Denhof v. City of Grand Rapids, 494 F.3d 534, 543 (6th Cir. 2007) (citing TCP Indus., Inc. v. Uniroyal, Inc., 661 F.2d 542, 546 (6th Cir. 1981)). If the verdict is “one which reasonably could have been reached,” the court may not grant a motion for a new trial. Id. (citing Duncan v. Duncan, 377 F.2d 49, 52 (6th Cir. 1967)).

C. Analysis

The court will first address the three enumerated reasons Auto-Owners raises before considering its general argument that the verdicts were against the weight of the evidence, contrary to controlling law, and contrary to the parties' contracts.

1. Robert McEaneney's Testimony

Auto-Owners contends that the court erred in permitting Robert McEaneney to testify regarding whether it acted in good faith and with reasonable justification in the handling of Blues To You's claims. ECF Doc. 164 at 3. Its challenge is two-fold. First, it argues that expert testimony is required to prove bad faith. ECF Doc. 164 at 3-4. Second, it asserts that because McEaneney had no experience working as an adjuster for an insurance company, he did not qualify as an expert on claims handling - from the insurance company's perspective - and testified to the incorrect bad faith standard. ECF Doc. 164 at 3-5. These errors, it argues, confused the jury and, thus, require a new trial. ECF Doc. 164 at 3-5.

In response, Blues To You contends that Auto-Owners' argument challenges the credibility, rather than the reliability, of McEaneney's testimony and, thus, a new trial is not necessary on this ground. ECF Doc. 173 at 3-6. It also argues that, even if an error, the inclusion of McEaneney's testimony was harmless because Auto-Owners submitted little evidence in mitigation of the claimed damages. ECF Doc. 173 at 6.

The proponent of expert testimony must demonstrate that the expert is qualified by his “knowledge, skill, experience, training, or education” and:

(1) that “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”;
(2) that “the testimony is based on sufficient facts or data”; (3) that “the testimony is the product of reliable principles and methods”; and (4) that “the expert has reliably applied the principles and methods to the facts of the case.”

Madej v. Maiden, 951 F.3d 364, 369 (6th Cir. 2020) (quoting Fed.R.Evid. 702). [W]hen parties offer expert testimony, the district court must determine whether the testimony is relevant and reliable before allowing its admission.” Nelson v. Costco Wholesale Corp., No. 21-5666, 2022 U.S. App. LEXIS 2634, at *4 (6th Cir. 2022) (unreported).

Whether the court may deem a witness an expert based on his expertise depends on the nature and extent of that experience. See United States v. Cunningham, 679 F.3d 355, 378 (6th Cir. 2012). Conclusory assertions of experience are insufficient; the proponent of the expert's testimony must show that “those qualifications provided a foundation for him to answer a specific question.” Nelson, 2022 U.S. App. LEXIS 2634, *8.

Auto-Owners has not shown that the jury reached a seriously erroneous result by being able to consider McEaneney's testimony. See Fed.R.Civ.P. 59(a)(1)(A); Mosby-Meachem, 883 F.3d at 606. First, as to the alleged “requirement” that bad faith claims must be supported by expert testimony, Auto-Owners' argument is not well taken. In repeatedly raising this argument (before and during trial and in the current motion), Auto-Owners has failed to support its argument. See ECF Doc. 156 at 16-19, 103-105; ECF Doc. 163 at 11; ECF Doc. 164 at 3-5. Although Auto-Owners cites cases (notably even fewer now than at trial), not one holds that expert testimony is required to succeed on a bad faith claim.

Auto-Owners presents no reason - legal or policy - for such a per se requirement, nor has it articulated why those cases cited, in which courts have approved the use of an expert, are so...

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