Salopek v. Zurich Am. Life Ins. Co.
| Decision Date | 30 October 2020 |
| Docket Number | NO. 18-CV-00339 JAP/CG,18-CV-00339 JAP/CG |
| Parties | MARCIE SALOPEK, Trustee for THE SALOPEK FAMILY HERITAGE TRUST Plaintiff, v. ZURICH AMERICAN LIFE INSURANCE COMPANY, Defendant |
| Court | U.S. District Court — District of New Mexico |
In February 2020, Plaintiff Marcie Salopek, Trustee for The Salopek Family Heritage Trust (Plaintiff) and Defendant Zurich American Life Insurance Company (Defendant) filed motions in limine seeking to exclude the qualifications of the opposing parties' proposed experts: Defendant's expert Charles McAleer, and Plaintiff's experts Vera Dolan and Don Kelley.1 The Motions are fully briefed.2
On March 9, 2020, the Court held a pretrial conference.3 Peter Selvin, Pooja Nair, Jamison Shekter, and Randi McGinn appeared for Plaintiff, and John Jacobus, Dan O'Brien, and John Kavanaugh appeared for Defendant. At that time, the Court orally denied Plaintiff's Mot. to Exclude Charles McAleer,4 took the remaining Qualifications Motions under advisement, and directed the parties to meet, confer, and examine whether after the Court's ruling on Plaintiff's Bad Faith claim the parties still disagreed about their expert's qualifications.5
On May 19, 2020, the Court entered a scheduling order advising the parties to inform the Court in writing by July 1, 2020 whether the parties continued to dispute the qualifications of proposed experts Mr. Kelley and Ms. Dolan.
On July 1, 2020, Defendant filed a letter brief and appendix indicating that Defendant maintained its stated position in Defendant's Mot. to Exclude Don Kelley and Mot. to Limit Dolan.6 Plaintiff responded to Defendant's letter brief with a letter indicating that she had not understood the Scheduling Order to authorize additional briefing and asked the Court permission to respond by July 15, 2020.7 On July 6, Defendant responded to Plaintiff's letter, arguing that the Scheduling Order contemplated simultaneous briefing by July 1, 2020.8 Plaintiff responded to this letter on July 7, 2020.9
On July 14, 2020, the Court entered an order permitting additional briefing on the Qualifications Motions.10 Subsequently, on July 15, 2020, Plaintiff filed a letter brief, responding to Defendant's July 1, 2020 Letter Brief.11 Defendant replied on July 29, 2020.12
On August 28, 2020, the Court held a Daubert hearing by Zoom on Defendant's objections to Mr. Kelley's proffered testimony.13 Present at the hearing for Plaintiff were Randi McGinn and Jamison Shekter and for Defendant, John Kavanagh, Dan O'Brien, John Jacobus, and Johanna Dennehy.
After reviewing all briefings and considering Mr. Kelley's testimony and the parties' arguments at the Daubert Hearing, the Court will grant Defendant's Mot. to Exclude Kelley from Testifying. Pending further briefing, the Court will take Defendant's Mot. to Limit Dolan under advisement.
The factual background of this case has been well-documented, and the Court will not repeat it fully here. In short, this is a breach of contract case, focusing on whether Defendant properly rescinded an insurance policy issued to Mr. Mark Salopek because of Mr. Salopek's alleged misrepresentations in the policy application about his alcohol and tobacco use.
On March 6, 2018, Plaintiff filed a five-count Complaint in New Mexico state court against Defendant, alleging the following claims: Count I, Breach of Contract; Count II, Bad Faith Insurance Conduct; Count III, Violation of Unfair Insurance Practices Act; Count IV, Violation ofUnfair Trade Practices Act; and Count V, Negligence. On April 11, 2018, Defendant answered the Complaint and removed the case to federal court based on diversity under 28 U.S.C. § 1332.14
On December 11, 2019, the Court dismissed three of Plaintiff's claims: Count III, Violation of Unfair Insurance Practices Act; Count IV, Violation of Unfair Trade Practices Act; and Count V, Negligence.15 In January 2020, the parties filed competing motions for summary judgment.16 Defendant asked the Court for summary judgment on the two remaining counts: Count I, Breach of Contract and Count II, Bad Faith Insurance Conduct, while Plaintiff asked the Court to determine the principal-agent relationship between Defendant and two non-party insurance brokers or agents. The Court partially granted Defendant's summary judgment motion and dismissed Count II, Bad Faith, and denied Defendant's motion at to Count I, Breach of Contract. The Court denied Plaintiff's partial summary judgment motion, finding that whether nonparties had functioned as brokers or agents was a disputed issue of material fact.17
Before the Court in this diversity proceeding are motions concerning the admissibility and relevance of proposed expert testimony. "[I]n a federal diversity action, the district court applies state substantive law—those rights and remedies that bear upon the outcome of the suit—and federal procedural law—the processes or modes for enforcing those substantive rights and remedies." Los Lobos Renewable Power, LLC v. Americulture, Inc., 885 F.3d 659, 668 (10th Cir. 2018) cert. denied sub nom. AmeriCulture, Inc. v. Los Lobos Renewable Power, LLC, 139 S. Ct.591 (2018). Plaintiff's sole remaining count is a breach of contract claim which involves an insurance policy executed in New Mexico.
Under New Mexico law, "[t]he elements of a breach-of-contract action are the existence of a contract, breach of the contract, causation, and damages." Abreu v. New Mexico Children, Youth & Families Dep't, 797 F. Supp. 2d 1199, 1247 (D.N.M. 2011) (further citation omitted). Plaintiff argues that Defendant breached the contract when it rescinded the Policy based on purported misrepresentations by Mr. Salopek. Rescission of an insurance policy is "allowed where there has been a misrepresentation of a material fact, the misrepresentation was made to be relied on, and has in fact been relied on." Prudential Ins. Co. of Am. v. Anaya, 428 P.2d 640, 643 (N.M. 1967).
Plaintiff's claim focuses on the events that occurred at the time Mr. Salopek applied for a policy and Plaintiff disputes whether the application contained material misrepresentations. In considering the materiality of any misrepresentations, the jury may be asked to make findings on whether the individual who signed the application, Mr. Luis Sisniega, functioned in the transaction as an agent or as a broker. See SJ MOO (Doc. 275) pp. 14-16. Plaintiff frames the issues for trial as:
See Plaintiff's Letter Brief dated July 15, 2020 (Doc. 290) at 1-2. Plaintiff argues that the complexity of these questions requires an expert to testify about how an application is assessedprior to acceptance (underwriting), how a policy claim is managed (claim processing and/or rescission), and the industry distinction between insurance agents and brokers (agent/brokers).
Plaintiff proffers two experts, Don Kelley and Vera Dolan, to testify about aspects of the insurance industry. "[T]he distinction between lay and expert witness testimony is that lay testimony results from a process of reasoning familiar in everyday life, while expert testimony results from a process of reasoning which can be mastered only by specialists in the field." United States v. Yeley-Davis, 632 F.3d 673, 684 (10th Cir. 2011) (further citation omitted). But expert testimony must be "both reliable and relevant." Alfred v. Caterpillar, Inc. 262 F.3d 1083, 1086 (10th Cir. 2001). Toward this end, courts act as gatekeepers. Id. "This gatekeeper function requires the judge to assess the reasoning and methodology underlying the expert's opinion, and determine whether it is scientifically valid and applicable to a particular set of facts." Goebel v. Denver & Rio Grande W. R.R. Co., 215 F.3d 1083, 1087 (10th Cir. 2000) (citing Daubert v. Merrill Dow Pharm., Inc., 509 U.S. 579, 592 (1993)).
The Court's gatekeeping function involves a two-step inquiry. See United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009) (en banc). First, the Court will evaluate the witness's qualifications. Second, the Court will analyze the reliability of the proffered opinion. See Ralston v. Smith & Nephew Richards, Inc., 275 F.3d 965, 969 (10th Cir. 2001). While substantive New Mexico law is relevant to a federal court's examination of issues of contractual interpretation, a federal court's scrutiny of expert testimony is governed by federal law. See Hall v. Conoco Inc., 886 F.3d 1308, 1311 (10th Cir. 2018).
Plaintiff submits Mr. Kelley as an expert on claim rescission and agent/brokers.19 Defendant objects to Mr. Kelley's testimony, arguing that 1) testimony about claim rescission is not relevant; and 2) Mr. Kelley is not an expert about agent/brokers.20
The Court begins its assessment of Mr. Kelley's qualifications by determining whether "[Mr. Kelley] is qualified by knowledge, skill, experience, training, or education to render an opinion." Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999).
Since 1961, when he began working as a manager at Pacific Mutual Life Insurance, Mr. Kelley has worked in the insurance field. Until 1968, he was responsible for policy changes and disbursements. After attending Southwestern University School of Law, Mr. Kelley shifted to working as counsel in the legal department of various insurance companies until he entered private practice in 1986. For a brief period, from 2011 to 2013, Mr. Kelley worked as general counsel at an insurance company. As legal counsel for insurance companies, Mr. Kelley was...
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