TBL Collectibles, Inc. v. Owners Ins. Co.

• Citation: 285 F.Supp.3d 1170
• Decision Date: 23 January 2018
• Docket Number: Civil Action No. 16–cv–01788–PAB–KLM
• Parties: TBL COLLECTIBLES, INC., d/b/a Colorado Coins, Cards & Comics, Plaintiff, v. OWNERS INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Colorado

285 F.Supp.3d 1170

TBL COLLECTIBLES, INC., d/b/a Colorado Coins, Cards & Comics, Plaintiff,

v.OWNERS INSURANCE COMPANY, Defendant.

Civil Action No. 16–cv–01788–PAB–KLM

United States District Court, D. Colorado.

Signed January 23, 2018

W. Randolph Barnhart, Melissa A. Hailey, Keating Wagner Polidori & Free, P.C., Denver, CO, for Plaintiff.

Erica Olson Payne, Muliha Alia Khan, Zupkus & Angell, P.C., Denver, CO, for Defendant.

ORDER

PHILIP A. BRIMMER, United States District Judge

This matter is before the Court on Plaintiff's Motion for Partial Summary Judgment on Its First Claim for Declaratory Relief [Docket No. 62], Defendant Owners Insurance Company's Motion for Summary Judgment [Docket No. 63], Plaintiff's Motion to Exclude Certain Opinions and Testimony of Defendant's Expert, John P. Craver, Esq. [Docket No. 54], and Owners' Motion to Exclude Certain Opinions and Testimony of Plaintiff's Expert David Young [Docket No. 83]. This Court has jurisdiction pursuant to 28 U.S.C. § 1332.

I. BACKGROUND¹

This case involves a dispute between the parties regarding payment of an insurance claim for stolen coins. Plaintiff TBL Collectibles, Inc. owns and operates Colorado Coins, Cards & Comics, a retail coin and collectibles store in Arvada, Colorado. Docket No. 62 at 2, ¶ 1; Docket No. 63 at 3, ¶ 2. At all times relevant to this action, plaintiff held an insurance policy with defendant Owners Insurance Company, that provided commercial property insurance coverage. Docket No. 63 at 3, ¶ 1. On August, 30, 2015, plaintiff's store was burglarized after hours. Docket No. 62 at 3, ¶ 4. The only items stolen were a floor safe and its contents. Id. at 3, ¶ 6. Plaintiff alleges that the safe contained $31,800 in cash and $81,317 in bullion coins. Id.²

Plaintiff reported the loss to the Arvada Police Department ("APD") on August 30, 2015. Docket No. 62–19 at 7. As part of its investigation into the incident, the APD prepared an Incident/Investigation Report containing a list of the stolen items as reported by Bruce Wray, the co-owner and manager of the store. Docket No. 1 at 3, ¶ 11; Docket No. 62–18 (APD Report); Docket No. 62–19 (APD Report continued); Docket No. 75 at 3 (stating that the "APD generated an Incident and Investigation Report (‘APD Report’), which also lists the coins Mr. Wray asserts were taken during the burglary"); Docket No. 62 at 3, ¶ 2 (stating that store is managed by owner of TBL, Bruce Wray). On August 31, 2015, plaintiff informed defendant of the loss and submitted a claim under the insurance policy. Docket No. 62 at 3, ¶ 5. Defendant immediately assigned the claim to an adjuster, Jayme Larson. Docket No. 63 at 5, ¶ 9. Ms. Larson contacted Mr. Wray on September 1, 2015. Id. On September 2, 2015, Ms. Larson visited the store, where she "confirmed placement of the safe that was stolen by left over marks on the carpet." Docket No. 1 at 6, ¶ 17; Docket No. 12 at 5, ¶ 17; Docket No. 67–11 at 20 (September 8, 2015 claims note).

At defendant's request, plaintiff provided the following documentation to substantiate the loss: (1) a handwritten list of the stolen items, which included the description and cost of each coin; (2) the APD Report; (3) invoices and deposit slips from Cornerstone Bullion, from which plaintiff had purchased coins prior to the theft; and (4) check copies, cash receipts, and bank statements reflecting plaintiff's coin purchases in the four years prior to the theft. See Docket No. 62 at 6, ¶¶ 17–18; Docket No. 67 at 8–9, ¶¶ 1, 5; Docket No. 62–24 at 6, 23:18–25 (discussing Cornerstone Bullion invoices and deposit slips); 62–25 (handwritten list of stolen items); Docket No. 62–26 at 2 (discussing invoices for coin purchases from Cornerstone Bullion); Docket No. 62–32 at 2 (discussing check copies and bank statements); Docket No. 67–2 at 3, 47:21–25 (noting that plaintiff purchased certain coins from Cornerstone Bullion); Docket No. 67–4 (APD Report).

On November 6, 2015, defendant authorized a policy limit payment of $15,000 for the stolen cash. Docket No. 1 at 7, ¶ 22; Docket No. 67–11 at 11. According to defendant, the Cornerstone Bullion invoices confirmed the existence of the cash in the safe. Docket No. 63 at 5, ¶¶ 9–10; Docket No. 62–24 at 6, 23:14–24:8.³

Ms. Larson continued her investigation of the stolen coins. See Docket No. 63–13 at 1; Docket No. 67–11 at 11. After discussions with the Home Office claims department, Ms. Larson ultimately concluded that the coins would be considered business personal property under the terms of plaintiff's insurance policy. See Docket No. 63–13 at 1; Docket No. 67–11 at 9–10.⁴ She determined, however, that the documentation provided did not adequately substantiate plaintiff's loss. Docket No. 62–29 at 2; Docket No. 63–13 at 2–3; Docket No. 67–11 at 5–7. Ms. Larson assigned a forensic accounting firm—RGL Forensics—to inspect plaintiff's business records. Docket No. 63–13 at 2. The accountant who reviewed the records, Paul DeBoer, determined that, although the records demonstrated a pattern of coin purchases, they did not prove the ownership or existence of the specific coins allegedly kept in the safe. Docket No. 63 at 6, ¶ 15; Docket No. 68 at 5–6, ¶ 15; Docket No. 62–32 at 2; Docket No. 67–11 at 3 (2/1/16 claims note).⁵ Mr. Wray was unable to provide further documentation because he did not keep written records of the coins he bought and sold. Docket No. 63 at 4–5, ¶ 8; Docket No. 68–5 at 9, 12. In addition, plaintiff admitted that many of the stolen items were purchased with cash and it did not have receipts. Docket No. 68–5 at 12–14.

On March 16, 2016, defendant sent plaintiff a letter denying its claim for the stolen coins. Docket No. 63–13.⁶ The letter states: "The documentation you have provided has show a pattern of purchasing coins, however it has not substantiated the specific coins you are claiming." Id. at 2. The letter then quotes from the "Duties In the Event of Loss or Damage" provision of plaintiff's insurance policy and explains that, based on the policy language, plaintiff has "a duty to provide complete inventories of damaged and undamaged property" and to "prove the loss." Id. at 3. Citing plaintiff's failure to comply with that duty, the letter states that defendant is "unable to issue any further payments on [plaintiff's] claim." Id.

The March 16, 2016 letter does not reference fraud as a basis for defendant's denial of payment. See id. Moreover, Ms. Larson's claims notes indicate that she found Mr. Wray believable and perceived his continued purchasing activities after the loss to be "an indication that the loss [was] legitamite [sic]." Docket No. 67–11 at 4 (2/1/16 claims notes entry). Both Ms. Larson and Donald Gibson, a representative in the Home Office claims department, see Docket No. 62–24 at 7, 28:4–6; Docket No. 62–32, testified that they never determined Mr. Wray's claim was false or fraudulent. Docket No. 62–24 at 6–7, 24:14–25:4; Docket No. 77–4 at 3, 15:6–13.

Plaintiff filed this lawsuit on July 13, 2016, asserting three claims for relief: (1) declaratory judgment as to whether plaintiff fulfilled its post-loss obligations under the insurance policy; (2) breach of contract; and (3) unreasonable delay or denial of benefits under Colo. Rev. Stat. § 10–3–1115. Docket No. 1. On July 5, 2017, plaintiff moved for partial summary judgment on its first claim for a declaratory judgment. Docket No. 62. On July 6, 2017, defendant moved for summary judgment on all claims. Docket No. 63. Both parties have also filed motions to exclude certain expert opinions under Fed. R. Evid. 702. See Docket No. 54 (plaintiff's motion to exclude opinions of John Craver); Docket No. 83 (defendant's motion to exclude opinions of David Young).

II. MOTIONS TO EXCLUDE

The Court will begin by addressing the parties' motions to exclude certain opinions of expert witnesses given that the outcome of those motions may affect the Court's resolution of the pending summary judgment motions.

A. Legal Standard

The admissibility of expert testimony is governed by Federal Rule of Evidence 702, which provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) 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; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. As the rule makes clear, while required, it is not sufficient that an expert be qualified based upon knowledge, skill, experience, training, or education to give opinions in a particular subject area. Instead, the Court must "perform[ ] a two-step analysis." 103 Investors I, L.P. v. Square D Co. , 470 F.3d 985, 990 (10th Cir. 2006). After determining whether the expert is qualified, the Court must assess whether the specific proffered opinions are reliable. See id. ; Fed. R. Evid. 702 (requiring that the testimony be "based on sufficient facts or data," be the "product of reliable principles and methods," and reflect a reliable application of "the principles and methods to the facts of the case").

Rule 702 thus imposes on the district court a "gatekeeper function to ‘ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable.’ " United States v. Gabaldon , 389 F.3d 1090, 1098 (10th Cir. 2004) (quoting Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ). To perform this role, the Court must "assess the reasoning and methodology underlying the expert's opinion, and determine whether it is both scientifically valid and applicable to a particular set of facts." Dodge v. Cotter Corp. , 328 F.3d 1212, 1221 (10th Cir. 2003) (citing Daubert , 509 U.S....