Opinion
Case No. 19-CV-00043-GKF-CDL
2021-02-11
Dustin HELLARD, Plaintiff, v. MID CENTURY INSURANCE COMPANY d/b/a Farmers Insurance, Defendant.
Donald Eugene Smolen, II, Dustin Joseph Vanderhoof, Laura L. Hamilton, Lawrence Richard Murphy, Jr., Smolen Law, PLLC, Tulsa, OK, for Plaintiff. Casper Johan den Harder, Kelsie M. Sullivan, Philip Raymond Richards, Richards & Connor, Tulsa, OK, for Defendant.
Donald Eugene Smolen, II, Dustin Joseph Vanderhoof, Laura L. Hamilton, Lawrence Richard Murphy, Jr., Smolen Law, PLLC, Tulsa, OK, for Plaintiff.
Casper Johan den Harder, Kelsie M. Sullivan, Philip Raymond Richards, Richards & Connor, Tulsa, OK, for Defendant.
ORDER
GREGORY K. FRIZZELL, UNITED STATES DISTRICT JUDGE
This matter comes before the court on the Second Motion in Limine : Irrelevant Standards for Bad Faith [Doc. 94] of defendant Mid-Century Insurance Company (MCIC). For the reasons set forth below, the motion is granted in part and denied in part.
Background/Procedural History
This case relates to an insurance dispute. Mr. Hellard made an insurance claim under an Artisan Contractor Premier Policy issued by MCIC to Hellard's employer, Gilley Ventures LLC, for he injuries sustained while driving a Gilley-owned vehicle in the course and scope of his employment.
When MCIC had not issued any payment by January 28, 2019, Mr. Hellard initiated this litigation. [Doc. 2]. The Amended Complaint, the operative pleading, included claims for breach of contract and breach of the implied duty of good faith and fair dealing, and sought punitive damages. [Doc. 10]. In an Opinion and Order dated November 10, 2020, the court denied MCIC's summary judgment motion as to all of plaintiff's claims, as well as his request for punitive damages. [Doc. 133]. On February 5, 2021, Mr. Hellard dismissed the breach of contract claim with prejudice. [Doc. 155]. The bad faith claim is currently scheduled for the March 15, 2021 trial docket. [Doc. 148].
In advance of trial, MCIC filed three (3) motions in limine. [Doc. 93; Doc. 94; Doc. 95]. MCIC's Second Motion in Limine seeks an order prohibiting admission of the following five general matters:
1. Evidence, testimony, or argument regarding MCIC's compliance or non-compliance with internal policies and procedures, claims guidelines, or adjuster training materials;
2. Evidence, testimony, or argument regarding MCIC's personnel files;
3. Evidence, testimony, or argument regarding the Oklahoma Unfair Claims Settlement Practices Act, Okla. Stat. tit. 36, §§ 1250.1 et seq. ;
4. Evidence, testimony, or argument concerning the legal duties an insurer owes an insured; and
5. Evidence, testimony, or argument asserting that MCIC had a continuing duty to evaluate Mr. Hellard's claim after litigation commenced.
[Doc. 94, pp. 1-2]. Mr. Hellard responded in opposition [Doc. 115], and MCIC filed a reply. [Doc. 125]. Thus, the motion is ripe for the court's determination.
Standard
"The purpose of a motion in limine is to allow the Court to decide evidentiary issues in advance of trial to avoid delay and ensure an evenhanded and expeditious trial." Dry Clean Super Ctr., Inc. v. Kwik Indus., Inc. , No. 08-CV-00578-WJM-CBS, 2012 WL 503510, at *4 (D. Colo. Feb. 15, 2012). However, "[s]ince a trial court is almost always in a better position at the actual trial to assess the probative value of evidence, courts are reluctant to grant broad exclusions of evidence in limine." Cook v. Peters , No. 13-CV-107-GKF-FHM, 2015 WL 10986407, at *1 (N.D. Okla. July 30, 2015) (quoting Walsh v. United States , No. 07-CV-568-PJC, 2009 WL 3755553, at *2 (N.D. Okla. Mar. 31, 2009) ). "A court will generally not grant a motion in limine unless the moving party meets its burden of showing that the evidence in question is clearly inadmissible on all potential grounds." Id. at *1 (emphasis added).
Analysis
As previously stated, MCIC seeks exclusion of five general matters. The court separately considers each matter.
A. MCIC's Internal Policies and Procedures, Claims Guidelines, and Adjuster Training Materials
MCIC contends that evidence of its internal policies and procedures, claims guidelines, and adjuster training, including whether MCIC complied with same, is irrelevant and unduly prejudicial.
With respect to relevance, MCIC first cites the Oklahoma Court of Civil Appeals decision, Peters v. American Income Life Insurance Company , for the proposition that an insurer's internal negligence in its procedures is not probative of bad faith. 77 P.3d 1090, 1098 (Okla. Civ. App. 2002). However, in that case, plaintiff alleged that the insurer acted unreasonably by failing to adopt appropriate written procedures, not that the insurer failed to comply with the standards adopted. Id. at 1097-98. In other words, plaintiff's bad faith theory
had nothing to do with the claim itself, the cause or event ([plaintiff's] death by accident) giving rise to the claim, insurable interest, amount of the claim, or breach of policy conditions. Moreover, no evidence was presented tending to show that [insurer] delayed payment, tried to extort some unfair advantage or result by withholding payment, or even just ignored the claim.
Id. at 1098 (emphasis in original). Here, a lack of written guidelines does not appear to be the crux of Mr. Hellard's claims.
Similarly, MCIC relies on the Tenth Circuit's decision in Johnson v. Liberty Mutual Fire Insurance Company , 648 F.3d 1162 (10th Cir. 2011). In that case, the insureds sued alleging that the insurer acted in bad faith by failing to preserve tail lights after a traffic accident as required by the insurer's internal policy, which allegedly resulted in the insureds settling a subsequent personal injury case "at a deep discount." Id. at 1164. In affirming the trial court's dismissal of the bad faith claim, the Tenth Circuit reasoned that the insureds failed to "show that their claimed damages were reasonably foreseeable—that [insurer] knew or should have known that the destroyed tail lights would be relevant (valuable) evidence in their future affirmative litigation." Id. While the court did recognize a distinction between violation of internal corporate guidelines and public legal liability, the court's holding was specific to the facts of that case:
[The insureds] point out that [insurer] had an internal policy requiring it to preserve the tail lights for six years after closing its claims file—in time for the [insureds] to use the lights in their affirmative litigation. But this line of argument conflates two very different things. When you violate a corporate policy you may well be in trouble with your boss, but that doesn't necessarily mean you have committed a tort. Our role as a court of law is not to enforce private corporate policy but to assess
public legal liability. And the [insureds] never show how, in this case, the existence of the one (the corporate retention policy) might be evidence of a violation of the other (the law). They never explain how [insurer's] adoption of an internal retention policy establishes that it did foresee or should have foreseen their not yet mentioned (and perhaps not yet formed) plan to bring an affirmative lawsuit. And they don't because they can't.
Id. at 1165 (emphasis added).
The court declines to extend Peters and Johnson to require wholesale preclusion of MCIC's internal policies and procedures, claims guidelines, and adjuster training in this case. See Godfrey v. CSAA Fire & Cas. Ins. Co. , No. CIV-19-00329-JD, 2020 WL 1056306, at *9 (W.D. Okla. Mar. 4, 2020) ; Thomas v. Farmers Ins. Co. , No. 16-CV-17-TCK-JFJ, 2018 WL 2323794, at *2 (N.D. Okla. Feb. 16, 2018).
As for prejudice, MCIC expresses concern that a jury may incorrectly determine that evidence that it did not comply with its internal policies, procedures, or guidelines is a sufficient basis for bad faith liability. [Doc. 94, p. 3]. However, it appears that MCIC's concern may be adequately addressed through a limiting instruction. Dennis v. Progressive N. Ins. Co. , No. CIV-17-182-SLP, 2018 WL 4871039, at *4 (W.D. Okla. Apr. 9, 2018). However, absent identification of specific evidence, that determination is premature.
For the reasons set forth above, the court declines to wholly exclude evidence of MCIC's internal policies and procedures, claims guidelines, and adjuster training materials, and MCIC does not identify any specific evidence that it wishes to exclude. Absent identification of specific evidence, MCIC's motion in limine as to this topic is denied without prejudice to the assertion of specific objections at trial.
MCIC does identify the opinions of plaintiff's expert Richard N. Cary that MCIC failed to adopt and implement reasonable standards for the investigation, evaluation, and settlement of uninsured motorist claims or train adjusters in the handling of uninsured motorist claims. [Doc. 94, p. 2]. However, the court previously excluded Mr. Cary's opinions on these topics. See [Doc. 157].
B. MCIC's Personnel Files
MCIC next seeks an Order prohibiting the admission of MCIC's personnel files because "what a personnel file may show with respect to the actions [MCIC's] employees did or did not take with respect to other claims or lawsuits is simply irrelevant for purposes of Plaintiff's claim." [Doc. 94, p. 4 (emphasis in original)]. MCIC further argues that the files are forbidden "other acts" evidence under Fed. R. Evid. 404(b). In response, Mr. Hellard argues that the personnel files include evidence of MCIC's handling of other claims, which is admissible habit evidence pursuant to Fed. R. Evid. 406. [Doc. 115, pp. 4-6].
The Tenth Circuit has characterized a habit as "semi-automatic act" or conduct performed "reflexively." United States v. Oldbear , 568 F.3d 814, 822 (10th Cir. 2009) (citing United States v. Troutman , 814 F.2d 1428, 1455 (10th Cir. 1987) and Sims v. Great Am. Life Ins. Co. , 469 F.3d 870, 887 (10th Cir. 2006) ); see also Meyer v. United States , 464 F. Supp. 317, 321 (D. Colo. 1979) ("Habit is one's regular response to a repeated specific situation.") (citing McCormick on Evidence § 195 (2d ed. 1972) ). To prove an act was habitual, the Tenth Circuit "require[s] the proponent to offer evidence of numerous, consistent occurrences of the act." Oldbear , 568 F.3d at 822 (citing Camfield v. City of Oklahoma City , 248 F.3d 1214, 1232-33 (10th Cir. 2001) ); see also United States v. Yazzie , 188 F.3d 1178, 1190 n.26 (10th Cir. 1999) (reasoning two factors predominate to determine when particular conduct qualifies as habit: "adequacy of sampling and uniformity of response") (citing Fed. R. Evid. 406, advisory committee note).
Mr. Hellard directs the court to two decisions discussing evidence of other insurance claims: the Tenth Circuit's decision in Vining ex rel. Vining v. Enter. Fin. Grp., Inc. , 148 F.3d 1206 (10th Cir. 1998) and a recent decision by U.S. District Judge Timothy DeGiusti in Charles A. Shadid, L.L.C. v. Aspen Specialty Insurance Company , No. CIV-15-595-D, 2018 WL 3420816 (W.D. Okla. July 13, 2018). In Vining , the Tenth Circuit found no error in the trial court's admission of the 1992 Market Conduct Examination Report prepared by the Oklahoma Insurance Department that detailed the defendant insurer's business practices. Vining ex rel. Vining , 148 F.3d at 1217-18. In Shadid , Judge DeGiusti conditionally permitted the testimony of three witnesses who owned or managed businesses insured by the defendant insurer which had claims for property damage resulting from the same weather event as plaintiff denied by the same claims adjusters for the same reason. Charles A. Shadid, L.L.C. , 2018 WL 3420816, at *3.
The court is without sufficient information to determine the admissibility of the personnel file information regarding other claims. Although the parties acknowledge that the files include information regarding other claims, the court is unable to determine if the evidence establishes "numerous, consistent occurrences" of the same act. See Oldbear , 568 F.3d at 822 ; Vining ex rel. Vining , 148 F.3d at 1218-19. Nor may the court glean that the other claims are sufficiently similar to Mr. Hellard's claim. Cf. Charles A. Shadid, L.L.C. , 2018 WL 3420816, at *3. Thus, a determination of the admissibility of the evidence, at this point, would be premature.
In addition to information regarding other claims, Mr. Hellard asserts that the personnel files include information regarding MCIC personnel's training, bonus, and performance reviews. With respect to training materials, for the reasons discussed above, the court declines to wholly preclude such evidence at this time. The court reserves ruling on this issue. Likewise, for reasons similar to those discussed above for similar claims, based on the briefs and evidence before it, the court is unable to make a meaningful determination as to whether the employee performance reviews bear any relevance to plaintiff's claim and therefore reserves ruling on this topic for trial. As for information regarding bonuses, the court observes that MCIC's First Motion in Limine includes argument directed to MCIC's employee bonus structure [Doc. 93]. The court will determine the admissibility of evidence regarding bonus payments in the context of that motion.
C. Unfair Claims Settlement Practices Act
The court previously addressed the parties’ arguments regarding evidence of the Unfair Claims Settlement Practices Act in its Opinion and Order, dated February 8, 2021, which granted in part and denied in part MCIC's Motion to Exclude Richard Cary. See [Doc. 157, pp. 5-7]. For the reasons set forth therein, MCIC's motion is granted and Mr. Hellard is prohibited from offering any evidence, testimony, or argument regarding the Oklahoma Unfair Claims Settlement Practices Act.
D. Legal Duties an Insurer Owes to an Insured
MCIC seeks to prohibit Mr. Hellard from introducing evidence or eliciting any testimony or argument "regarding the interpretation of a duty an insurer owes its insured or the duties owed by an insurer to an insured." [Doc. 94, p. 7]. MCIC contends that such evidence invades the province of the court and is unduly prejudicial.
MCIC's request is overbroad and the court is unable to make a meaningful determination as to the admissibility of all of the evidence at issue. For example, Mr. Hellard may question MCIC's claims-handlers regarding MCIC's claims handling practices and industry standards based on their experience and training. See Elk City Golf & Country Club, Inc. v. Philadelphia Indem. Ins. Co. , No. CIV-18-196-D, 2020 WL 53556, at *2 (W.D. Okla. Jan. 3, 2020) ; Thomas , 2018 WL 2323794, at *1. However, no witness will be permitted to instruct the jury as to the applicable Oklahoma law nor may any witness offer opinions or testimony on issues of law. See Specht v. Jensen , 853 F.2d 805 (10th Cir. 1988). The motion is therefore granted as to questions and/or testimony about legal conclusions or applicable law, but is otherwise denied without prejudice to the assertion of specific objections at trial.
E. Continuing Duty to Investigate or Evaluate the Claim After Litigation Commenced
MCIC argues that Oklahoma law imposes no continuing duty on an insurer to investigate or evaluate an insurance claim after the commencement of litigation and therefore any evidence, testimony, or argument that such duty exists should be excluded from trial. [Doc. 94, pp. 8-9].
MCIC relies on a decision of the Oklahoma Court of Civil Appeals, Andres v. Oklahoma Farm Bureau Mutual Insurance Company , 290 P.3d 15 (Okla. Civ. App. 2012), wherein the insured brought a bad faith claim premised on the insurer's failure to "initiate and pursue an independent investigation to evaluate her claim" outside the confines of litigation. Id. at 17. However, the court reasoned that "[o]nce a court ... proceeding is commenced seeking insurance benefits, normal claim handling is superseded by the litigation proceeding." Id. (quoting Allan D. Windt, 2 Insurance Claims and Disputes 5th: Representation of Insurance Companies & Insureds , § 9.28 (updated Mar. 2012)).
The Oklahoma Court of Civil Appeals recently discussed Andres in the context of a bad faith claim. Linn v. Okla. Farm Bureau Mut. Ins. Co. , 479 P.3d 1013 (Okla. Civ. App. 2020) (unpublished). There, citing Andres , the insurer argued that the trial court erred by permitting plaintiff's counsel to question the claims adjuster "regarding not paying until the time of trial" and illicit testimony regarding a report that was not submitted to the insurer until after litigation. Id. at 1020-1021. However, the court rejected the insurer's interpretation of Andres as "beyond that intended." Id. First, the court observed the unique procedural posture of Andres. There, the Oklahoma Court of Civil Appeals upheld a summary judgment on the insured's bad faith claim, but remanded the case to the trial court for a determination of the value of the claim for purposes of breach of contract. Id. On remand, the insured "attempted to amend and add an additional bad faith claim based solely on the insurer's conduct on remand, arguing that [the insurer] simply sat back and waited for Plaintiff to ‘prove’ her claim's value ‘without ever proffering its own evaluation.’ " Id. (quotations omitted).
Additionally, the court examined the Andres court's quotation from the Windt treatise, stating that the full passage revealed "an opposite rule to that proposed by [the insurer]," specifically that:
It should logically make no difference when or how an insurer learns that policy
benefits are owed; once it learns that benefits are owed, the insurer should pay them. Accordingly, the fact that the insurer is already being sued does not somehow insulate the insurer from having to pay what it knows that it owes . An insurer's duty of good faith might not, however, continue after a judgment is entered against the insurer.
[and]
In short, allowing an insurer's litigation conduct to be the basis for a bad faith claim would impair its right to contest questionable claims and to defend against such claims ....
However, simply because the insurer's conduct should not, under the foregoing circumstances, give rise to a bad faith claim does not necessarily mean that the conduct cannot constitute additional evidence of pre-existing bad faith.
Id. at 1021-1022 (bolded emphasis added; italicized emphasis in original) (quoting Windt, 2 Insurance Claims and Disputes § 9.28). The court is persuaded by this narrow interpretation of Andres and declines to apply Andres to foreclose evidence or argument regarding a post-litigation duty.
MCIC also argues that it had no duty to investigate or evaluate Mr. Hellard's claim after it made an offer on January 29, 2019. [Doc. 125, p. 7]. However, under Oklahoma law, "the analysis in bad faith cases indicates the cutoff for relevant evidence is the date of payment or denial of the claim." Hale v. A.G. Ins. Co. , 138 P.3d 567, 571-72 (Okla. Civ. App. 2006) (emphasis added); see also Higgins v. State Auto. Prop. & Cas. Ins. Co. , No. 11-CV-90-JHP-TLW, 2012 WL 2571278, at *6 (N.D. Okla. July 2, 2012) (emphasis added) ("The claim in this case has been neither fully paid nor denied, continuing the duty of good faith and fair dealing well into the litigation."). If the duty terminated upon an insurer making an offer rather than payment, as suggested by MCIC, an insurer could cut-off any further evidence of bad faith liability simply by making a false promise to pay.
Here, it appears that Mr. Hellard's claim was not fully paid until March 27, 2019. Evidence regarding MCIC's investigation, processing, and payment of the claim until that time is therefore generally relevant to MCIC's asserted delay in resolving the claim. See Elk City Golf & Country Club, Inc. , 2020 WL 53556, at *3 ; Higgins , 2012 WL 2571278, at **5-6. However, evidence of MCIC's litigation conduct will not be admitted. Higgins , 2012 WL 2571278, at *7 ; Timberlake Constr. Co. v. U.S. Fid. & Gaur. Co. , 71 F.3d 335, 341 (10th Cir. 1995). Further, MCIC may object to specific evidence during trial of this matter. Thus, MCIC's motion as to this topic is granted in part and denied in part without prejudice to its reassertion.
Although the motion in limine includes a discussion of a continuing duty to investigate and evaluate, since the filing of those briefs, Mr. Hellard dismissed his breach of contract claim with prejudice. See [Doc. 155]. Thus, Mr. Hellard's claim was fully paid as of March 27, 2019.
Conclusion
WHEREFORE, defendant Mid-Century Insurance Company's Second Motion in Limine : Irrelevant Standards for Bad Faith [Doc. 94] is granted in part and denied in part.