Opinion
Civil No. 03-2092 (JRT/JSM).
May 23, 2005
Paul Dahlberg, MESHBESHER SPENCE, LTD., Rochester, MN, for plaintiff Patricia Ille, as Trustee for the Next-of-Kin of Rebecca Wallace.
Phillip A. Kohl, CHRISTIAN PETERSON, P.A., Albert Lea, MN, for plaintiff Leo Osbeck, as Trustee for the Next-of-Kin of Kathleen Wallace.
David K. Furness and Ross L. Leuning, WALBRAN, FURNESS LEUNING, Owatonna, MN, for plaintiff Laureen Hohansee, as Trustee for the Next-of-Kin of Robert Wallace.
Patrick J. Sauter and Daniel Q. Poretti, RIDER BENNETT, Minneapolis, MN, for defendant.
ORDER AFFIRMING ORDER OF MAGISTRATE JUDGE DECEMBER 1, 2004.
Plaintiffs, trustees for the next-of-kin of individuals killed in an automobile accident, bring this "bad faith" action against defendant American Family Mutual Insurance Company ("American Family"). On December 1, 2004, United States Magistrate Judge Janie S. Mayeron issued an Order ("the Order") denying plaintiffs' motion to strike the testimony and report of one of defendant's experts and to strike portions of the report of another of defendant's experts. Plaintiffs appeal. For the reasons discussed below, the Court denies the appeal.
The Order also granted in part and denied in part plaintiffs' Motion for a Protective Order and Alternative Motion for Extension of Pretrial Discovery Schedule and Award on Related Expenses. That aspect of the Order is not appealed.
BACKGROUND
The Court has recited the background of this dispute in a previous order, and provides only a brief summary of the underlying facts for the purposes of this appeal. On February 22, 1997, six people, including Lyle Wallace, Robert Wallace, Kathleen Wallace, and Rebecca Wallace, were killed in an automobile accident. Timothy Donaldson, Lyle Wallace, and Sean Young were the drivers of the three cars involved in the fatal accident. Plaintiffs are the trustees for the next-of-kin of the victims in the Wallace vehicle who brought a wrongful death suit in Minnesota state court against Timothy Donaldson. At the time of the accident, Donaldson was insured by American Family. All three plaintiffs offered to settle their claims with American Family for $60,000, the limit of Donaldson's policy. American Family refused, and the wrongful death action proceeded to a jury trial.
In early 2001, the jury found Donaldson thirty-three percent negligent, and $4,632,000 was awarded to the plaintiffs. Donaldson then assigned all his claims against American Family to the plaintiffs, including the claim that American Family's refusal to settle was taken in bad faith. After the assignment, plaintiffs sued American Family in Minnesota state court, and American Family properly removed to this Court on the basis of diversity of citizenship.
After being served with the reports of American Family's experts Judy A. Strachan and Daniel A. Gislason, plaintiff Osbeck moved that Strachan's report be stricken and she be precluded from testifying, and that part of Gislason's report be stricken. Plaintiffs Ille and Hohansee joined the motion. In the Order denying the motion, the Magistrate Judge determined that Strachan's report did not comply with Federal Rule of Civil Procedure 26(a)(2)(B) because it did not set forth the basis and reasons for her opinions and conclusions, but rather than strike the report and preclude Strachan from testifying, the Magistrate Judge ordered American Family to supplement her report. The Magistrate Judge also found that Gislason's report did not include impermissible legal analysis as asserted by the plaintiffs, but merely analyzed the relevant case law on bad faith to explain and give context to his conclusion. Finally, the Magistrate Judge found that neither of the experts' reports challenged the verdict in the prior wrongful death action or attempted to relitigate the issue of Donaldson's liability. The plaintiffs appeal the Magistrate Judge's finding that portions of the experts' reports do not impermissibly attack the verdict and judgment from the underlying wrongful death action.
ANALYSIS
"The standard of review applicable to an appeal of a magistrate judge's order on a nondispositive issue is extremely deferential." Reko v. Creative Promotions, Inc., 70 F. Supp. 2d 1005, 1007 (D. Minn. 1999). This Court will reverse such an order only if it is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); D. Minn. LR 72.1(b)(2).
Plaintiffs assert that statements from the experts' reports should be stricken because they contradict the verdict in the wrongful death action. Specifically, plaintiffs object to the following statements in Strachan's report.
1) Mr. Donaldson was operating his vehicle in a safe and responsible manner when the Wallace vehicle put him in an emergency situation with very little or no time to respond.
2) All of the information gathered by American Family staff and outside counsel prior to trial indicated this was an unavoidable accident on the part of Mr. Donaldson; that it was an unintended occurrence that could not have been prevented by the exercise of reasonable care.
3) Mr. Donaldson's conduct did not cause nor contribute to the emergency's occurrence; and his response to it was reasonable.
(Kohl Aff. Ex. A.) Plaintiffs also object to the following statement from Gislason's report.
In my view of the facts in determining whether Donaldson was clearly liable, the preponderance of the evidence is that the accident or collision would have occurred with the same unfortunate consequences, notwithstanding any other reasonable response by Donaldson.
(Kohl Aff. Ex. B at 3.)
Plaintiffs assert that these statements impermissibly impeach the verdict of the underlying case. Kissoondath v. United States Fire Ins. Co., 620 N.W.2d 909 (Minn.App. 2001) (finding expert testimony that the evidence did not support the jury verdict in the underlying case was reversible and prejudicial error). Plaintiffs also assert that these statements attempt to relitigate the issue of Donaldson's liability in contravention of the doctrine of collateral estoppel. The defendant, the Magistrate Judge, and this Court have already agreed that such relitigation is prohibited. In a previous order issued in this case concerning another of American Family's experts, the Court stated that:
American Family acknowledges that Timothy Donaldson's ultimate liability is not at issue, and testimony regarding his ultimate liability will not be permitted. For example, [an expert] will not be permitted to testify that the jury verdict in the underlying case was wrong . . . The jury will be carefully instructed as to the elements of the [bad faith] claim. The Court will also instruct the jury, and the plaintiffs are free to emphasize, that Timothy Donaldson's liability is settled.Ille v. Am. Family Mut. Ins. Co., 2004 WL 2066843, at *3 (D. Minn. Aug. 31, 2004) (footnote omitted).
The Court agrees with the Magistrate Judge that the experts' statements do not attempt to relitigate the issue of Donaldson's liability or impeach the verdict in the prior action. The experts' reports concern whether Donaldson was clearly liable for the purposes of a bad faith claim, not whether a jury should have found him liable in the underlying action. See Ille, 2004 WL 2066842, at *3 (stating that in order to make out a case for bad faith in Minnesota the plaintiff must show that the insured was "clearly liable before the insurer may suffer liability for breach of its duty of good faith") ( quoting Northfield Ins. Co. v. St. Paul Surplus Lines Ins. Co., 545 N.W.2d 57, 61 (Minn.Ct.App. 1996). "American Family must be permitted to argue, and offer evidence, that its refusal to settle was not in bad faith." Id. These statements go to that issue and will not be stricken.