United States District Court, D. Nevada
ORDER (MOT STRIKE - ECF NO. 20)
A. LEEN UNITED STATES MAGISTRATE JUDGE
court set a hearing on defendant's Motion to Strike
Plaintiffs' Rebuttal Expert Report of Charles M. Miller
(ECF No. 20) on July 19, 2018 at 2:00 p.m. Kesha Hodge
appeared on behalf of the plaintiffs, and Scott Flinders
appeared on behalf of defendant. The court has considered
motion, defendant's Erratta (ECF No. 21), plaintiff's
Response and Opposition (ECF No. 22), defendant's Reply
(ECF No. 24), and the arguments of counsel at the hearing. At
the hearing the court granted the motion in part and denied
it in part.
a breach of contract and bad faith claim arising out of claim
made under a homeowner's insurance policy issued to the
plaintiffs for a home located at 9610 Drayton Avenue in Las
Vegas, Nevada. American Family Mutual Insurance Company
(“American Family”) issued a homeowner's
policy for the home and its contents. The case was initially
filed in state court and Removed (ECF No. 1) November 3,
2017. Plaintiffs notified American Family, their
homeowner's insurance company, on September 21, 2016,
that their house had been flooded while the plaintiffs were
away. American Family eventually denied coverage for the
claim asserting the water damage was caused by continuous
seepage, or slow escape of water involving wear and tear and
deterioration, which was not covered by the policy.
Plaintiffs claim that the source of the water damage was a
fracture in the supply line of the downstairs bathroom.
Defendant denied coverage asserting it was a continuous
seepage and slow escape of water which was not covered by the
policy. Plaintiffs seek damages for necessary repairs to the
structure and expenses incurred from the loss in excess of
$180, 000.00. The plaintiffs assert claims for breach of
contract; the implied duty of good faith and fair dealing;
and tortious bad faith claims handling.
court's initial Discovery Plan and Scheduling Order (ECF
No. 10) established a May 11, 2018 discovery cutoff and other
deadlines consistent with the requirements of LR 26-1. The
court approved the parties' Stipulation (ECF No. 18) in
an Order (ECF No. 19) which extended the discovery cutoff
from May 11, 2018, to July 11, 2018. The parties did not
request, and the court did not order any extension of the
expert or rebuttal expert deadlines.
current motion, defendant seeks to strike the report of
plaintiffs' expert, Charles M. Miller. On March 12, 2018,
plaintiffs disclosed a damages expert, M. Chris Gusick, but
did not disclose a bad faith expert. After defendant
disclosed its bad faith expert, plaintiffs served what is
styled “An Expert Rebuttal Report of Charles M.
Miller.” Defendant argues that Mr. Miller's
opinions go beyond rebuttal of defendant's bad faith
expert, Steve Plitt, and instead offers independent bad faith
theories. Defendant argues that Mr. Miller only directly
discusses Plitt's report in 5 paragraphs of his 80
paragraph, 46-page report. Plaintiffs have the burden of
proof on their bad faith claims, but did not disclose a bad
faith expert by the initial expert deadline. Defendant's
expert, Plitt, offers opinions regarding whether American
Family acted reasonably and properly in processing
plaintiffs' claims and whether denial was reasonable.
American Family's expert did not offer legal opinions as
to whether there is coverage, but opinions that decisions
concerning coverage was reasonable. By contrast, Mr.
Miller's rebuttal report offers independent theories on
both the interpretation of the policy, and reasonableness of
American Family's investigation that do not directly
rebut Mr. Plitt's opinions. A rebuttal report cannot be
used to establish plaintiffs' case-in-chief, and a
rebuttal expert may only testify after an opposing expert has
testified. The rebuttal opinion is not an opportunity to cure
oversights in a party's casein-chief. Accordingly, the
court should strike Mr. Miller's report in its entirety
and preclude plaintiffs from using it in motion practice, at
hearing, or at trial.
oppose the motion arguing that expert testimony is not
required to establish bad faith or to show improper claims
handling. Plaintiffs argue that the motion to strike is based
on the premise that expert testimony is required for
plaintiffs to establish a bad faith claim. Plaintiffs rely on
Tracy v. American Family, 2010 WL 3724896 (D. Nev.
2010) in which the court held that, unless a breach of
contract involves unusually complex or esoteric matters
beyond the ken of ordinary jurors, expert testimony is not
required to establish bad faith. Plaintiffs argue that this
case does not involve complex or esoteric issues, and
therefore, no expert is required. However, plaintiffs argue
they can “bolster” their claim through expert
represent that the need for rebuttal expert testimony only
arose when American Family disclosed Steve Plitt as its bad
faith expert. Plaintiffs dispute that Mr. Miller's
rebuttal report only rebuts 5 of 80 paragraphs of Mr.
Plitt's report. However, if the court determines that an
expert on bad faith is required for plaintiffs'
case-in-chief to establish their bad faith claim, then
exclusion would be case dispositive. In this instance, the
court must apply the Ninth Circuit five factor test. Less
drastic sanctions are available. The defendant has time to
depose Mr. Miller before the existing discovery cutoff, and
the prejudice or surprise to American Family will be minimal.
Family replies that it is not seeking a ruling from the court
regarding whether expert testimony is needed to establish a
bad faith claim. This is an issue for the court to consider
on summary judgment. Rather, American Family wants an order
striking some or all of Mr. Miller's report because it is
not a true rebuttal report and can only be properly used to
rebut Mr. Plitt's opinions. In this case, plaintiffs
concede Miller's report is only rebuttal, so the only
issue is whether it is a true rebuttal report, or whether all
or portions of the report should be stricken, and plaintiff
should be precluded from relying on it at hearing, motion
practice, or trial.
37(c) authorizes sanctions for a party's failure to make
disclosures or cooperate in discovery:
If a party fails to provide information or identify a witness
as required by Rule 26(a) or (e), the party is not allowed to
use that information or witness to supply evidence on a
motion, at a hearing, or at a trial, unless the failure was
substantially justified or is harmless.
Fed. R. Civ. P. 37(c)(1). Rule 37 gives “teeth”
to Rule 26's mandatory disclosure requirements by
forbidding the use at trial of any information that is not
properly disclosed. Ollier v. Sweetwater Union High Sch.
Dist., 768 F.3d 843, 861 (9th Cir. 2014). Rule 37(c)(1)
is a “self-executing, automatic” sanction
designed to provide a strong inducement for disclosure.
Goodman v. Staples, The Office Superstore, 644 F.3d
817, 827 (9th Cir. 2011). Rule 37(a)(4) explicitly provides
that an evasive or incomplete disclosure, answer, or response
to a discovery obligation “is to be treated as a
failure to disclose, answer, or respond.”
“district court has wide discretion in controlling
discovery.” Ollier, 768 F.3d at 862 (citing
Jeff D. v. Otter, 643 F.3d 278, 289 (9th Cir. 2011).
The Ninth Circuit “gives particularly wide latitude to
the district court's discretion to issue sanctions under
Rule 37(c)(1), ” which is “a recognized
broadening of the sanctioning power.” Ollier,
768 F.3d at 859 (citing Yeti by Molly, Ltd. v. Deckers
Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001)). The
burden is on the party facing discovery sanctions under Rule
37(c)(1) to prove harmlessness. Torres v. City of Los
Angeles, 548 F.3d 1197, 12123 (9th Cir. 2008) (citing
Yeti by Molly, 259 F.3d at 1107). Exclusion of an
expert's testimony for failure to comply with the
requirements of Rule 26(a) is a sanction available to the
district court even in the absence of showing a bad faith or
willfulness. Yeti by Molly, 259 F.3d at 1106.