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Certain Underwriters at Lloyd's v. Ssdd, LLC

United States District Court, E.D. Missouri, Eastern Division

July 7, 2014

SSDD, LLC, Defendant.


CHARLES A. SHAW, District Judge.

This matter is before the Court on plaintiffs Certain Underwriters at Lloyd's, London Subscribing to Certificate No. IPSI 12559's (collectively, "Underwriters") motion in limine to exclude the testimony of SSDD, LLC's ("SSDD") expert witness Donald J. Brayer. Underwriters contend that Mr. Brayer's expert report and testimony do not meet the standards for admissibility set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579 (1993). SSDD opposes the motion and it is fully briefed. No party requested oral argument or an evidentiary hearing. The parties have submitted an extensive evidentiary record in connection with the motion, which includes Mr. Brayer's expert report and deposition. For the following reasons, plaintiffs' motion will be granted in part and denied in part.


This is a declaratory judgment action in which Underwriters assert claims for rescission of a commercial property insurance policy (the "Policy") they issued to SSDD, based on alleged material misrepresentations and/or omissions in the Policy application (Count I). In the alternative to Count I, Underwriters seek a declaration that the Policy is void based on SSDD's alleged concealment or misrepresentation of material facts concerning the property under the Policy's Commercial Property Condition A (Count II); and a declaration that all loss occurring after May 22, 2012 is barred by the Exclusion 2(m) of the Policy's Causes of Loss - Special Form, that precludes coverage for loss or damage caused by or resulting from SSDD's alleged neglect to use all reasonable means to preserve the property from further damage at and after the time of loss. SSDD filed its Answer, Affirmative Defenses and Counterclaim, asserting counterclaims for breach of the insurance contract and statutory vexatious refusal to pay. Missouri law applies to the case.

Legal Standard

The admission of expert testimony in federal court is governed by Federal Rule of Evidence 702. The Eighth Circuit has explained that "Rule 702 reflects an attempt to liberalize the rules governing the admission of expert testimony, " Weisgram v. Marley Co. , 169 F.3d 514, 523 (8th Cir. 1999), and "favors admissibility if the testimony will assist the trier of fact[.]" Clark ex rel. Clark v. Heidrick , 150 F.3d 912, 915 (8th Cir. 1998). Doubt regarding "whether an expert's testimony will be useful should generally be resolved in favor of admissibility." Id . (citation and internal quotation omitted).

In Daubert, the United States Supreme Court interpreted Rule 702 to require district courts to be certain that expert evidence based on scientific, technical or other specialized knowledge is "not only relevant, but reliable." Daubert , 509 U.S. at 589. The district court must make a "preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Id . at 592-93.

The Eighth Circuit Court of Appeals has stated that proposed expert testimony must meet three criteria to be admissible under Rule 702. "First, evidence based on scientific, technical, or other specialized knowledge must be useful to the finder of fact in deciding the ultimate issue of fact. This is the basic rule of relevancy." Lauzon v. Senco Prods., Inc. , 270 F.3d 681, 686 (8th Cir. 2001) (internal citation omitted). "Second, the proposed witness must be qualified to assist the finder of fact." Id . (citation omitted). "Third, the proposed evidence must be reliable or trustworthy in an evidentiary sense, so that, if the finder of fact accepts it as true, it provides the assistance the finder of fact requires." Id . (internal quotation marks omitted). To meet the third requirement, the testimony must be "based on sufficient facts or data" and be "the product of reliable principles and methods, " and the expert must have "reliably applied the principles and methods to the facts of the case." Fed.R.Evid. 702(b)-(d).


Underwriters move to exclude Mr. Brayer's expert report and testimony on the following grounds: (1) Mr. Brayer lacks specialized knowledge, skill, experience or training regarding surplus lines property underwriting and claims handling; (2) Mr. Brayer's testimony and opinion regarding materiality should be excluded because he applies conflicting legal standards; (3) Mr. Brayer's opinions are inadmissible as legal conclusions; (4) Mr. Brayer's opinions lack a sufficient factual basis as required by Rule 702(b), Fed. R. Evid.; and (5) Mr. Brayer's testimony is based in part on speculation or the presumed intent of Underwriters. The Court will address each argument in turn.

1. Mr. Brayer's Qualifications as an Expert

Rule 702 states that an expert may be qualified by "knowledge, skill, expertise, training, or education." Whether a witness is qualified as an expert depends on whether the witness' training and experience demonstrate knowledge of the subject matter. Moran v. Ford Motor Co. , 476 F.2d 289 (8th Cir. 1973). For an expert witness to be qualified based on experience, that experience must bear a close relationship to the expert's opinion. Schmidt v. City of Bella Villa , 557 F.3d 564 (8th Cir. 2009). However, "An expert witness need not be an outstanding practitioner in the field nor have certificates of training in the particular subject." United States v. Rose , 731 F.2d 1337, 1346 (8th Cir. 1984).

Underwriters argue that Mr. Brayer lacks "knowledge, skill, experience, training, or education" to opine as to whether Underwriters' claims adjuster used proper claims adjusting procedures, because he has not adjusted claims or worked with surplus lines commercial property policies. The Court disagrees. Mr. Brayer has worked in the insurance industry for insurance companies in various capacities and as an independent consultant for a total of thirty-seven years. Mr. Brayer is, among other things, a Chartered Property Casualty Underwriter, a Registered Professional Liability Underwriter and an Associate in Claims. Mr. Brayer held a surplus lines broker's license for approximately twelve years and wrote policies and endorsements for surplus lines policies, spent ten years as a property underwriter, and testified he was closely involved with the claims department during that time. Although Mr. Brayer has never been employed as a claims handler, he testified he has seen hundreds of claims investigations and has often reviewed cases in conjunction with claims personnel "from the perspective of a claim handler." (Brayer Dep. at 112.) Mr. Brayer has been an expert witness in numerous cases including six property cases, two of which concerned surplus lines.

The Court concludes that Mr. Brayer possesses the knowledge, skill, and experience necessary to satisfy the threshold of admissibility under Rule 702. See, e.g., Huval v. Offshore Pipelines, Inc. , 86 F.3d 454, 457-58 (5th Cir. 1996) (where witness had broad, general experience in the insurance industry, including 32 years of experience as an underwriter, accounts manager and underwriting manager for various companies, he was qualified as an expert even though he had no experience regarding two critical facts in the case: acting as an insurance agent where an insurance consultant was involved, and working directly with a London broker); McDermott Int'l, Inc. v. Industrial Risk Insurers, 2008 WL 5120694, at *1 (E.D. La. June 18, 2008) (expert was qualified to testify as to reinsurance custom and practice, although his primary background was in claims handling, where he also had experience in insurance auditing in the field of reinsurance). See also Davis v. American Jet Leasing, Inc. , 864 F.2d 612 (8th Cir. 1988) (holding that an individual who had been a licensed pilot since 1946, was the operator of a jet sales and leasing company similar to the defendant's for over ten years, and supervised the maintenance and repair of jets, had sufficient specialized knowledge to testify as an expert about the ...

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