DECEMBER 2012 BAD FAITH CASES: COURT PRECLUDES INSURED FROM INTRODUCING INADVERTANTLY DISCLOSED PRIVILEGED DOCUMENTS, IRRELEVANT EXPERT TESTIMONY, AND EVIDENCE OF CARRIER’S NET WORTH, BUT PERMITS INSURED TO INTRODUCE EVIDENCE OF EXPERT BIAS (Western District)

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In Smith v. Allstate Ins. Co., the court heard a carrier’s motion in limine seeking to preclude its insured from introducing four types of evidence in coverage litigation regarding injuries the insured suffered in a car accident.

First, the carrier sought to preclude the insured from introducing privileged information that was inadvertently disclosed during discovery. The insured argued that the carrier had waived any privileges by failing to provide it with redacted files. Yet, the court held that no waiver occurred because the carrier immediately notified the insured and relied on an understanding with the insured that the matter was resolved.

Second, the carrier sought to preclude the introduction of certain expert testimony because of the insured’s failure to satisfy Rule 26(a)(2)(B) and irrelevancy of the testimony. The court reasoned that the insured’s failure to satisfy Rule 26 by omitting publications from its expert report was a harmless error, but that the testimony was nevertheless irrelevant because it consisted of legal conclusions that did not require scientific or technical testimony.

Third, the carrier sought to preclude the insured’s introduction of evidence related to alleged punitive damages and the carrier’s net worth. The court granted this motion because the insured may not introduce evidence of net worth and punitive damages prior to presenting legally sufficient evidence in support of a claim for such damages.

Fourth, the carrier sought to preclude the insured’s argument that carrier’s expert was a “hired gun.” The court denied the carrier’s motion on this count because evidence of bias is relevant to a statutory bad faith analysis. Therefore, the court granted the carrier’s motion in limine on all counts except the fourth.

Date of Decision: November 8, 2012

Smith v. Allstate Ins. Co., NO. 3:11-CV-165, 912 F. Supp. 2d 242, U.S. District Court for the Western District of Pennsylvania (W.D. Pa. Nov. 8, 2012) (Gibson, J.)

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