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Moore v. Safeco Insurance Co. of Illinois

United States District Court, W.D. Kentucky, Louisville Division

June 5, 2018



          Colin H. Lindsay, Magistrate Judge

         This case is set for trial by jury before the United States Magistrate Judge on June 11, 2018. The final pretrial conference was held on June 4, 2018. Plaintiff, Justine Moore (“Moore”) has filed two motions in limine (DN 36), to which Defendant, Safeco Insurance Company of Illinois (“Safeco”), filed a response.[1] (DN 43.) Safeco also filed one document containing thirteen motions in limine (DN 38), to which Moore filed a response. (DN 41.) All are ripe for review. Given that overlap exists between the parties’ motions, the instant memorandum opinion and order will address both Moore’s and Safeco’s motions.


         A brief summary of the factual allegations underlying this case will help to put the parties’ motions in context. This is an underinsured motorist (“UIM”) coverage and bad faith case. Moore was involved in a motor vehicle accident on August 23, 2014 with non-party, Isaak Anderson (“Anderson”). (DN 1-1, at PageID # 6; DN 5, at PageID# 20.) Moore alleges that she was insured under a UIM policy issued by Safeco at the time of the accident. Moore settled with Anderson and requested additional monies from Safeco pursuant to her UIM coverage. Moore has now sued Safeco for breach of contract, violation of the Kentucky Unfair Claims Settlement Practices Act, and bad faith.


         I. Moore’s Motions in Limine (DN 36)

         Moore has made two motions in limine. (DN 36.) Moore’s first motion relates to evidence of liability and/or comparative fault for the underlying collision other than the decision of Arbitration Forums, Inc., Automobile Decision, Docket #A039-00935-15-00, Publication Date June 23, 2015 (“the Arbitration Decision”). (DN 36, at PageID # 96.) Moore’s second motion relates to opinion testimony by witness Isaak Anderson. (Id. at PageID # 2.) Each of Moore’s motions is addressed below.

         A. Motion to Exclude Evidence of Liability/Comparative Fault for the Underlying Collision Other Than That of the Arbitration Decision

         1. The Motion and Response

         Moore moves the Court to exclude any evidence of liability or comparative fault other than the Arbitration Decision on grounds of issue preclusion. (DN 36.) Moore attached a copy of the Arbitration decision as Exhibit C to her motion. (DN 36, PageID # 109-10.) Safeco filed a response in opposition arguing that none of the required elements for issue preclusion are met. (DN 43.) A close review of the relevant facts surrounding the Arbitration Decision is necessary for a full analysis of Moore’s motion.

         Safeco filed the claim in arbitration against Anderson’s insurer, Allstate Insurance Company (“Allstate”) on April 14, 2015, nearly eight months after the August 23, 2014 accident. (DN 36, PageID # 109.) Both Safeco and Allstate submitted evidence to the Arbitrator for consideration, though the decision does not contain a specific list of all evidence submitted. (Id.) On June 23, 2015, the Arbitrator issued a decision that Safeco had proved damages in the amount of $7,999.76 and “100% liability against [Allstate].” (Id.) The Arbitrator specifically found that Safeco proved that Allstate/Anderson “failed to stop at a flashing red light,” “yield the right of way to a vehicle that had control of the intersection,” and “was not aware of their surroundings.” (Id.) The Arbitrator indicated the basis for his decision as follows:

The police report confirms that the respondent admitted to the police officer at the scene that they ran the flashing red light and did not know what to do at a flashing red light. The witness statement states that they did not witness the incident but witnesses both vehicles colliding in the middle of the intersection. The applicant’s recorded statement confirm that they were stopped at the flashing red and proceeded forward when the respondent went through the flashing red.

(Id.) Accordingly, the Arbitrator awarded Safeco its requested $7,999.76 in damages.

         Moore argues that Safeco should be bound by the previous liability determination it obtained. (DN 36.) Moore states that fundamental fairness and justice require Safeco be bound by the prior determination and that the result would further judicial economy because it would eliminate the need for at least four witnesses. (Id. at PageID # 100.) In response, Safeco argues that the arbitration was a result of an “early and incomplete investigation” and that it would be inconsistent with the principles of justice to apply issue preclusion in this case. (DN 43, at Page ID # 152, 154.)


         a. Choice of Law

         While not raised by the parties, the Court must first consider which law applies to Moore’s claim of issue preclusion: the Kentucky law largely cited by the parties or federal law. The answer to this question is “less than clear,” as the Sixth Circuit recently recognized. See W.J. O’Neil Company v. Shepley, Bulfinch, Richardson & Abbott, Inc., 700 Fed.Appx. 484, 489-90 (6th Cir. 2017).

         Where a litigant seeks to enforce the preclusive effect of a federal court judgment, the Court must look to federal law. See Hamilton’s Bogarts, Inc. v. Michigan, 501 F.3d 644, 650 (6th Cir. 2007). However, under the Federal Full Faith and Credit Statute, 28 U.S.C. §1738, “[f]ederal courts must give the same preclusive effect to a state-court judgment as that judgment receives in the rendering state.” Abbott v. Michigan, 474 F.3d 324, 330 (6th Cir. 2007). The Arbitration Decision in the instant case is neither a federal nor a state court judgment.

         When faced with a similar situation in W.J. O’Neil Company v. Shepley, Bulfinch, Richardson & Abbott, Inc., the Sixth Circuit chose to apply state law. The Sixth Circuit cited to the fact that neither party in that case had briefed the issue nor disputed the application of Michigan law. W.J. O’Neil Company, 700 Fed.Appx. at 489-90. The same is true of the instant case. Therefore, this Court follows the Sixth Circuit and applies Kentucky’s issue preclusion doctrine to Moore’s motion.

         b. Issue Preclusion

         Issue preclusion, sometimes referred to as collateral estoppel, “prevent[s] a defendant from relitigating issues resolved in [an] earlier proceeding.” Chesley v. Abbott, 524 S.W.3d 471, 482 (Ky. Ct. App. 2017) (quoting Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979)). Under Kentucky law, the following elements are required to apply the doctrine: (1) the issue in the two proceedings must be identical; (2) the initial proceeding must have resulted in a final decision on the merits; (3) the issue must have been necessary to the first proceeding, with the estopped party given a “full and fair opportunity to litigate;” and (4) there must have been a prior losing litigant. Further, issue preclusion should only be applied where “the principles of justice and fairness would be served by its application.” Berrier v. Bizer, 57 S.W.3d 271, 281 (Ky. 2001). Because the Court finds that the third element of the doctrine is not met, it declines to address the other three elements.

         As to the third element, Moore argues that Safeco had a full and fair opportunity to litigate because Safeco, as the applicant, choose the forum and was able to submit any evidence it thought was relevant. (DN 36, at PageID # 99.) Safeco argues in response that it did not have a full and fair opportunity to litigate because the Arbitration Decision was based on an early and preliminary investigation of the accident. (DN 43, at PageID # 152-53.)

         Kentucky’s treatment of preclusion doctrines in administrative proceedings is instructive as to why the Arbitration Decision does not meet this third element. Kentucky law recognizes that administrative proceedings are subject to claim preclusion, otherwise known as res judicata. Ky. Bar Ass’n v. Harris, 269 S.W.3d 414, 418 (Ky. 2008) (“Decisions of administrative agencies acting in a judicial capacity are entitled to the same res judicata effect as judgments of a court.”). However, Kentucky courts have declined to permit issue preclusion in cases involving certain kinds of administrative proceedings, noting that the differences between those proceedings and a civil suit are such that a litigant is deprived a full and fair opportunity to litigate.

         In Board of Education v. Gray, 806 S.W.2d 400 (Ky. Ct. App. 1991), the Kentucky Court of Appeals refused to apply issue preclusion to the findings of the Kentucky Unemployment Insurance Commission in a subsequent civil suit. In doing so, the Kentucky Court of Appeals noted that “the procedures utilized in the unemployment system” do not “grant [a] party a full, true opportunity to litigate issues . . . .” Id. at 403. For example, the Court noted that the rules of evidence are less stringently applied, “often “lead[ing] to the inclusion of evidence which might otherwise be inadmissible in a court of law.” Id. Additionally, the amounts sought are often smaller than what could be recovered in a lawsuit. Id. The Kentucky Supreme Court later affirmed this account of the differences in the two types of proceedings in Berrier v. Bizer. Berrier, 57 S.W.3d at 281.

         Other courts have observed similar differences between arbitration proceedings and civil suits. For example, as the United States Supreme Court observed in Alexander v. Gardner-Denver Co., 415 U.S. 36, 57 (1974),

The factfinding process in arbitration usually is not equivalent to judicial factfinding. The record of the arbitration proceedings is not as complete; the usual rules of evidence do not apply; and rights and procedures common to civil trials, such as discovery, compulsory process, cross-examination, and testimony under oath, are often severely limited or unavailable.

         These differences are observable when comparing the Arbitration Decision and instant suit. The Arbitration Decision is based on hearsay and documents that will be inadmissible at trial of this action, such as the police report. (DN 36, at PageID # 109) (citing to the police report and witness statements to support the arbitrator’s decision). There is also a vast difference between the $8,000 property damage settlement at issue in the Arbitration Decision and the potential damages involved in defending Moore’s personal injury and bad faith claims. Further, neither party has presented evidence regarding whether any discovery was conducted, any witnesses gave live testimony, or any witnesses were cross-examined during the arbitration. Given the differences between arbitration and a civil suit generally and their application to the Arbitration Decision at issue, this Court finds that Safeco did not have a full and fair opportunity to litigate its claims in arbitration prior to the issuance of the Arbitration Decision.

         Accordingly, Moore’s motion in limine to exclude all evidence of liability/comparative fault other than the Arbitration Decision is DENIED.

         B. Motion to Exclude Opinion Testimony by Witness Isaak Anderson

         Moore has moved in limine to exclude certain testimony from Anderson related to a hypothetical question asked of Anderson at his deposition. (DN 36, at PageID # 101.) While the exact text of the hypothetical and Anderson’s answer were not included in either Moore’s Motion or Safeco’s Response, the hypothetical purportedly relates to “[w]hether Anderson would still consider himself to be at fault if another car had also not stopped at the intersection.” (Id.) Safeco asserts that Anderson “is expected to testify that if he had known Plaintiff had also failed to stop at the flashing red light, he never would have simply assumed that he was the only one at fault for the accident.” (DN 43, at Page ID # 156.) Moore asserts that this opinion is improper lay opinion testimony under Fed.R.Evid. 701.

         Under Fed.R.Evid. 701, opinion testimony by a lay witness is admissible only if it is “(a) rationally based on the witness’s perception; (b) helpful to clearly understand the witness’s testimony or to determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” Fed.R.Evid. 701. Anderson’s opinion as to his fault is based on his own perception of the accident and within the scope of the type of lay “reasoning familiar in everyday life” typically admitted by courts. See United States v. White, 492 F.3d 380, 401 (6th 2007) (quoting State v. Brown, 836 S.W.2d 530, 549 (Tenn. 1992)). As Moore must prove Anderson’s liability for the accident to recover, Anderson’s belief as to his fault is helpful to determine a fact in issue within the meaning of Rule 701. See Coots v. Allstate Ins. Co., 853 S.W.2d 895, 899 (Ky. 1993) (“[T]he liability of the tortfeasor and the amount of damages sustained are elements that must be established in measuring the UIM carrier’s obligation . . . .”).

         However, the hypothetical referenced by counsel does not refer to Anderson’s belief about his fault at the time of trial. Instead, it refers to Anderson’s belief as to his prior statement that he was a fault for the accident. This opinion, though still based on Anderson’s perception and within the proper scope of reasoning for a lay opinion, does not meet the second prong of Rule 701. Anderson’s past opinion and his current opinion as to whether he would have uttered his past opinion are not helpful to ...

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