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Reliable Transportation Specialists, Inc. v. Wausau Under Writers Insurance Co.

United States District Court, E.D. Michigan, Southern Division

April 10, 2019

RELIABLE TRANSPORTATION SPECIALISTS, INC. and AMARILD USHE, Plaintiffs,
v.
WAUSAU UNDERWRITERS INSURANCE COMPANY, Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO EXCLUDE JUDGE MACDONALD'S TESTIMONY AND RULE 26(b)(2)(C) WITNESS TESTIMONY REGARDING BAD FAITH [ECF NO. 211]

          GEORGE CARAM STEEH UNITED STATES DISTRICT JUDGE

         This matter comes before the court on Wausau's motion in limine to exclude Judge MacDonald's testimony in its entirety and to exclude plaintiffs' Rule 26(b)(2)(C) hybrid witness testimony regarding bad faith. For the reasons set forth, Judge MacDonald's opinion testimony is excluded and the fact testimony of Judge MacDonald, as well as Ven Johnson's and Thomas Schulte's testimony, is limited as described.

         I.

         Wausau moves to exclude retired Judge Kathleen MacDonald as both a fact and an opinion witness because her testimony would be unfairly prejudicial and cumulative. Wausau argues that the jury is likely to give her testimony undue weight merely because she was a judge, and any probative value of her testimony is substantially outweighed by the likelihood of unfair prejudice under FRE 403.

         Judge MacDonald presided over the underlying litigation and, if permitted, will testify to the facts involving three settlement conferences she held before and during trial; the facts of the underlying litigation and trial; that Mr. Holt, Reliable and Mr. Ushe were ready to settle within policy limits multiple times; and her opinions formed during the case, including that Wausau was reckless and indifferent toward its insureds.

         One area of MacDonald's proposed testimony is of particular concern to both parties. Judge MacDonald is expected to testify that at the May 21, 2015 settlement conference, which took place during the underlying trial, she indicated to Mr. Joslin, insured Reliable's attorney, that plaintiff Mr. Holt would accept the policy limits to settle the case. Plaintiffs contend that they will be severely prejudiced if this testimony is excluded because the jury will be presented with Mr. Joslin's testimony that he does not recall having this conversation with Judge MacDonald.

         Wausau argues that MacDonald's conversation with Reliable's defense counsel is not relevant to the issue of Wausau's bad faith. The issue in this litigation is Wausau's conduct, based on the information known to it at the time. Therefore, the relevant evidence is what Mr. Joslin communicated to Wausau after he spoke to MacDonald, not what MacDonald might have told Joslin.

         FRE 605 and MRE 605 prohibit a judge from testifying at trial in the case over which the judge is presiding. Wausau contends that it would be only slightly less prejudicial to have Judge MacDonald testify in this case. Wausau cites to cases from other states for the proposition that it is prejudicial for a judge to express her opinion as a witness about events that occurred in an earlier trial over which she presided. Merritt v. Reserve Ins. Co., 34 Cal.App.3d 858 (Cal.Ct.App. 1973) (bad faith failure to settle case); see also Aetna Cas. & Sur. Co. v. Price, 146 S.E.2d 220, 227 (Va. 1966) (testimony of trial court judges in underlying action regarding parties' settlement discussions was inadmissible and prejudicial in subsequent bad faith failure to settle action); Joachim v. Chambers, 815 S.W.2d 234, 238-39 (Tex. 1991) (“The risk of such appearance of impropriety extends beyond the particular case in which the judge testifies. Not only are jurors likely to be influenced in their decision by the testimony of a judge on one party's behalf, they will see a judge appearing to take sides. The entrance of a judge into the litigation arena in aid of a combatant impacts not only the outcome of that conflict but the very idea of judicial impartiality.”).

         Plaintiffs cite to a legal malpractice case where the court permitted the testimony of the trial court judge who presided over the underlying employment dispute. Sansone v. Garvey, Schubert & Barer, 71 P.3d 124 (Or. Ct. App. 2003). The court upheld the trial court's decision to permit the judge to testify as to her factual observations of the witnesses at the underlying trial as well as to her opinions she communicated to the trial attorneys during settlement negotiations “because those qualified as ‘facts' pertaining to what the trial attorneys knew and when they knew it.” Id. at 132. The court noted that the trial court “took particular care in instructing the jury so that it would understand that Judge Rosenblum was testifying as a witness, not as a judge.” Id. at 133. The court concluded that the trial court properly exercised its discretion in managing the judge's testimony.

         Finally, Wausau points out that Judge MacDonald does not accurately recall some of the details of the case and was not involved in many of the key events. For example, at her deposition, she incorrectly testified that Wausau offered $750, 000 to settle during the first pretrial conference; that Holt would have “always” taken $1, 000, 000 to settle before trial; and that Wausau never offered its $1, 000, 000 policy limit. MacDonald dep., p. 12-13, 18, 30-31. MacDonald was not aware of many of Wausau's settlement offers made to Holt, and she was not aware of the extensive high-low settlement negotiations. Id. at 18, 28-29.

         The court agrees with those courts that have recognized the inherent prejudice in having a judge testify as an opinion witness regarding a case they presided over. The court also has concerns regarding the foundation for any opinions Judge MacDonald formed as to Wausau's bad faith. While Judge MacDonald was witness to the evidence presented at trial, and engaged in three settlement conferences, she was not privy to all the settlement negotiations engaged in by the parties. Given that she was not aware of the entire settlement history, the court finds that the probative value of Judge MacDonald's opinion, specifically that Wausau was reckless and indifferent toward Reliable in its settlement positions taken in the underlying litigation, is substantially outweighed by the danger of unfair prejudice. Pursuant to Rule 403, the court grants defendant's motion in limine to exclude the opinion testimony of Judge MacDonald.

         Defendant also seeks to exclude Judge MacDonald's fact testimony. The court has concerns about the relevance of such testimony. Judge MacDonald's impressions of the strengths and weaknesses of the underlying litigation in relation to Wausau's settlement decisions are only relevant if they were communicated to Wausau. For example, MacDonald testified at her deposition that she told Mr. Joslin, “I can't believe you're going to continue with this. Are you going to make an offer? . . . If you get me the million I'll make sure that Mr. Johnson takes it.” MacDonald dep., p. 17. The jury will be asked to consider if Wausau failed to consider a reasonable settlement demand when the facts of the case indicate obvious liability and serious injury. The fact that MacDonald might have shared her assessment of the evidence and settlement value with Mr. Joslin, however, is not relevant unless either she or Joslin communicated her opinions to Wausau. Otherwise, permitting MacDonald's fact testimony has a significant risk of confusing the jury.

         Plaintiffs will have to lay an appropriate foundation as to any fact testimony they seek to elicit from Judge MacDonald. If they can establish relevance, the court believes that Judge MacDonald's proposed fact testimony presents much less danger of unfair prejudice than does her opinion testimony. The court can further minimize any prejudice by instructing the jury that they are to consider MacDonald's testimony as they would any witness and not to give her testimony more weight merely because she was a judge. ...


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