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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Adams Craig Acquisitions LLC, et al.,

Plaintiffs, 

v. 

Atain Specialty Insurance Company, et al., 

Defendants.

No. CV-18-00817-PHX-GMS

ORDER 

 Pending before the Court is the Motion to Preclude Expert Testimony (Doc. 52) of 

Defendant Atain Specialty Insurance Company. For the following reasons the motion is 

denied. 

BACKGROUND

This case is a dispute over an insurance claim. Plaintiff Adams Craig Technology 

(“ACT”), a Nevada LLC, contracted for the construction of a residence in Paradise Valley, 

Arizona in 2014. In August 2016, the homeowners noticed a leak in the garage of the 

home, which ultimately led to the discovery of problems with the construction. Defendant 

Specialty Insurance Company Atain determined that it would cover $36,416 in costs 

associated with work undertaken by Plaintiff Adams Craig Acquisitions, LLC (“ACA”) to 

resolve the issues in the home. But Atain denied coverage for $42,900 in property damage. 

Atain similarly declined to cover ACA’s management and overhead costs associated with 

the repairs. A few months after the initial coverage decision, Atain readjusted the amount 

they were willing to pay downward to $27,362.97. ACA was dissatisfied with that outcome 
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and filed suit in the Superior Court for Maricopa County. Atain timely removed the action 

to this court in March 2018. 

DISCUSSION

I. Standard 

Federal Rule of Evidence 702 governs the admissibility of expert testimony, and 

permits the presentation of “scientific, technical, or other specialized knowledge” by a 

qualified expert if it will “assist the trier of fact to understand the evidence or to determine 

a fact in issue,” it is “based on sufficient facts or data,” it is “the product of reliable 

principles and methods,” and “the expert has reliably applied the principles and methods 

to the facts of the case.” Expert testimony must be relevant and reliable to be admitted. 

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993).1

 “Rule 702 contemplates 

a broad conception of expert qualifications.” Hangarter v. Provident Life and Acc. Ins. 

Co., 373 F.3d 998, 1015 (9th Cir. 2004) (internal quotation marks omitted) (emphasis in 

original). 

“[T]he test under Daubert is not the correctness of the expert's conclusions but the 

soundness of his methodology.” Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010), as 

amended (Apr. 27, 2010). Offering “only the expert['s] qualifications, [her] conclusions[,] 

and [her] assurance of reliability” is insufficient. Daubert v. Merrell Dow 

Pharmaceuticals, Inc., 43 F.3d 1311, 1319 (9th Cir. 1995). Criteria for reliability of 

methodology include “testability, publication in peer reviewed literature, and general 

acceptance, but the inquiry is a flexible one.” Primiano, 598 F.3d at 564; see also Daubert, 

509 U.S. at 592–94. Other criteria may include how often the methodology produces 

erroneous results and whether the testimony is based on “legitimate, preexisting research 

unrelated to the litigation.” In re Apollo Grp. Inc. Sec. Litig., 527 F. Supp. 2d 957, 961 (D. 

Ariz. 2007) (internal citation omitted). However, these factors are neither exhaustive nor 

applicable to every case. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999); United

States v. Hankey, 203 F.3d 1160, 1168 (9th Cir. 2000). Trial courts have broad discretion 

 

1 Daubert applies to all expert testimony and not only that of a scientific nature. Kumho 

Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999). 
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in performing their gatekeeping function under Daubert. United States v. Alatorre, 222 

F.3d 1098, 1101 (9th Cir. 2000) (citing Hankey, 203 F.3d at 1168). 

II. Analysis 

A. ACT’s expert is sufficiently qualified. 

Atain first asserts that ACT’s expert, Kirk Hays, is not qualified to offer testimony. 

Rule 702 contemplates expertise resulting from multiple areas: “knowledge, skill, 

experience, training, or education.” Fed. R. Evid. 702. “In certain fields, experience is the 

predominant, if not sole, basis for a great deal of reliable expert testimony.” Hangarter, 

373 F.3d at 1015 (quoting Fed. R. Evid. 702 advisory committee’s note) (quotation marks 

omitted). 

Hays is an attorney with experience in legal fields related to “construction-related 

insurance claims.” (Doc. 58 at 3.) He has represented clients in proceedings regarding 

insurance coverage for construction-related claims; the adequacy of insurance coverage 

and coverage decisions by insurance carriers; and subrogation cases that included insurance 

investigations. (Doc. 58-1 at 2–4.) Hays also states that he has participated in site 

inspections, construction investigations, and insurance investigations, during which he has 

apparently worked closely with claims adjusters regarding coverage decisions. (Id. at 3.) 

Although he has never actually worked for an insurance company, as had the expert in 

Hangarter, Hays’ experience with the insurance industry in the context of construction is 

sufficient to meet “the minimal foundation of knowledge, skill, and experience required in 

order to give ‘expert’ testimony on the practices and norms of insurance companies in the 

context of a bad faith claim.” Hangarter, 373 F.3d at 1016 (quotation marks omitted) 

(emphasis in original) (quoting Thomas v. Newton Int’l Enters., 42 F.3d 1266, 1269 (9th 

Cir. 1994)). 

B. Hays’ opinions in the report do not exceed the identified scope for his opinions. 

Atain next argues that Hays’ opinions exceed the scope identified by ACT in its 

expert witness disclosure. Under the Federal Rules of Civil Procedure, parties “must 

disclose to the other parties the identity of any witness it may use at trial to present [expert] 
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evidence.” Fed. R. Civ. P. 26(a)(2)(A). Additionally, parties must accompany their expert 

disclosures with written reports from the expert witness. Id. (B). As relevant here, such a 

report must contain “(i) a complete statement of all opinions the witness will express and 

the basis and reasons for them; (ii) the facts or data considered by the witness in forming 

them; . . . [and] (iv) the witness’s qualifications.” Id. (B)(i)–(iv). Evidence beyond the 

scope of the opinions identified in the disclosure and expert report is subject to exclusion 

under Federal Rule of Civil Procedure 37(c)(1) (“If a party fails to provide information or 

identify a witness as required . . . the party is not allowed to use that information or witness 

to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially 

justified or is harmless.”). 

The disclosure provided by ACT for Hays states that Hays was retained to opine on 

“(1) [t]he reasonableness of insurance coverage positions taken by Atain[;] . . . (2) [t]he 

adequacy of the investigation undertaken by Atain[;] . . . (3) [t]he claims of prejudice made 

by Atain[;] . . . (4) [t]he timeliness of Atain’s [i]nvestigation[;] [and] (5) [p]rejudice to 

[ACA] caused by Atain’s actions.” (Doc. 58-2 at 2.) Hays’ report explains his 

qualifications, sets forth materials on which he bases his opinions, and discusses his 

opinions. As part of his opinion regarding the reasonableness of Atain’s coverage and the 

adequacy of its investigation, Hays discusses the source and cause of the water damage at 

the property. (See Doc. 58-2.) That discussion is necessary to his ultimate opinion on the 

topic, which is that Atain unreasonably denied coverage for certain areas of damage. 

Atain argues that Hays was not retained as a construction expert, and that any 

opinions he gives regarding the cause of the water damage exceed the scope of the opinions 

identified at the beginning of his report. But Hays’ discussion of the water damage is 

necessary to support his conclusion that Atain did not adequately investigate the claim and 

unreasonably denied coverage. For that reason, his discussion of the cause of water 

damage fits within the scope of the disclosed topics for his expert testimony. And in any 

event, Hays’ opinions regarding the cause of water damage were disclosed in the report. 

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The same logic applies to Hays’ discussion of voluntary payments and management 

expenses. Hays’ report only discusses those topics in order to support his conclusion that 

Atain behaved unreasonably by denying coverage. That fits within the first identified topic 

for his opinions: “[t]he reasonableness of insurance coverage positions taken by Atain.” 

C. Hays’ testimony is sufficiently reliable under Daubert.

When non-scientific expert testimony is being offered, “the Daubert factors (peer 

review, publication, potential error rate, etc.) simply are not applicable to this kind of 

testimony, whose reliability depends heavily on the knowledge and experience of the 

expert, rather than the methodology or theory behind it.” Hangarter, 373 F.3d at 1017 

(quoting Mukhtar v. Cal. State Univ., Hayward, 299 F.3d 1053, 1169 (9th Cir. 2002) 

overruled in part on other grounds by Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 

457 (9th Cir. 2014)). So while Daubert and Kumho Tire still require the Court to act as 

gatekeeper and assess the reliability of Hays’ evidence, “the relevant reliability concerns . 

. . focus upon personal knowledge or experience.” Kumho Tire, 526 U.S. at 150. 

Hays’ report does not present “too great an analytical gap between the data and the 

opinion proffered.” See General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). Hays’ 

report lists the materials he reviewed in preparing his report—both materials from the case 

itself and legal materials regarding insurance claims. Further, he notes that he attended a 

site inspection of the property. In the opinions given in the report, Hays discusses the 

reasons for his conclusions. Contrary to Atain’s assertions, the report is not lacking the 

“how” and “why.” (See Doc. 52 at 9.) Rather, the report explains why Hays states that 

Atain’s denial of the claim was unreasonable—after explaining that Atain failed to 

correctly identify the source of the leak itself but was subsequently informed of the source 

by Dynamic Claims, Hays then gives his conclusion: “[g]iven that Atain’s own inspector 

identified the area behind the siding as suffering from water intrusion resulting from 

parapet wall cap leaks, it was both unreasonable and reckless to deny this portion of the 

claim.” (Doc. 58-2 at 10.) 

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The rest of the report follows a similar pattern. Though Atain remains free to 

disagree with the conclusions reached in the report and to probe Hays’ conclusions on 

cross-examination, the report sufficiently discloses how Hays reached his conclusions. 

D. Hays does not improperly opine on ultimate legal conclusions. 

“It is well established that expert testimony concerning an ultimate issue is not per 

se improper.” Hangarter, 373 F.3d at 1016 (quoting Mukhtar, 299 F.3d at 1066 n.10) 

(alterations omitted). But expert witnesses cannot give opinions “as to [their] legal 

conclusion, i.e., an opinion on the ultimate issue of law.” Id. 

Hays’ report does not give his opinion on the ultimate issue in this case—whether 

Atain acted in bad faith. Rather, the issues on which he opines are subsidiary questions 

that will help a finder of fact to make that ultimate conclusion. Likewise, Hays’ report 

does not usurp the Court’s role of instructing the jury as to the legal standards relevant to 

the case. “Witness[es] may refer to the law in expressing an opinion without that reference 

rendering the testimony inadmissible.” Id. at 1017 (quoting Specht v. Jensen, 853 F.2d 

805, 809 (10th Cir. 1988)). 

That being said, should Hays attempt to inappropriately opine on legal conclusions 

at trial or attempt to usurp the court’s role in instructing the jury as to the law applicable to 

this case, such opinions will be excluded. 

CONCLUSION

 Hays’ proffered expert testimony passes muster under Rule 702. Since Atain has 

requested wholesale exclusion of Hays’ testimony, the motion is denied. Atain remains 

free, of course, to probe his conclusions, qualifications, and methodology on cross 

examination, and to object to any specific portions of his testimony at trial. 

 IT IS THEREFORE ORDERED that Defendant Atain Specialty Insurance 

Company’s Motion to Preclude Expert Testimony (Doc. 52) is DENIED WITHOUT 

PREJUDICE. 

 Dated this 2nd day of August, 2019.