Opinion ID: 2584111
Heading Depth: 1
Heading Rank: 2

Heading: part iii. analysismr. lee and mr. bulla.

Text: ¶ 16 Section 81(A)(3) provides: A. Whenever, under the laws of this state, a person may be compelled by order, subpoena, or other lawful compulsion to appear as a witness, whether or not testimony or other evidence is actually adduced, the witness shall receive the following:    3. For a witness who appears from this state pursuant to an order, subpoena, or other lawful means for compelling the appearance of the witness, Ten Dollars ($10.00) for each day of attendance, plus reimbursement as prescribed by law for travel expenses at rates not to exceed those prescribed by law for reimbursement for state employees. [13] Subsections 3226(B)(3)(a)(2), 3226(B)(3)(b) and 3226(B)(3)(c)(1), those potentially pertinent to Mr. Lee (outside claims adjuster) and Mr. Bulla (outside private investigator), provide in relevant part: 3. TRIAL PREPARATION: EXPERTS. a. Discovery of facts known and opinions held by experts, otherwise discoverable under the provisions of paragraph 1 of this subsection and acquired or developed in anticipation of litigation or for trial, may be obtained only as follows:    (2) After disclosure of the names and addresses of the expert witnesses, the other party expects to call as witnesses, the party, who has requested disclosure, may depose any such expert witnesses subject to scope of this section. Prior to taking the deposition the party must give notice as required in subsections A and C of Section 3230 of this title. If any documents are provided to such disclosed expert witnesses, the documents shall not be protected from disclosure by privilege or work product protection and they may be obtained through discovery.    b. A party may discover facts known or opinions held by an expert who has been retained or specially employed by another party in anticipation of litigation or preparation for trial and who is not expected to be called as a witness at trial, only upon motion ... upon a showing of exceptional circumstances under which it is impracticable for the party seeking discovery to obtain facts or opinions on the same subject by any other means. c. Unless manifest injustice would result: (1) The court shall require that the party seeking discovery pay the expert a reasonable fee for time spent in responding to discovery under division (2) of subparagraph a of this paragraph and subparagraph b of this paragraph. [14] (Emphasis added.) ¶ 17 The central question in a bad faith failure to settle/denial of insurance tort suit (i.e., insurance company alleged to have breached its duty of good faith to deal fairly with its insured) is: what did the insurance company know or what should it have known at the time the insured requested payment under the applicable policy, i.e., whether the insurer had a justifiable, reasonable basis to withhold payment when the insured requested the carrier to perform its contractual obligation? See Conti v. Republic Underwriters Ins. Co., 1989 OK 128, 782 P.2d 1357, 1362; Buzzard v. McDanel, 1987 OK 28, 736 P.2d 157, 159; see Hall v. Globe Life and Acc. Ins. Co., 1998 OK CIV APP 161, ¶ 4, 968 P.2d 1263, 1265. The reasonableness of any investigation conducted by the insurer is, thus, oftentimes one of the main issues in the bad faith tort case. Hall v. Globe Life and Acc. Ins. Co., 1998 OK CIV APP 161, at ¶¶ 4-8, 968 P.2d at 1265-1266. Also, expert testimony on the adequacy or inadequacy of the carrier's pre-denial investigation may be relied on by both sides to support their respective positions in the case. See id., 1998 OK CIV APP 161, at ¶¶ 7-8, 968 P.2d at 1266. As to the contract theory to recover under the insurance policy, obviously, a prime issue would be whether or not the fire was incendiary in nature, i.e., deliberately set by or at Mr. Heffron's direction, and expert opinion testimony as to the fire's cause will probably be sought to be introduced by the opposing parties. See McCoy v. Oklahoma Farm Bureau Mut. Ins. Co., 1992 OK 43, 841 P.2d 568, 569. [15] ¶ 18 Emcasco frames the issue as to all three witnesses in a narrow, and as we will explain, incorrect manner. It states: [t]he issue before this [C]ourt is to determine whether the three witnesses named are expert witnesses as defined by statute. Response of Illinois Emcasco Insurance Company, etc., pg. 7, filed March 11, 2003. It then argues all three are experts under 12 O.S. 2001, § 2702 and, therefore, expert witness fees for their depositions must be paid. [16] Emcasco misperceives what is actually necessary for entitlement to expert witness compensation under the pertinent subsections of § 3226, as apparently did the trial judge. Expert status in a certain field is not alone sufficient. As noted above, we assume Mr. Lee and Mr. Bulla (as well as Mr. Dallas) are experts; however, that does not end the inquiry, but merely begins the process which will lead to proper resolution of whether the witnesses are entitled to more compensation than that provided in § 81(A)(3). ¶ 19 As seen by review of § 3226(B)(3)(a)(2), § 3226(B)(3)(b) and § 3226(B)(3)(c)(1), particularly the bolded portions emphasized above, the preeminent trigger for entitlement to payment of a reasonable expert fee for individuals such as Mr. Lee and Mr. Bulla is 1) that the facts known and opinions held by the expert be acquired or developed in anticipation of litigation or for trial, in the case of an expert witness expected to be called at trial by the other party (i.e., Mr. Lee) or 2) in the case of an expert not expected to be called at trial (i.e., Mr. Bulla) that said expert must be retained or specially employed by another party in anticipation of litigation or preparation for trial. The initial burden to show the anticipation of litigation or trial preparation trigger is plainly on the party who is claiming the witness is entitled to an expert witness fee, here Emcasco. As noted above, Emcasco does not even argue it hired Mr. Lee and Mr. Bulla in anticipation of litigation or for trial or that their opinions were formed, acquired or developed for the litigation, in anticipation thereof or for trial. Instead, the facts and opinions known and held by them seem to have been uncovered and formed, at least initially, prior to denial of the claim while they were assisting Emcasco in adjusting and investigating the claim in the ordinary course of business. [17] ¶ 20 Although we have not previously directly dealt with what is meant by anticipation of litigation or for trial in the context of whether an expert is entitled to reasonable compensation for the taking of his deposition over that provided by the ordinary witness fee statute, we have considered the anticipation of litigation concept within the confines of a suit against an insurance company in the somewhat analogous situation of an insurer invoking work product privilege to protect documentary materials from discovery by the insured under other portions of § 3226. In Hall v. Goodwin, supra , this Court held an insurer was required to produce a factual witness statement taken by its attorney during investigation of a fire loss claim prior to the insurer's denial of the claim, the statement of the witness essentially being that the insured had hired people to burn his house. Hall v. Goodwin, 775 P.2d at 291-292. In so doing, this Court decided that the crucial inquiry as to whether a document was protected by a qualified work product privilege was whether the document was secured by the insurer (or its employee) in anticipation of litigation, or merely in the ordinary or regular course of business. Id., 775 P.2d at 295. [18] ¶ 21 Hall v. Goodwin also appeared to recognize, in that a central part of the business of insurance companies is to investigate claims, review them and decide whether or not to pay, documents prepared in the ordinary course of business by the insurer, its employees and agents in regard to such endeavors cannot automatically be deemed to have been generated in anticipation of litigation merely because litigation may be deemed a contingency. Id., 775 P.2d at 294-295. For the anticipation of litigation threshold to be met, the primary motivating purpose behind creation of a document or investigative report must be in aid of possible future litigation, although litigation need not be imminent at the time of the document's creation. Hall v. Goodwin, 775 P.2d at 294, quoting Janicker v. George Washington University, 94 F.R.D. 648, 650 (D.D.C.1982). Further, whether an insurance company's investigatory documents were prepared in anticipation of litigation turns on the facts of each particular case. Carver v. Allstate Insurance Co., 94 F.R.D. 131, 134 (S.D.Ga.1982); see also Chambers v. Allstate Insurance Co., 206 F.R.D. 579 (S.D.W.Va.2002); Wikel v. Wal-Mart Stores, Inc., 197 F.R.D. 493 (N.D.Okla.2000). In other words, the point is not fixed, but may vary depending on the nature of the claim and the type of investigation conducted. Carver v. Allstate Insurance Co., supra, 94 F.R.D. at 134. ¶ 22 As noted, the trial judge's order makes no finding that Mr. Bulla was hired or specially retained by Emcasco in anticipation of litigation or for trial preparation, or that the facts known or opinions held by either he or Mr. Lee were acquired or developed in anticipation of litigation or for trial, the overriding preliminary determinations calling into play entitlement to more compensation than that provided in the ordinary witness fee statute, § 81(A)(3). [19] In fact, the trial judge's order expressly recognizes the same thing admitted by Emcasco, that Mr. Lee and Mr. Bulla were hired by Emcasco to assist it in adjustment and investigation of Mr. Heffron's claim for recovery of fire loss under the applicable insurance policy. In that the trial judge's order, on its face, shows an unauthorized use of judicial force in that it exhibits a failure to even consider the preeminent issues as to their entitlement to expert witness compensation, a writ prohibiting the order's enforcement is required. ¶ 23 The Advisory Committee Notes to the 1970 amendment to Fed.R.Civ.P. 26 (the provision from which our § 3226 as pertinent here was taken) show that the mere fact an individual is an expert is not alone sufficient to bring into play the reasonable expert fee provision, as opposed to treating the individual as a witness entitled only to the statutory ordinary witness fee. The Advisory Committee Notes state in relevant part: Subdivision (b)(4)Trial Preparation: Experts. This is a new provision dealing with discovery of information (including facts and opinions) obtained by a party from an expert retained by that party in relation to litigation or obtained by the expert and not yet transmitted to the party. The subdivision deals separately with those experts whom the party expects to call as trial witnesses and with those experts who have been retained or specially employed by the party but who are not expected to be witnesses. It should be noted that the subdivision does not address itself to the expert whose information was not acquired in preparation for trial but rather because he was an actor or viewer with respect to transactions or occurrences that are part of the subject matter of the lawsuit. Such an expert should be treated as an ordinary witness. (Emphasis added.) 28 U.S.C., Fed. R. Civ. P. 26, app. (1970). ¶ 24 The primary purpose behind the subsections of § 3226 before us is to prevent a party from building his case with opinions from experts his opponent engages for assistance and guidance in preparing for the merits of the litigation. In re Brown Company Securities Litigation, 54 F.R.D. 384, 385 (E.D.La.1972). The provisions guard against the discovering party unduly benefitting from his adversary's efforts to obtain expert testimony. Nelco Corporation v. Slater Electric Inc., 80 F.R.D. 411, 415-416 (E.D.N.Y.1978). The purpose, then, is to foster fairness between the parties to the litigation in regard to expert witnesses. See Maurer, Compelling the Expert Witness: Fairness and Utility Under the Federal Rules of Civil Procedure, 19 Ga.L.Rev. 71, 115 (1984). Of course, in regard to an expert that will be called at trial, it also insures that, if a party seeks to depose his opponent's expert in order to better prepare for cross-examination at trial, the discovering party pay the expert's charges for submitting to the examination. 8 CHARLES A. WRIGHT, ARTHUR R. MILLER & RICHARD L. MARCUS, FED. PRAC. & PROC. CIV.2d, § 2034 (Supp.2003). ¶ 25 There may be many and varied situations where a person is an expert, yet the information sought to be discovered from him or her falls outside the confines of facts known or opinions held which were acquired or developed in anticipation of litigation or for trial. See e.g. Nelco Corporation v. Slater Electric Inc., supra (inventor in patent infringement suit); In re Brown Securities Litigation, supra (opinion formed not in anticipation of litigation but as part of proxy solicitation regarding mergersecurities litigation involved). ¶ 26 We realize there may be situations where an expert initially hired by an insurance company merely to assist in adjusting and/or investigating an insured's claim for recovery under the insurance policyand, thus, the individual would only be considered an actor or viewer to relevant transactions or events involved in the underlying litigation for bad faith denial of the insurance claim or for contractual recovery under the policyat some point in time could be transformed, for deposition fee purposes, from an ordinary witness into one that has acquired facts or developed opinions, or been retained or specially employed, in anticipation of litigation or trial preparation, and, therefore, entitled to reasonable expert compensation. As the Court of Civil Appeals correctly recognized in McCoy v. Black, supra , there may be situations where a witness sought to be deposed may be considered an expert as to some matters and, thus, entitled to a reasonable fee above the ordinary witness fee, while as to other matters he will properly be considered only an actor or viewer not so entitled. McCoy v. Black, 1997 OK CIV App 78, at ¶¶ 9-10, 949 P.2d at 693-694. As with the question offor work product privilege analysiswhether insurance company documents were prepared in anticipation of litigation or for trial or, instead, in the ordinary course of business, the question offor deposition fee purposeswhether an expert should be considered an actor or viewer to events or transactions relevant to the underlying lawsuit, only entitled to the ordinary witness fee, or rather, an expert who has acquired or developed facts or opinions in anticipation of litigation or for trial or has been retained or specially employed in anticipation of litigation or for trial preparation, turns on a particularized examination of the facts of each case, i.e., a case-by-case diagnosis. ¶ 27 Nothing in the materials presented to us shows that the trial court conducted such an analysis prior to making the determination Mr. Lee and Mr. Bulla were entitled to more compensation than that provided in § 81(A)(3). It seems the trial court merely determined they were experts and should be paid something in addition to the ordinary witness fee. This is so notwithstanding the fact they appear to be actors or viewers as pertains to one or more of the primary issues in the underlying suit, e.g., what did Emcasco know or what should it have known at the time Mr. Heffron requested payment under the applicable policy, as such knowledge bears on gauging the reasonableness of any investigation conducted by Emcasco leading up to denial of the fire loss claim. ¶ 28 In the final analysis, the trial judge failed to properly apply the relevant statutes, seemingly relying only on a determination Mr. Lee and Mr. Bulla were experts in their respective fields. That alone does not entitle them to fees over and above the ordinary witness fee of $10.00. When the matter returns to the trial court, attention must be given as to whether one or the other of these individuals should be considered actors or viewers to transactions or events relevant to issue(s) involved in the underlying lawsuit, and whether at some point in time their role(s) were transformed from actors or viewers to experts falling within the ambit of § 3226(B)(3)(a)(2) or § 3226(B)(3)(b), and § 3226(B)(3)(c)(1). Until such an analysis is conducted, a final reasoned decision on the fee issue, as it relates to Mr. Lee and Mr. Bulla, cannot be made. We now turn to Mr. Dallas.