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U.S. Bank National Association v. Phl Variable Life Insurance Co.

United States District Court, S.D. New York

June 22, 2015



COLLEEN McMAHON, District Judge.

The court, for its rulings in limine on the motions filed by U.S. Bank National Association ("U.S. Bank") and PHL Variable Life Insurance Company ("Phoenix") ( see Docket ##179, 182 in No. 13 Civ. 1580 and Docket ##386, 389 in No. 12 Civ. 6811), and on an untimely motion for judgment by the pleadings filed by Phoenix, ( see Docket #398 in No. 12 Civ. 6811):

I. Phoenix's Motion for Judgment on the Pleadings

Phoenix has filed a motion for judgment on the pleadings in No. 12 Civ. 6811 seeking dismissal of U.S. Bank's claim for breach of the covenant of good faith and fair dealing. I had previously dismissed an analogous claim in No. 13 Civ. 1580; applying New York law, I held that the claim was duplicative of U.S. Bank's breach of contract claim. (No. 13 Civ. 1580, Docket #149.) Phoenix argues that dismissal of the analogous claim in No. 12 Civ. 6811 is compelled under California law as well, because U.S. Bank's bases for alleging that Phoenix breached the covenant of good faith and fair dealing depend on Phoenix's having improperly exercised discretion afforded to it by the life insurance contracts at issue. U.S. Bank alleges that Phoenix failed to exercise its discretion to set COI rates in good faith by raising rates to penalize policyholders who exercised their rights to minimally fund their policies, by using COI rate increases to make policies prohibitively expensive and encourage lapses, and by using COI rate increases to manage Phoenix's profitability at the expense of policyholders. According to Phoenix, California law does not recognize a claim for breach of the covenant of good faith and fair dealing based on one party's exercise of discretion afforded it under a contract.

The motion is DENIED.

Phoenix misstates the applicable law. Under California law, "There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement." Comunale v. Traders & Gen. Ins. Co., 328 P.2d 198, 200 (Cal. 1958). "This principle is applicable to policies of insurance." Id. Further, "The covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith." Carma Developers (Cal.), Inc. v. Marathon Dev. California, Inc., 826 P.2d 710, 726 (Cal. 1992) (emphasis added). Thus, "where a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing." Perdue v. Crocker Nat'l Bank, 702 P.2d 503, 510 (Cal. 1985) (internal quotation marks and citation omitted).

However, "The covenant of good faith is plainly subject to the exception that the parties may, by express provisions of the contract, grant the right to engage in the very acts and conduct which would otherwise have been forbidden by an implied covenant of good faith and fair dealing." Carma Developers, 826 P.2d at 728 (internal quotation marks and citation omitted); see also Third Story Music, Inc. v. Waits, 41 Cal.App.4th 798, 803 (1995). That exception, in turn, is subject to its own exception. Courts will imply a covenant of good faith and fair dealing to cabin a party's exercise of express contractual rights when failing to do so would render the contract itself illusory for want of consideration. Perdue, 702 P.2d at 510; Third Story Music, 41 Cal.App.4th at 804-08.

Phoenix flips these principles on their head by treating the implied covenant of good faith and fair dealing as an exception, inapplicable to any exercise of discretion under a contract unless unbounded discretion would render the contract illusory. The actual rule is that a covenant of good faith and fair dealing governs all exercises of contractual discretion except when the parties expressly permit certain acts that would otherwise violate an implied covenant.

Here, the insurance policies at issue unquestionable grant Phoenix discretion to set COI rates, subject to specific constraints: "We review our Cost of Insurance rates periodically and may re-determine Cost of Insurance rates at such time on a basis that does not discriminate unfairly within any class of insureds." (Docket #203, Ex. 2 at 12.) "No more frequent than once per year and no less frequent than once every five years, We will review the monthly Cost of Insurance Rates to determine if these rates should be changed." (Docket #203, Ex. 3 at 11.) Phoenix admits that these rate increases are subject to certain express conditions, including that they be based on permissible factors and that COI rates not exceed maximum permissible rates.

These insurance policies do not expressly permit the acts alleged in the complaint. While the policies provide Phoenix bounded discretion in setting insurance rates, there is no language suggesting that Phoenix was free to set rates as it pleased subject only to the express limitations of the contract. Nothing, for example, permits Phoenix to set its rates in a manner designed to penalize and deter policyholders from exercising their contractual rights to fund their policies minimally, or to force policyholders to let their policies lapse, or to use COI rate increases to manage Phoenix's profitability. Nothing permits Phoenix to set rates in a manner that discriminates among policy holders who, actuarially speaking, belong in the same class (indeed, that is expressly prohibited). Nothing suggests that Phoenix need not set COI rates in good faith.

Phoenix points to Baymiller v. Guarantee Mut. Life Co., No. SA CV 99-1566 DOC AN, 2000 WL 1026565 (C.D. Cal. May 3, 2000), as an opinion dismissing a claim that an insurer breached the implied covenant of good faith and fair dealing by increasing insurance rates. But the contract in Baymiller included language expressly permitting any rate increase "in the amount and by the method to be determined by the Company." Id. at *1-2. Here, the policies merely state that Phoenix will periodically review and change COI rates, but will not do so in a way that does not discriminate unfairly within a class of insured and subject to the other terms of the policy that were the subject of extensive discussion in the opinion denying the motion for summary judgment. More analogous cases are those where insurance policies permit an insurer to take action such as increasing premiums, and to do so based on certain factors, but with no language absolving the insurer of its responsibility to exercise its responsibility reasonably. In those cases - where discretion exists without broad, Baymiller -like language - California courts have consistently implied a covenant of good faith and fair dealing. Acree v. Gen. Motors Acceptance Corp., 92 Cal.App.4th 385, 394-95 (2001); Saver v. Principal Mut. Life Ins. Co., No. B147324, 2002 WL 440406, at *9-11 (Cal.Ct.App. Mar. 21, 2002). So it is here.

U.S. Bank may, of course, move for a directed verdict during the trial on the covenant of good faith and fair dealing or on any other count or counts. But now - with trial imminent - is not the time for U.S. Bank to make such a motion.

II. U.S. Bank's Motions in Limine

A. U.S. Bank's Motion in Limine #1

U.S. Bank's first motion in limine seeks to preclude Phoenix from offering the analyses of Douglas French, Phoenix's actuarial expert in Fleisher, through the testimony of Timothy Pfeifer, Phoenix's actuarial expert in this case. U.S. Bank points to three aspects of Pfeifer's report that it claims impermissibly adopted French's analysis:

The COI increase class ($1 million, ages 68/65) underfunded their contracts to a much greater degree than other policyholders, as demonstrated in the September 16, 2013 Expert Report of Doug French in the related Fleisher litigation (as discussed later). (Solomon Decl. Ex. A (Pfeifer Rebuttal Report) at 10.)
Since year-by-year data is sometimes not credible enough or more difficult to compare, the analysis performed by Douglas French in his Expert Report dated September 16, 2013 (pages 7-9) illustrated clearly that on an overall present value basis, the premium flow/persistency on PAUL policies at older ages (68) was substantially lower than the premium flow/persistency at younger ages. (Pfeifer Rebuttal Report at 28.)
On a present value basis, reflecting all years of funding, the present value of actual premiums as a percentage of the present values of CTP is 64% at ages 68, compared to 82%/96% at younger ages ( see French Expert Report, Page 9). Thus, it is clear that the 68 cohort behaved substantially different than the younger cohorts.
As further evidence, the average account value per unit of face amount on younger lives versus ages 68 dropped dramatically from the PAUL IIb and earlier versions of PAUL to the PAUL IIc through PAUL IIIc versions of PAUL. ( See French Expert Report, Page 9). (Pfeifer Rebuttal Report at 35-36.)

This motion is DENIED.

The law governing this motion is straightforward. One expert is permitted to rely on facts, opinions, and data not of the expert's own making - including analyses performed or findings made by another expert in the case - even if those facts, opinions, and data are otherwise inadmissible. See Faulkner v. Arista Records LLC, 46 F.Supp. 3d 365, 385 (S.D.N.Y. 2014); Jung v. Neschis, No. 01 CIV. 6993 RMBTHK, 2007 WL 5256966, at *16 (S.D.N.Y. Oct. 23, 2007), original report and recommendation adopted (Sept. 21, 2007); see also Eberli v. Cirrus Design Corp., 615 F.Supp.2d 1357, 1364 (S.D. Fla. 2009); Wright & Miller, Fed. Prac. & Proc. Evid. ยง 6274 n.50 (1st ed.) ("[T]he Advisory Committee clearly contemplated that experts can base opinions on the opinions of others."). One expert may not, however, merely adopt another expert's opinions as his or her own reflexively and without understanding the materials or methods underlying the other expert's opinions. Member Servs., Inc. v. Sec. Mut. Life Ins. Co. of New York, No. 06-CV-1164, 2010 WL 3907489, at *27 (N.D.N.Y. Sept. 30, 2010).

The cases on which U.S. Bank relies are not to the contrary. These cases establish that one expert may not rely on another expert's opinion if the first expert is unfamiliar with the methods and reasons supporting the second, TK-7 Corp. v. Estate of Barbouti, 993 F.2d 722 (10th Cir. 1993), that an expert cannot merely recite another expert's opinion, Member Servs., Inc., 2010 WL 3907489, at *27, and that an expert cannot directly testify as to the conclusions of another expert. Mike's Train House, Inc. v. Lionel, LLC, 472 F.3d 398, 409 (6th Cir. 2006). None of these cases establishes that Pfeifer was precluded from considering French's report - including French's opinions - together with Pfeifer's own analysis and the facts of the case in forming an opinion. Phoenix has not demonstrated that Pfeifer failed to conduct his own analysis, merely vouched for French's opinions, or failed to understand how French reached his conclusions.

U.S. Bank points to a laundry-list of things Pfeifer failed to do: oversee French's work, consult with French, ensure French properly applied his methodology to his data, and obtain and verify French's data. These are proper subjects for cross-examination and sound like excellent bases on which U.S. Bank could impeach Pfeifer. None of these alleged defects, however, shows that Pfeifer failed to understand French's work or incorporate it properly in formulating his own conclusions. Pfeifer's purported analytical shortcomings go to weight, not admissibility.

B. U.S. Bank's Motion in Limine #2

U.S. Bank moves to preclude Phoenix's actuarial expert, Pfeifer, from testifying about Phoenix's contention in the JPTO that "U.S. Bank would have received a COI Adjustment regardless of the methodology employed by P[hoenix]." U.S. bank argues that Pfeifer may not testify to this fact because Pfeifer offered no such opinion, in either his expert report or his deposition.

This motion is GRANTED.

It is well-established that "expert testimony exceeding the bounds of the expert's report is excludable pursuant to Rule 37(c)(1)." Advanced Analytics, Inc. v. Citigroup Global Markets, Inc., 301 F.R.D. 31, 36 (S.D.N.Y.), reconsideration denied (May 7, 2014), objections overruled, 301 F.R.D. 47 (S.D.N.Y. 2014) (quoting In re Kreta Shipping, S.A., 181 F.R.D. 273, 275 (S.D.N.Y. 1998) (alteration omitted)). "This result is self-executing and is an automatic sanction that is designed to provide a strong inducement for disclosure of relevant material that the disclosing party expects to use as evidence. This duty to disclose information concerning expert testimony is intended to allow opposing parties to have a reasonable opportunity to prepare for effective cross examination and perhaps arrange for expert testimony from other witnesses." LaMarca v. United States, 31 F.Supp.2d 110, 122 (E.D.N.Y. 1998) (internal alteration, quotation marks, and citations omitted).

Phoenix has failed to demonstrate that its assertion about the inevitability of a COI rate increase in paragraph 30 of the JPTO - about which it intends to offer Pfeifer's testimony - was disclosed in Pfeifer's expert report.

Phoenix points to two statements made by Pfeifer in response to the report of Plaintiff's expert, Larry Stern:

As Mr. Stern appears to concede, [Phoenix's] consideration of its future expectations with respect to these factors on re-determination of rates is not constrained by its approach, methodology, or evaluation of its prior COI rate determinations. (Pflepsen Decl. Ex. A (Pfeifer Rebuttal Report) at 11.)
After the need for a change in future expectations was determined, the Funding Ratio methodology was a mechanism developed by the company...." (Pfeifer Rebuttal Report at 20.)

The first statement has nothing to do with an inevitable COI rate increase. The fact that Phoenix could have set COI rates based on many factors, and could select which factors it would apply when re-determining rates, is different from saying that a rate increase was inevitable no matter what methodology was used.

The second statement says nothing more than this: once Phoenix decided that its existing expectations ought to be changed on a going forward basis, Phoenix developed a methodology for changing COI rates. Once again, that is a far cry from saying that a COI increase was inevitable, let alone that any other funding ratio methodology Phoenix might have adopted would have yielded an increase.

Phoenix claims that even if these statements don't encompass the assertion in its JPTO, Phoenix should still be permitted to elicit testimony from Pfeifer about an inevitable COI rate increase because that assertion is within the scope of Pfeifer's report and would merely provide evidentiary details.

Phoenix is incorrect. Asserting that a different hypothetical COI rate increase would have inevitably been imposed if Phoenix had adopted an entirely different set of assumptions pursuant to a different (and never employed) funding ratio methodology is an argument entirely distinct from Phoenix's actuarial justifications for the rate increase that was actually imposed. Phoenix is trying to argue that the COI rate increase it imposed cannot be said to have caused U.S. Bank any harm - even if it was impermissible under the policies - because U.S. Bank would inevitably have suffered a COI rate increase of some kind. Phoenix points to nothing in the Pfeifer report making any such assertion. It simply asserts that the "actual substance and topics addressed by [Pfeifer's] reports" include an inevitable COI rate increase. But nothing in Pfeifer's report indicates that either he or Phoenix ever employed different assumptions to conclude that a rate increase in an equal or greater amount to the one actually imposed was actuarially justifiable at the moment Phoenix actually increased rates using the methodology it adopted.[1] Pfeifer's conclusory statements about alternative scenarios are supported neither by Phoenix's actual behavior at the time nor by Pfeiffer's own calculation of what alternative courses Phoenix could or should have followed to reflect its changing expectations without either running afoul of the terms of the policy or discriminating within a class of insureds. Phoenix has therefore failed to establish that Pfeifer's testimony about the inevitability of a COI rate increase is admissible.

C. U.S. Bank's Motion in Limine #3

U.S. Bank moves to preclude Phoenix from eliciting testimony from any witness - including Phoenix's actuarial expert witness Pfeifer - based on the "asset-share pricing model, " which model Phoenix did not disclose to U.S. Bank. This motion specifically identifies several documents that U.S. Bank seeks to exclude, including Exhibit 8 to the Pfeifer Report, and Defendant's Exhibits 35, 38-39, 42-43, 49, 52, and 55-58.

This motion is DENIED, because Phoenix states, and U.S. Bank cannot deny, that Phoenix timely produced to U.S. Bank (1) Exhibit 8 to the Pfeifer Report; and (2) every other Defendant's Exhibit identified in U.S. Bank's motion.

Phoenix has properly characterized U.S. Bank's argument as something akin to a "fruit of the poisonous model" argument. According to U.S. Bank, it served Phoenix with Requests for Production including "All pricing models that YOU ran or generated, at any time, for each of the POLICIES, " and "All DOCUMENTS [defined to include electronically stored information] that reflect, evidence, [or] memorialize... any asset share calculations[.]" U.S. Bank claims that Phoenix objected to these requests for production and never produced the asset share model or any other model. Phoenix also allegedly violated Rule 26(a)(1)(A)(ii) by failing to disclose the asset share model, which U.S. Bank characterizes as "electronically stored information... that the disclosing party has in its possession... and may use to support its... defenses." Because Phoenix never produced the underlying model, U.S. Bank asserts that Phoenix can offer no evidence that relies on the model (including the Exhibits identified above) or testimony ultimately relying on conclusions drawn from that model.

In the first place, it appears that U.S. Bank misunderstands the asset share pricing model. Phoenix notes that the asset share pricing model is a "computer program" which it used to pull data from a database, which were then analyzed by Phoenix or its experts. (Pflepsen Decl. Ex. C.) Although the program has the word "model" in its name, it does not fall within the scope of the discovery requests described above, because it is not a "model" in the sense of a set of equations or assumptions on which Phoenix priced its insurance policies. Rather, it is a tool for extracting data from an electronic data base. That is not what U.S. Bank requested.

Putting that to one side, it is undisputed that Phoenix produced every document on which it intends to rely during discovery. U.S. Bank was not precluded from deposing witnesses about these documents and could have asked any questions about how the data presented in the documents were generated. Indeed, Phoenix's counsel even exchanged emails with U.S. Bank's counsel, in which Phoenix explained that the asset share pricing model was used to produce the data underlying Exhibit 8 to Pfeifer's expert report. Thus, U.S. Bank had ample opportunity to question Pfeifer about what the asset share pricing model might be. It could have asked Pfeifer or any other Phoenix witness during his or her deposition about the pricing model and (for whatever it was worth) how that program extracts data for analysis. U.S. Bank will not be unfairly surprised if these documents are introduced at trial.

U.S. Bank has pointed to no cases holding that a party may not introduce documents because it failed to produce a computer program used to compile data presented in those documents. Rather, U.S. Bank cites opinions holding that an expert's report may be excluded when the underlying data supporting the report (for example patient records relied on by a medical expert) are not disclosed. But Exhibit 8 itself contained all the underlying data supporting Pfeifer's report, and Phoenix's counsel explained the calculations applied to the data pulled from Phoenix's database. (Pflepsen Decl. Ex. C.) Phoenix was required to produce no more.

D. U.S. Bank's Motion in Limine #4

U.S. Bank moves to preclude Phoenix from eliciting testimony from its actuarial expert, Pfeifer, that the 2010 and 2011 COI rate increases are justified because Phoenix's original expectations for investment earnings changed. U.S. Bank argues that Pfeifer's testimony rests on a fundamentally infirm factual basis. U.S. Bank alleges that Phoenix, contrary to Actuarial Standard of Practice 2, has no contemporaneous evidence about its original investment earnings assumptions, and that all the documentation supporting Pfeifer's report and his claims about changes in original assumptions consists of after-the-fact fabrications. Thus, according to Phoenix, Pfeifer's opinion is unreliable and should not reach the jury.

This motion is DENIED.

"As a general rule, the factual basis of an expert opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing party to examine the factual basis for the opinion in cross-examination." Boykin v. W. Exp., Inc., No. 12-CV-7428 NSR JCM, 2015 WL 539423, at *6 (S.D.N.Y. Feb. 6, 2015) (quoting Hollman v. Taser Int'l Inc., 928 F.Supp.2d 657, 670 (E.D.N.Y. 2013) (internal citations omitted)). "Mere weakness in the factual basis of an opinion bears on the weight of the evidence, not its admissibility." Burke v. TransAm Trucking, Inc., 617 F.Supp.2d 327, 335 (M.D. Pa. 2009); see also Phillips v. Raymond Corp., 364 F.Supp.2d 730, 743 (N.D. Ill. 2005). "Only if the expert's opinion is so fundamentally unsupported that it can offer no assistance to the jury must such testimony be excluded." Boykin, 2015 WL 539423, at *6.

Here, U.S. Bank has no objection to Pfeifer's methodology (the basis of a valid Daubert motion), but only to the factual basis for Pfeifer's conclusions - i.e., the "original assumptions", which are input for the methodology - on which Pfeifer relied. Challenges to the factual basis for an expert's application of an otherwise reliable methodology are quintessential jury issues. U.S. Bank is free to impeach Pfeifer or any other U.S. Bank witness by asking when and how these original assumptions were developed. It can ask whether Phoenix gave Pfeifer contemporaneous documentary evidence about the original assumptions and it can ask Phoenix witnesses whether any such evidence exists (classic fodder for a Request to Admit, which would then be admissible at trial). It can ask about inconsistencies between the documents supporting the "original assumptions" employed by Pfeifer and analyses performed by third parties and Phoenix itself. By doing so, it can call Pfeifer's conclusions into question, arguing "garbage in, garbage out."

Nor has U.S. Bank met the high burden described in Boykin of showing that Pfeifer's claims are so fundamentally unsupported that they offer no assistance to a jury. U.S. Bank instead offers something of an ipse dixit - because Phoenix has no documents about its original investment assumptions that were created at the time those assumptions were made, its reconstruction of those assumptions is necessarily unreliable. But that conclusion does not follow. Memory be faulty and Phoenix may have a motive to concoct biased reconstructions, but it is perfectly possible for someone to reconstruct work previously done. There is no reason at all to believe that Phoenix could not produce reliable documentation recreating those assumptions. Whether it did so is for a jury to decide.

E. U.S. Bank's Motion in Limine #5

U.S. Bank next moves to preclude Constance Foster, Phoenix's expert on insurance industry custom, practice, and standards, from offering non-rebuttal testimony. Foster was retained by Phoenix as a rebuttal expert and offered only a rebuttal report in response to the report of U.S. Bank's expert, Bruce Foundree.

Foundree's expert report concerns principles of fairness in the business of insurance and the application of those principles to the universal life policies at issue in this case. He opines that fair insurance practices are governed by the Insurance Marketplace Standards Association ("IMSA"), which places particular emphasis on accurate product descriptions and equal treatment within classes of insured by pricing according to mortality risk. Foundree concludes that the 2010 and 2011 COI rate increases violated these industry standards. Specifically he concludes that both increases violated industry fairness principles by impairing the insureds rights to minimally fund their policies - an essential feature of universal life policies. Foundree also concludes that the 2010 and 2011 increases violated industry fairness principles treating a class of insureds in a non-uniform manner and improperly increasing rates by funding value, respectively.

U.S. Bank argues that several paragraphs of Foster's report, specifically paragraphs III(1), V, VI(1-3), (6), VII(6-8), and (16), are irrelevant and not responsive to anything in Foundree's report, and should there be excluded under Rules 26(a)(2)(D)(ii) and 37(c)(1).

This motion is GRANTED IN PART with respect to paragraphs III(1), V, VI(1-3), (6), and VII(16). It is otherwise DENIED.

Paragraphs III(1) and V of the Foster report discuss state regulatory review and approval processes for life insurance policies. Paragraph III(1) specifically refers to state review of policies as a means of ensuring policies are "fair[]." Paragraph V elaborates the state regulatory approval process in greater detail.

Both paragraphs are excluded. Although U.S. Bank has raised a claim for breach of the covenant of good faith and fair dealing, that claim does not put at issue fairness of the PAUL policies as such. Rather, the question is whether certain actions taken with respect to those policies frustrated the reasonable expectations of policyholders. Industry practices and standards are relevant to that claim insofar as they may inform what a reasonable policyholder would expect under a contract. But state policy approval processes are completely irrelevant.

Paragraphs VI(1-3), (6) and VII(16) address the life settlement market, the traditional role of insurance, and insurable interests. Paragraphs VI(1-3) assert that life insurance traditionally protects policyholders against losses resulting from the death of the insured - i.e., the concept of an insurable interest. Paragraphs VI(6) and VII(16) asserts that life settlement investment - though legal in many states - contravenes the traditional purpose of insurance.

U.S. Bank claims these paragraphs are irrelevant because Phoenix has not raised an insurable interest defense, and further argues that paragraph VI(6), concerning life settlement is "hypocritical" because Phoenix itself invested in insurance policies. Phoenix argues that these paragraphs respond to an assumption of Foundree's report - that "Phoenix continued to sell policies into the life settlement/non-recourse market knowing that its standard rating assumptions did not fit life settlement/non-recourse business."

Foundree did indeed state that he made the above assumption - he says so explicitly on pages 8-9 of his report. But Foster's expert report is not the place to rebut that assumption, which is essentially one of fact. Foster's argument seems to be (it is not completely clear) that because life settlement investment is non-traditional and the policyholders therein have no insurable interest in the named insureds, Phoenix did not know it was selling to that market. This inference itself is absurd. But it is, in any case, not the province of an expert. From what I know of the evidence, it seems obvious that Phoenix knew it was selling policies into the life settlement market, but if Phoenix wants to contest that fact then it should use its fact witnesses - those familiar with Phoenix's business practices - to do so. Paragraphs VI(1-3), (6) and VII(16) are excluded.

Paragraphs VII(6-8) of Foster's report discuss the National Association of Insurance Commissioner's Model Act for unfair trade practices. Foster opines that the Act was designed to provide comprehensive state legislation addressing unfair insurance practices, but that the act was only designed to protect individuals and not businesses that use life insurance as an investment vehicle. U.S. Bank asserts that those paragraphs are completely irrelevant to the issues to be tried in this case. Phoenix claims that these paragraphs respond to Foundree's amorphous IMSA standards of fairness by describing the specific statutes that govern fair insurance practices and showing that those statutes do not call into question Phoenix's practices.

The argument Foster is actually making is not well-described by Phoenix. Foster's discussion of the NAIC Model Act follows her opinions that (1) life settlement investment is not a traditional function of insurance; and (2) IMSA standards are defunct and inapplicable to Phoenix's actions. Foster concludes - as I read her report - that the NAIC Model Act better reflects governing industry standards, and that under the NAIC, Phoenix did nothing wrong because those standards do not protect life settlement investors.

U.S. Bank's motion with respect these paragraphs is denied. Foundree has argued that one set of standards informs the reasonable expectations of policyholders and insurers. Foster has argued for a different set of standards derived from the NAIC Model Act. It does not matter that the Model Act is not the governing law of this case because Foster does not present it as such. Rather, she argues that the Model Act reflects industry practices, which are relevant to U.S. Bank's claim for breach of the covenant of good faith and fair dealing. Any risk of jury confusion can be easily cured by an instruction about the limited purpose of this opinion testimony.

F. U.S. Bank's Motion in Limine #6

U.S. Bank's sixth motion in limine asks the court to preclude Phoenix from eliciting "expert" testimony from witnesses it did not identify as expert witnesses. U.S. Bank identifies nine fact witnesses - eight Phoenix employees and one consultant for Towers Watson - who it claims Phoenix will use to introduce improper expert testimony. The testimony identified includes several of Phoenix's ...

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