EVANSTON INSURANCE COMPANY v. ENTERPRISE PLAN INC (2026)

ORDER RE: CROSS-MOTIONS FOR SUMMARY JUDGMENT AND MOTIONS TO EXCLUDE EXPERT TESTIMONY

Plaintiff Evanston Insurance Company filed this insurance-coverage action seeking a declaration that it owed no duty to defend or indemnify defendants Enterprise Plan B, Inc., Lance Brown, and Diane Stember Richards in connection with an underlying lawsuit filed against Enterprise, Brown, and Richards by defendants Alex and Eugenia Serrano Borja. The Borjas counterclaimed, seeking a declaration that Evanston had a duty to both defend and indemnify. This is the second round of cross-motions for summary judgment in this case. The relevant factual background is laid out in the Court's prior summary-judgment order. See Evanston Ins. Co. v. Enter. Plan B, Inc., 802 F. Supp. 3d 1156, 1160–61 (N.D. Cal. 2025).

In its prior summary-judgment order, the Court concluded that genuine disputes of material fact exist as to Evanston's duty to indemnify the insureds but granted the Borjas' motion for a summary judgment that Evanston had (and breached) a duty to defend the insureds. The Borjas now move for summary judgment on Evanston's three affirmative defenses challenging the underlying judgment as fraudulent. Evanston moves for summary judgment on the Borjas' claim that Evanston's denial of coverage, failure to settle, and denial of a defense were in bad faith. For the reasons below, the Court grants the Borjas' motion for summary judgment in full, grants Evanston's motion for summary judgment as to the Borjas' claim for bad-faith denial of coverage, and denies Evanston's motion as to the Borjas' claim for bad-faith failure to settle and bad-faith denial of defense.

In connection with its summary-judgment briefing, Evanston also filed motions to exclude the testimony of two of the Borjas's experts. The Court grants in part and denies in part Evanston's motion to exclude the testimony of Timothy Walker, and grants Evanston's motion to exclude the testimony of Dr. John Gardiner.

LEGAL STANDARDS

I. Summary Judgment

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A factual dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is material if it “might affect the outcome of the suit under the governing law.” Id. The moving party bears the burden of demonstrating that there is no genuine factual dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). While courts may not resolve genuine issues of fact at the summary-judgment stage, courts may resolve any purely legal questions. See N. Cal. River Watch v. Wilcox, 633 F.3d 766, 772 (9th Cir. 2011).

“It is well-settled in this circuit and others that the filing of cross-motions for summary judgment ․ does not vitiate the court's responsibility to determine whether disputed issues of material fact are present.” Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (quoting United States v. Fred A. Arnold, Inc., 573 F.2d 605, 606 (9th Cir. 1978)). Instead, “[w]here ․ the parties have both filed summary judgment motions,” the Court “considers each party's evidence to evaluate whether” a genuine factual dispute exists. Herrera v. Command Sec. Corp., 837 F.3d 979, 985 (9th Cir. 2016) (citation modified).

II. Exclusion of Expert Testimony

Courts act as gatekeepers of expert testimony to ensure that such testimony is reliable and relevant under Federal Rule of Evidence 702. See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597 (1993). Under Rule 702, expert testimony is permitted so long as “(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.” Id. The proponent of expert testimony has the burden of proving admissibility. See In re Korean Ramen Antitrust Litig., 281 F. Supp. 3d 892, 931 (N.D. Cal. 2017). This inquiry “a flexible one,” and “[s]haky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.” Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010) (citing Daubert, 509 U.S. at 596). Courts should “screen the jury from unreliable nonsense opinions, but not exclude opinions merely because they are impeachable.” Alaska Rent–A–Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969 (9th Cir. 2013).

Under the reliability requirement, expert testimony must “ha[ve] a reliable basis in the knowledge and experience of the relevant discipline.” Primiano, 598 F.3d at 565 (citation modified). To ensure reliability, the court must “assess the reasoning or methodology, using as appropriate such criteria as testability, publication in peer reviewed literature, and general acceptance.” Id. These factors are “helpful, not definitive,” and a court has discretion to decide how to test reliability “based on the particular circumstances of the particular case.” Id. (citation modified). “When evaluating specialized or technical expert opinion testimony, ‘the relevant reliability concerns may focus upon personal knowledge or experience.’ ” United States v. Sandoval-Mendoza, 472 F.3d 645, 655 (9th Cir. 2006) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999)).

ANALYSIS

I. The Borjas' motion for summary judgment as to Evanston's fraud defenses is granted.

The Borjas move for summary judgment on Evanston's fourth, fifteenth, and sixteenth affirmative defenses to the Borjas' counterclaims. Each of these affirmative defenses alleges that the underlying judgment was the product of fraud.¹ The Borjas argue, and the Court agrees, that Evanston's fraud-based defenses fail as a matter of law because Evanston alleges “intrinsic fraud,” while California law permits an insurer to challenge the enforceability of a judgment based only on “extrinsic fraud.”²

In their briefing on the Borjas' motion for summary judgment, all parties agree that the “key case” on this issue is Pruyn v. Agricultural Insurance Company, 36 Cal. App. 4th 500 (1995). Pruyn held that where an insurer denies a defense to an insured and the insured then settles the case or stipulates to a judgment, the insurer's ability to challenge the settlement or judgment based on alleged fraud turns on “the nature and extent of judicial oversight of, or participation in, the settlement process so as to give some assurance that there was no fraud and collusion in the making of the settlement.” Id. at 516. Where the extent of judicial participation is minimal, such as when parties settle and a court's review of that settlement is limited to a good-faith determination pursuant to Cal. Civ. Proc. Code § 877.6, the settlement is entitled to presumptive validity but is still challengeable. Id. at 525. But where a case is resolved through “an independent adjudication of facts based on an evidentiary showing” using “a process that does not create the potential for abuse, fraud or collusion,” the resulting judgment is not just presumptively valid but conclusively binding on the insurer. Id. at 517. Critically, such an independent adjudication “need not be based on a contested or adversarial trial,” so even “a default hearing held following a settlement or an uncontested trial where the insured settled with the claimant and thereafter presented no defense” is binding. Id. at 516–17. “These circumstances necessarily involve significant independent adjudicatory action by the court, thus mitigating the risk of a fraudulent or collusive settlement between an insured and the claimant.” Id. at 517. Thus, an insurer may challenge such a judgment only if the insurer was excluded from participation in the adjudication process (i.e., based on “extrinsic fraud”), but not based on inherent defects in the judgment itself that render it suspect (i.e., “intrinsic fraud”). See id. at 517 (explaining that judgments bind insurers only when defendants have notice of but choose not to defend an insured in an action).

Pruyn forecloses Evanston efforts to attack the underlying judgment based on alleged fraud or collusion. The parties in the underlying action did not stipulate to a judgment or to damages. Instead, they stipulated to reach a judgment and to determine damages through a general reference under Cal. Civ. Proc. Code § 638(a). The referee, a retired judge, then held a trial at which the referee heard lay and expert testimony and received several dozen exhibits into evidence. Based on the trial evidence, the referee then entered judgment, which was approved by a state court. That is precisely the type of “independent adjudication of facts based on an evidentiary showing” that Pruyn held is binding on insurers. Id. at 517.

Evanston's arguments to the contrary are unavailing. It first argues that the underlying judgment cannot be binding because the trial before the referee was uncontested. But Pruyn states that even uncontested trials or default hearings following settlement are binding, as they involve sufficient judicial review of the evidence to mitigate any risk of fraud. See id. at 516–17; see also National Union Fire Ins. Co. v. Lynette C., 27 Cal. App. 4th 1434, 1449 (1994) (finding no collusion where an insured agreed to not contest the plaintiff's claim in exchange for a covenant not to execute because the judgment was entered by the court after an uncontested trial where the court made an “independent adjudication of facts based on an evidentiary showing”).

Evanston also argues, in essence, that the referee's review was insufficiently independent because the trial lasted only one day and the referee adopted the Borjas' proposed statement of decision. But the short length of the trial was due primarily to its uncontested nature, which as noted above is irrelevant under Pruyn. And adjudicators (including this Court) regularly adopt proposed orders as their own after independent review of the record.

Finally, Evanston points to a litany of alleged substantive defects in the underlying judgment that render it suspect—i.e., to evidence of intrinsic fraud—arguing that this evidence is sufficient to permit Evanston to attack the underlying judgment as fraudulent. That gets the analysis exactly backwards. The Court may consider evidence of intrinsic fraud only if it first concludes that the process leading to the underlying judgment was suspect, whether because it involved insufficient judicial participation or because the insurer was excluded from participation (i.e., due to extrinsic fraud). The primary case on which Evanston relies reflects this rule. See Andrade v. Jennings, 54 Cal. App. 4th 307, 332–33 (1997). There, the court permitted an insurer to challenge an underlying judgment based on intrinsic fraud only because the insurer had provided a defense to the insured yet was still excluded from participation in the adjudication. Id. Those are not the circumstances here.

This case is instead akin to Safeco Insurance Company of America v. Parks, 170 Cal. App. 4th 992 (2009). Like Evanston, the insurer in Safeco declined to defend the insured or to settle the action against her. Id. at 997. The insured and the plaintiff then “submitted their claims to binding arbitration,” and “[t]he arbitrator, a retired superior court judge, ․ found in favor of” the plaintiff. Id. at 998. The insured “settled with [the plaintiff] by assigning to him any claims she might have against [the insurer].” Id. Thereafter, the plaintiff sued the insurer to recover the judgment he obtained against the insured. Id. At trial, the insurer “proposed [a] special jury instruction on the question whether the judgment against [the insured] in the underlying personal injury action was collusive.” Id. at 1013. Though the insurer had presented evidence suggestive of collusion—including that the insured “assigned her ․ claims to [the plaintiff] before the arbitration occurred, her codefendants settled before the arbitration, and the arbitration award was very large”—the court of appeal affirmed the trial court's rejection of a collusion instruction. Id. at 1013–14. The court of appeal's conclusion turned on the fact that “[t]he matter was submitted to binding arbitration before a neutral arbitrator, a retired superior court judge.” Id. at 1014. “This fact alone len[t] credibility to the award” because, “[i]f there had been collusion ․ at the arbitration, ․ the retired superior court judge would have perceived as much and ruled accordingly.” Id. So too here, the fact that the underlying judgment was the product of an adjudicatory proceeding before a retired judge, in which Evanston chose not to participate despite receiving notice, precludes its fraud-based attacks on that judgment.

For these reasons, Evanston is bound by the underlying judgment and cannot attack it as fraudulent. The Court therefore grants summary judgment in favor of the Borjas as to Evanston's fourth, fifteenth, and sixteenth affirmative defenses to the Borjas' counterclaims.

II. Evanston's motion for summary judgment as to the Borjas' bad-faith claim is granted in part and denied in part.

The Borjas claim that Evanston acted in bad faith when it denied a defense to the insureds, failed to accept the Borjas' policy-limits settlement offer, and then denied coverage for the underlying judgment. Evanston moves for summary judgment as to these claims. The motion is granted in part and denied in part.

Evanston argues that the Borjas' bad-faith claims fail because Evanston reasonably believed that it had no duty to cover the insureds for the underlying judgment. The legal significance of this belief, however, differs as between the three bad-faith claims at issue.

With respect to the ultimate denial of coverage, California law recognizes that “[t]he mistaken withholding of policy benefits, if reasonable or if based on a legitimate dispute as to the insurer's liability under California law, does not expose the insurer to bad faith liability.” Tomaselli v. Transamerica Ins. Co., 25 Cal. App. 4th 1269, 1280–81 (1994). So under the “genuine issue rule,” summary judgment on a bad-faith denial of coverage claim is proper where an insurer denies coverage based on a reasonable (but mistaken) interpretation of a policy. Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1162 (9th Cir. 2002). As Evanston argues, the Court has already concluded that there is a genuine dispute about whether James Brown was an “employee” of the insureds within the meaning of the auto exclusion such that the policy precluded coverage for the accident. See Evanston Ins. Co., 802 F. Supp. 3d at 1162–65. All the material facts underlying the Court's genuine-dispute determination were also available to Evanston at the time it denied coverage for the judgment. Thus, the Court's prior order conclusively establishes that Evanston's denial of coverage was reasonable, even if a jury ultimately concludes that it was mistaken. The Court therefore grants Evanston's motion for summary judgment as to the Borjas' claim for bad-faith denial of coverage.

That Evanston's ultimate denial of coverage for the underlying judgment was reasonable does not, however, establish that its earlier failure to settle and denial of a defense were reasonable. To the contrary, a reasonable jury could find otherwise.

As to the failure to settle, Evanston refused to accept the Borjas' policy-limits settlement offer, but it does not dispute that the offer was reasonable. The Borjas argue that Evanston's rejection of that reasonable offer per se amounts to bad faith. But “[a]n insurer's duty to accept a reasonable settlement offer is not absolute,” and “failing to accept a reasonable settlement offer does not necessarily constitute bad faith.” Pinto v. Farmers Ins. Exch., 61 Cal. App. 5th 676, 688 (2021), as modified (Mar. 18, 2021). Only an “unreasonable” failure to settle constitutes bad faith. See id. And “[t]he crucial issue” when assessing reasonableness is “the basis for the insurer's decision to reject an offer of settlement.” Id. (citation modified) (quoting Walbrook Ins. Co. v. Liberty Mutual Ins. Co., 5 Cal.App.4th 1445, 1460 (1992)). “[I]n deciding whether or not to settle a claim, the insurer must take into account the interests of the insured, and when there is a great risk of recovery beyond the policy limits, a good faith consideration of the insured's interests may require the insurer to settle the claim within the policy limits.” Id. (quoting Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 658–661 (1958)).

Here, there is a genuine dispute about the reasonableness of Evanston's rejection of the Borjas' policy-limits settlement offer. Evanston argues that its decision was reasonable only because Evanston reasonably believed that the policy precluded coverage. But that accounted only for Evanston's interest in not paying for the underlying action. Evanston does not argue, nor is there any evidence in the record, that it “t[ook] into account the interests of the insured[s]” or whether “there [wa]s a great risk of recovery beyond the policy limits.” Id. Quite the opposite: Evanston conceded at the hearing that its sole basis for rejecting the Borjas' reasonable settlement offer was its belief that it had no coverage obligation. Absent any suggestion that Evanston considered the insureds' interests in rejecting the Borjas' settlement offer, a reasonable jury could find that Evanston acted unreasonably and thus in bad faith.

As to the denial of a defense, the parties debate whether the “genuine issue rule” applies to claims of an insurer's bad-faith refusal to defend. The Court agrees with the analysis of another court in this district, which, faced with this exact question, concluded that a legitimate dispute about an insurer's duty to indemnify cannot defeat a claim of bad faith. See Jacobs v. Liberty Surplus Ins. Corp., No. 3:21-CV-01687-WHO, 2021 WL 4243396, at *8 (N.D. Cal. Sept. 17, 2021).

The duty to defend is crucially different than other alleged breaches of contracts. Under California insurance law, insurers have the duty to defend even when there is a potential for indemnity. See Montrose Chem. Corp. v. Superior Ct., 6 Cal. 4th 287, 295 (1993). If there is a genuine dispute about whether a claim is covered, there is necessarily the potential—indeed, a realistic potential—for indemnity. Accordingly, when there is a genuine dispute about whether coverage extends to a claim, the insurer is still obligated to defend first, then seek redress later if it believes it was erroneous. When an insurer sees a genuine dispute about the scope of coverage and chooses not to defend, it has therefore failed to adhere to this law and a jury could find that it acted in bad faith, based (as always) on the particular circumstances.

Id.

At least one California court of appeal recently reached the same conclusion. In Bartel v. Chicago Title Insurance Company, the court of appeal reversed a trial court's determination that an insurer could not have acted in bad faith where, as here, it denied a defense because it reasonably interpreted a confusing policy to preclude coverage. 111 Cal. App. 5th 655, 701 (2025), reh'g denied (May 30, 2025), rev. denied (Aug. 13, 2025). As the court explained, “[t]his approach misconstrued the nature of the insurer's obligation to fairly and in good faith fulfill its contractual duty to defend based on the possibility of a covered claim.” Id. Far from excusing the denial of a defense, “the complexity of facts associated with the underlying legal claim and difficulty of ascertaining whether those facts might support a claim under the policy weigh against the insurer denying coverage.” Id. That is because “the insurer is excused from defending against a third party claim ‘only when the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage.’ ” Id. at 702 (quoting Hartford Cas. Ins. Co. v. Swift Distribution, Inc., 59 Cal. 4th 277, 288 (2014)). In other words, “[t]hat coverage depended on uncertain facts ․ was itself the type of unresolved factual dispute that would establish a possibility of coverage and thus a duty to defend,” and the insurer was “required to accept [the insured]'s tender unless an adequate investigation demonstrated that the possibility of any coverage was precluded.” Id.

Bartel is on all fours with this case. Like the insurer there, Evanston argues that “the existence of coverage was uncertain and reasonably disputable” at the time it denied a defense. But the existence of such uncertainty meant that Evanston was required to provide a defense. Evanston has not argued that it could reasonably have believed that there was no possibility of coverage, such that it had no duty to defend. As a result, a jury could find that Evanston's denial of a defense was unreasonable and in bad faith.

None of the authorities on which Evanston relies are to the contrary. Evanston points to the Ninth Circuit's decision in Lunsford v. American Guaranty & Liability Insurance Co., 18 F.3d 653, 656 (9th Cir. 1994). To be certain, Lunsford applied the genuine-issue doctrine to bar a claim based on the duty to defend. See id. “But it gave no indication that it did so in the face of arguments that there is a particular rule applied to the duty to defend[;] it only cited more general authorities.” Jacobs, 2021 WL 4243396, at *8 (citing Lunsford, 18 F.3d at 656). “Even if the Ninth Circuit had issued a holding on this question, California's courts have indicated several times in the intervening decades that California law is otherwise.” Id. (collecting cases); see also Bartel, 111 Cal. App. 5th at 701–02. The remaining cases cited by Evanston for the proposition that the genuine-issue rule applies to denial of a defense are almost entirely from other federal district courts, which neither bind nor convince this Court. Asked at the hearing to identify California case law holding that the genuine-issue rule precludes a finding that an insurer denied a defense in bad faith, Evanston's counsel cited cases involving only denials of coverage or refusals to settle, see Case v. State Farm Mut. Auto. Ins. Co., 30 Cal. App. 5th 397, 400 (2018); Walbrook Ins. Co. v. Liberty Mut. Ins. Co., 5 Cal. App. 4th 1445, 1450–51 (1992), or that simply did not involve the genuine-issue rule, see Griffin Dewatering Corp. v. N. Ins. Co. of N.Y., 176 Cal. App. 4th 172, 190 (2009) (“In this opinion, we do not address at all any arguable applicability of the ‘genuine dispute doctrine’ to this case.”), as modified on denial of reh'g (Aug. 28, 2009).³

In sum, there is no genuine dispute as to the reasonableness of Evanston's denial of coverage, but there are genuine disputes of material fact as to whether its denial of a defense and failure to settle were in bad faith. Summary judgment is therefore proper only with respect to the Borjas' claim for bad-faith denial of coverage.

III. Evanston's motion to exclude the testimony of Timothy Walker is granted in part and denied in part.

Evanston seeks to strike the expert report and testimony of Timothy Walker, the Borjas' claims-handling expert. Walker's report and testimony concern the reasonableness of Evanston's conduct in investigating the insured's claim, both when initially denying a defense and then when later refusing the Borjas' policy-limits settlement offer.⁴ Evanston does not dispute that Walker is qualified to testify as an expert on claims-handling issues. But Evanston argues that Walker's report should be stricken and his related testimony barred in their entirety for two reasons.

First, Evanston contends that Walker's opinions are unlikely to “help the trier of fact to understand the evidence or to determine a fact in issue.” Fed. R. Evid. 702. In other words, Evanston argues that Walker's testimony is not relevant to the question whether Evanston acted reasonably in investigating the insureds' claim, denying a defense, and refusing to settle. See Primiano, 598 F.3d at 564 (“The requirement that the opinion testimony assist the trier of fact goes primarily to relevance.” (citation modified)). The Court disagrees.

The core of Walker's report and testimony is his opinion that Evanston's conduct departed from customs and practice in the insurance industry. Evanston concedes both that this is the relevant inquiry for the purposes of the Borjas' bad-faith claims and that Walker is qualified to opine as an expert on standard claims-handling practices. Evanston nonetheless contends that “[u]nder California law[,] insurance industry ‘custom and practice’ is synonymous with compliance with or deviation from” California's Fair Claims Settlement Practices Regulations. While Walker's report briefly mentions those regulations in passing, the bulk of his expert report and deposition testimony concerning customs and practices is rooted in California case law, California jury instructions, and his own experience. Evanston argues that his opinions are improper and irrelevant because they do not “relate to Evanston's compliance with or deviation from the California [F]air Claims Settlement Practices [Regulations].”

Evanston cites only two cases for the proposition that an expert's testimony as to claims-handling custom and practice must be based solely on the Fair Claims Settlement Practices Regulations: Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1016 (9th Cir. 2004), and Oxnard Manor LP v. Hallmark Specialty, Ins. Co., 2024 U.S. Dist. LEXIS 68434, *14-15 (C.D. Cal. 2024).⁵ Neither case supports Evanston's position. In Hangarter, the Ninth Circuit rejected the argument that a district court was required to exclude the testimony of a claims-handling expert whose opinion “that Defendants departed from insurance industry norms relied in part on his understanding of the requirements of state law, specifically California's [Fair Claims Settlement Practice Regulations] § 2695.” 373 F.3d at 1017. The Ninth Circuit reasoned that “a witness may refer to the law in expressing an opinion without that reference rendering the testimony inadmissible.” Id. The court in Oxnard Manor similarly rejected a motion to exclude a claims-handling expert's opinion “that it is the custom and practice of insurers doing business in California to treat [the Fair Claims Settlement Practice] regulations as minimum standards for interactions with insureds” and that the defendant insured had departed from those minimum standards. 2024 U.S. Dist. LEXIS 68434, at *15. These cases merely suggest that a claims-handling expert may refer to the Fair Settlement Claims Practice Regulations, without suggesting that an expert may only or must refer to those regulations. Evanston makes no effort to explain its assertion that such regulations are the only relevant source of industry customs and practices concerning claims handling. The Court therefore concludes that Walker's opinions concerning claims-handling customs and practices—based on his undisputed expertise and experience in the insurance industry, as well as case law and jury instructions—are reliable, relevant, and likely to assist the jury. See id. at *14–16; Icon-IP Pty Ltd. v. Specialized Bicycle Components, Inc., 87 F. Supp. 3d 928, 946 (N.D. Cal. 2015) (explaining that “[s]ubjective beliefs and opinions” may be “proper expert testimony” when based on an expert's “extensive experience in the ․ industry”).

Second, Evanston argues that Walker's expert opinion and deposition testimony included improper legal conclusions that (1) an insurer must “meet a heavy burden” to establish that no potential for coverage exists; (2) insurance-policy exclusions are construed against insurers; (3) insurance policies in California impose an implied obligation of good faith and fair dealing; (4) insurers have a legal duty to diligently search for and consider evidence to support coverage; and (5) an insurer is responsible for an entire judgment if it unreasonably rejects a policy-limits settlement offer. The Court agrees. “[I]nstructing the jury as to the applicable law ‘is the distinct and exclusive province’ of the [C]ourt.” Id. (quoting United States v. Weitzenhoff, 35 F.3d 1275, 1287 (9th Cir. 1993)). As Evanston argues, the five challenged statements constitute bare legal assertions and would therefore improperly usurp the Court's role, so they must be excluded.

The Borjas suggest that these statements are admissible because they “describe foundational claims-handling principles that insurers operating in California are trained to understand and account for when evaluating and responding to tenders and settlement demands.” In the Borjas' telling, Walker's statements of law merely “provide context for how insurers instruct claims professionals to approach their work, and why certain investigative and evaluative steps are standard in the industry.” To be sure, as noted above, an expert “may refer to the law in expressing an opinion without that reference rendering the testimony inadmissible.” Id. at 1017. But a mere reference to the law is different from a bare legal conclusion. In Hangarter, for example, the Ninth Circuit held that a claims-handling expert's testimony was admissible where his opinion as to “insurance industry norms relied in part on his understanding of the requirements of state law.” Id. That was because the expert's testimony ultimately aimed “to aid the jury in understanding the facts in evidence”—i.e., the claims-handling customs and practices from which an insurer allegedly departed—“even though [his] reference to those facts [wa]s couched in legal terms.” Id. (citation modified). By contrast, other courts have concluded that an expert's report must be stricken where it merely states rules of law and thus “reads like a legal brief.” See Haas v. Travelex Ins. Servs. Inc., 679 F.Supp.3d 962, 967 (C.D. Cal. 2023) (striking report stating that “an insurer may, and often does, accept the duty to cover a risk before the effective date of a policy, but the risk does not occur until the effective date of the policy”). Here, Walker's challenged statements are much more like the latter than the former. He simply articulates high-level legal principles of insurer liability and insurance-policy interpretation without drawing a clear connection to specific industry norms and practices. While the Borjas attempt to explain such connections in their opposition to Evanston's motion, such “post hoc argument[s] ․ cannot fill in the gaps for [Walker's] deficient expert report.” Wolff v. Tomahawk Mfg., No. 3:21-CV-880, 2025 WL 1555251, at *7 (D. Or. June 2, 2025).

This does not mean, however, that Walker is totally precluded from opining on the industry customs and practices relevant to the Borjas' claim that Evanston acted in bad faith when it denied a defense and rejected their policy-limits settlement offer. The Court strikes and excludes only the statements of legal principles described above. To the extent Walker's expert report and deposition testimony discuss the norms arising from those legal principles, or from any other source, he may testify as to those norms and Evanston's departure therefrom at trial. For example, Walker's opinion that the short duration of Evanston's investigation of the insured's claim for a defense, based on his industry experience, is not barred.

Third, Evanston argues that certain of Walker's statements in his expert report and deposition testimony improperly opine on ultimate issues of law. The Court agrees. As the Ninth Circuit has explained, an expert “cannot give an opinion ․ on an ultimate issue of law.” Hangarter, 373 F.3d at 1016. An insurer's bad faith is such an issue. Id. So while an expert may “testify to the issue of bad faith” by opining that an insurer “deviated from industry standards,” an expert cannot opine that an insurer “actually acted in bad faith.” Id. Nor can an expert skirt that prohibition by offering opinions that are nothing more than proxies for the ultimate issue of bad faith, such as by stating that an expert acted unreasonably. See Oxnard Manor, 2024 U.S. Dist. LEXIS 68434, at *16 (explaining that an opinion “on whether [an insurer's] conduct was ‘reasonable’ ․ would consist of inadmissible legal conclusions”). Here, Walker expressly stated in his deposition testimony that Evanston's conduct was “the epitome of bad faith,” and his report opines that Evanston's investigation was “biased with a mindset to deny coverage,” which is simply another way of stating that Evanston acted in bad faith. The Court grants Evanston's motion to strike and exclude these statements.

IV. Evanston's motion to exclude the testimony of John Gardiner is granted.

Evanston also seeks to strike the expert report and testimony of Dr. John Gardiner, the Borjas' biomechanical expert. The Borjas offer Gardiner to rebut the report and testimony of Evanston's own expert, Dr. Dagmar Jewkes, who opined that Alex Borja's injuries from the accident giving rise to the underlying judgment could have been mitigated by his installation and use of a three-point seatbelt in his 1960 Chevrolet Impala. As Evanston makes clear in its briefs, Jewkes's opinions are relevant only for the purpose of “demonstrat[ing] the [j]udgment in the underlying lawsuit was greatly inflated by failing to take into account valid defenses never raised by the ․ [i]nsureds.” But because the Court has granted the Borjas' motion for summary judgment as to Evanston's fraud-based defenses, Evanston may not attack the underlying judgment, rendering Jewkes's opinions irrelevant to any material issue. As a result, Gardiner's report and testimony—which the Borjas offer only to rebut Jewkes's opinions—are also irrelevant. Indeed, the Borjas suggested in their opposition that neither Jewkes's nor Gardiner's opinions could be properly offered at trial in the event the Court granted their summary-judgment motion. Having done so, and because Gardiner's testimony no longer bears on any issues that will be presented to the jury, the Court grants Evanston's motion to strike Gardiner's report and to exclude his testimony.

CONCLUSION

For the foregoing reasons, the Borjas' motion for summary judgment is granted, Evanston's motion for summary judgment is granted in part and denied in part, Evanston's motion to strike the expert report and exclude the testimony of Timothy Walker is granted in part and denied in part, and Evanston's motion to strike the expert report and exclude the testimony of Dr. John Gardiner is granted.

IT IS SO ORDERED.

FOOTNOTES

1.   Specifically, Evanston's fourth affirmative defense “alleges that [the Borjas] are barred from recovery ․ by the doctrine of unclean hands.” Its fifteenth affirmative defense “alleges that the ․ judgment in the Underlying Action and covenant(s) not to execute were the product(s) of collusion and/or fraud, thereby precluding recovery on the same.” And Evanston's sixteenth affirmative defense “alleges that the ․ judgment ․ is tantamount to an unreasonable settlement, thereby precluding recovery on the same.”

2.   Because the Court grants the Borjas' motion on that basis, the Court need not address the Borjas' alternative argument that Evanston's fraud-based defenses are inadequately pleaded under Federal Rule of Civil Procedure 9(b). The Court notes, however, that the purpose of Rule 9(b)'s heightened pleading standard is to ensure that an opposing party receives sufficient notice of the nature of their alleged fraud. The briefing in this matter makes clear that the Borjas' received notice sufficient to enable their defense against Evanston's allegations of fraud.

3.   To the extent Griffin bears on this case, it is of no help to Evanston. Griffin reaffirmed the well-established principle that “the duty to defend does not arise in the first instance” and an “insurer may properly deny a defense” where a “third-party suit never presented any potential for policy coverage[.]” 176 Cal. App. 4th at 209 (citation modified). Thus, Griffin suggests that denying a defense is reasonable only where an insurer reasonably believes that there is not even a potential for policy coverage. As the Court has already explained, it was “clear that, when Evanston refused to defend the ․ [i]nsureds, there was at least a potential that the policy would cover the underlying action.” Evanston Ins. Co., 802 F. Supp. 3d at 1167. And in its motion for summary judgment as to the Borjas' bad-faith claim, Evanston argues only “that the existence of coverage was uncertain and reasonably disputable” and that it “acted reasonably with proper cause believing that there was no coverage”—not that Evanston reasonably believed there was never even a potential for coverage.

4.   Walker's report also includes opinions on the meaning of certain terms in the parties' insurance agreement. The parties agree that those opinions are no longer relevant in light of the Court's previous summary-judgment order and shall not be introduced at trial. The Court therefore need not address those portions of Walker's report.

5.   As the Court's standing order notes, the Court strongly “prefers Westlaw citations.” To the extent the parties find it necessary to include Lexis citations in future filings, they are ordered to file PDF copies of the cited authorities as individual exhibits to those filings.

P. Casey Pitts United States District Judge