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Trinity Yachts, LLC v. Thomas Rutherfoord, Inc.

United States District Court, Fifth Circuit

May 31, 2013

TRINITY YACHTS, LLC, Plaintiff,
v.
THOMAS RUTHERFOORD, INC., and MARSH & McLENNAN AGENCY, LLC, Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO STRIKE, EXCLUDE AND/OR LIMIT TESTIMONY OF PLAINTIFF'S EXPERT WITNESS

LOUIS GUIROLA, Jr., Chief District Judge.

BEFORE THE COURT is the Motion to Strike, Exclude and/or Limit the Testimony of Plaintiff's Expert Witness, Geoffrey Hughes [97] that was filed by the defendants Thomas Rutherfoord, Inc., and Marsh & McLennan Agency, LLC (hereinafter collectively referred to as "Rutherfoord"). Rutherfoord asks the Court to strike or limit Hughes' proposed expert testimony, because (1) Trinity's attorney assisted Hughes in the drafting of his report; (2) Hughes offers inadmissible legal opinions; (3) Hughes' opinions are unreliable, biased, and incorrect; and (4) Hughes' damages calculations are unverified, unsubstantiated, and inaccurate. Trinity has filed a response in opposition to the Motion, and Rutherfoord has filed a reply. Upon reviewing the submissions of the parties and the applicable law, the Court finds that Rutherfoord's Motion to Exclude should be granted to the extent that Hughes offers legal opinions but denied in all other respects.

BACKGROUND

In this lawsuit, Trinity alleges that its former insurance broker Rutherfoord permitted excessive, undisclosed commissions to be charged on Trinity's account. A complete discussion of the facts and procedural history of this case are contained in this Court's Amended Memorandum Opinion and Order concerning Defendants' Motions for Partial Summary Judgment.

Rutherfoord has filed a Motion asking the Court to exclude the opinions of Trinity's expert, Geoffrey Hughes. In his report, Hughes gave the following opinions:

It is my professional opinion that the duty of an agent is to protect the interest of the insured. When negotiating with a London broker on behalf of the insured, when the agent is being reimbursed on a flat fee, rather than commission, it is incumbent upon the agent to insure that the commissions given to the London broker by the underwriter, part of which would normally go to the agent, are discounted. A failure to do so is a failure to protect the insured's interest as an insurance agent would be expected to do.
Having reviewed the documents above, and based on my experience and expertise, it is my conclusion that Rutherfoord failed to protect Trinity Yachts' interest by failing to adequately negotiate the commissions to be taken and retained by Bowood.... In this instance, Rutherfoord failed to protect Trinity's interests.
It is my professional opinion that the retained commissions, and in turn the total fees and commissions taken with respect to these placements, was well above that which is normal in the industry. The typical retained commission by London brokers in a marine insurance of this size is approximately 7.5%. Having reviewed the Trinity Brokerage Amounts Schedule as produced by R.K. Harrison, the commissions allowed to be retained by the London brokers in this instance ranged from 12.5% to 22.5%.... [T]herefore the commissions shown in that schedule were excessive when allowed to be wholly retained by the London broker, on top of a flat fee to the domestic agent.
The damages resulting to Trinity Yachts resulting from Rutherfoord's failure to negotiate the retained commissions can be computed by comparing the actual amount of retained commissions to the customary amount of retained commissions which should have been negotiated. Based on the information I have reviewed, although I am unable to arrive at a precise figure due to the lack of access to records of actual premiums, the approximate amount of retained commissions appears to be $2, 223, 351. Had Rutherfoord negotiated ordinary and reasonable commission agreements, the London broker would have received total retained commissions of approximately $1, 083, 456. It is my opinion that failing to reduce the London brokers' commission, could have cost the insured approximately $1, 139, 886 in premium savings.

(Defs.' Mot., Ex. H, ECF No. 98-8).

DISCUSSION

Rule 702 of the Federal Rules of Evidence establishes the following standards for determining whether expert testimony is admissible:

(a) the expert's scientific, technical, or other specialized knowledge [must] help the trier of fact to understand the evidence ...

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