
    Sylvia A. Kulak, Respondent-Appellant, v Nationwide Mutual Insurance Company, Appellant-Respondent.
    Argued March 23, 1976;
    decided June 15, 1976
    
      
      John M. Freyer and Robert J. Hunt for appellant-respondent. I.
    The trial court erred in receiving opinion testimony as to the reasonableness of the defenses raised in the underlying action. (Dougherty v Milliken, 163 NY 527; Noah v Bowery Sav. Bank, 225 NY 284; Schütz v Union Ry. Co., 181 NY 33; Dittman v Edison Elec. Illuminating Co., 87 App Div 68; Clark v Iceland S. S. Co., 6 AD2d 544; Hall v New York Tel. Co., 168 App Div 396; People v Soper, 243 NY 320; Ferguson v Hubbell, 97 NY 507; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; Cornwell v Safeco Ins. Co. of Amer., 42 AD2d 127.) II. There was no proof before the trial court sufficient to sustain a verdict against Nationwide in excess of its policy limits. (Brockstein v Nationwide Mut. Ins. Co., 448 F2d 987, 405 US 921; Bates v Merchants Mut. Ins. Co., 277 F Supp 308, 392 F2d 591.) III. The county clerk’s postverdict assessment of interest was illegal and would have permitted a double recovery. (First Int. Pictures v F. C. Pictures Corp., 262 App Div 21; Mayaguez Drug Co. v Globe & Rutgers Fire Ins. Co. of N. Y., 260 NY 356; Urband v Lubell, 245 NY 156; Wilcoxon v Sun Oil Co., 49 Misc 2d 589; Stuckey v Erie R. R. Co., 22 Misc 2d 472; D’Angelo v State of New York, 200 Misc 657; Fleming v Jacob, 57 Misc 375; Collier v Granger, 258 F Supp 717; First Nat. Bank of Hollywood v American Foam Rubber Corp., 309 F Supp 545.) IV. The award of punitive damages was without legal or factual support. (Gordon v Nationwide Mut. Ins. Co., 37 AD2d 265; Huschle v Battelle, 33 AD2d 1017.)
    
      Terry D. Smith for respondent-appellant.
    I. The trial court properly admitted expert testimony. (Harris v Standard Acc. & Ins. Co., 191 F Supp 538, 297 F Supp 627, 369 US 843; Cornwell v Safeco Ins. Co., 42 AD2d 127; Dougherty v Milliken, 163 NY 527; Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 410 US 931; Peterson v Allcity Ins. Co., 472 F2d 71; Young v American Cas. Co. of Reading, Pa., 416 F2d 906, 396 US 997; Worden v Tri-State Ins. Co., 347 F2d 336; American Cas. Co. of Reading, Pa. v Howard, 187 F2d 322; Blue Bird Taxi Corp. v American Fid. & Cas. Co., 26 F Supp 808; Knobloch v Royal Globe Ins. Co., 38 NY2d 471.) II. The jury’s award of punitive damages was proper and should be reinstated. (Knibbs v Wagner, 14 AD2d 987; Sanders v Rolnick, 188 Misc 627, 272 App Div 803; Korber v Dime Sav. Bank of Brooklyn, 134 App Div 149; Gordon v Nationwide Mut. Ins. Co., 37 AD2d 265, 30 NY2d 427.) III. Assessment of interest on the cause of action for breach of Nationwide’s implied covenant to defend Mrs. Ortiz in good faith was proper. (Brassil v Maryland Cas. Co., 147 App Div 815.) IV. The finding that Nationwide had failed to act in good faith should not be disturbed. (Cappano v Phoenix Assur. Corp. of N. Y., 28 AD2d 639; Brockstein v Nationwide Mut. Ins. Co., 417 F2d 703, 405 US 921; Brown v United States Fid. & Guar. Co., 314 F2d 675; Parisi v Maryland Cas. Co., 32 AD2d 1030, 27 NY2d 505; Gregersen v Aetna Cas. & Sur. Co., 241 F Supp 204; American Employers Ins. Co. v Globe Aircraft Specialties, 205 Misc 1066; Decker v Amalgamated Mut. Cas. Ins. Co., 35 NY2d 950.) V. The court below properly held that the measure of compensatory damages in this case was the full amount of the excess judgment together with interest from the date of entry thereof pursuant to CPLR 5003. (Henegan v Merchants Mut. Ins. Co., 31 AD2d 12.)
   Jones, J.

The question presented on this appeal is one of first instance—to what extent, if any, may expert opinion be introduced in actions against an insurer for failure to settle an automobile liability claim within policy limits?

About 5:30 a.m. on July 15, 1962 plaintiff was seriously and permanently injured in a one-car accident when the vehicle in which she was riding as a passenger, owned by defendant’s insured, Esther Ortiz, and driven by the latter’s son, left the highway while traveling at a high rate of speed, causing the death of the driver and the injuries to the sole passenger. In an action subsequently instituted against Mrs. Ortiz in which she was defended by counsel employed by her insurance carrier, defendant herein, plaintiff recovered a judgment in the amount of $60,000—which was $50,000 above the coverage provided to the owner by the automobile liability insurance policy carried by her with defendant. After the insurer had paid plaintiff the $10,000 for which it was obligated under the policy in partial satisfaction of her judgment, Mrs. Ortiz assigned her rights against her insurer to plaintiff. Based on that assignment, plaintiff commenced the present action predicated on the insurer’s alleged bad faith in failing to settle the personal injury action within the policy limits. A jury verdict in her favor has been affirmed by the Appellate Division, two Justices dissenting.

We agree with the court below that the record was sufficient to support the jury’s finding of bad faith by the insurer (cf. Knobloch v Royal Globe Ins. Co., 38 NY2d 471). There is in the record, however, testimony which should not have been received over defendant’s objection and which may well have played a significant part in the jury’s determination. A new trial is therefore required.

At the trial of the action based on alleged bad faith of the insurer, in addition to proof not relevant to our present concern, the parties adduced evidence as to the assertion of plaintiff’s claim against the insured, the investigation and negotiations carried on by the insurer both before and after the claim had been converted to the personal injury action, its engagement of trial counsel and the communications between defendant and its trial counsel prior to and during trial, the defenses relied on and the proof introduced by both sides in the personal injury action, medical reports prepared prior to that trial, trial counsel’s notes and the verdict recovered by plaintiff against the insured. Included was proof that the defenses relied on by the insurer in the underlying action were three: (1) that plaintiff, rather than the insured’s son, was driving the vehicle at the time of the accident, (2) that plaintiff was riding with the son when, to her knowledge, he was intoxicated, so as to have been contributorially negligent, (3) that, by the same conduct, plaintiff had assumed the risk of injury. There was also evidence that plaintiff—a young woman —had sustained substantial physical injuries and had become a permanent hunchback as a result of the accident, which was known to the insurer prior to and during the trial of the personal injury claim; that the highest settlement offer made by the insurer was $7,500 even after the Trial Judge had excluded evidence of the alcohol content of the driver’s blood, on which the insurer had substantially relied to establish his intoxication; and that the trial counsel engaged by the insurer to represent Mrs. Ortiz had not been informed of the limit of the policy coverage until after the trial had been concluded.

As part of her direct case in the present action, plaintiff then called two experienced trial attorneys, neither of whom had had any connection with her personal injury action but whom she qualified and offered as experts in the field of automobile accident injury litigation. The pattern of interrogation and the testimony of these witnesses was substantially the same. First, each was asked to describe the factors he considered in evaluating a personal injury case for settlement. (Both responded, liability and damages.) Objection was interposed by defendant when this question was addressed to the second attorney although not when asked of the first witness. Then followed three hypothetical questions purporting to summarize the evidence offered in the personal injury action as to liability and damages and soliciting from the witnesses their opinions, "with a reasonable degree of professional certainty”, as to the "viability” in this particular case of the defense that the plaintiff was in fact driving the vehicle at the time of the accident, the probability of success on the defenses of contributory negligence and assumption of risk and the likelihood that a verdict returned for plaintiff would exceed $10,000. (The witnesses replied that in the particular circumstances hypothesized the defenses were unlikely to succeed and that the verdict was likely to exceed $10,000, and, on request by plaintiffs counsel, then stated the bases for their conclusions.) Defendant objected to the first of these hypothetical questions when directed to the first witness, on the ground that it was not a matter subject to expert testimony, and to the last hypothetical when addressed to the second witness on the ground the subject was a matter of judgment, not legal opinion.

Each expert was then asked what significance he attached in this instance to the testimony of a Deputy Sheriff who had observed young Ortiz some hours before the accident and had directed plaintiff to drive the vehicle at that time, which testimony had been relied on by the insurer in the personal injury action to support the claim that Ortiz was intoxicated and thus that plaintiff had been guilty of contributory negligence or assumption of risk. (Both witnesses deprecated the value of the testimony, either because of the lapse of time or because of other activities by Ortiz preceding the accident.)

The witnesses were next asked their opinions, again with a reasonable degree of professional certainty, whether $7,500 represented a realistic evaluation of this case for settlement purposes at the conclusion of the proof on the trial, and also whether in general it was possible for an attorney retained by the insurer adequately to represent the interests of an insured sued for an amount in excess of policy limits, if the carrier does not inform that attorney what the policy limits are. (Both witnesses answered both questions in effect in the negative.)

Although argument is available to the contrary, we conclude that sufficient objection was raised to the testimony of both expert witnesses to preserve for our review the errors, if any, committed by the trial court in receiving their opinion testimony. When the first hypothetical question was posed, soliciting the witness’ opinion of the viability of the defense that plaintiff was driving the vehicle at the time of the accident, defendant objected on the ground that the matter was not a proper subject of expert testimony. The objection thus clearly made and overruled served as a continuing objection and made it unnecessary to challenge other improper evidence of the same sort adduced from that witness and the second expert, during whose examination the objection was several times repeated (Dilleber v Home Life Ins. Co., 69 NY 256, 260-261; Schutz v Union Ry. Co., 181 NY 33, 36). Although objection was not made to every question during this line of testimony the objections "were sufficient to cover the whole of the material accepted as evidence” (Macy v New York World-Tel. Corp., 2 NY2d 416, 421).

We conclude that in the circumstances disclosed in this record the testimony of the attorney experts was admissible in part and inadmissible in other part. As stated, for the purposes of the present appeal we proceed on the basis that all errors now asserted were preserved for our review. We observe, however, that because there can properly be no broadly categorical resolution of the issue of admissibility, it would have very much assisted the trial court in making its evidentiary rulings and would have now facilitated our appellate review had the objections been precisely focused and the differentiated supporting reasons been clearly articulated. Because there was no such development on this trial we are now obliged to make what may appear to be a broader and more categorical holding than we would have been disposed to do had there been an appropriate refinement of the issues at the trial level.

In perspective we distinguish between testimony that relates to automobile accident actions in general and testimony that is addressed to the individual action on which this excess liability claim is predicated in particular. We first assume that a proper foundation is laid—i.e., that the witness called to the stand is familiar with the practices of insurers and defendants in evaluating personal injury and property damage claims. Such knowledge may have been acquired in consequence of direct representation of insurers or defendants, or may have come from broader experience in the field of automobile accident litigation which has included substantial exposure to such practices. (No assertion is made here that either of the two attorneys who testified was not qualified by training and experience to express such expert opinion as might be admissible.) On the basis of such foundation the witness should be permitted to identify considerations relevant to the assessment of personal injury claims by insurers in general and then to describe the materiality and weight customarily ascribed to each. So, in this case, the testimony as to factors to be considered in evaluating a personal injury case for settlement was, admissible. It is true that in form the questions were phrased to inquire what factors the witnesses considered, while more precisely the questions should have sought to elicit the factors considered by insurers in general. No objection was taken, however, to the form of the questions, and we conclude that both questioner and witnesses intended that the testimony relate to factors relevant in general rather than in this instance in particular. Similarly, testimony might be introduced which would be descriptive of the practice in settlement of claims followed by insurers in general as well as by their attorneys (see Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, 444).

This principle, however, would not cover the testimony elicited in response to the hypothetical questions addressed to plaintiff’s expert witnesses. We refer to the testimony as to the "viability” of three defenses interposed by the insurer and the likelihood in this instance of a plaintiff’s verdict in excess of the $10,000 limit of liability under the policy involved in this case. In these instances the questions were focused precisely on this particular case, and did not seek an expression of expert opinion generally with respect to defenses based on intoxication, on contributory negligence, or on assumption of the risk. The attorney witnesses were invited and permitted to express opinions as to the significance of such considerations in this particular case and that the recovery would exceed policy limits. This was far more than a matter of the form of the question and went to the substance of the testimony. In our view in thus presuming to apply general experience to the particulars of this individual case, the witnesses trespassed on the jury’s domain. Accordingly, such testimony was inadmissible and its prejudice to the defendant insurer was in direct proportion to the degree of qualification of the attorney-expert. Likewise we hold that it was error, over what we perceive as a continuing objection, to permit the witnesses to express their individual opinions as to the significance to be attached to the testimony of the Deputy Sheriff with respect to his observations of young Ortiz. In the same category were the opinions expressed as to the penultimate issue before the jury—whether $7,500 represented a realistic evaluation of this particular claim for settlement purposes.

As was recognized by the dissenting Justices in the Appellate Division, estimation as to the probable outcome of the particular personal injury action—a factor bearing on defendant’s performance of its obligation to act in good faith in refusing to settle within policy limits—did not require expert opinion after the testimony given in the personal injury action had been presented to the jury in the bad faith action. The conclusions which might be drawn as to the likely verdict in the former action, and its probable amount, were within the competence of the jury deciding the issue of bad faith. Since those assessments did not "depend upon professional or scientific knowledge or skill not within the range of ordinary training or intelligence”, there was no occasion to resort to "the knowledge of men whose experience or study enables them to speak with authority” (Dougherty v Milliken, 163 NY 527, 533; People v Kenny, 30 NY2d 154, 157). While it might be suggested that an experienced trial attorney—or even an observant court attendant—who has had frequent occasion to observe the results of juries’ deliberations in personal injury actions might be expected reliably to predict the outcome in a particular case, we know of no empirical support for such a conclusion. Moreover, any such result would be based on exposure rather than expertise, and would treat of subject matter calling for no special scientific or professional education, training or skill. Any experience advantage enjoyed by such witnesses would not establish the inability or incompetence of jurors, on the basis of their day-to-day experience and observation, to comprehend the issues, to evaluate the evidence, and finally, to estimate the likely outcome of a specific action (Ferguson v Hubbell, 97 NY 507, 513-514). Absent such inability or incompetence, the opinions of experts, which intrude on the province of the jury to draw inferences and conclusions, are both unnecessary and improper (Meiselman v Crown Hgts. Hosp., 285 NY 389, 396; People v Creasy, 236 NY 205, 222-223).

We would distinguish the admissiblity of testimony by medical experts as to whether, with a reasonable degree of medical certainty, it could be said that the accident in question was a competent producing cause of the physiological or neurological condition suffered by a particular plaintiff. There the causal linkage involves what is recognized as an area of medical expertise as to which the jury has little if any competence. Applying the same standard, we hold admissible in this case the expert witnesses’ testimony as to the possibility, in general, of adequate representation of an insured by the attorney selected by the insurer if that attorney is not informed of the limits of liability of the pertinent insurance policy. The daily experience of the jurors provides no basis for a determination by them of the relevance of knowledge of policy limits to adequacy of professional representation.

Because of the errors in the admission of evidence, there must be a new trial. Accordingly, the order of the Appellate Division should be reversed and the matter remitted to Supreme Court.

Fuchsberg, J.

(dissenting). In my opinion, there was no error in the admission of the testimony given by the lawyer-experts in this case, the two called on behalf of the plaintiff as well as the one called on behalf of the defendant. Therefore, a new trial is not required. There should be an affirmance instead.

Specifically, I find it difficult to understand why, if as the majority holds, expert testimony is proper to identify and evaluate considerations relevant to personal injury automobile accidents in general, it is not admissible when addressed to the particular accident case whose faulty management by the defendant is the basis for the bad faith action before us, especially since the particular is far more likely to be relevant to the issues than is the general.

Basically, the admissibility of the testimony of an expert is governed by the answers to the following three questions: "1. Is the subject concerning which he is to testify, one upon which the opinion of an expert can be received? 2. What are the qualifications necessary to entitle a witness to testify as an expert? 3. Has the witness those qualifications?”, each of which is generally to be resolved by the trial court (Richardson, Evidence [10th ed], § 367, pp 339-340, quoting Jones v Tucker, 41 NH 546, 547).

Since the excellent qualifications of the expert witnesses in the case before us are acknowledged, I concern myself here with the first question only, i.e., whether the matters on which the experts testified were ones upon which expert testimony should have been received. In answering that question, I begin by asking not only what issues were to be decided at the bad faith trial, but also what were the precise evidentiary matters on which those issues were to be decided.

Thus, while the ultimate issue was whether the defendant has acted in bad faith, the determination of that issue, in turn, required, among other things, the assessment of the reasonably anticipatable result of a trial of the particular underlying negligence action here, both as to liability and, if that issue were to be decided for the plaintiff, as to the amount or range of damages to be anticipated. Relevant also would be the degree of probability that those results would ensue.

Advice as to these factors by their very nature would, most relevantly, have to relate to the particular circumstances peculiar to the negligence case involved. Many of those factors are not well understood by laymen. Indeed, their very existence may be completely unknown to the uninitiated.

Let us consider a few examples. For instance, a particular automobile accident case tried in urban Kings County before a jury of apartment dwellers who do all their traveling by subway or bus may face an entirely different prospect than will the identical case tried in more rural Cayuga County before a jury of car and home owners concerned with their liability insurance rates. Insurance people and experienced trial lawyers understand that; both settle their cases for amounts that take it into account, and the former fix their rates accordingly. Nor do either ignore the identity of a particular defendant; in the real world, whether the owner of a car is a giant corporation which nightly advertises its might on television, or whether he is John Smith, factory worker, does make a difference. Also, the greater or lesser penchant of appellate courts in a particular geographical area to exercise their power of remittitur is a practical consideration which any insurance representative, but no jury, unless advised, would be likely to take into account.

Of course, litigants, witnesses and lawyers are not stereotypes. Their impact varies from witness to witness and case to case. Whether an important witness is a preacher or a prostitute matters much, as it should. The personality, occupation and speech of a particular plaintiff or of a particular defendant will color credibility, whether for better or worse. Realistically, even the experience, skills and conscientiousness of the particular lawyers engaged by the parties make a difference. Under our adversary system, it may give one party a definite advantage over the other. Even in the presentation of the injuries, one lawyer in a personal injury case may proceed as though a broken leg was just a broken bone; to another it is also an injury to muscles, ligaments, nerves and blood vessels, to which the trauma has simultaneously done its most lasting damage. Indeed, insurance companies and their attorneys routinely consider such matters in evaluating their risks. They would be derelict to ignore them when acting in their own immediate interests; their own conduct must thus be measured by the same kind of expertise.

Expert testimony on such matters, it appears to me, is not only entirely or in part "peculiarly within the knowledge of men whose experience or study enables them to speak with authority”, but the conclusions to be drawn from it also are "not within the range of ordinary training or intelligence”, the tests of Doughtery v Milliken (163 NY 527, 533) for admission of expert testimony to prove facts and conclusions, respectively. Such "experience”, "knowledge”, "study” and "training” appear at odds with the majority’s puzzling dichotomy between "exposure” and "expertise”. (See McCormick, Evidence [2d ed], § 13, p 30.)

Furthermore, the admissibility of expert testimony should not be dependant on its indispensibility. Professor Wigmore, after criticizing ancient exponents of a more restrictive rule, particularly Ferguson v Hubbell (97 NY 507, 513), on which the majority here has posited much of its holding, puts it as follows: "But the only true criterion is: On this subject can a jury from this person receive appreciable help? In other words, the test is a relative one, depending on the particular subject and the particular witness with reference to that subject and is not fixed or limited to any class of persons acting professionally”. (7 Wigmore, Evidence [3d ed], § 1923, p 21 [emphasis in text].) Other writers (Ladd, Expert and Other Opinion Testimony, 40 Minn L Rev 437, 443 ["There are many matters * * * about which the triers of fact may have a general knowledge, but the testimony of experts would still aid in their understanding of the issues”]) and the Federal Rules of Evidence (rule 702 [in US Code, tit 28, Appendix]) also endorse an approach that takes a realistic view of the need for expert testimony in today’s complex society. Weinstein’s Evidence (vol 3, par 702 [01], p 702-9) states the modern rule precisely: "Doubts about whether an expert’s testimony will be useful should generally be resolved in favor of admissibility * * * The jury is intelligent enough, aided by counsel, to ignore what is unhelpful in its deliberation”.

Interestingly, it may be questioned whether the doctrine that such testimony should be viewed with an overriding concern that it "may intrude on the province of the jury to draw inferences and conclusions”, as the majority suggests, was ever the law in New York. In Finn v Cassidy (165 NY 584, 592), our court pointedly declared: "It is said that the [expert] witness is not to 'usurp the functions of the jury.’ The answer is simply that he is not attempting to usurp them— not attempting to decide the issue and thus usurp their place, but merely to give evidence, which they may or may not accept, as they please. Even though his opinion is admitted, it is not decisive, especially when it is considered that opinions might be given by witnesses on both sides.”

Bender’s New York Evidence too (vol 3, par 100.01 [6], p 338) suggests the broader rule of admissibility: "The criterion under the better view is no longer the question of usurping the province of the jury, but simply whether or not an inference or conclusion to be drawn from, factual testimony is so obvious that it can be said that jurors are as equally competent to reach it as one who may be skilled through long experience. If the opinion of one so skilled may be of aid to the jury in reaching its conclusions, the opinion should be admissible”.

Turning specifically to expert testimony by qualified trial lawyers in "bad faith” actions, the issue is far from res nova (e.g., Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, cert den 410 US 931; Cornwell v Safeco Ins. Co. of Amer., 42 AD2d 127; Peterson v Allcity Ins. Co., 472 F2d 71; Worden v Tri-State Ins. Co., 347 F2d 336; American Cas. Co. of Reading, Pa. v Howard, 187 F2d 322; [testimony concerning local jury verdicts in cases similar to the one in question]; Hartford Acc. & Ind. Co. v Cosby, 277 Ala 596; Government Employees Ins. Co. v Grounds, 311 So 2d 164 [Fla]). Such testimony was admitted in all these cases. While the issue of admissibility was not raised in all of them, in every one in which it was the testimony was admitted broadly.

The Alabama, Florida and Federal Court of Appeals cases make that clear. In Hartford Acc. & Ind. Co. v Cosby (277 Ala 596, 603, supra) the Alabama Supreme Court said, "[This] testimony was not to the ultimate issues of the case, but was directed toward showing the reasonable probability that should the Carrie Smith [wrongful death action] case go to a jury there was a reasonable probability of a verdict in excess of the limits of the policy. Such proof was incumbent upon the plaintiff”. In Government Employees Ins. Co. v Grounds (311 So 2d 164, 168, supra), the Florida District Court of Appeals approved testimony "as to their opinion that the insurer did not meet the standard of care imposed upon an insurance company in such circumstances” (emphasis added). In Worden v Tri-State Ins. Co. (347 F2d 336, 340, supra), the court sanctioned testimony regarding "all phases of investigation, preparation, the evidence presented at the trial, and the applicable law of the case” (emphasis added). (Accord American Cas. Co. of Reading, Pa. v Howard, 187 F2d 322, 328, supra.)

Similarly, in the case before us, the expert witnesses, in bringing their specialized knowledge to bear on the particular facts and circumstances here, provided no more than what Mr. Justice Cardamone, writing for the Appellate Division described as a "helpful aid to the jury in understanding and drawing proper inferences from the technical factual” matters which it had heard (47 AD2d, at p 421). Accordingly, there is no basis for disturbing the verdict, which should stand.

Chief Judge Breitel and Judges Jasen, Gabrielli, Wachtler and Cooke concur with Judge Jones; Judge Fuchsberg dissents and votes to affirm in a separate opinion.

Order reversed and a new trial granted, with costs to abide the event.  