Simchat Torah Beit Midrash v. Philadelphia Indemnity Insurance Company

1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
District Judge S. Kato Crews
Civil Action No. 1:23-cv-00594-SKC-TPO
SIMCHAT TORAH BEIT MIDRASH, a nonprofit corporation,
Plaintiff,
v.
PHILADELPHIA INDEMNITY INSURANCE COMPANY,
Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO
EXCLUDE EXPERT TESTIMONY OF PETER RIDULFO
(DKT. 56)
The above-referenced Motion is now before the Court. No hearing is necessary
to aid the Court’s ruling. This is an insurance bad faith case arising from a windstorm
which Plaintiff claims damaged the custom slate roof tiles of Plaintiff’s synagogue
and broadcasting station. As a result of the damage, Plaintiff made a claim with its
insurance carrier, Defendant Philadelphia Indemnity Insurance Company, under a
property insurance policy.
Plaintiff hired Peter Ridulfo of Claims Pro Public Adjusters (collectively,
“Ridulfo”) to help Plaintiff process its claim with Defendant under the insurance
policy. Based on the contract between Plaintiff and Ridulfo, Plaintiff is to compensate
Ridulfo a contingent fee of the lesser of 10 percent of the “whole amount of loss” or 15
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 1 of 8

2
percent of the net increase to the “whole amount of loss.” Dkts. 56-1, pp.1, 4. Their
contract defines “whole amount of loss” to include damages recovered in litigation. Id.
at p.1.
In this litigation, Plaintiff disclosed Ridulfo as a non-retained expert under
Fed. R. Civ. P. 26(a)(2)(B)(II). In relevant part, Plaintiff described Ridulfo’s expected
testimony in this way:
Mr. Ridulfo is a public adjuster who Plaintiff retained to represent it on
this claim. Mr. Ridulfo has information and knowledge concerning all
issues related to Plaintiff’s claim including, but not limited to: Plaintiff’s
damages caused by the subject hailstorm; the repairs necessary to make
Plaintiff 	whole; 	the 	unreasonable 	acts 	taken 	by 	Defendant 	which
delayed or denied Plaintiff’s owed benefits; the reasonable steps taken
by Plaintiff to cooperate with Defendant in adjusting its claim; and
Plaintiff’s insurance policy which provides coverage for the damages
caused 	by 	the 	hailstorm. 	Mr. 	Ridulfo 	will 	also 	have 	specialized
knowledge of claims handling practices and standards in the industry,
as well as insurance and construction regulations related to repairs.
. . . His testimony is expected to include but is not limited to Colorado’s
insurance 	claims 	handling 	practices 	and 	standards, 	case 	law 	and
statutes, and Division of Insurance bulletins and guidelines.
. . . He will also testify to his opinion on what Defendant’s duty was to
Plaintiff and how Defendant’s actions were unreasonable and breached
that duty. He will also testify as to his actions and how Plaintiff, by way
of his representation and by its actions, reasonably cooperated and
complied with the terms of its insurance policy with Defendant. . . . Mr.
Ridulfo will testify to the scope of damages submitted to Defendant in
the Proofs of Loss and his basis for those damages, the information he
gathered substantiating those damages, and why he believed that those
damages were appropriate [and] his opinion regarding third-party
adjuster Keith Schmelling’s actions as a representative of Defendant
and how these actions were unreasonable and put Defendant’s interests
before those of Plaintiff.
Dkt. 56-1, p.10.
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 2 of 8

3
Defendant argues that Ridulfo should be precluded from testifying as an expert
in this case because his direct financial interest in the outcome of the litigation—i.e.,
his contingent fee arrangement with Plaintiff—renders his opinions unreliable.
Defendant claims excluding Ridulfo’s expert testimony would not prejudice Plaintiff
because Plaintiff disclosed three specially retained experts who are redundant of
Ridulfo’s 	purported 	expert 	opinions—specifically, 	John 	Kezer, 	who 	will 	testify
regarding insurance industry standards and the reasonableness of Defendant’s
claims handling; John Chan, who will testify about the cause and damage to the slate
roof; and David Phalen, who will testify about the alleged costs associated with
Plaintiff’s scope of repair.
Plaintiff contends Ridulfo’s testimony would be to his observations as a public
adjuster and his expert testimony would only be so that he could explain why he made
the decisions and observations he did during his work for Plaintiff. It’s Plaintiff’s
position that Ridulfo is not being offered as a retained expert and is not being
compensated for his opinion contingent on any outcome of this trial but instead is
providing testimony as a non-retained expert, discussing the facts related to the
claims process and testifying with expertise in the area of claims adjusting as a public
adjuster.
LEGAL PRINCIPLES
“The proponent of expert testimony bears the burden of showing that the
testimony is admissible.” Conroy v. Vilsack, 707 F.3d 1163, 1168 (10th Cir. 2013). A
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 3 of 8

4
witness who qualifies as an expert by knowledge, skill, experience, training, or
education may offer their opinions at trial if the proponent satisfies the court that it
is more likely than not: “(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’s opinion reflects a
reliable application of the principles and methods to the facts of the case.” Fed. R.
Evid. 702; see also United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).
The district court performs an important gatekeeping function to assure expert
testimony meets these requirements. Macsenti v. Becker, 237 F.3d 1223, 1230-34
(10th Cir. 2001). Even still, courts are mindful that “Rule 702 mandates a liberal
standard” for the admissibility of expert testimony. Cook v. Rockwell Int’l Corp., 580
F. Supp. 2d 1071, 1082 (D. Colo. 2006). The rejection of expert testimony has proven
“the exception rather than the rule.” Fed. R. Evid. 702, advisory committee notes
(2000 amendments). The decision to admit or exclude expert testimony is committed
to the sound discretion of the district court. Summers v. Missouri Pacific Railroad
System, 132 F.3d 599, 603 (10th Cir. 1997).
ANALYSIS AND FINDINGS
The Court finds Ridulfo’s agreement with Plaintiff gives him a financial stake
in the outcome of this case. That agreement expressly provides that Plaintiff is to
compensate Ridulfo a contingent fee of the lesser of 10 percent of the “whole amount
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 4 of 8

5
of loss” or 15 percent of the net increase to the “whole amount of loss,” defining “whole
amount of loss” to include damages recovered in this litigation. Dkts. 56-1, pp.1, 4.
Whether Ridulfo’s financial stake in the outcome of this case renders him
incompetent to testify as an expert witness is governed by state law in this diversity
case. Fed. R. Evid. 601. Colorado courts recognize “a settled principle of American
law” that “expert witnesses should not receive contingent fees.” City & Cnty. of Denver
v. Bd. of Assessment of the State of Colo., 947 P.2d 1373, 1379 (Colo. 1997). When an
expert “obtains a direct financial interest in the outcome of the litigation . . ., any
semblance of independence or promise of intellectual rigor that normally adheres to
an expert witness is fatally wounded.” Wheatridge Off., LLC v. Auto-Owners Ins. Co.,
578 F. Supp. 3d 1187, 1210 (D. Colo. 2022) (cleaned up). This is because “[i]n the
specific context of expert testimony, the usefulness of an expert witness depends in
large measure on the degree to which the expert is able to convince the trier of facts
of his or her strict and unyielding impartiality to both the parties and their counsel,
and to the issues in the case.” Calfox, Inc. v. Certain Underwriters at Lloyd’s, London
Subscribing to Certificate No. T0530bp1eb10018, No. 20-cv-02443-RM-KMT, 2024
WL 1051948, at *10 (D. Colo. Mar. 11, 2024) (cleaned up).
“Some courts in this District, following the guidance of Colorado state courts,
apply a balancing test under Rule 403 to determine whether an expert witness’s
financial stake in a case warrants the expert’s exclusion.” Mordhorst Cleaning, LLC
v. Am. Strategic Ins. Corp., No. 23-CV-00017-NYW-MEH, 2024 WL 4932505, at *4
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 5 of 8

6
(D. Colo. Dec. 2, 2024) (citing cases); see also Midtown Invs., LP v. Auto-Owners Ins.
Co., 641 F. Supp. 3d 1066, 1075 (D. Colo. 2022). This Court finds the Rule 403
balancing test is warranted here to determine whether the potential of unfair
prejudice that may result from allowing Ridulfo’s expert opinions outweighs any
probative 	value 	of 	those 	opinions. 	“[T]he 	question 	of 	whether 	an 	improperly-
compensated expert may testify is left to the sound discretion of the trial court, to be
determined on a case-by-cas[e] basis, based on the reliability of that testimony under
all the circumstances.” Hiland Hills Townhouse Owners Ass’n v. Owners Ins. Co., No.
17-CV-01773-MSK-MEH, 2022 WL 2198262, at *9 (D. Colo. Feb. 8, 2022).
The Court agrees with the line of cases which find, under circumstances like
those here, the probative value of the opinions of an expert who has a financial stake
in the outcome of the case is substantially outweighed by the danger of unfair
prejudice. Fed. R. Evid. 403; Midtown Invs., LP v. Auto-Owners Ins. Co., 641 F. Supp.
3d at 1076 (“The Court finds that Mr. Bezek’s opinion testimony, given his financial
interest in the outcome of litigation, presents a danger of unfair prejudice to Owners
that substantially outweighs its probative value[.]”); Wheatridge Off., LLC v. Auto-
Owners Ins. Co., 578 F. Supp. 3d at 1211 (excluding expert testimony under Fed. R.
Evid. 403 because it was the expert’s “financial interest in the outcome of the case
that creates the conflict of interest.”); Mordhorst Cleaning, LLC, 2024 WL 4932505,
at *5 (“Permitting a conflicted expert with a financial stake in the ultimate valuation
determination to testify about valuation and other related topics presents the
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 6 of 8

7
significant 	danger 	of 	unfair 	prejudice 	to 	Defendant.”) 	(emphasis 	in 	original).
Exclusion under these circumstances is not a sanction, but rather, it is the Court’s
appropriate exercise of “its gatekeeping function to protect the integrity of the judicial
process.” Wheatridge Off., LLC, 578 F. Supp. 3d at 1211.
The Court further finds little prejudice to Plaintiff in precluding Ridulfo’s
expert opinions for two reasons. First, Plaintiff has disclosed three specially retained
experts whose testimony is seemingly cumulative of the opinions Ridulfo would
otherwise offer. Dkt. 56-1, ¶1 (disclosing John Kezer, Esq., to offer opinions re:
insurance claims handling standards and practices and the “unreasonable actions
taken by Defendant during its adjusting of Plaintiff’s subject claim.”); id. at ¶2
(disclosing John Chan to offer opinions re: slate tile roofs and the damage caused by
the windstorm which impacted Plaintiff’s roof, that the damage is consistent with
wind 	damage 	and 	uplift, 	and 	that 	“city 	codes 	and 	direction 	on 	repairs 	and
replacement of roofs is the final word on what must be followed.”); Dkt. 56, pp.5, 10
(referring to Plaintiff’s disclosure of David Phalen “as its costing expert” “who will
testify about the alleged costs associated with [Plaintiff’s] scope of repair.”).
Second, because Ridulfo wears two hats—Plaintiff offers him as a fact witness
and an expert witness—the Court will allow Ridulfo to testify as a fact witness. He
may testify to his actions and the events that occurred during the claim process with
Defendant.
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 7 of 8

8
For the reasons shared above, the Court finds Ridulfo’s expert opinions are
precluded under Fed. R. Evid. 403. The Motion is GRANTED.
DATED: March 1, 2025
BY THE COURT:
____________________________
S. Kato Crews
United States District Judge
Case No. 1:23-cv-00594-SKC-TPO Document 104 filed 03/01/25 USDC Colorado
pg 8 of 8