Plaintiff Nichole Hertel sued State Farm Lloyds citing failure to pay insurance benefits following severe damage to her home during the February 2021 winter storm. Since filing suit, Plaintiff has sold and vacated her home.
The Court issued a Scheduling Order in April 2023 which set a deadline of September 13, 2023, for Plaintiff to name her experts and furnish their reports. Despite the specified deadline, Plaintiff designated Michael Brubaker as an expert and submitted his expert report on December 18, 2023. Brubaker, an experienced appraiser, was intended to testify about the value of Plaintiff’s home at the time of sale and its hypothetical value if storm damages had been promptly remediated. Plaintiff sought an extension of the September 13, 2023 deadline such that Brubaker’s report and testimony could be admitted.
In light of the untimely submission, Defendant State Farm Lloyds sought to exclude Brubaker’s report and testimony, arguing that they were both untimely and unreliable. The Court considered the motion alongside Defendant’s separate motion to exclude the testimony and opinions of other experts: All Peril Adjusting, LLC; Tom Cain; and Southeast Environmental Microbiology Laboratories. However, it was clarified that Plaintiff did not intend to present the testimony or opinions of these additional experts.
The Court denied as moot any requests present in Defendant’s motion seeking exclusion of experts other than Brubaker. The primary issue before the Court was whether to exclude Brubaker’s testimony and opinions.
Real Estate Appraisal Expert Witnesses
Michael Brubaker is a highly experienced real estate appraiser and broker in Texas. He has held a Certified General Appraiser license in the state and is also a licensed real estate broker. Brubaker earned the prestigious SRA designation from the Appraisal Institute in 1988, demonstrating his expertise in residential appraising. He holds a Bachelor’s degree in Architecture from the University of Houston earned in 1981.
Over his long career spanning more than 35 years, Brubaker has undertaken extensive education in the appraisal field including numerous courses and seminars offered by organizations like the Appraisal Institute. Brubaker is recognized as a leader in the appraisal community through his prior roles as an instructor, Director, and committee member for appraisal and real estate trade groups.
Brubaker has performed valuations for purposes including eminent domain, litigation support, relocation, and lending. He has appraised both residential and commercial properties. Through his depth of experience, Brubaker has testified and been qualified as an expert witness in Texas Courts on multiple occasions. He counts major law firms and lenders among his past clients during his 30+ year career as an appraiser. Overall, Brubaker’s extensive qualifications and active involvement make him a recognized authority in the real estate appraisal field.
Thomas “Tom” Cain is a Certified Real Estate Appraiser at Brubaker & Associates, Inc. Cain spent over 20 years as a financial advisor prior to becoming an appraiser. He hold a M.B.A from Baylor University and is a member of the Houston Association of Realtors, Texas Association of Realtors,National Association of Realtors as well as the Association of Texas Appraisers.
Discussion by the Court
During the hearing, the parties’ arguments were centered on the relevance of Mike Brubaker’s testimony regarding the diminution in value of Plaintiff Nichole Hertel’s home. Both parties acknowledged that Plaintiff’s insurance policy did not cover diminution in value. Plaintiff asserted that Brubaker’s testimony was pertinent to establishing her actual pecuniary loss.
The Court referenced the case of Southwest Risk, L.P. v. Ironshore Specialty Ins. Co., 188 F. Supp. 3d 621, 629 (S.D. Tex. 2016), which clarified that, under Texas law, insured individuals cannot recover from their insurer if they have not suffered a pecuniary loss—meaning if the proceeds from the sale of their home had made them whole. However, the Court noted that the degree of Plaintiff’s actual pecuniary loss was not relevant, as Defendant had not raised a pecuniary loss argument. Moreover, Defendant explicitly stated during the hearing that it did not plan to raise a pecuniary loss argument at trial.
At this stage, the Court found that Brubaker’s testimony was not relevant for two reasons: (1) Plaintiff’s insurance policy did not cover diminution in value, and (2) the diminution in value of Plaintiff’s home did not pertain to any pending legal issue in the case. The Court concluded that Brubaker’s testimony was not relevant given these circumstances. It was emphasized that if Defendant were to raise a pecuniary loss argument in the future, the Court would reconsider the relevance of Brubaker’s opinion.
Held
The Court denied Plaintiff’s motion to extend Plaintiff’s Expert Designation Deadline but granted Defendant’s motion to exclude the testimony of Michael Brubaker. A final decision has not been reached in this case by the Court considering the remaining issues involved in this case still await resolution.
Key Takeaways:
Both parties acknowledged that Plaintiff’s insurance policy did not cover diminution in value, a point that became pivotal in the arguments presented. Plaintiff contended that Brubaker’s testimony was crucial for establishing her actual pecuniary loss. The Court referenced the precedent set by Southwest Risk, L.P. v. Ironshore Specialty Ins. Co., emphasizing that under Texas law, insured individuals cannot recover from their insurer unless they have suffered a pecuniary loss—defined as not being made whole by the proceeds from the sale of their home. Despite Plaintiff’s stance, the Court deemed Brubaker’s testimony irrelevant for two primary reasons: the exclusion of diminution in value from the insurance policy coverage and its consequent lack of pertinence to any pending legal issue in the case. Notably, the Court clarified that the degree of Plaintiff’s actual pecuniary loss was not a relevant consideration at this stage, as Defendant had not raised a pecuniary loss argument and explicitly stated it had no intention to do so at trial. The Court concluded that Brubaker’s testimony was not relevant in the given circumstances, while leaving open the possibility of reconsideration if the Defendant were to introduce a pecuniary loss argument in the future.
Case Details:
| Case Caption | Hertel V. State Farm Lloyds |
| Docket Number | 4:22cv4448 |
| Court | United States District Court, Texas Southern |
| Citation | 2024 U.S. Dist. LEXIS 14011 |
| Order Date | January 26, 2024 |
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