Expert Witness Profiler

Tag: Insurance

  • Insurance Expert’s Testimony on Market Multiples Range Excluded

    Insurance Expert’s Testimony on Market Multiples Range Excluded

    The matter before the Court stems from Plaintiff USI Insurance Services LLC’s (“USI”) lawsuit against Defendants Alliant Insurance Services Incorporated (“Alliant”), William J. Havard III, Robert Engles, Jenise Purser, and Justin Walsh (collectively, “Defendants,” or without referring to Alliant, the “Individual Defendants”) relating to allegations that, among other things, they engaged in the improper solicitation of USI’s clients on Alliant’s behalf after resigning from USI.

    Defendants filed a motion to exclude certain trial testimony and the opinions of USI’s industry expert witness, Thomas R. Linn.

    Insurance Expert Witness

    Thomas Richard Linn has extensive experience in the insurance industry, having served as the Executive Vice President of Marsh, Berry & Company, Inc., one of the nation’s largest insurance agency consulting firms. Throughout his 22-year tenure at MarshBerry, Linn advised industry players on financial and organizational development and served as an intermediary to insurance-related mergers and acquisitions totaling more than $2 billion.

    Get the full story on challenges to Thomas R. Linn ‘s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Defendants objected to Linn’s testimony concerning (1) certain “market multiples” derived from other undisclosed insurance transactions and (2) opinions on the enforceability and interpretations of the restrictive covenants in the Individual Defendants’ employment agreements.

    Market Multiples

    USI planned to offer Linn’s testimony on the process for buying, selling, and acquiring books of business (“BOB(s)”) in the commercial insurance industry and the typical pricing for such assets. Linn opined that industry uses “multiples of revenue” as a rule of thumb to price of a firm or BOB and “multiples of EBITDA” to calculate the sale price. He further provided specific ranges of multiples for revenue and for EBITDA in which the range covers standard business risks in the insurance industry and unique, transaction-specific risks.

    Defendants attacked Linn’s factual basis for reaching the proffered multiples. According to Defendants, Linn based his multiples every transaction he worked on during his twenty-two-year career, including those concerning the sale of entire insurance brokerage firms and isolated BOBs.

    Defendants also pointed out that when their counsel asked him to identify specific comparable transactions involving the sale of BOBs underlying his multiples, Linn refused to identify the names, revenues, locations, and acquisition prices as confidential and indicted that he based the multiples on the “the judgment [he] . . . gained after 22 years of experience.”

    Linn testified that he spoke with partners who worked at his former company for “touch points and points of reference for which he used to form [his] opinion” regarding the status of the marketplace and current pricing multiples. These conversations related to the sale of entire brokerage firms, not BOBs, and Linn did not receive any information regarding any specific transactions.

    He further testified that asking about BOBs in particular was unnecessary because the valuation of a BOB incorporates a discount from the valuation of the entire firm, which remained the same since the time he was with the company.

    Analysis

    Though it is possible that business assets like BOBs may sell at some multiple that accounts for various discounts or premiums based on various performance and market-based factors as a matter of general principle, Linn opined to a specific range of multiples by applying that rule, i.e., the principle, to a set of unidentified facts.

    The proffered range of multiples is not a matter of general principle but rather a conclusion drawn from analytical reasoning based on Linn’s facts and experience. But Linn, however, refused to disclose the facts, i.e., the transactions, underlying the range, removing the Court’s ability to evaluate whether those transactions provide a sufficient factual basis to support his opinion.

    Linn indiscriminately included every transaction from his career without explaining how the various factors impacted his analysis to arrive at specific numbers that define the boundaries of the range. Consequently, Linn failed to link his experience in valuing BOBs with his conclusion on the range of multiples, and by never explaining how the relevant factors apply to determine a particular multiple, the Court is left with no basis to determine whether he reliably applied such factors to reach his ultimate conclusion.

    Additionally, by failing to explain how the particular factors apply to discount a BOB, Linn’s testimony on a range provided the jury with no guidance on how to determine the appropriate multiple within that range. Therefore, the Court excluded Linn’s testimony pertaining to the specific range of market multiples. This exclusion, however, is narrow because the Defendants’ challenge pertains to the ranges themselves and not the general principles underlying the sales process. Linn may testify to the other general market-based principles addressed prior to arriving at the specific multiple.

    Enforceability and Interpretations of the Restrictive Covenants

    The parties disputed whether Linn should have been permitted to testify that the restrictive covenants in the Individual Defendants’ employment agreements reflected industry standards and remained reasonable. Their disagreement focused on the relevance of his opinion to the covenants’ enforceability. They raised these arguments before the Court issued its summary-judgment ruling, which resolved the enforceability question. After that decision, any additional testimony became unnecessary and irrelevant.

    Held

    The Court granted the Defendants’ motion to exclude certain testimony of Thomas R. Linn.

    Key Takeaway:

    An expert must establish the reliability of the principles and methods, “along with the particular method of analyzing data thereby obtained, to draw a conclusion regarding the particular matter to which the expert testimony was directly relevant.” In other words, without more, Linn generated his proffered range of multiples based on mere ipse dixit.

    Case Details:

    Case Caption: USI Insurance Services LLC V. Alliant Insurance Services Incorporated Et Al
    Docket Number: 2:23cv192
    Court Name: United States District Court, Arizona
    Order Date: June 26, 2025
  • Architecture Expert’s Opinions on Causation and Damages Admitted

    Architecture Expert’s Opinions on Causation and Damages Admitted

    Plaintiffs Michael Gerstman and Marie Webster, the insureds, sued Defendant Crestbrook Insurance Company (“Crestbrook”), their insurer, to recover on contractual and extracontractual theories arising from Crestbrook’s denial of their claim in this storm damage insurance coverage dispute.

    Crestbrook filed a motion to strike the testimony of Plaintiffs’ experts, Dr. Neil Hall and Kevin Funsch.

    Architecture Expert Witness

    Neil B. Hall is the owner and principal of Groundtruth Forensics, a consulting firm specializing in building performance, failure analysis and damage assessment.

    Hall is a member of the American Institute of Architects, American Society of Civil Engineers, Structural Engineering Institute, Construction Specifications Institute, International Institute of Building Enclosure Consultants, American Society of Safety Professionals and Association of State Floodplain Managers.

    Get the full story on challenges to Neil Hall’s expert opinions and testimony with an in-depth Challenge Study. 

    Insurance Adjuster Expert Witness

    Kevin C. Funsch is an insurance adjuster and engineer with a solid background in claims handling and estimating. He has experience in adjusting property losses, performing appraisals, and writing expert reports.

    Want to know more about the challenges Kevin Funsch has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Neil Hall

    Crestbrook filed a motion to strike Hall’s opinions on the basis that they are irrelevant, and it contended that his opinion regarding the full replacement of the roof should be excluded because it is unreliable and lacked a clear or verifiable methodology.

    Crestbrook first contended that Hall’s opinions should be excluded as irrelevant because there is no dispute as to the scope of the damages at issue in this case. Plaintiffs countered that Hall’s opinions on causation and damages will certainly help the trier of fact understand the cause and extent of the damages at issue in this case.

    Hall’s expert opinions suggested that there may be more damages at issue than Crestbrook is willing to acknowledge when it maintained that it was only obligated to pay the cost of replacing the individual damaged tiles.

    Therefore, the Court declared that Hall’s opinions regarding the cause of the damage would assist the jury in understanding the evidence and in determining a fact in issue.

    Crestbrook also contended that Hall’s opinions regarding the necessity of replacing the entire roof in the absence of available matching tiles are unreliable and not based on any clear or verifiable methodology. However, Hall’s report and CV plainly showed that his reliance on his experience makes his opinions on the repairs required to bring the Property back to pre-loss condition sufficiently reliable for purposes of Rule 702.

    And to the extent that Crestbrook maintained that Hall did not make “any effort to determine whether ‘matching’ tiles were available,” the Court held that this fact, if true, would not undermine the reliability of his opinion that the entire roof would need to be replaced if matching tiles were unavailable in sufficient quantity.

    Kevin Funsch

    Crestbrook contended that Funsch’s estimate and opinions related to the full replacement of the roof are irrelevant because they will not assist the jury in determining whether Crestbrook underpaid the claim.

    It maintained that they are unreliable insofar as they rely on Hall’s opinion that the roof may need to be completely replaced if there are not sufficient matching tiles with which to replace the damaged tiles.

    The Court disagreed with Crestbrook’s assertion that Funsch’s opinions and estimate are irrelevant because they will not assist the jury in determining whether Crestbrook underpaid the claim. This contention is based on Crestbrook’s position that it is not required to replace the entire roof under the Policy and that the estimated cost of replacing the roof is not relevant.

    Because there remains a genuine issue of fact as to whether Crestbrook was required to pay the cost of replacing the entire roof in the absence of the availability of matching tiles, the Court held that Funsch’s estimate regarding the cost of replacing the roof is relevant.

    Crestbrook contended that Funsch’s estimate and opinions related to the full replacement of the roof are unreliable insofar as they rely on Hall’s opinion that the entire roof may need to be replaced if there are insufficient matching tiles to replace the damaged tiles. However, Crestbrook did not maintain that Funsch has relied on unreliable sources in determining the cost to replace the roof.

    Instead, the objection seemed to be that Funsch included in his damages calculation the cost of replacing the roof based on Hall’s opinion that the entire roof may need to be replaced. However, the Court held that this does not make Funsch’s calculation unreliable for purposes of Rule 702.

    Held

    The Court denied Crestbrook’s motions to strike the testimony of Plaintiffs’ testifying experts Dr. Neil Hall and Kevin Funsch. 

    Key Takeaway:

    Hall relied on his own inspection of the property, as well as weather data. His attached CV demonstrates his extensive education and professional experience in engineering and architecture.

    By extension, Funsch’s estimate and opinions are reliable because they are based on Hall’s recommendations, which, in turn, are grounded in reliable weather data and decades of experience. The opinions are also relevant, as they help determine the cost of the repairs.

    Case Details:

    Case Caption: Gerstman Et Al V. Crestbrook Insurance Company
    Docket Number: 3:24cv635
    Court Name: United States District Court, Texas Northern
    Order Date: June 09, 2025
  • Insurance Expert’s Testimony on Industry-Accepted Claims Practices Admitted

    Insurance Expert’s Testimony on Industry-Accepted Claims Practices Admitted

    This case arises from a claim made by Richard Bernier under the underinsured motorist (“UIM”) coverage provided in his State Farm policy.

    Bernier was involved in a November 18, 2020 auto accident. He settled the underlying claim for the other driver’s limits of coverage and then sought the maximum available UIM coverage under his own policy of $50,000.

    Bernier’s expert, Mr. Stephen Strzelec, concluded that State Farm “arbitrarily reduced/discounted [medical bills] based on speculation and conjecture by the claim handler.”

    However, State Farm’s expert, Ms. JoAnna Moore, wrote that Bernier’s medical bills “should have been questioned . . . [because] there was no airbag deployment, only slight injuries were noted,” and Moore saw “no physician report tying Bernier’s rotator cuff tear, ulnar nerve injury, or cervical disc disease to the accident.”

    Bernier filed and served his expert report of Stephen Strzelec on December 13, 2024 and on January 7, 2025, State Farm filed its rebuttal expert report of JoAnna Moore “on issues relating to claim handling and specifically with regard to Stephen Strzelec’s report.”

    Bernier asserted that the eight numbered paragraphs in Moore’s report are a valid rebuttal but that the last two and a half pages are “an attempt to testify in Defendant’s case-in-chief” and should be excluded.

    Insurance Expert Witness

    JoAnna Moore is the Principal and Founder of J. Moore Consulting Services. For nearly a decade, Moore served on the Advisory Board for the Center for Insurance Studies, which is part of the Mihaylo College of Business & Economics at California State University, Fullerton. In that capacity, she has been a frequent keynote speaker during the University’s annual Business Week and guest class lecturer, as well as advising the center on curriculum and course offerings.

    In 2009 she received special recognition by the Center for her continuing support of insurance education. Moore is also a participating Advisory Board member of the Women’s Leadership Institute at Auburn University, Auburn, Alabama. She earned a B.S. Degree from Auburn in 1978 and is a member of the National Association of Professional Women (NAPW). 

    Get the full story on challenges to JoAnna Moore’s expert opinions and testimony with an in-depth Challenge Study

    Discussion by the Court

    The topics in Moore’s report are valid rebuttals of Strzelec’s report. Strzelec lays out what he asserts are claims-handling principals and standards, and analyzes State Farm’s handling of Bernier’s first-party underinsured motorist claim. For example, Strzelec lists all the UCSPA standards for insurance companies and asserts that, on top of the standards set in statutes and regulations, “internal standards of fairness by the insurer” help define the parameters required for every specific situation. In response to Strzelec’s assertions regarding standards for insurance companies, Moore detailed what she asserts is the “standard for claim handling.”

    First, Moore summarized what she argued is the applicable “reasonableness, not perfection” standard, and then she listed what she asserted, based on her experience, are “the reasonable and industry-accepted claims practices.” The Court held that this evidence is proper rebuttal evidence, as Moore addressed insurance company standards and practices, which is the same subject matter as the opinions in Strzelec’s report.

    Moore’s report provided “[a] list of things that Moore believes Defendant did correctly,” as well as her “personal opinion on whether Defendant acted reasonably.” These topics are on the same subject matter as the testimony of Strzelec in his expert report. In fact, Strzelec stated at the top of his “analysis and discussion” section that he was asked to “provide [his] opinions regarding State Farm’s handling of the first party underinsured motorist claims.”

    When Strzelec concluded that “State Farm failed to meet minimum industry
    standards for handling claims,” Moore listed the actions she argued demonstrated State Farm complied with industry standards, such as reviewing and utilizing contract language, seeking input from supervisory personnel, and providing appropriate claim note documentation.

    Held

    The Court denied Richard Bernier’s motion to exclude portions of JoAnna Moore’s expert report.

    Key Takeaway:

    Moore’s rebuttal expert report did not merely opine on the same general subject matter as Strzelec’s report. Instead, Moore’s rebuttal expert report properly rebuts and contradicts Strzelec’s expert testimony.

    Case Details:

    Case Caption: Bernier V. State Farm Mutual Automobile Insurance Company
    Docket Number: 4:24cv2
    Court Name: United States District Court, Alaska
    Order Date: May 28, 2025
  • Insurance Expert is Not Allowed to Opine on Structural Design

    Insurance Expert is Not Allowed to Opine on Structural Design

    Plaintiffs, Michael and Karen Green claimed that they had sustained loss as a result of hail and wind. Defendant Nationwide Mutual Insurance Company issued them a homeowner’s policy but when Plaintiffs filed a claim for loss under the policy, it gave rise to this dispute because Nationwide apparently failed to reimburse all covered losses under the Policy.

    Nationwide sought to exclude the testimony of Plaintiffs’ retained expert witness, James Taylor, a licensed public adjuster.

    Insurance Expert Witness

    James Taylor has extensive knowledge about restoration and common practices in adjusting and handling claims in the insurance industry. He is licensed public adjuster, insurance appraiser, and IICRC-certified restorer with significant experience in insurance claims handling, loss assessment, and industry-standard compliance.

    He has worked in field of remediation since 2000, and as an insurance adjustor and appraiser since 2019. Taylor’s professional background includes experience in water intrusion and hail damage assessments and structural loss analysis. He holds a public adjuster license with multi-state reciprocity, including Missouri, and maintains IICRC certification in restoration practices.

    Get the full story on challenges to James Taylor’s expert opinions and testimony with an in-depth Challenge Study.  

    Discussion by the Court

    Nationwide argued that Taylor lacked the qualifications to opine on the Nederveld engineering report or offer credibility opinions regarding third parties. Plaintiffs countered that Taylor’s testimony concerned insurance industry standards and claims handling practices, not legal conclusions, and agreed he would not testify on the legal standard for vexatious refusal to pay under Missouri law.

    The Court found Taylor qualified based on his extensive experience as a public adjuster, appraiser, and restorer. The Court ruled that Taylor will be permitted to testify regarding insurance industry practices and standards in general, proper claims handling, how certain information affects claims decisions, and whether Nationwide’s actions deviated from insurance industry customs and practices.

    As for the Nederveld engineering report, the Court allowed Taylor to testify on how the industry uses such reports and why, as an adjuster, he finds it reliable or not, but ruled he could not offer opinions on structural engineering defects. Similarly, while he could not give unfounded credibility opinions about third parties like SeekNow or Sedgwick Claims, the Court permitted him to testify if their services or practices were consistent with insurance industry standards.

    Held

    The Court granted in part and denied in part the Defendant’s motion to exclude the testimony of expert James Taylor.

    Key Takeaway

    Taylor is not an attorney offering a legal opinion as to whether Nationwide complied with Missouri law. He is a licensed public adjuster and former restorer, and he is an expert in insurance industry practices and standards. He is offering opinions as to whether Nationwide’s handling of Plaintiffs’ claim was in line with practices in the insurance industry, which goes to the issue of reasonableness and is admissible.

    Case Details

    Case Caption: Green v. Nationwide Mut. Ins. Co.
    Docket Number: 4:23 cv 156 
    Court Name: United States District Court for the Eastern District of Missouri, Eastern Division
    Order Date: May 12, 2025
  • Appraisal and Valuation Expert is Qualified to Testify about the Value of the Porsche

    Appraisal and Valuation Expert is Qualified to Testify about the Value of the Porsche

    Joseph Falasco bought a non-functioning 1974 Porsche 911S for $10,000 and put a significant amount of time and money into restoring it, including the installation of a new engine and transmission.

    Falasco later filed a claim regarding the non-collision fire that destroyed Plaintiff’s 1974 Porsche 911S (the “1974 Porsche”) and ended up suing USAA for breach of insurance contract, bad faith, and unfair claims
    settlement practices.

    Falasco filed a motion to exclude the testimony of two of USAA’s experts— Roy Da Silva and Mark McGillivray.

    Insurance Expert Witness

    Mark A McGillivray holds a bachelor’s degree in business administration with a concentration in Finance from the University of Puget Sound and a master’s degree in Business Administration with a concentration in Marketing from the University of Illinois at Chicago.

    He also holds the Chartered Property Casualty Underwriter (CPCU) designation from the American Institute for CPCU and the Insurance Institute of America (The Institutes).

    McGillivray has over 41 years of experience in the Insurance Industry, primarily in claims roles. He held various roles at Allstate Insurance Company for over 35 years, including Senior Vice President in claims.

    Since 2019, he has worked as a consultant in the industry, participated in expert networks, and been retained as an insurance expert. He is also on the Board of Directors of Hancock Claim Consultants.

    Get the full story on challenges to Mark A McGillivray’s expert opinions and testimony with an in-depth Challenge Study.  

    Appraisal and Valuation Expert Witness

    Roy Da Silva is an experienced appraiser who specializes in classic cars. He founded and developed Source One Services to provide specialized services
    to the collector car markets.

    Want to know more about the challenges Roy Da Silva has faced? Get the full details with our Challenge Study report.  

    Discussion by the Court

    Motion to exclude the Expert Testimony of Mark McGillivray

    Falasco filed a motion to exclude the expert testimony of Mark McGillivray. The Court ruled that this motion is denied without prejudice as moot.

    It appeared that USAA intended to offer McGillivray’s testimony solely in support of its defense on Falasco’s bad faith and unfair claims settlement practices claims.

    Since the Court had already granted summary judgment on those claims, McGillivray’s testimony was no longer relevant to the remaining issues in the case.

    Motion to exclude the Expert Testimony of Roy Da Silva

    Falasco argued for the exclusion of Roy Da Silva’s testimony, implying it would not offer adequate assistance to the trier of fact.

    The Court held that Da Silva is qualified to testify about the value of Falasco’s Porsche. In other words, Da Silva’s expertise will aid the jury due to the complexity of the classic car market. 

    While Falasco may dispute Da Silva’s valuation or methodology, the Court held that such challenges concerned the weight and credibility of his testimony. These concerns could be addressed through “vigorous cross-examination and presentation of contrary evidence” at trial, allowing the jury to evaluate its significance.

    Held

    • The Court denied without prejudice as moot the motion to exclude the testimony of Mark McGillivray.
    • The Court denied Falasco’s motion to exclude the testimony of Roy Da Silva.

    Key Takwaway:

    Classic car appraiser Roy Da Silva’s testimony was admitted because his expertise was essential for assisting the jury in understanding the complex classic car market.

    Case Details:

    Case Caption: Falasco v. USAA Cas. Ins. Co
    Docket Number: 4:23cv01054
    Court Name: United States District Court for the Eastern District of Arkansas, Central Division
    Order Date: May 2, 2025
  • Insurance Expert Allowed to Testify Regarding Industry Customs and Practices based on Experience

    Insurance Expert Allowed to Testify Regarding Industry Customs and Practices based on Experience

    Plaintiff Jose Verdecia sustained injuries after falling through the ceiling of his home. He claims these injuries and other damages resulted from a misrepresentation by State Farm’s adjuster, Marvin Johnson, who allegedly instructed him to inspect the attic for damage, implying that his claim would be denied otherwise.

    To support his case, Plaintiff retained Earl Stigler as an expert. Stigler was prepared to testify about proper claims handling procedures and the standard of care expected from insurance adjusters.

    On November 7, 2024, Plaintiff served supplemental disclosures regarding Stigler’s testimony. One week later, State Farm filed a motion to strike Stigler, arguing the disclosures were late and the testimony failed to meet Daubert standards.

    State Farm later filed a supplement to its motion to strike, citing deposition testimony that it believes further supports the argument that Stigler’s opinions should be struck. State Farm argued that Stigler’s deposition revealed that Stigler’s report contained irrelevant information and opinions that were contradictory, rendering it unreliable.

    Insurance Expert Witness

    Earl Stigler became an adjuster in 1983. His experience includes serving as a field auto and property adjuster, an inside property damage adjuster, an inside casualty adjuster, and a senior casualty adjuster. Over the course of his career, he has adjusted more than 14,000 claims, demonstrating his expertise by successfully negotiating a $18.8 million property claim and a $3.25 million open head injury claim.

    Discover more cases with Earl Stigler as an expert witness by ordering his comprehensive Expert Witness Profile report. 

    Discussion By the Court

    Initial Arguments

    State Farm contended that Stigler’s report and testimony lacked a reliable methodology, could not be adequately peer-reviewed for his field, and constituted “ipse dixit” (unsupported assertions). They also argued that the report contained erroneous, conflicting, and irrelevant information, making it unreliable under Rule 702 and Daubert.

    Analysis

    Methodology

    The Court found Stigler’s methodology entirely reliable, deeply “grounded in his professional experience and training”, a career spanning back to 1983. His process involved a practical approach: reviewing the relevant records in this case and rigorously comparing them to “recognized practices in the industry that are generally accepted.” The Court recognized that Stigler’s decades in the insurance industry, coupled with his review of relevant materials, equipped him with intimate familiarity with these very standards. When State Farm declared that peer review of Stigler’s report is impossible, the Court reiterated that the rigid checklist of traditional Daubert factors doesn’t always apply. Not all Daubert factors need be met for expert testimony to be admissible. Stigler’s testimony does not involve scientific evidence and therefore any peer review need not be the rigorous scientific or technical review as might be necessary for purely scientific or technical testimony.

    The Court also disagreed that Stigler’s report constitutes mere ipse dixit. Again, Stigler need not cite to “recognized scientific or technical standards.”

    The Court found State Farm’s arguments concerning erroneous, irrelevant, and conflicting information similarly unavailing. All of the issues, including Stigler’s citation of the incorrect handling guidelines, can be discussed on cross examination.

    Held

    The Court held that Plaintiff’s expert, Earl Stigler’s testimony is reliable. Any issues concerning Stigler’s report or testimony may be discussed on cross-examination and are not grounds for exclusion.

    Key Takeaways:

    Courts across the country allow experts to testify regarding industry customs and practices based on experience. Stigler’s testimony does not involve scientific evidence and therefore any peer review need not be the rigorous scientific or technical review as might be necessary for purely scientific or technical testimony. State Farm was free to find its own expert in industry custom to review Stigler’s report and come to its own conclusions. Again, it is also free to question Stigler’s testimony or report on cross-examination.

    Case Details:

    Case Caption: Verdecia v. State Farm Lloyds
    Doket Number: 7:23cv67
    Court: United States District Court, Texas Western
    Order Date: April 1, 2025
  • Insurance Law Expert Witness’ Testimony Does Not Survive the Rule 37 Challenge

    Insurance Law Expert Witness’ Testimony Does Not Survive the Rule 37 Challenge

    A fire took place overnight at Tiffany Keen and Trevor Wogrin’s newly-purchased residence at 45100 County Road 1 in Parker (the “Home”), on June 5-6, 2022 (the “Fire”), causing damage. The Home was insured by a homeowner’s insurance policy issued by Allstate (the “Policy”). The Insureds submitted a claim to Allstate on June 6, 2022 for the payment of covered benefits under the Policy (the “Claim”).

    Allstate refused to pay Dwelling benefits under the Policy. Almost ten (10) months after the Claim was submitted, Allstate filed this action against the Insureds seeking a declaration that the intentional acts exclusion applies to the Claim to bar coverage.

    Defendants designated an insurance industry expert in support of their counterclaims for breach of insurance contract and bad faith. However, Allstate did not designate an affirmative insurance industry standards expert; instead, it designated its industry standards expert, Keith Olivera as a rebuttal expert.

    To begin with, Defendants sought to strike Olivera on the ground that he was not a proper rebuttal expert. Alternatively, they claimed that he was unqualified to offer certain opinions asserted in his expert report and sought to limit other aspects of his testimony as unnecessary, irrelevant, confusing, or usurping the Court’s prerogative to instruct the jury on the law. 

    Insurance Law Expert Witness

    Insurance Law Expert Witness

    Keith R. Olivera has been an attorney practicing in the field of insurance law for 30 years. Much of his practice involves advising insurers on claim handling practices and claims decisions.

    He advises insurers on claim handling decisions involving both first- and third-party claims. Moreover, he has represented or assisted insurers in hundreds of cases or claims where the insurer has been alleged to have engaged in unreasonable claim handling.

    Get the full story on challenges to Keith R. Olivera’s expert opinions and testimony with an in-depth Challenge Study.  

    Discussion by the Court

    As per Fed. R. Civ. P. 26(a)(2)(D)(ii), a rebuttal expert opinion is one “intended solely to contradict or rebut evidence on the same subject matter identified by another party.”

    The Court found that, superficially, this is what Olivera’s opinion appeared to do. In other words, Olivera contradicted the opinions of the Defendants’ industry standards expert witness, Douglas Meier, who asserted that Allstate’s handling of the Defendants’ insurance claim was unreasonable.

    However, where the subject matter of the expert’s testimony concerns a matter the designating party knew or should have known would be part of its opponent’s case-in-chief, that expert is an affirmative expert.

    To prove their substantive claim, Defendants perforce will be required to show Allstate “acted unreasonably and with knowledge of or reckless disregard for the fact that no reasonable basis existed for denying [Defendants’] claim.” Accordingly, Allstate absolutely should have predicted Defendants would offer an industry standards expert. They could not lay behind the log and only designate their own industry standards expert in rebuttal. Accordingly, the Court held that Olivera is not a proper rebuttal witness.

    Under Rule 37, a party is required to show that the violation of the discovery obligations was substantially justified or harmless.

    Allstate has failed to even acknowledge Rule 37 standards, must less attempt to show how they might be satisfied in this case.

    Held

    The Court granted the Defendants/Counterclaim Plaintiff’s motion to strike or limit the opinions and testimony of Plaintiff’s retained insurance law expert witness, Keith Olivera.

    Key Takeaway

    A rebuttal expert addresses “new unforeseen facts” that emerge in the opposing side’s case. Basically, Allstate tried to present Olivera as a rebuttal expert to counter the Defendants’ expert testimony about insurance industry standards. However, where the subject matter of the expert’s testimony concerns a matter the designating party knew or should have known would be part of its opponent’s case-in-chief, that expert is an affirmative expert.

    When given the chance to justify the violation of its discovery obligations under Rule 37(c)(1), Allstate failed to address any of the required factors for showing their violation was either substantially justified or harmless. Allowing Olivera to testify would have prejudiced Defendants and disrupted the trial. This failure further cemented the Court’s decision to strike his opinions and bar him from testifying.

    Case Details:

    Case caption: Allstate Vehicle And Property Insurance Company V. Wogrin Et Al
    Docket Number: 1:23cv803
    Court: United States District Court for the District of Colorado
    Date: December 23, 2024
  • Law And Legal Expert Witness Improperly Speculates about the Defendant’s Motivation

    Law And Legal Expert Witness Improperly Speculates about the Defendant’s Motivation

    This is an insurance bad faith case stemming from Westfield’s handling of a first-party property insurance claim following a fire.

    Plaintiffs JME Investments, LLC (“JME”) and Hiway Bar, LLC (“Hiway Bar”) (together, “Plaintiffs”) filed claims after a kitchen fire damaged their property on July 12, 2020. The fire burned a building owned by JME. Constructed in the 1890s, the building had been leased to Hiway Bar since 2018 for $4,000 per month. Hiway Bar operated a restaurant and bar on the ground floor and leased the three residential apartments on the second floor, particularly to tourists and hunters during the hunting season.

    Defendant Westfield Insurance Company insured the building for $625,500. However, JME later admitted that it “woefully” underinsured the property. Still, the parties agreed that Westfield has paid Plaintiffs over $900,000 on their claims arising from the fire loss.

    Plaintiffs retained Damian J. Arguello to evaluate and opine as to whether Westfield’s handling of Plaintiffs’ insurance claims was consistent with industry standards. Arguello submitted two expert reports: an initial affirmative report on March 10, 2023, followed by a supplemental report on May 15, 2024, which addressed specific issues raised in Westfield’s counterclaims.

    Subsequently, Westfield filed a motion to exclude the opinions and testimony of Damian J. Arguello.

    Law And Legal Expert Witness

    Damian J. Arguello is an insurance coverage attorney, expert witness, and former adjunct law professor whose legal practice focuses on representing and counseling commercial policyholders, business and trial attorneys, and insurance agents and brokers regarding insurance issues.

    In his consulting and expert witness practice, Arguello also draws from his pre-law school experience as a claims adjuster for several insurance companies and as a claims manager and errors & omissions risk manager for a major insurance brokerage to consult and deliver testimony on insurance company claims handling and insurance agent/broker professional liability.

    Arguello’s insurance industry experience also includes reengineering an insurance company’s claims best practices in conjunction with consultants with McKinsey & Company.

    Want to know more about the challenges Damian J. Arguello has faced? Get the full details with our Challenge Study report.   

    Discussion by the Court

    Defendant’s Arguments

    Arguello submitted an initial report in connection with the Plaintiff’s common law bad faith claim. Westfield contended that this report was littered with factual inaccuracies and improper legal conclusions considering various opinions in the report were highly unreliable, prejudicial, and unhelpful to the jury. Moreover, Westfield challenged Arguello’s supplemental report in which, according to Westfield, Arguello improperly speculated about Westfield’s motivation for asserting its counterclaims, including that Westfield filed the counterclaims to “distract the factfinder’s attention from Westfield’s deficient claim handling,” and that Westfield sought to “perpetuate this litigation by raising its counterclaims extremely late in the litigation.”

    As required by the Court’s Uniform Practice Standards, Westfield recited the ten opinions in Arguello’s affirmative report that it considered improper due in part to the “litany of factual errors” predicating these opinions. After analyzing the ten opinions, the Court declined to exclude them at that time. The Court had already outlined the numerous factual disputes in this matter. Westfield was free to challenge any perceived factual errors through cross-examination of the expert. The Court emphasized that its role as a gatekeeper under Daubert “is not intended to serve as a replacement for the adversary system.”

    Helpfulness to the Trier of Fact

    Westfield challenged Arguello’s claims-handling opinion, in which he stated, “in my opinion, Westfield’s handling of JME’s and Hiway’s claims failed to meet applicable standards of care for a reasonable insurer under the facts and circumstances of this loss.” The Court permitted Arguello to testify, consistent with his expertise in the insurance industry, about the relevant insurance industry standards concerning an insurer’s duty to investigate claims, including whether Westfield’s conduct was consistent with that of a reasonable insurer. However, Arguello may not go any further by testifying that Westfield’s handling of Plaintiffs’ claim was unreasonable. 

    The Court emphasized that expert testimony must assist the jury, as required by Federal Rule of Evidence 702(a). To ensure testimony remains helpful, “an expert may not state legal conclusions drawn by applying the law to the facts, but an expert may refer to the law in expressing his or her opinion.” The Court acknowledged that “the line between a permissible opinion on an ultimate issue and an impermissible legal conclusion is not always easy to discern.” In this instance, the Court found that Arguello’s challenged opinion goes right up to that line but does not cross the thin line.

    Legal Conclusions

    Westfield challenged seven opinions from Arguello’s supplemental report, because they apparently constituted improper legal conclusions. For example, Arguello stated, “[i]n my opinion, the available evidence doesn’t support Westfield’s counterclaims.” In another instance, he opined, “in my opinion, Plaintiffs provided ample cooperation with Westfield’s investigation”.

    It was noted that Plaintiffs did not address any of these seven opinions with specificity in their response. Instead, Plaintiffs asserted high-level arguments that Arguello’s opinions were “properly grounded in the standard of care for insurance claims handlers and were relevant to the determination of materiality.” Plaintiffs added that this post-litigation conduct was relevant to Westfield’s on-going duty of good faith and fair dealing. 

    While the Court acknowledged that an insurer’s “duty of good faith and fair dealing continues unabated during the life of the insurer-insured relationship, including through a lawsuit or arbitration between an insured and the insurer,” Arguello’s opinions, especially his opinion that the evidence does not support Westfield’s counterclaims, were improper because this type of testimony will invade the province of the jurors, who will be tasked with evaluating whether the evidence supports Westfield’s counterclaims. 

    Reliability

    The Court questioned Arguello’s ability to speculate as to Westfield’s rationale and motivation for filing its counterclaims, concluding that such testimony would be inherently unreliable. Further, the Court was well-informed of the timing of Westfield’s counterclaims when it determined that good cause existed to permit Westfield leave to amend its answer to bring the counterclaims. He appeared to question the Court’s ruling, which was another reason his counterclaims opinions were impermissible

    Held

    The Court granted in part and denied in part Westfield’s motion to exclude opinions and testimony of Damian J. Arguello.

    Key Takeaways:

    Westfield challenged Arguello’s expert opinions, arguing they contained factual inaccuracies, improper legal conclusions, and speculative reasoning. The Court ruled as follows:

    i) Testimony on Industry Standards – Arguello could testify about the relevant insurance industry standards concerning an insurer’s duty to investigate claims but could not state that Westfield’s claim handling was unreasonable.

    ii) Opinions on Counterclaims – The Court rejected Arguello’s opinion that “the available evidence doesn’t support Westfield’s counterclaims,” determining that such testimony would improperly invade the jury’s role in evaluating the evidence.

    iii) Speculation on Westfield’s Motives – The Court found Arguello’s testimony questioning Westfield’s rationale and motivation for filing counterclaims inherently unreliable.

    Case Details:

    Case Caption: JME Investments, Llc Et Al V. Westfield Insurance Company
    Docket Number: 1:22cv1012
    Court: United States District Court for the District of Colorado
    Order Date: January 30, 2025
  • Risk Management Expert Witness’ Testimony on Economic Injury Conditionally Admitted

    Risk Management Expert Witness’ Testimony on Economic Injury Conditionally Admitted

    In June 2008, USA experienced the collapse of the housing market and the worst financial crisis since the Great Depression.

    For homeowners who put down less than 20% for the purchase of their homes, most were required to purchase private mortgage insurance to protect their lenders in the event of default. Many of those private mortgage insurers, in turn, entered into agreements with reinsurers whereby they paid or “ceded” to the reinsurer a portion of the premiums received in exchange for the reinsurer’s assumption of a percentage of the risk of loss.

    Each of the six named Plaintiffs in this case were required to purchase private mortgage insurance in connection with mortgage loans obtained from the lender defendants, PHH Mortgage Corporation and PHH Home Loans, LLC. Atrium Insurance Corporation (“Atrium”), an affiliate of Defendant PHH Corporation, is the reinsurer for Plaintiffs’ loans pursuant to its reinsurance agreements with the private mortgage insurers. According to the Plaintiffs, Atrium receives “millions of dollars” in premiums but assumes “little or no risk of loss” in connection with its obligations under the reinsurance agreements as evidenced by the lack of any paid claims in the years 2000 through 2007.

    After more than a decade of litigation asserting other theories, Plaintiffs now claim they have standing based on a theory that they suffered economic harm from the reinsurance Atrium provided in the form of higher mortgage insurance premiums.

    Defendants filed a motion to exclude the testimony of Dr. Robert E. Hoyt, whom Plaintiffs offer as an expert on insurance, reinsurance, insurance economics, and risk management to establish their Article III standing. 

    Risk Management Expert Witness

    Robert E. Hoyt is the Moore Chair, Professor of Risk Management and
    Insurance and Department Head of the Department of Insurance, Legal Studies & Real Estate in the Terry College of Business at the University of Georgia.

    He earned his M.A. (1983) and Ph.D. (1987) degrees in risk and insurance from the Wharton School at the University of Pennsylvania. He joined the Terry College of Business faculty in 1988, where he teaches corporate risk management and insurance.

    Get the full story on challenges to Robert Hoyt’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Hoyt opined that “the captive reinsurance agreements utilized by Defendants which do not involve a real risk transfer simply increased transaction costs and in turn the premiums paid by private mortgage insurance buyers (borrowers/class members).”

    For purposes of his report, counsel for Plaintiffs told Hoyt to “assume” the following:

    The jury will find: 1) that there was no real transfer of risk to Atrium under the subject captive reinsurance agreements; and 2) that the amounts paid to Atrium by the primary mortgage insurers were not commensurate with the value of reinsurance services (if any) provided by Atrium.

    Defendants argued that because Hoyt’s reliance on these assumptions was unfounded, his testimony cannot help the trier of fact determine a fact in issue.

    Here the jurisdictional fact in issue is whether Plaintiffs suffered economic injury from Defendants’ assumed Real Estate Settlement Procedures Act of 1974 (“RESPA”) violation.

    Defendants first contended that an expert may not assume liability to establish the harm necessary for standing. They relied on the familiar principle that “[s]tanding is an independent threshold issue that must be established before proceeding to the merits of a claim.”

    Defendants next argued that allowing Hoyt to testify as to harm “will confuse the jury on the issue of liability,” requiring his exclusion.  In substance, their argument invokes Rule 403, though they do not cite it. 

    Analysis

    The topic for Hoyt’s testimony—whether Defendants’ (assumed) RESPA violation injured Plaintiffs—is not the jury’s province, because injury is not an element of the latter’s claim. Instead, the Court decided that question as it would any other factual challenge to standing not intertwined with the merits. 

    Because the Court must decide whether Plaintiffs suffered economic injury, the Defendants’ Rule 403 challenge to Hoyt’s testimony failed.

    Finally, Defendants argued that the assumptions counsel provided to Hoyt are unsubstantiated and refuted by the record. As a general matter, they are correct as to the governing legal principle: An expert witness may not rely on assumptions supplied by counsel that lack factual support in the record because such assumptions, and any testimony based on them, are speculative. However, the flip side of that principle is that an expert may base an opinion on assumptions from counsel provided they are based on evidence that either has been or will be admitted. 

    Defendants’ arguments failed because the Court had previously held—based on evidence proffered by Plaintiffs—that there is a genuine issue of fact as to Hoyt’s two assumptions. That holding is the law of the case, and therefore those assumptions are supported by evidence to be introduced at trial. 

    Besides, there is no dispute here that Hoyt’s training and experience will help the Court—the factfinder for these purposes—”determine a fact in issue,” i.e., whether Plaintiffs suffered any economic injury. 

    The Court conditionally admitted Hoyt’s testimony for purposes of a bench trial as to whether Plaintiffs suffered any economic injury if the jury later finds the two assumptions provided to him by counsel are substantiated. After the hearing, which will also encompass the contested Rule 702 issues, the Court will determine whether to exclude Hoyt’s testimony.

    Held

    The Court denied Defendants’ motion to exclude Robert Hoyt insofar as they seek such relief on grounds other than Federal Rule of Evidence 702(b)-(d) and otherwise reserved judgment pending the conclusion of a bench trial on economic harm where his testimony shall be conditionally admitted.

    Key Takeaway:

    While the governing legal principle states that an expert witness may not rely on assumptions supplied by counsel that lack factual support in the record, the flip side of that principle is that an expert may base an opinion on assumptions from counsel provided they are based on evidence that either has been or will be admitted.

    As a result, when Defendants argued that the assumptions counsel provided to Hoyt are unsubstantiated and refuted by the record, Defendants’ arguments failed because the Court had previously held—based on evidence proffered by Plaintiffs—that there is a genuine issue of fact as to Hoyt’s two assumptions.

    Case Details:

    Case Caption: Munoz, Et Al. V. PHH Mortgage Corporation, Et Al.
    Docket Number: 1:08cv759
    Court: United States District Court, California Eastern
    Order Date: January 31, 2025
  • Court Refused to Exclude Insurance Expert Witness’ Opinions on Insurance Availability

    Court Refused to Exclude Insurance Expert Witness’ Opinions on Insurance Availability

    This case stems from a dispute over a provision of a ground lease between Stewart Development, LLC and 111 Veterans Boulevard, LLC. Stewart owned Heritage Plaza, a Class A office building in Metairie, Louisiana but leases the land on which it sits pursuant to a ground lease. 111 Veterans took over this ground lease in 2017. A few years later, in 2022, Stewart listed Heritage Plaza for sale, and 111 Veterans expressed interest in purchasing the building. However, purchase negotiations ultimately fell through. The next year, on March 16, 2023, 111 Veterans defaulted Stewart for allegedly violating the ground lease. In the default letter sent to Stewart, 111 Veterans explained Stewart breached the ground lease for failing to maintain $110,700,000 of casualty insurance, the amount equal to the replacement cost of the building (less depreciation of 10%) with a $10,000 or less deductible.

    About three months after this letter was sent, Stewart filed this lawsuit seeking a declaratory judgment and alleging claims for breach of contract and Louisiana Unfair Trade Practice and Consumer Protection Act (“LUTPA”) violations. Stewart argues inter alia that 111 Veterans’ mandated amount of insurance coverage is not reasonably obtainable, that Stewart’s failure to obtain such coverage was not a violation of the ground lease, and that 111 Veterans breached the lease by placing Stewart in default. 111 Veterans argues inter alia that its required coverage is reasonably obtainable, and that Stewart did in fact breach the ground lease for failing to maintain such coverage.

    Stewart filed a motion to exclude the testimony of 111 Veterans’ insurance expert Timothy Gold under Federal Rules of Evidence 702 and 703 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1998).

    Insurance Expert Witness

    Timothy Gold began his insurance career in 2005 and joined Hartwig Moss Insurance Agency in 2013. Gold holds both property and casualty as well as life, health and accident licenses.

    Get the full story on challenges to Timothy J. Gold’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    In his report, Gold provided the following opinions:

    • There were no indicators from the commercial insurance market of pending issues acquiring property or flood coverage in southeast Louisiana prior to landfall of Hurricane Katrina on August 29, 2005;
    • For the coverage periods of 2021- 2024, it has been possible to obtain replacement cost, special form property insurance coverage excluding coverage for the peril of windstorm, for a significant property risk with an insured value in excess of $100,000,000 at a reasonable market cost;
    • For the coverage periods of 2021-2024 it has been possible to obtain property insurance coverage for the peril of windstorm for a building with insured values in excess of $100,000,000 with coverage limits in excess of $10,000,000 at a market cost;
    • And the cell captive program and parametric insurance policy Stewart Development, LLC utilized do not comply with paragraph 3(g) of the Fourth Amendment of the Ground Lease agreement.

    Analysis

    Stewart advanced numerous arguments in support of excluding Gold’s testimony. Specifically, Stewart argued that Gold’s testimony on Stewart’s parametric wind policy should be excluded because Gold did not read Stewart’s policy. Stewart claimed that Gold’s testimony on Stewart’s captive cell policy should be excluded because it is a legal conclusion. Plaintiff alleged that Gold’s opinions on the local insurance market before and after Hurricane Katrina in 2005 are speculative and warrant exclusion because Gold did not work in the insurance industry until 2006.

    Moreover, Stewart claimed that Gold’s reliance on conversations with other industry brokers constitutes unreliable methodology for his opinions on insurance availability from 2021-2024. And Stewart asserted that Gold’s testimony is undermined by his failure to read the testimony of Eric Lowenstein, 111 Veterans’ corporate representative, and his misreading of key facts from the testimony of Jason Provenzano, 111 Veterans’ insurance broker, and Andrew Schutzman, president and owner of AMS Risk Management and Consulting, Inc.

    111 Veterans opposed Stewart’s motion. Basically, 111 Veterans argued that Gold’s opinions meet the requirements of Rule 702, Rule 703, and Daubert, and that Stewart’s concerns constitute fodder for cross examination, not reasons for exclusion under Rule 702. Defendants further argued that, because this is a bench trial, Stewart’s concerns can be explored during trial with the judge as the gatekeeper and trier of fact.

    The Court agreed with 111 Veterans. The purpose of a Daubert motion is “to ensure that only reliable and relevant expert testimony is presented to the jury.” 

    Held

    The Court denied Stewart’s motion to exclude Timothy Gold’s opinions and testimony.

    Key Takeaway:

    The Court is “capable of assessing the probative value of the evidence and the weight [the expert’s] testimony should be given.” Moreover, as 111 Veterans points out, cross examination is the proper vehicle for Stewart’s concerns. In conclusion, vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.

    Case Details:

    Case Caption: Stewart Development, LLC V. 111 Veterans Boulevard, LLC
    Docket Number: 2:23cv2085
    Court: United States District Court, Louisiana Eastern
    Order Date: November 15, 2024