Expert Witness Profiler

Tag: Insurance

  • Insurance Expert Witness’ Testimony Limited Because it is Needlessly Cumulative

    Insurance Expert Witness’ Testimony Limited Because it is Needlessly Cumulative

    This lawsuit stems from claims of breach of contract and statutory and common-law bad faith.

    It all started when Plaintiff, Paul Schulz, was injured when his motorcycle struck an oil spill in the roadway, causing the front tire to slide out and the motorcycle to overturn. Shortly thereafter, Schulz filed a claim with his insurer, Shelter Mutual Insurance Company (“Shelter”), for uninsured/underinsured motorist (“UIM”) coverage. After speaking with Schulz about the accident and the injuries he sustained, the claims adjuster determined Schulz was 100% at fault for the accident and denied coverage. When Schulz hired an attorney, Shelter agreed to consider any other information that might bear on the claim and ordered the police report. Nine days later, Shelter again denied the claim on the basis that Schulz was more than 50% at fault.

    Defendant filed a motion to strike certain opinions of Plaintiff’s industry standard expert Brian Seigal.

    Insurance Expert Witness

    Brian Seigal has been involved in the insurance industry throughout his career since 1995, working in and being responsible for claims departments. He has a multi-line background in P & C and Health Insurance. He has managed claims departments for carriers and TPAs, with experience spanning primary, excess, and reinsurance levels. Over the years, he has managed and trained hundreds of adjusters and has been involved with thousands of claims. He has also held department reserve and settlement authority.

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

    Discussion by the Court

    Seigal should be precluded from relying on averments in Shelter’s amended answer to the complaint

    Shelter first argued Seigal should be precluded from relying on averments in Shelter’s amended answer to the complaint to draw conclusions about the adequacy vel non of Shelter’s investigation. Essentially, in response to a series of allegations regarding the cause of the crash, the nature of Schulz’s injuries, and Shelter’s initial investigation, Shelter responded that it was without sufficient information to admit or deny those allegations. Seigal opined these answers demonstrate Shelter’s investigation was inadequate because they suggest Shelter was unclear as to the basic facts of the accident, the nature and extent of Schulz’s damages, and the results of its own investigation.

    The Court held that the relevant facts regarding Shelter’s initial investigation are recited in Shelter’s claim file notes and were the subject of inquiry at the 30(b)(6) depositions of the corporate representatives. Expert testimony regarding Shelter’s pleadings about these same matters therefore also would be needlessly cumulative and wasteful of limited trial time.

    Seigal’s opinion suggests Shelter’s investigation was unreasonable for failing to engage experts to vet Schulz’s claim prior to the initiation of litigation

    Seigal stated there exist a variety of tools of which a carrier may take advantage to fulfill its duty of reasonable investigation, and while there is no formulaic approach, not pursuing a particular investigative avenue may indicate a lack of good faith in particular circumstances. Seigal suggests this case presented a circumstance in which the adjuster should have engaged one or more experts as part of the investigation of the claim.

    Shelter points out that the insured bears the initial burden of producing sufficient evidence to suggest his damages were caused by an event that comes within the coverage of the policy.

    The Court held that it is not objectionable for Seigal to opine that Schulz’s case was one which warranted the retention of one or more experts as part of Shelter’s investigation.

    Seigal testified that Shelter’s attempt to condition payment of Schulz’s policy limits on his execution of a release was impermissible and unreasonable

    Shelter sought to preclude Seigal from testifying that Shelter’s attempt to condition payment of Schulz’s policy limits on his execution of a release was impermissible and unreasonable.

    Shelter attached a Release and Trust Agreement to his settlement letter which, inter alia, would have required Schulz to release Shelter from “all liability under any Uninsured Motorist/Underinsured Motorist/Uninsured Motorist Property Damage policy provisions for bodily injury, sickness, disease, or property damage (collectively “damages”) arising from the accident.”

    The Court denied the motion to exclude this portion of Seigal’s testimony because the insurer breaches its duty not to unreasonably delay or deny payment of undisputed benefits, even if additional benefits remain in dispute. Shelter’s recommendations with regard to the payment of benefits suggested that Shelter acknowledged Schulz was entitled to a payment of more than $138,000, but suggested withholding the remainder of the policy limits until he signed a release.

    Seigal opined, in regard to the withholding of the Fisher payment, that “other courts in Colorado have dealt with similar issues and provided orders against carriers who utilized these practices”

    Lastly, and relatedly, Shelter objected to Seigal testifying, in regard to the withholding of the Fisher payment, that “other courts in Colorado have dealt with similar issues and provided orders against carriers who utilized these practices.” Seigal’s supplemental report suggested that he will provide these cases in a further supplemental appendix, and Schulz claims by his response that they have been provided to Shelter in discovery (although Shelter disputes that suggestion).

    Critically, however, these cases are nowhere to be found in the record before the court. It therefore is impossible for the court to determine whether these cases are indeed analogous, as Seigal suggests. Even if they were, the Court held that allowing Seigal to discuss these other cases at trial runs too great a risk of confusing and misleading the jury, as well as wasting time on matters that can be, at best, merely tangential to the issues this jury will be asked to decide.

    Held

    The Court granted in part and denied in part Defendant’s motion to strike certain opinions of Plaintiff’s industry standard expert Brian Seigal.

    Key Takeaway:

    • The insured bears the initial burden of producing sufficient evidence to suggest his damages were caused by an event that comes within the coverage of the policy. As a result, Shelter’s investigation was unreasonable for failing to engage experts to vet Schulz’s claim prior to the initiation of litigation.
    • According to Shelter’s recommendations with regard to the payment of benefits, Shelter was aware that Schulz was entitled to a payment of more than $138,000, but suggested withholding the remainder of the policy limits until he signed a release. However, the insurer breaches its duty not to unreasonably delay or deny payment of undisputed benefits, even if additional benefits remain in dispute.

    Case Details:

    Case Caption: Schulz V. Shelter General Insurance Company
    Docket Number: 1:23cv1657
    Court: United States District Court, Colorado
    Order Date: September 12, 2024
  • Insurance Expert Witness’ Testimony Limited Because it Consists of the Interpretation of Policy Language

    Insurance Expert Witness’ Testimony Limited Because it Consists of the Interpretation of Policy Language

    Plaintiff American Empire Surplus Lines Insurance Company (“AESLIC” or “Plaintiff”) issued to J.R. a commercial excess liability insurance policy, which included a premium charge to be computed as a percentage of J.R.’s gross receipts during the policy period. Plaintiff assigned an advanced premium to the Policy based on J.R.’s estimate of its gross receipts during the policy period, which was subject to adjustment if a post-policy audit reflected that J.R.’s actual gross receipts exceeded its initial estimate.

    The post-policy audit concluded that J.R.’s actual gross receipts exceeded its initial estimate, and thus J.R. owed an additional premium in the amount of $487,386.00. Following non-payment of this additional premium, AESLIC brought this action on June 13, 2023, seeking to recover payment of said additional premium.

    After Arthur R. Nelson issued his expert report in support of J.R., Thomas M. Trezise issued his rebuttal report in support of AESLIC.

    Based on his review of the audit and the Nelson Report, Trezise offered the following four opinions:

    1. The Policy was a surplus lines policy and, as such, not regulated by the State of New Jersey. [AESLIC] had full discretion to establish the forms and terms of the Policy as well as the rules and rates by which the premium was determined.

    2. The terms of the Policy solely define the relationship between [AESLIC] and J.R…. Standards and practices, whether of admitted or surplus lines insurers, have no application.

    3. The Policy provided coverage for significant risks. The coverage was not illusory.

    4.  J.R. and Nelson cannot challenge the underwriting process of [AESLIC].

    Motion to Exclude

    While addressing a number of Nelson’s premises and assumptions, Trezise maintained that “rate [at issue] was unmistakably and clearly stated and anyone familiar with basic arithmetic can understand how it determined the premium. The Policy has no flaw as to the definition of the [r]ates and is, therefore, enforceable.”

    On August 16, 2024, J.R. filed its Daubert motion to exclude Trezise’s expert opinion.

    Insurance Expert Witness

    Thomas M. Trezise graduated cum laude from Western Maryland College in 1975 with a Bachelor of Arts in American Studies and Political Science. He then obtained his Juris Doctor degree from Washington & Lee University in 1978. In 2009, Trezise was licensed as an adjuster in the State of Florida.

    From 1978 to 1992, Trezise practiced as a trial attorney, where his experience included commercial, and property & casualty and life insurance coverage and bad faith litigation and his expertise included commercial litigation, premises and premises security liability, and insurance coverage. Trezise held various positions in the insurance industry for over 30 years and, during that time, he supervised individuals who conducted premium audits. He also was involved in litigation where there was a dispute “over the premium owed or whether additional amounts were owed under the policies.” The policies in that litigation were “structured similar to the policies in this case,” because there was “an [upfront] premium involved and then a premium due at the end.”

    Additionally, Trezise’s self-identified expertise includes “the management of primary and excess property and casualty liability, property, auto physical damage, and worker’s compensation business operations, claims, coverage, and litigation, as well as reinsurance and surplus lines issues in those lines.” He also has assisted underwriting departments in the development, drafting and approval of policy forms, underwriting classifications, rate filings and risk management services.

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

    Discussion by the Court

    Qualifications

    Defendant argued that Trezise is not qualified as an expert because he lacks relevant experience in conducting post policy premium audits, especially in connection with surplus lines policies. 

    The Court found that Trezise is qualified as an expert. The Court added that Trezise possesses “specialized knowledge” in insurance that will more likely than not “help the trier of fact to understand the evidence or to determine a fact.”

    In addition to his experience of over 30 years in the insurance industry and related experience involving insurance coverage as a trial attorney, the Court added that he has “experiential qualifications in a general field closely related to the subject matter in question.” Considering the “liberal thrust” of the Federal Rules and their “general approach of relaxing the traditional barriers to ‘opinion’ testimony,” Trezise is qualified as an expert to provide an opinion (but not as to legal conclusions). 

    Existence Of Sufficient Facts Or Data And Reliable Principles And Methods

    Defendant argued that Trezise’s opinions are not well-grounded, are not reliable, are purely speculative, and lack analysis, because Trezise has no experience with post-policy premium audits. 

    The Court found that Trezise’s opinions, as permitted herein, are based upon sufficient facts and reliable principles and methods drawn from his background, including relevant experience. Trezise has decades of experience in the insurance industry, during which he was exposed to the surplus lines market. Trezise’s opinions regarding industry practice, including his opinions about the purpose of surplus lines policies and the general existence of standards and practices in the surplus lines market, is based upon that experience. After all, Trezise explicitly tied his conclusion regarding industry practice to his specialized experience.

    Defendant argued that Trezise’s experience, which does not include participation in post-policy premium audits, does not align with the issues here. The Court held that such a “quibble” goes to the “weight and credibility,” and not the admissibility of Trezise’s opinion.

    Helpful To The Trier Of Fact

    The Court found that portions of the Trezise Report and related deposition testimony improperly reach legal conclusions. For example, the Trezise Report includes interpretation of policy language, such as the discussion of whether a professional liability exclusion clause in the Policy limits its coverage for New York Labor Law claims.

    The Court held that such legal conclusions are not helpful to the trier of fact, because an expert’s opinion on questions of law is inadmissible even when an expert—like Trezise, who is a former practicing attorney—has legal qualifications. 

    Held

    The Court granted in part and denied in part the Defendant’s Daubert motion to exclude Trezise’s expert opinion.

    Key Takeaways:

    • Trezise explicitly tied his conclusion regarding industry practice to his specialized experience. Trezise’s opinions regarding industry practice, including his opinions about the purpose of surplus lines policies and the general existence of standards and practices in the surplus lines market, is based upon his years of experience in the insurance industry and his exposure to the surplus lines market.
    • Trezise may provide testimony about the insurance industry and audits, and he may provide his opinion regarding premiums due under the Policy based upon a hypothetical set of facts. However, Trezise may not testify or provide his opinion about his interpretation of the Policy, and may not testify about any other legal conclusions. 

    Case Details:

    Case Caption: American Empire Surplus Lines Insurance Company V. J.R. Contracting & Environmental Consulting, Inc.
    Docket Number: 1:23cv4942
    Court: United States District Court, New York Southern
    Order Date: October 21, 2024
  • Insurance Expert Witness’ Testimony Regarding the Storm Damage and Cost of Necessary Repairs Admitted

    Insurance Expert Witness’ Testimony Regarding the Storm Damage and Cost of Necessary Repairs Admitted

    This case arises from a claim for wind/hail damage that allegedly occurred on or around December 5, 2021. The damage occurred to Plaintiffs’ property located at 16207 E. 47th Place, Tulsa, Oklahoma. State Farm inspected the home twice and found minor hail damage. State Farm did not observe any hail damage to the roof itself. According to State Farm, the minor hail damage observed did not exceed the deductible; therefore, no payment was issued.

    Plaintiff designated R. Sean Wiley as a construction and insurance industry expert to testify regarding his assessment of hail and wind damage to Plaintiffs’ roof and the estimated replacement cost. 

    Defendant sought an order barring Plaintiff from calling Wiley as an expert witness on the grounds that his opinions were unreliable and inadmissible under Rule 702.

    Insurance Expert Witness

    Randy (Sean) Wiley is the President of JW Construction Management Inc. and works as insurance appraisal and umpire in insurance claims. He also works as a construction consultant for insurance carriers.

    Want to know more about the challenges Randy (Sean) Wiley has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    The Court held that Wiley is qualified to provide expert opinions in the areas of his proposed testimony.

    Reliability and Relevance

    Defendant challenged Wiley’s expert opinions as speculative solely because Defendant believed Wiley was first retained after an “historic Father’s Day storm struck Plaintiffs’ neighborhood” in June 2023. Based on this belief, Defendant assumed “Wiley’s ‘multiple inspections’ likely occurred after the Father’s Day storm,” and Defendant faulted Wiley for failing to address that storm “or provide an explanation of how he links all of the alleged damage he reports to the 2021/2022 storms” underlying Plaintiffs’ insurance claim.

    Plaintiff stated that “Wiley first inspected the Bales’ home on June 3, 2022, more than a year before the Father’s Day storm” and provided a one-page affidavit from Wiley so stating. Wiley also stated that his report “discusses damage that was present during my June 3, 2022 inspection.”

    The Court found that Defendant’s criticism of Wiley’s opinions was unfounded.

    Defendant attempted to avoid this conclusion by attacking Wiley’s affidavit as an untimely supplemental report. Defendant argued at length that Rule 26(a) required Wiley to provide a complete statement of his opinions and their basis in his original report and that his affidavit is a supplemental disclosure that should be disregarded. 

    Rule 26

    The Court held that Wiley’s affidavit served only to correct Defendant’s factual error. Apparently, Defendant elected not to depose Wiley but assumed facts regarding his work based on certain deposition testimony of Bales. But for Defendant’s error, Wiley’s affidavit would have been unnecessary. The affidavit consisted of four simple sentences identifying the dates of Wiley’s inspections and stating that he personally observed the damage discussed in his report. Except the first date, which became material solely because of Defendant’s motion, Wiley’s original report contained the same information. Plaintiffs’ new “disclosure” was not made because they “learn[ed] that in some material respect [Wiley’s report] is incomplete or incorrect.”

    Held

    The Court denied  Defendant’s Daubert motion to exclude the testimony of Plaintiffs’ expert R. Sean Wiley.

    Key Takeaway:

    Defendant made an incorrect factual assumption concerning the timing of Wiley’s first inspection. With that mistake corrected, Defendant had no substantial basis to challenge the reliability of Wiley’s opinions regarding the storm damage and the cost of necessary repairs.

    Case Details:

    Case Caption: Bales Et Al V. State Farm Fire And Casualty Company
    Docket Number: 5:22cv851
    Court: United States District Court, Oklahoma Western
    Order Date: August 16, 2024

  • Insurance Expert Witness’ Testimony About the Industry Norms and Customs of the Insurance Adjustment Process Admitted

    Insurance Expert Witness’ Testimony About the Industry Norms and Customs of the Insurance Adjustment Process Admitted

    This claim arises from 2B’s negligent handing of an auto insurance claim brought by Harold and Milagros Lacey against GoAuto insureds, Alisha and Kayranasia Hill resulting from a motor vehicle accident in Panama City Beach, FL on July 31, 2020 (the “Lacey Claim”). GoAuto is a Louisiana-based insurance company that writes policies in Louisiana, Texas, Ohio, and Nevada and whose senior claim adjusters are not licensed in the state of Florida. GoAuto therefore engaged 2B to handle the adjustment of this Florida-based claim.

    The parties, Plaintiff GoAuto and Defendant 2B Claims, each moved to exclude opposing expert witnesses. GoAuto filed a motion to exclude the expert testimony of Kelly Gray while 2B Claims filed a motion to strike expert witness Susan Kaufman based on GoAuto’s untimely disclosure.

    Insurance Expert Witnesses

    Kelly Kathleen Gray is an attorney licensed to practice law in the State of Florida since 1993. During the past thirty years, she has focused her practice on insurance coverage and extra-contractual matters, both as a litigation attorney and as a corporate claims attorney. This includes first-party property litigation. In addition, she has several years of experience litigating various types of personal injury matters, including catastrophic automobile accidents, construction defect litigation, and professional liability.

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

    Susan Kaufman has been retained as a claim handling expert or consultant in jurisdictions across the United States, including cases in Colorado, Florida, Kentucky, South Carolina, Utah, South Dakota, Indiana, Wyoming, Illinois, Nevada, Washington, and Arizona. She has given testimony as an expert in insurance claim practices on 80 or more occasions in state or federal court. She is presently a Florida Licensed All Lines Adjuster (620), and she has held such license since 1986.

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

    Discussion by the Court

    Kelly Gray

    GoAuto did not challenge Gray’s qualifications. Instead, it argued her testimony would not assist the jury for three reasons: it focused on irrelevant facts, did not articulate an objective industry standard, and constituted legal argument rather than expert opinion.

    As to relevance, GoAuto argued Gray’s differentiating between a third-party administrator (TPA) and independent adjuster (IA) is a “red herring” since “the crux of this case is not whether 2B’s relationship with GoAuto was that of an IA or that of a TPA, but whether 2B made negligent misrepresentations to GoAuto on proper Florida claims handling.” But regardless of “the crux” of the case, the Court held that the nature of the parties’ relationship (which is disputed) is relevant in determining what duties were owed. And to the extent GoAuto argued Gray was wrong about the relationship, that is a question for the jury.

    Next, GoAuto argued Gray did not articulate an objective, industry standard—that she provided only general statements of a professional standard without clearly defining it. But, the Court found that Gray described industry norms and customs of the insurance adjustment process that are “beyond the understanding of the average layperson.”

    GoAuto claimed Gray did little more than summarize the record and make legal conclusions that usurped the jury’s role.  Gray opines about the different relationships within the insurance industry, what the standards are for those relationships, and whether 2B Claims’ conduct was consistent with those standards, which, according to the Court, are admissible opinions.

    Susan Kaufman 

    2B Claims moved to strike expert witness Susan Kaufman based on GoAuto’s untimely disclosure. The expert disclosure deadline had been April 30, 2024. 2B Claims had served its expert disclosure by that deadline, but GoAuto had not. GoAuto disclosed Kaufman as a rebuttal expert witness on May 30. The parties disputed whether Kaufman was a true rebuttal witness and whether the disclosure had been timely.

    The Court held that the rule-breaking party has the burden to show its failure to disclose was harmless. Here, GoAuto has shown that the delay is harmless. As GoAuto argues, the disclosure came a month before the close of discovery and several months before trial, leaving ample time for discovery and trial preparation with the new information. Indeed, 2B Claims does not appear to contend that the disclosure’s timing prejudices it, but rather that the testimony itself is harmful. 

    Held

    The Court denied both motions to exclude the testimony of Kelly Gray and Susan Kaufman.

    Key Takeaways:

    • According to Rule 704, the fact that expert testimony may “embrace[] an ultimate issue” does not, in itself, make the testimony inadmissible. Gray opines about the different relationships within the insurance industry, what the standards are for those relationships, and whether 2B Claims’ conduct was consistent with those standards. 
    • Gray described industry norms and customs of the insurance adjustment process that are “beyond the understanding of the average layperson.”
    • The expert disclosure deadline had been April 30, 2024. 2B Claims had served its expert disclosure by that deadline, but GoAuto had not. GoAuto disclosed Kaufman as a rebuttal expert witness on May 30. As GoAuto argues, the disclosure came a month before the close of discovery and several months before trial, leaving ample time for discovery and trial preparation with the new information.

    Case Details:

    Case Caption: Goauto Insurance Company V. 2b Claims Services, Inc.
    Docket Number: 5:23cv188
    Court: United States District Court, Florida Northern
    Order Date: July 18, 2024
  • Scope of Damages Identified by Insurance Expert Witness Admitted

    Scope of Damages Identified by Insurance Expert Witness Admitted

    This suit arises from alleged damage to Plaintiff, Curt Marcantel’s primary residence in Lake Charles, Louisiana, and his ranch in Singer, Louisiana, during Hurricane Laura. At all relevant times the properties were insured under policies issued by State Farm. Plaintiff filed suit in this court on June 6, 2022, alleging that State Farm had not timely or adequately compensated him for his covered losses. Accordingly, he raised claims for breach of insurance contract and bad faith under Louisiana law.

    State Farm filed a motion to exclude or limit the testimony of Plaintiff’s expert Stevephen Lott. In particular, State Farm argued that Lott’s opinions based on moisture meter readings conducted by Plaintiff’s expert Charles Norman do not meet the standards laid out in Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1995).

    Insurance Expert Witness

    Stevephen Lott has been providing professional public adjuster & consulting services to Insureds and Clients across the country. Prior to this, he spent 10 years working claims for several large Insurance Carriers on the other side of the aisle. He started Integrity Claims Consultants out of a strong belief that the Insured’s interests were not being represented fairly, by both the Carrier’s he was representing and the Public Adjusting firms they were being represented by. 

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

    Discussion by the Court

    Notably, Lott testified that he did not use any moisture meters to determine readings on which he based his opinion that certain repairs needed to be made to the interior of the home. Rather, Lott relied on Norman’s moisture meter readings.

    State Farm challenged the scope of damages identified by Lott because he had relied on moisture meter readings conducted by Charles Norman. In two separate Daubert motions, State Farm had challenged Norman’s technique in using the moisture meter as well as his failure to account for the fact that both properties had sat in Louisiana’s humid weather without air conditioning for nearly a year before his inspection. The Court had denied those challenges as impacting the weight rather than the admissibility of Norman’s testimony. Accordingly, there was no basis for excluding or limiting Lott’s testimony.

    Held

    The Court denied State Farm’s motion to exclude or limit the testimony of Plaintiff’s expert Stevephen Lott.

    Key Takeaway:

    The Court refrained from excluding Lott’s opinions based on moisture meter readings conducted by Plaintiff’s expert Charles Norman because State Farm had previously challenged Norman’s technique in using the moisture meter as well as his failure to account for the fact that both properties had sat in Louisiana’s humid weather without air conditioning for nearly a year before his inspection. The Court had denied those challenges as impacting the weight rather than the admissibility of Norman’s testimony.

    Case Details:

    Case Caption: Marcantel V. State Farm Fire & Casualty Co
    Docket Number: 2:22cv1511
    Court: United States District Court, Louisiana Western
    Order Date: July 9, 2024
  • Insurance Expert Witness’ Testimony Admitted Despite Not Being Tied to Covered Loss

    Insurance Expert Witness’ Testimony Admitted Despite Not Being Tied to Covered Loss

    A district judge in Texas admitted the insurance expert’s testimony about the cost to repair or replace the damaged areas.

    This is a commercial property insurance coverage dispute arising from hail and wind damage to Plaintiff’s property located at Midland, Texas. Landmark insured the Property under a commercial policy. Landmark received notice that the Property had sustained storm damage with the date of loss claimed as June 19, 2020.

    On March 28, 2022, Landmark sent Plaintiff a letter explaining that investigation revealed that the roof was exposed to multiple hail events on April 16, 2017; on May 16, 2017; and/or on April 23, 2019, but did not support that a hail event occurred at the Property on or about June 19, 2020. Plaintiff subsequently filed suit against Landmark for alleged property damages with a date of loss of June 19, 2020.

    Plaintiff designated Kevin Funsch, “a licensed public adjuster and owner of US Insurance Adjusters, LLC.” On March 22, 2024, Landmark filed a motion requesting that the Court exclude Plaintiff’s expert witness, Funsch’s testimony and strike his expert report.

    Insurance Expert Witness

    Kevin Funsch is a public adjuster and the owner of an insurance adjusting firm with a solid background in claims handling and estimating. He is experienced in adjusting property losses and performing appraisals.

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

    Discussion by the Court

    Landmark sought for Funsch’s report to be struck and his testimony excluded because: (1) Plaintiff’s expert designation and Funsch’s report did not comport with Federal Rule of Civil Procedure 26(a)(2); (2) Funsch’s report and opinions were unreliable; and (3) Funsch’s report and opinions were irrelevant.

    Funch’s Compliance with Rule 26 and Rule 702

    Defendant asserted that Funsch’s expert report is deficient for multiple reasons: (1) it “did not contain a complete statement of the basis and reasons for Funsch’s opinions as to the damages sustained to the property and the cost of repairs”; (2) Funsch did not “explain in his report how his experience as an insurance adjuster led him to reach his conclusions”; (3) the report “did not include any explanation as to the basis or reliability of the estimate”; (4) it “failed to demonstrate that Funsch’s opinions on the damages and necessary repairs are based on sufficient facts or data”; and (5) “that Funsch reliably applied those principles and methods in forming his estimate as required by Rule 702”.

    After thoroughly scrutinizing Funsch’s report, the Court found it satisfied both Rule 26 and Rule 702. It added that Landmark’s reliance on its cited Rule 702’s advisory committee note was inapplicable to Funsch’s expert report in this case, as he stated that he relied on multiple other documents and conversations with Neil Hall in forming his opinions, rather than relying solely on experience as the advisory committee note contemplated.

    The Court addressed Landmark’s arguments that Funsch failed to demonstrate his opinions on the damages and necessary repairs are based on sufficient facts or data, the product of reliable principles and methods; and that he reliably applied those principles and methods in forming his estimate as required. The Court noted that Plaintiff designated Funsch as his damages expert. Funsch is offered as an expert to provide opinion testimony only on the cost to repair or replace the damaged areas identified in the Hall Report.

    Reliability of Kevin Funsch’s Opinions

    Next, Landmark asserted Funsch’s “opinions regarding the costs of repairs are unreliable because he relied on unexplained assumptions about the Property that have no factual basis.” Landmark’s argument is premised on Funsch’s deposition testimony. In his deposition, Funsch stated most of the quantities and measurements in his estimate were copied over from the Berkley estimate. Then, because Hall’s report “only called for replacing some sections of the roof and the Berkeley estimate called for replacing all of them, Hall told Funsch to just use ‘about half’ of some of the Berkeley quantities.” Funsch admitted he “wasn’t able to verify every single one of the quantities.” Funsch concluded ‘these quantities, the number of items seems reasonable’ which Landmark asserted were “assumptions” by Funsch instead of “actual quantities” actually rendered the entirety of Funsch’s opinions unreliable.

    The Court, citing Rule 703, found Funsch’s testimony and report reliable.

    Relevancy of Kevin Funsch’s Opinions

    Landmark argued Funsch’s opinions were irrelevant because: (1) his repair estimate was based on prices as of April 2023, when the Policy required valuation based on the date of loss; (2) his repair estimate was a replacement cost estimate, not an actual cash value estimate; and (3) his opinions were not tied to “covered causes of loss.”

    His repair estimate was based on prices as of April 2023, when the Policy required valuation based on the date of loss

    Defendant first asserted Funsch’s opinions were irrelevant and/or not helpful to the jury because his report contained prices from April 2023 instead of 2019, and the Policy’s valuation provision mandated the cost of repairs be in 2019 (the alleged date of loss).

    The Court found that the date of Funsch’s damage estimate did not render it
    completely irrelevant and unhelpful; rather the exact weight to be given to Funsch’s testimony and expert report was for the fact finder to determine.

    His repair estimate was a replacement cost estimate, not an actual cash value estimate

    Landmark argued Funsch’s opinions were irrelevant and/or not helpful to the jury because his report contained only a replacement cost estimate, and “[i]n order to receive Replacement Cost coverage, the Policy stated that Plaintiff must first ‘actually’ repair or replace the property.” However, “it was undisputed that Plaintiff did not make the necessary repairs and the very minor repairs Plaintiff did make were not made until over two and a half years later.”

    The Court noted that whether Plaintiff could recover replacement cost value or actual cash value damages was a point of contention currently being litigated. Thus, without an order barring Plaintiff from recovering replacement cost damages, the Court found Funsch’s opinion as to replacement cost damages was relevant.

    Funsch’s opinions are irrelevant and/or not helpful because his opinions are not tied to a covered loss

    Landmark argued Funsch’s opinions are irrelevant and/or not helpful because his opinions are not tied to a covered loss. The Court emphasized that Plaintiff designated Funsch as his damages expert. Funsch is offered as an expert to provide opinion testimony only on the cost to repair or replace the damaged areas identified in the Hall Report.

    Held

    The Court denied Landmark’s motion to strike and exclude the testimony of Kevin Funsch.

    Key Takeaways:

    • It is not unusual in insurance coverage cases to have separate causation and damages experts, and to have the damages expert rely on causation opinions from the separate expert.
    • Simply because Funsch relied on Hall’s opinion and his own analysis of photographs, does not render Funsch’s reliability below Rule 702’s threshold, as this is exactly the kind of facts and data experts in Funsch’s field reasonably rely on in forming their opinions.

    Case Details:

    Case Caption: William Douglas C/O The Havens Group, Inc. V. Landmark American Insurance Company
    Docket Number: 7:22cv167
    Court: United States District Court, Texas Western
    Order Date: May 28, 2024
  • Insurance Expert Witness’ Ultimate Conclusions about the Defendant’s Conduct Rejected

    Insurance Expert Witness’ Ultimate Conclusions about the Defendant’s Conduct Rejected

    This matter arises out of a motor vehicle accident (“MVA”) on May 15, 2017, in Denver, Colorado. Plaintiff, Richard Marion Jr was driving a vehicle registered in the State of Nebraska and insured by American Family under a Nebraska family car policy and Umbrella policy (“Policy”) issued to Plaintiff’s parents, Richard and Angela Marion. Marion filed a claim against the tortfeasor and received American Family’s consent to settle with the tortfeasor’s insurance carrier for policy limits of $100,000.00. Plaintiff also sought underinsured motorist benefits (“UIM”) under his Policy.

    American Family evaluated the information received from Plaintiff and initially offered Plaintiff $60,000.00, followed by two additional offers of $70,000.00 and $80,000.00. Plaintiff did not respond to American Family’s offer of $80,000.00 and instead filed this action. He sought UIM benefits under two policies, a Nebraska family car policy with UIM coverage limits of $250,000.00, and an umbrella policy with UIM coverage limits of $1,000,000.00. Plaintiff asserted claims for: (1) breach of contract and/or determination of benefits owed; (2) common law bad faith under Colorado law; and (3) statutory bad faith.

    In support of his claims against American Family, Plaintiff disclosed Lorraine Berns as his retained liability expert, along with her affirmative expert report. Defendant American Family Mutual Insurance Company filed a motion to limit the testimony Plaintiff’s expert, Lorraine Berns, pursuant to Rule 702 and Rule 403.

    Insurance Expert Witness

    Lorraine Berns provides insurance consulting and expert witness testimony in the area of insurance bad faith/good faith claims-handling practices based upon insurance claims industry standards. She has worked in the insurance industry since 1991 and has been a consultant and expert witness in this field since 2006. She also provides consulting services to attorneys in the areas of settlement strategies, pre-litigation strategies, investigations, negotiations, and claims handling industry standards.

    Discover more cases with Lorraine Berns as an expert witness by ordering her comprehensive Expert Witness Profile report.

    Discussion by the Court

    Opinions that Defendant Unreasonably Delayed Benefits

    Defendant argued that Berns’ opinions that it unreasonably delayed benefits to Plaintiff are legal conclusions and therefore improper expert opinion that should be excluded from trial. Plaintiff responded that he had no intention of asking Berns to usurp the role of the jurors. Instead, Plaintiff explained that he intended to question Berns about her background in automobile insurance claim handling; the facts and data she reviewed; her knowledge of insurance industry standards applicable to the handling of UIM claims; her observations / conclusions as to whether the insurer’s claim handling evidenced compliance with industry standards.

    Under Federal Rule of Evidence 704(a), an expert’s opinion is not inadmissible simply because it embraces an ultimate issue to be determined by the trier of fact. The Court concluded that Berns may offer testimony articulating what she believes to be the relevant industry standards, and explaining—factually—how Defendant’s conduct did or did not comport with those standards. However, the Court excluded Berns’ opinions that Defendant’s conduct was unreasonable or insufficient as a matter of law, or was in violation of any statute.

    Opinions Concerning Defendant’s Motives or State of Mind

    Defendant argued that Berns’ “speculative opinions regarding American Family’s motives or state of mind during the handling of Plaintiff’s claim are impermissible and should be precluded from trial.” Defendant added that such opinions concerning Defendant’s motivation or state of mind regarding policy limits are not based on any personal knowledge or personally observed facts or data.

    The Court granted in part and denied in part this portion of the motion. The Court granted the Motion to the extent that Plaintiff may not elicit testimony regarding Defendant’s motives or state of mind because such testimony would constitute speculation. However, the Court denied the Motion to the extent Berns is permitted to testify about facts from which the jury could infer intent, as such testimony is proper expert testimony.

    Opinions Regarding Nebraska Law

    Defendant argued that Berns is not qualified to render opinions regarding Nebraska’s Unfair Claims Settlement Practices Act. Defendant emphasized that Berns has not worked in the insurance industry in Nebraska, has not evaluated a Nebraska claim, and is not familiar with Nebraska law. Additionally, Defendant argued that opinions regarding American Family improperly or incorrectly applying Nebraska law (in other words, saying that Defendant should have applied Colorado law) to Plaintiff’s claims are also impermissible expert opinion that usurp the function of this Court.

    The Court granted the motion to the extent that Berns was precluded from offering opinions on Nebraska’s Unfair Claims Settlement Practices Act. However, the motion was denied to the extent that Berns may offer opinions concerning whether Defendant’s offers of compromise complied with the applicable insurance industry standards.

    Held

    The Court granted in part and denied in part the Defendant American Family Mutual Insurance Company’s motion to limit the testimony Plaintiff’s Expert, Lorraine Berns.

    Key Takeaways:

    • The Court excluded Berns’ opinions that Defendant’s conduct was unreasonable or insufficient as a matter of law, or was in violation of any statute. She was unqualified to offer such opinions as a matter of legal expertise and such ultimate conclusions would not be helpful to the jury and would improperly intrude on its fact-finding function.
    • Only the Court will determine what law applies to the remaining claims in this case, and Berns may not offer opinions concerning which state’s law Defendant should have applied.

    Case Details:

    Case Caption: Marion V. American Family Mutual Insurance Company, S.I.
    Docket Number: 1:22cv1330
    Court: United States District Court, Colorado
    Order Date: July 12, 2024
  • Insurance Law Expert Witness’ Opinions Excluded Despite his Vast Experience

    Insurance Law Expert Witness’ Opinions Excluded Despite his Vast Experience

    A district judge in Ohio barred an expert in insurance law from testifying because he lacked sufficient expertise in insurance litigation despite his long and distinguished career.

    This action arises out of a material breach of insurance policies by Defendant Nancy Caraballo, who entered an unreasonable and collusive $36 million settlement with the Estate of Jordan Rodriguez (“Jordan”), a 5-year-old Cleveland boy who died tragically in late 2017, and whose body was discovered buried in his mother’s backyard. In connection with that tragic death, Caraballo pleaded guilty to four felonies concerning a benefits-fraud scheme she entered into with Jordan’s mother, which she tried to cover up by falsifying records related to her work purporting to provide Jordan’s mother with services as a parent educator.

    Prior to Caraballo’s breach, Princeton Excess and Surplus Lines Insurance Company (“PESLIC”), as the insurer of Caraballo’s former employer, Catholic Charities Corporation (“Catholic Charities”), was supporting good faith settlement discussions for a reasonable resolution with the Estate on behalf of both Caraballo and Catholic Charities. PESLIC had also agreed to reimburse Caraballo’s covered defense costs despite several policy defenses asserted under a reservation of rights.

    Caraballo was informed repeatedly that any settlement with the Estate in excess of the policies’ $1 million retained limit required the consent of PESLIC. Rather than honor her obligations to PESLIC, Caraballo agreed to a $36 million settlement, an amount that no independent rational actor would agree to pay. Caraballo’s material breach of the obligations imposed by the policies prevented both her and the Estate from obtaining indemnification or any other benefits from PESLIC.

    The Estate retained Judge William Taylor to render an opinion regarding whether PESLIC (1) “maintained control of” the underlying State Court litigation; and/or (2) engaged in “bad faith” towards Caraballo. 

    Plaintiff Princeton Excess and Surplus Lines Insurance Company (“PESLIC”) filed a motion to exclude the report and testimony of Judge William Taylor, submitted by Defendant Michelle Rodriguez, as the Administrator of the Estate of Jordan Rodriguez (“the Estate”).

    Insurance Law Expert Witness

    Judge William Taylor graduated from Northwestern University School of Law in 1979. He worked as an associate at the law firm of Peterson Ross from 1979 to 1982. While employed at Peterson Ross, Judge Taylor practiced insurance litigation, including representing Lloyd’s of London. Judge Taylor left Peterson Ross in 1982, and moved to Cuyahoga County, Ohio where he helped run a gubernatorial political campaign for Jerry Springer. After that, he moved to California and worked on another political campaign. In 1983, Judge Taylor joined the law firm of Sachnoff Weaver, where he practiced “business litigation.”

    Judge Taylor then worked as the Chief of Litigation of Revenue for the Illinois Attorney General’s Office from 1985 to 1987. He testified that, in this position, he was a “tax collector,” supervised 30 people, and appeared in court occasionally. From 1987 until approximately 1989 or 1990, Judge Taylor worked on several political campaigns, including those of Walter Mondale, Michael Dukakis, Harold Washington, and Carole Mosley Braun. In 1990 or 1991, Judge Taylor went into private practice, where he did “litigation, real estate, wills, divorces” and “whatever came in the door.”

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

    Discussion by the Court

    The Estate retained Judge William Taylor to render an opinion regarding (1) PESLIC’s supposed control of “the litigation in the underlying case” in state court; and whether PESLIC (2) engaged in “bad faith” towards Caraballo. 

    Judge Taylor opined that “it was apparent that PESLIC refused to agree to indemnify Caraballo.” PESLIC argued that not only did Judge Taylor lack the requisite qualifications to testify, but also that his opinions were irrelevant and unreliable.

    Qualifications

    The Court held that Judge Taylor was unqualified to provide expert opinion regarding PESLIC’s control of the state court litigation and for PESLIC acting in bad faith in its control of the litigation regarding Caraballo. While Judge Taylor has a long and distinguished career as a lawyer, jurist, and campaign manager, the Court found that he did not have sufficient expertise in insurance litigation to provide a proper foundation for him to testify about whether PESLIC “maintained control of” the underlying state court litigation or engaged in bad faith under Ohio law.

    Reliability

    The Court found that neither Judge Taylor’s three years of experience at an insurance defense firm in the 1980’s nor his tenure as a state trial and appellate judge were sufficient to demonstrate that he had specialized knowledge and experience regarding whether an insurance company “maintains control of” litigation and/or engages in bad faith. To sum it up, Judge Taylor’s reliance on his experience and some ill-defined concept of “logic” to form his opinions did not constitute a reliable methodology.

    Legal Conclusions

    The Court found that several of Judge Taylor’s opinions crossed the line into inappropriate legal conclusions. For example, Judge Taylor opined that: (1) PESLIC’s alleged conduct “constituted legal maneuvering which at a minimum is a constructive refusal to indemnify;” (2) “PESLIC’s refusal to make any offer of settlement within their policy was arbitrary, capricious, and in bad faith;” and (3) “the decision of Caraballo to settle the claim despite the insurer refusing to give written consent was not arbitrary or unreasonable.” 

    Held

    The Court granted PELSIC’s motion to exclude the testimony of Judge William Taylor.

    Key Takeaways:

    Caraballo and the Estate entered into a $36 million settlement agreement without PESLIC’s consent—an obvious breach of the PESLIC insurance policies’ consent-to-settle provisions. Defendant’s expert, Judge Taylor was highly accomplished but his background and experience simply did not relate sufficiently to the subject matter on which he opined in the instant case. The Court held that several of Judge Taylor’s opinions about PESLIC’s alleged conduct crossed the line into inappropriate legal conclusions.

    • Expert testimony should not constitute legal conclusions regarding the ultimate legal issues.
    • Expert witness’ knowledge and experience should be such that his opinions will likely be helpful to or otherwise assist the trier of fact. 
    • Judge Taylor’s reliance on his experience and some ill-defined concept of “logic” to form his opinions did not constitute a reliable methodology.

    Case Details:

    Case Caption: Princeton Excess And Surplus Lines Insurance Company V. Caraballo Et Al
    Docket Number: 1:21cv1981
    Court: United States District Court, Ohio Northern
    Order Date: May 21, 2024
  • Insurance Expert Witness’ Report on Bad Faith Deemed Inadmissible

    Insurance Expert Witness’ Report on Bad Faith Deemed Inadmissible

    A district judge in Texas refused to admit the insurance expert witness’ bad faith report because it failed to explain how exactly the Defendant violated the generally accepted adjusting standards.

    On February 17, 2021, a Texas winter storm damaged a commercial building owned by Barron. Century insured that building under a surplus lines renewal policy. Barron filed a claim with Century for damages to the metal roof of the insured building. Immediately after the storm, Barron began emergency repairs to the metal roof of the building. Barron also repaired damage to the interior of the building and the domestic plumbing.

    On March 5, 2021, a field adjuster inspected the building on Century’s behalf. On June 16, 2021, Century sent a letter to Barron that adopted its field adjuster’s net replacement cost of less than $4,000 and claimed that damage to the metal roof, domestic plumbing lines, and the interior of the building was excluded from coverage. Century identified “freeze damages to the domestic plumbing lines” as the cause of damage to the building’s interior. Further, Century stated that the indentations in the roof resulted from activities excluded from coverage under the policy exclusions. 

    Motions to exclude

    Barron designated Phil Spotts as an expert to testify regarding damages and bad faith. Spotts inspected the damaged building on October 6, 2021. Spotts prepared his final estimate on December 6, 2021, relying on both his inspection and “additional information that was provided by the insured.” His estimate of the replacement cost value of the roof totaled $370,020.81. Spotts also rendered an opinion on whether Century’s claim investigation and adjustment were conducted in bad faith. Additionally, Barron designated Joshua Reeves as an expert to testify regarding causation. Reeves conducted two on-site inspections of the damaged building on November 10, 2022 and November 23, 2022. Reeves opined that the damages to the metal panels that comprised the roof of Barron’s building were damages by environmental forces from the February 2021 winter storm. Century sought to exclude Spotts and Reeves’ expert reports. 

    Insurance Expert Witness

    Philip N. Spotts is the founding member of The Mission Risk Consulting Group, LLC, having opened Mission Adjusting and Risk Management, LLC in 1993.  He has over 40 years’ experience in handling or managing a wide variety of property and casualty claims, including commercial and residential property, national catastrophe, auto liability, general liability, and governmental liability.

    He has several industry designations granted by the Insurance Institute of America, including Chartered Property and Casualty Underwriter, Associate in Risk Management, and Associate in Claims.  

    Fortify your strategy by reviewing a Challenge Study detailing grounds for excluding Philip Spotts’ expert testimony. 

    Engineering Expert Witness

    Joshua G. Reeves is a licensed Professional Engineer employed by Neches Engineers, an engineering firm located in Beaumont, Texas. He is a Licensed Professional Engineer in Texas and a Certified Texas Department of Insurance Windstorm Inspector. He has designed thirteen metal roofs for private commercial and industrial clients.

    Want to know more about the challenges Joshua Reeves’ has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Phil Spotts

    Regarding bad faith, Spotts concluded that the Century claim investigation and adjustment “fell below generally accepted adjusting standards and involved an unreasonable and sub-standard investigation” based on his experience. Spotts also concluded that the Century estimate used as a basis for the claim payment was “underpriced” and “under scoped.”

    Century challenged (1) Spotts’ qualifications as both a damage and bad faith expert and (2) the reliability of his report.

    At the hearing, the parties agreed that expert reports on damages were unnecessary in light of the appointed umpire’s forthcoming appraisal of the damage to Barron’s property, which was binding on both parties pursuant to the appraisal provisions of the policy. Accordingly, Century’s instant Motion to Exclude was denied as moot with respect to Spotts’ expert report on damages. Additionally, to the extent Barron sought to offer Spotts as an expert on causation, Century’s instant Motion to Exclude was granted because Barron had not formally designated Spotts as an expert on causation. The Court considered Spotts’ qualifications, the relevance of his report, and the reliability of his methodology regarding only his bad faith report. 

    Spotts is Qualified to Serve as an Expert

    Spotts stated that he had been licensed “on an All-Lines basis to supervise and adjust claims” involving “tens of thousands of residential and commercial structures due to a diverse number of causes” and that he “possessed over 40,000 hours of claims-related experience.”

    The Court found that Spotts had demonstrated sufficient qualifications to serve as a bad faith expert.

    Spotts’ Expert Report is Relevant to the Issues Presented in this Case

    Century contended in conclusory fashion that Spotts’ damage report was not relevant but failed to specifically explain how the report lacked relevance to the issues presented in this case.

    The Court found that Spotts’ opinions on bad faith were relevant to Barron’s breach of contract, statutory bad faith, and Prompt Payment of Claims Act claims. The parties’ dispute over whether Century properly adjusted Barron’s claim in good faith was central to the resolution of all three claims.

    Spotts’ Expert Report Failed to Demonstrate Reliance on Reliable Methodology

    Century contended that Spotts’ report on bad faith was not reliable because it “was not supported by any evidence” and failed to cite to “any Texas law, statute, policy provision, or any other standard that would apply to this claim.”

    When Spotts claimed that the Century claim investigation and adjustment fell below generally accepted adjusting standards and involved an unreasonable and sub-standard investigation, he identified two sources for the standards on which he relied in his report. First, he cited “long standing claims standards” identified in a book entitled “The Claims Environment” by James J. Markham but the Court found that Spotts’ conclusory statement on Century’s claim investigation and adjustment amounted to him stating “it is so.” In other words, Spotts did not explain how Century’s behavior failed to meet the vague standards of insurance adjusting he cited.

    The second source on which Spotts based his conclusions was the “National Association of Insurance Commissioners Unfair Claims Settlement Practices Act” (“NAIC Act”), attached to his report as an addendum. The Court held that while the NAIC Act provided standards for proper adjustment and investigation of claims, Spotts failed to explain which specific sections of the NAIC Act he relied on in reaching his conclusions. Moreover, Spotts did not reference any specific sections of the NAIC Act at all in his expert report. Spotts’ general reference to the entire NAIC Act without reference to any specific provisions was insufficient to demonstrate a reliable methodology because he did not describe what specific standards were violated.

    Joshua G. Reeves

    In developing his report, Reeves relied on the inspections he conducted as well as various documents such as the International Building Code and International Existing Building Code.

    It should be noted that Century challenged only the reliability of Reeves’ report. The Court held that Reeves was qualified to serve as an expert in this case and that Reeves’ expert report was relevant to Barron’s claims since Barron must show that the February 2021 winter storm caused the alleged damage to the metal roof of the building.

    Reeves’ Expert Report is Based on Reliable Engineering Methodology

    In his report, Reeves identified four potential causes for the damage to the metal roof of Barron’s building: “foundation settlement, faulty construction materials, poor methods of construction, excessive live loads such as wind, show, ice, or seismic.” Reeves determined that the first three causes were not applicable based on the Neches Engineering analysis of (1) the presence of foundation settlement, (2) the structural integrity of the original roof panels, and (3) whether the building’s construction complied with the 1988 Uniform Building Code, which was the governing design criteria when Barron’s building was constructed. After describing his analysis and conclusions on the first three potential causes of the damage, Reeves concluded that the damages “are directly linked to excessive loads: either mechanical or environmental loads.”

    Reeves’ conclusion was based on a flawed process of elimination

    Century contended that Reeves’ conclusion “was based on a flawed process of elimination.” It added that Reeves’ opinions on these potential causes amounted to “it is so” opinions, which made them unreliable. The Court disagreed because Reeves relied on both his own inspection of Barron’s building, relevant building codes, weather data, reports from other adjusters that examined the property, and documents containing information regarding the specific roof panels used. Reeves then analyzed each potential cause and reached a specific conclusion on each one, excluding three and concluding that the fourth was the cause of damage to Barron’s property. 

    The Court disagreed with Century that Reeves’ opinions regarding whether mechanical loads caused the damage to Barron’s property were based on insufficient information because Reeves inspected the damaged roof panels during his two on-site inspections of the damaged property and analyzed whether the damage was consistent with footsteps.

    Century’s arguments attacking the information on which Reeves relied pertained to the weight of the evidence

    The Court held that Century’s arguments attacking the information on which Reeves relied pertained to the weight of the evidence, not its admissibility such as when Century made no attempt to explain why the meteorological data or environmental load calculations Reeves used in his report were incorrect.

    Held

    The Court granted Defendant Century Surety Company’s motion to exclude Plaintiff’s witnesses Spotts and Reeves with respect to Phil Spotts’ expert report on bad faith; denied it as moot with respect to Spotts’ expert report on damages; and denied it with respect to Joshua Reeves’ expert report on causation.

    To the extent Plaintiff Larry Barron sought to offer Spotts as an expert on causation, the Court granted Century’s instant motion to exclude Plaintiff’s Witnesses Spotts and Reeves.

    Key Takeaways:

    • Phil Spotts identified two sources for the standards on which he relies in his report. He cited “long standing claims standards” identified in a book entitled “The Claims Environment” by James J. Markham and the National Association of Insurance Commissioners Unfair Claims Settlement Practices Act. The Court held that there is “too great an analytical gap between the data and the opinion proffered” to render these standards a sufficiently reliable methodology for determining whether Century’s claim investigation and adjustment were conducted in bad faith.
    • Determining whether an expert report is reliable is the product of a three-part analysis: (1) whether “the testimony is based on sufficient facts or data”; (2) whether “the testimony is the product of reliable principles and methods”; and (3) whether “the expert has reliably applied the principles and methods to the facts of the case.” Joshua Reeves’ testimony was the product of engineering analysis based on Reeves’ personal observations and inspections.

    Case Details:

    Case Caption: Barron V. Century Surety Company
    Docket Number: 1:22cv144
    Court: United States District Court, Texas Eastern
    Order Date:  April 23, 2024

  • Report of Civil  Engineering Expert Witness Rejected for being based on Inadequate Data and Exterior Inspection to assist in any Meaningful Factual Analysis

    Report of Civil  Engineering Expert Witness Rejected for being based on Inadequate Data and Exterior Inspection to assist in any Meaningful Factual Analysis

    This case centered on a disagreement over property insurance coverage between Bliv, Inc., a plastics production and manufacturing company, and their insurer Charter Oak Fire Insurance Company. Specifically, Bliv filed an insurance claim due to purported damage from a wind and hail storm that occurred on or around July 9, 2021(referred to as “the Event”). During the Event, Bliv, Inc (referred to as the “Plaintiff”) held a Commercial Insurance Policy provided by The Charter Oak Fire Insurance Company (referred to as “Charter Oak”). The policy was effective from April, 2021, to February, 2022 (referred to as “the Policy”). The Policy covered a commercial building situated at 1643 Lotsie Blvd. in St. Louis County, Missouri. The roof of the Property consists of a Thermoplastic Polyolefin (TPO) membrane as the primary water-proofing layer, with fiberboard and additional supporting materials directly below it.

    Around July 21, 2021, the Plaintiff informed Charter Oak about the Event and asserted losses and damage to the property. Charter Oak initiated an investigation into the claim, enlisting a professional engineer from The Vertex Companies (referred to as “Vertex”) to inspect the property and identify the cause of the alleged loss and damage. Following three property inspections on August 31, 2021, September 21, 2021, and March 14, 2022, Charter Oak determined that the covered loss and damage to the commercial building, attributable to the Event, did not surpass the $2,500 deductible specified in the Policy. Furthermore, Charter Oak concluded that the claimed loss and damage to both the exterior and interior of the building were not a result of the Event or any other covered cause of loss.

    During the legal proceedings, the Plaintiff identified professional engineer Brian Johnson (referred to as “Johnson”), as a retained expert witness and provided his “Storm Damage Report.” The Plaintiff relied on Johnson to present expert opinions and testimony regarding the alleged causes of the reported exterior and interior damages. Notably, Johnson conducted a roof inspection of the property on May 30, 2023, almost two years after the Event. He did not inspect the interior of the building during his on-site visit, and he did not engage in conversations with the building owner or any other employee of the Plaintiff. Additionally, Johnson did not review maintenance or repair records related to the property. Importantly, he admitted an inability to state with scientific certainty the cause of the alleged damage. Consequently, the Defendant argues that Johnson’s expert report, opinions, and testimony should be excluded because they lack a sufficient factual basis, he did not consistently apply accepted methodologies, and his opinions are characterized as mere speculation and conjecture.

    Civil  Engineering Expert Witness

    Brian Craig Johnson holds a Bachelor of Science in Civil Engineering and a Master of Science in Civil Engineering, both from the University of Minnesota. Since becoming a registered Professional Engineer in Civil Engineering in Minnesota in 2004, he has leveraged his background across a range of project engineering and consulting positions. His areas of specialty encompass steel, precast, masonry, and wood construction applications. He gained this well-rounded expertise through roles as a Senior Construction Engineer for Lockheed Martin, as a government contractor. He is currently the Project Director of SRF Consulting Group.

    Discussions by the Court

    Federal Rule of Evidence 702 governs the admissibility of expert testimony, requiring the expert to be qualified and the testimony to aid the trier of fact. The proponent must prove its admissibility, and the Court, in its discretion, ensures the testimony is both relevant and reliable. Daubert factors, including testing, error rate, and general acceptance, guide the determination of reliability. The Court serves as a gatekeeper, separating reliable expert opinions from speculation. Disputes about an expert’s factual basis usually pertain to credibility rather than admissibility. Liberalized standards favor the admission of expert testimony, allowing scrutiny through the adversarial process. Exclusion is warranted only if the testimony is fundamentally unsupported and provides no assistance to the jury.

    Johnson’s Storm Damage Report was deemed unreliable as it relied on insufficient data, leading to speculative conclusions. His delayed inspection, conducted almost two years post the Event, lacked an assessment of interior damage and interviews with the owner of the business or any of its employees. Additionally, he failed to review maintenance records or ascertain the property’s condition before, during, or shortly after the Event. This undermined the credibility of his opinions, as he couldn’t reasonably relate his findings to the property’s state during the Event, which made his report inadmissible under Rule 702 and Daubert standards.

    Therefore, Johnson’s opinions regarding the interior of the property lacked any factual basis, let alone sufficient facts or data. His assertions about the cause of the alleged interior damage did not necessitate scientific, technical, or specialized training. The Defendant argued that Johnson’s opinion was mere speculation and conjecture, as he seemingly inferred interior damages solely from reading the Access Restoration Services (“ARS”)estimate and assuming the inclusion of “interior components” indicated Event-related damage. Furthermore, Johnson’s report and opinions, as per his own admission, were not grounded in reliable facts or data, particularly lacking personal observations and supporting evidence for the claimed damage being a result of the Event. Consequently, the Defendant contended that Johnson’s opinions failed to meet Rule 702’s requirement of “sufficient facts or data” and should be excluded from consideration.

    Johnson’s exploration of potential explanations for the claimed damage is criticized for residing in the realm of speculation and conjecture. The lack of personal observations, evidence, or supporting data renders his theories unsupported. Citing Knepfle v. J-Tech Corp., 48 F.4th 1282, 1296 (11th Cir. 2022), the Court emphasized that his purported possibilities or theories lack any iota of support from personal observations, evidence, facts, or data.

    Johnson’s factual conclusions about the alleged damage were heavily reliant on his status as an expert, his examination of photographs from ARS and Vertex, and his claim of deducing the events. Contrary to his belief, the facts and data gathered by ARS, Vertex, and Charter Oak starkly show the inaccuracy of Johnson’s assertion that there were no failed seams or flashings.

    The assertion is made that Johnson’s testimony and Storm Damage Report would not be beneficial to a jury. Citing the standard set in Cole v. Homier Distrib. Co., 599 F.3d 856, 865 (8th Cir. 2010), an expert’s opinion should be excluded if it is fundamentally unsupported and unable to offer assistance to the jury. It is emphasized that an expert must substantiate their opinion, as presenting only an ultimate conclusion without analysis is deemed meaningless.

    Johnson’s report is titled “Storm Damage Report,” implying a predetermined assumption that the building damage resulted from a storm, the very issue under consideration. Moreover, there is a lack of substantive evidence supporting his opinion that the damage was caused by the specific event. Johnson failed to identify any storm-created openings through personal observation, photographs, tests, or observations by any party who personally inspected the building.

    Due to his minimal independent analysis and investigation, Johnson’s ultimate conclusion that the damage was caused by the Event is deemed meaningless and unhelpful to the trier of fact. The opinion lacks fundamental support, rendering it insufficient to provide any assistance to the jury. 

    The Plaintiff contends that weather data suggesting the possible presence of hail on the storm date supports Johnson’s approach in ruling out the possibility of damage from a previous or subsequent storm. However, it is highlighted that Johnson, despite acknowledging the absence of hail punctures or fractures on the roof and finding no evidence of anvil strikes, did not definitively observe such damage. The argument asserts that while Johnson systematically eliminated other potential causes for the damage, his conclusion attributing the damage to the storm remains speculative. This speculation arises from his failure to determine if any damage occurred before or after the storm, prior to his inspection. The Plaintiff argues that Johnson’s opinion regarding hail damage to the roof membrane does not lack a sufficient basis in facts and data to aid the finder of fact. The Plaintiff also contends that the complaints go to the weight of the evidence, not its admissibility.

    Although the Plaintiff is correct in asserting that an expert can rely on information collected by others, the Court aligns with the Defendant’s perspective that total reliance is inadequate to demonstrate Johnson’s opinion would assist the jury in its fact-finding responsibilities. This agreement is reached, considering that Johnson’s report includes only a single photograph. Johnson did not conduct independent testing to support his opinion that the absence of physical damage to the roof membrane does not rule out hail damage. Instead, he based this conclusion on roofing literature, specifically marketing materials from a membrane manufacturer, asserting that fiberboard is more prone to hail impact damage. This reliance on unverified marketing literature is identified as a methodological failure in reaching his conclusions.

    Similarly, Johnson conducted no independent testing regarding the interior of the building. The absence of concrete reasons for Johnson’s conclusion that there must have been interior damage from the storm, solely because it was included in the estimate, is highlighted. Despite Johnson’s high qualifications, the opinion fails to meet the requirements of Daubert and Rule 702. The deficiency in sufficient facts, data, and methodology is emphasized, and it is noted that even vigorous cross-examination regarding Johnson’s credibility cannot overcome these shortcomings. The report, based on an exterior inspection, photographs taken by others, and data deemed too remote in time or substance, is deemed insufficient for meaningful factual analysis.

    Held

    The Court reaches the conclusion that Johnson’s opinion fails to assist the trier of fact in understanding the evidence or determining a relevant fact. The opinion lacks a foundation in sufficient facts or data and does not adhere to the necessary reliable principles and methods mandated by Rule 702. Consequently, the Court grants the Defendant’s Daubert Motion to Exclude Expert Reports, Testimony, and Opinions of Brian Johnson. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution. 

    Key Takeaways

    This case demonstrates the vital gatekeeping function Courts must serve under Daubert to scrutinize the reliability of expert witness testimony. The Court excluded Plaintiff Bliv’s expert, Brian Johnson, because his causation opinion lacked sufficient factual support and objective methodology. Most critically, Johnson grounded his conclusion that a hailstorm caused roof and interior damage almost entirely on third-party photographs, estimates, and marketing materials rather than his own inspection and testing. While qualified experts may reference outside sources, Johnson crossed the line into unreliable speculation by basing his view solely on external findings without verification. Moreover, the Court found his failure to review maintenance records or examine the building’s interior especially problematic given his admission that he observed no exterior hail damage. This inability to rule out alternative explanations undermined the reliability of his testimony under Daubert. Finally, Johnson’s reliance on interior damage estimates was misplaced since he never actually inspected inside the premises. By opining on evidence contradicted by his own limited investigation, his methodology proved unsound. Moving forward, this case demonstrates that expert opinions require thorough factual support and objective testing to clear Daubert’s reliability test. Subjective assumptions or theories fail to assist the trier of fact. Attorneys hoping to leverage expert testimony must ensure opinions rest on demonstrable “good grounds” before trial or risk exclusion.