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.
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
In this action, the Frazier Parties alleged that the Eagle Air Parties lacked probable cause to sue them for defamation and other similar claims in an underlying lawsuit that concluded in 2020 (the “Underlying Action”). The Frazier Parties claimed that the Underlying Action damaged Sentinel’s existing or prospective client relationships, resulting in lost profits of at least several million dollars.
Defendants Eagle Air Med Corporation and Valley Med Flight, Inc. filed a motion to exclude the testimony of proposed expert witness Dr. Ronald Luke, who was retained by Plaintiffs Jeffrey Frazier and Sentinel Air Medical Alliance, LLC under Fed. R. Evid. 702.
Economics Expert Witness
Ronald T. Luke has developed Research & Planning Consultants as an inter-disciplinary firm providing economic, financial, and public policy studies. As President and owner, he supervises RPC’s professional staff and maintains high standards for the firm’s work products. Also, he has been accepted as an expert in economics, socioeconomic impact analysis, and policy analysis by state and federal courts, and state administrative agencies.
To begin with, Defendants’ motion primarily addressed the reliability of Luke’s expert testimony and did not challenge the qualifications of Luke. Defendants argued that (1) “Luke’s opinions regarding Sentinel’s lost profits damages are unreliable and inadmissible under Rule 702[,]” and (2) “any opinion [Luke] might try to offer on the litigation-related damages would be unhelpful and inadmissible.”
Also, Defendants argued that “Luke’s lost profit opinions rests on unreasonable assumptions that are unsupported by the record” and “Luke failed to properly account for other factors that might affect the amount and existence of Sentinel’s alleged lost profits.” According to Defendants, Luke did not use a discount rate that accounted for certain risk factors in his calculations that other experts use in similar analyses, and he used a ten-year time period for his calculations.
The Court held that the fact that Luke’s opinion and analysis take into account facts that are still in dispute does not justify exclusion of his expert testimony and report.
As for the litigation expense damages, Defendants sought to exclude Luke’s inclusion of the litigation expense damages because he did not calculate, analyze, or offer expert opinion related to these damages. There is no indication in the report that Luke himself calculated the litigation expense damages; rather, he merely included the previously calculated litigation expenses in his lost profits analysis based on the other information in the record. Defendants did not dispute that there is evidence in the record supporting the litigation expenses. Therefore, Defendants did not provide grounds for the exclusion of litigation expenses in Luke’s report at that point.
The Court reviewed Luke’s expert report and found that he had a reasonable basis for reaching his conclusions regarding Sentinel’s lost profits damages.
Held
The Court denied Defendants’ motion to exclude the testimony of Plaintiffs’ proposed expert Ronald Luke.
Key Takeaway:
Exclusion is not warranted just because Luke’s opinion and analysis take into account facts that are still in dispute
Luke’s inclusion of the litigation expense damages was not excluded due to evidence in the record supporting the litigation expenses.
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.”
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
