Bad Faith Insurance And More On Experts – 2

Bad Faith Insurance – It’s been said that if you need an expert to explain bad faith, then you probably don’t have a case.  However, there may be an expert needed on other aspects of the case.  Our last Blog explained part of the way that courts look at experts.  This is some more of that opinion.  The case is styled, Richard Kim D/B/A Centre Cleaners v. Nationwide Mutual Insurance Company.  The opinion is issued by the Northern District of Texas, Dallas Division.

Plaintiff had hail damage coverage for his property through Nationwide.  Plaintiff made a timely claim for damages and Nationwide inspected the claim and asserted that the damage amount was below the deductible amount.

Plaintiff filed suit under the Texas Insurance Code, Sections 541 and 542, and for various violations of the Texas Deceptive Trade Practices Act. and breach of the duty of good faith and fair dealing.

Plaintiff had hired an expert, Lupfer who found damages totaling $135,827.03.  Nationwide filed a motion to strike Lupfer’s opinion and testimony based on the methodology used by Lupfer in forming his opinion.

The Court found that Lupfer explained his methodology such that the court can conclude that it is sufficiently reliable.  He said that he inspected the Property; observed the markings himself on the Property; was able to distinguish the hail from other potential sources of damages; and reviewed a weather report to determine whether a hail storm could have damaged the roof.  His personal inspection of the Property, his in-depth explanation of his procedures, and his experience employing the same methodology show that he used sufficiently reliable methods.

Nationwide contends that Lupfer’s methods are unreliable because he only relied on a weather website and nine photos of hail damage, which were taken within only five minutes, to reach his conclusions.  In challenging Lupfer’s methods, however, Nationwide appears to contest the “bases and sources” of Lupfer’s opinion.  But other than taking issue with the sources of information relied on by Lupfer, Nationwide has not articulated any reason why it believes Lupfer’s methodology is unreliable.  As such, these arguments again relate to the weight and credibility that the jury should assign to Lupfer’s causation testimony because Nationwide focuses on the persuasiveness of the sources of information relied on by Lupfer, not whether his methods were reliable.  The court therefore rejects Nationwide’s challenge to Lupfer’s methods as based on a flawed methodology.

Finally, the court concludes that Lupfer’s cost opinion testimony is sufficiently reliable to be admitted at trial.  In reaching his conclusion on cost, Lupfer inspected the Property and explained why he estimated certain prices.  For example, he explained that federal law required that there be a skilled, not unskilled, laborer involved in building the roof.  He also specified why certain roles, like safety supervisor, had specific duties and how that factored into his estimates.

Nationwide posits that Lupfer’s estimates are speculative and unreliable.  But its argument fails because it takes Lupfer’s estimates out of context.  For example, Lupfer does speculate that some costs will be incurred to bring the roof up to code. But this speculation stems from the fact that he does not know whether in bringing the roof up to code it will be necessary to replace a particular item that is missing or damaged, making it necessary to include the cost of replacing that item in order to reasonably estimate the cost of repairing the roof.

Accordingly, considering Lupfer’s explanations for his estimates, and his detailed discussion of his costs analysis, the court concludes that his methodology is sufficiently reliable for his cost opinion testimony to be admissible at trial.

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