2. Eastern District Of Louisiana Issues Series Of Opinions Excluding Experts In Property Insurance Coverage Actions Arising Out Of Hurricane Katrina
Recent opinions from the United States District Court for the Eastern District of Louisiana demonstrate that retained experts should view and inspect the property damage at issue prior to its repair. Otherwise, experts run the risk of being precluded from testifying in court because such testimony is deemed unreliable under Federal Rule of Evidence 702, Daubert v. Merrell Dow Pharmaceuticals, Inc, 509 U.S. 579, 590 (1993), and Daubert’s progeny. These recent opinions – in Williams, Tardo, Lightell, and Lombardo – may be used as a precaution for experts retained by insurers, or as a tool to preclude an expert retained by a policyholder, who inspected the property damage after (1) the loss and (2) the completion of repairs.
In Williams v. Allstate Ins. Co., 2008 WL 5110604 (E.D.La. Nov. 26, 2008), the policyholders sued Allstate following Hurricane Katrina for damages under their homeowners policy beyond those previously paid. To support their claim for damages, the policyholders retained an expert to opine that they had suffered additional wind damage than the amount Allstate paid. Id. at *2. The court excluded the opinions of the policyholders’ expert as unreliable pursuant to Federal Rule of Evidence 702 because the “expert” had visited the damaged property more than three years after the hurricane, and two years after the property had been repaired. Id. at *2.
In Tardo v. State Farm Fire and Cas. Co., the court precluded the policyholders’ expert from testifying at trial because his methodology was unreliable – it did not fulfill the requirements within Rule of Evidence 702. 2009 WL 1804766 (E.D.La. June 22, 2009). Similar to the policyholders in Williams, those in Tardo sued State Farm for additional proceeds for wind-related damage allegedly sustained as a result of Hurricane Katrina. Id. at *1. The policyholders hired an expert who visited the property in July 2008; thereafter, he prepared three damage estimates. Id. The court held that the expert employed an unreliable methodology and precluded his trial testimony for a number of reasons: first, the proffered expert inspected the property three years following Hurricane Katrina, and after the damages had been repaired; second, he did not review photographs of the property taken before repairs were completed; third, he failed to take into account the actual repair estimates and found the details of the actual repairs to the property to be inconsequential; fourth, he relied entirely on his interview with policyholder Russell Tardo to describe the damages; and finally, he made admitted mistakes in his estimates. Id. at *2-4.
In Lightell v. State Farm Fire and Cas. Co., 2009 WL 5217087 (E.D.La. Dec. 31, 2009), the court excluded the policyholders’ expert from testifying at trial because the methods he utilized were also unreliable. In Lightell, the policyholders sued State Farm following Hurricane Katrina for damage to their home. Even though the policyholders had received insurance proceeds, they believed that State Farm failed to properly assess their home’s damage. 2009 WL 5217087 at *1. After the litigation was pending and months after the property had been repaired and sold, the policyholders’ attorney retained an individual to provide an estimate of the damage to the home. Id. To perform this task, the proffered expert contacted and interviewed the policyholders about the damage to their home; reviewed the State Farm claims file, including photographs and notes taken by the adjuster; and cursorily reviewed the outside of the premises after repairs were completed, and after the property had been occupied by new owners. Id. Based upon this work, State Farm argued that the methodology of the proffered expert was unreliable and failed to satisfy either Federal Rule of Evidence 702 or Daubert. Id.
The Lightell court agreed with State Farm and followed the line of recent Eastern District decisions which excluded experts who were equally unreliable. See Tardo v. State Farm Fire and Cas. Co., supra., and Williams v. Allstate Ins. Co., supra. The court acknowledged that the Lightell case may be somewhat distinguishable from both Tardo and Williams because in Lightell the policyholders’ expert reviewed photographs contained in the claims file. However, the court found that the expert testified that he could not understand the photographs. 2009 WL 5217087 at *3. Thus, the court held that the methods used were similar to those held to be unreliable in both Tardo and Williams, and excluded the proffered expert’s damage estimate and related testimony.
On February 4, 2010, Judge Barbier who issued the Lightell opinion again excluded an unreliable expert from testifying in Lombardo v. State Farm Mut. Auto. Ins. Co., Case 2:09-cv-00512-CJB-ALC, Record Doc. No. 61. In Lombardo, the policyholder, a homeowner, sued State Farm alleging an underpayment of insurance proceeds following damage caused by Hurricane Katrina. Id. at *1. The policyholder retained an individual to prepare an estimate of the wind and/or wind driven rain damage to the property. Id. at *2. The proffered expert conducted an inspection of the property more than three years after most repairs were completed, interviewed the property owner, and analyzed photographs of the property. Id. at *2-3, 8. Judge Barbier discounted the fact that the proffered expert had reviewed photographs of the property, and held that “[t]his Court does not believe that a reliable estimate can be formed by observing property long after the property has been repaired.” Id. at * 8, citing Lightell, supra. Judge Barbier again compared the reliability and methodology of this proffered expert to those excluded in Tardo and Williams. Judge Barbier excluded the expert from testifying as to those portions of the claim that had been repaired at the time of the inspection, even if he had reviewed photographs of the damage. Id. at *8. (Note that the Court found that the retained expert “could have formed a reliable estimate” on the portion of the property that had not been repaired at the time of his inspection.)
These cases confirm that experts retained to opine on property damage should actually view and inspect the damage close to the time of the loss and prior to the start of property damage repairs. Although several of these cases left open the possibility that an expert’s review of photographs could withstand scrutiny, the Lombardo court foreclosed that possibility, indicating that only an inspection of the actual property damage was a sufficiently reliable methodology.
While having a retained expert view the actual property damage prior to repairs appears on its face to be common sense, the case law recently generated demonstrates the pitfalls when a retained expert conducts an analysis contrary to this simple rule.