WESTERN DISTRICT OF TEXAS HOLDS PRE-TRIAL, NON-RETAINED EXPERTS NOT SUBJECT TO CONTINGENT-FEE WITNESS PROHIBITIONS

In a roof damage case, Arthur et. al. v. Liberty Mutual Personal Ins. Co., 2022 WL 14225368 (W.D. Tex. October 24, 2022), the Arthurs sued their insurer, Liberty Mutual for not paying a claim for their weather-damaged metal roof.  Liberty Mutual denied the claim on the basis that it was a policy exclusion for cosmetic damage.  The Arthurs hired a public adjuster with the agreement that he would be paid 10% of whatever insurance settlement they received.  They later initiated a suit against Liberty and designated the public adjuster as a non-retained expert regarding the market value of repairs for their home.  Liberty Mutual sought to exclude the public adjuster’s testimony, arguing that the fee arrangement violated Rule 3.04 of the Texas Rules of Disciplinary conduct, which prohibits attorneys from offering to compensate a witness contingent upon the outcome of the case.  The Court disagreed, stating that this type of fee arrangement was approved by the Texas Department of Insurance; it was between Plaintiffs and the expert, not Plaintiffs’ attorney; and it was dependent on any insurance settlement and entered into prior to the litigation started, not necessarily the outcome of litigation or dependent on his testimony.  The court overall seemed to indicate that the bias concerns that could normally be presumed on contingent fee testimony were absent in this situation.