Federal District Court Judge David Ezra of the Western District of Texas recently considered several expert witnesses retained by the insured and his counsel to address claimed smoke damage to an insured residence following the 2011 Bastrop wildfire and found the testimony offered was unreliable, stating at one point: "from a  common sense perspective, this is absurd."  The Court accordingly struck the expert's testimony.  In Falcon v. State Farm Lloyds, 2014 WL 2711849 (W.D. Tex., June 16, 2014), the insured claimed smoke damage to the insured residence as a result of the 2011 wildfire in Bastrop County, Texas.  State Farm inspected the property and found minor fire damage around the property and paid for that damage as well as to clean the residence and personal property and paid roughly $20,000 for the cleaning and other covered losses.  Later, State Farm received a letter from the insured's attorney claiming attaching an estimate from the insured's public adjuster, Stephen Hadhazi, seeking $112,766.59 to remediate the property entirely.  State Farm's re-inspection revealed that initial cleaning efforts by Service Master were successful.  This lawsuit followed.

State Farm moved to strike expert testimony offered by plaintiff's experts James fields, Stephen Hadhazi and Marion Armstrong.  The court's well-reasoned twenty-seven page opinion provides a thorough analysis of the court's gatekeeper role under the rules of evidence "to ensure that any and all scientific evidence is not only relevant, but reliable."  Addressing the qualifications of James Fields, the insured's expert on smoke contamination who took samples for testing, the court found that his lack of formal education, his reported self-education by learning what he could from the internet, "do not qualify him as an expert in smoke contaminate sampling and testing procedures."  And, the Court found Fields "course of study" which he claims qualifies him as an expert in smoke contaminant testing "is woefully inadequate."  The court carefully reviewed Fields opinions on smoke contamination's impact on property values, disclosure obligations, diminution in the property value and other issues and likewise held Fields was not qualified and that his opinions were unreliable.  Lastly, the court found his method of sampling for smoke contamination was unreliable, with unreliable techniques and handling procedures.

The samples taken by James Fields were sent to Armstrong Labs for analysis.  The court found that while plaintiff's expert Marion Armstrong is well qualified as an industrial hygienist, having found that Field's samples were unreliable, the court likewise rejected any opinions that relied solely on them.  The impact was to greatly limit those topics on which Armstrong would be allowed to testify. 

Lastly, the court reviewed the qualifications and opinions offered by plaintiffs damage and bad faith expert, Stephen Hadhazi.  The court observed serious questions regarding his experience, qualifications and background.  State Farm challenged the reliability of Hadhazi's estimating methods and his experience, asserting that he has never estimated a wildfire case as a public adjuster and his experience comes from preparing fifty to one hundred estimates in other cases for the plaintiff's attorney.  The court found that Hadhazi's methods for coming up with his damage estimate were unreliable and his testimony would be excluded.  The court noted  "Hadhazi can point to no actual method he used, other than "eyeballing" what he perceived to be damage in the home.  The court also observed Hadhazi had no documentation of his methods, performed no quantifiable test for his damage estimate or to support his conclusion that the roof needed to be replaced.  The court found Hadhazi's experience was "not enough to render his testimony reliable when all of his opinions are based on guesswork."  And in addressing Hadhazi's position that insurance companies should always replace a damaged item without first trying to clean it, the court astutely noted: "From a common sense perspective, this is absurd."  Similarly, the court found Hadhazi was not qualified to opine on bad faith, and was not even able to offer  a cogent definition of it.  Accordingly, Hadhazi's testimony was excluded.

[Editor’s Note: Christopher Lewis and Richard Grigg of Spivey & Grigg in Houston, Rick Leeper of the Law Offices of Dicky Grigg in Austin and Robert Collins of Houston represented Plaintiffs.   Richard South of Wright & Greenhill in Austin represented State Farm.  Congratulations to Mr. South and State Farm for this great win.]

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