A Texas couple suing State Farm for bad faith and unfair dealings was struck a blow last week when the trial judge determined their expert witness was not qualified to opine on State Farm’s behavior at trial. Andrew and Donna Falcon filed the lawsuit alleging State Farm owed more than $112,000 for damages to their home covered by their home insurance policy, and attempted to call Stephen Hadhazi, a public adjuster, to testify that the insurance company denied their claim in bad faith.
Homeowner Calls Public Adjuster as Expert Witness
The Falcon’s trouble started in 2011 when a wildfire threatened their home and forced evacuation. Unable to return to the property, and believing their home had been destroyed, the Falcons contacted State Farm, with whom they had a home insurance policy, to begin the process of filing a claim. State Farm assisted the Falcons while they were unable to return to their home, and, when the threat of fire had been neutralized, went to inspect the property to assess damage. Although the home had not been destroyed, State Farm issued payments of close to $20,000 to help the Falcons clean and repair fire and smoke damage to the home and property and pay for expenses accrued while they were unable to return to their residence.
The Falcons disagreed with State Farm’s damage assessment, and called upon the expert analysis of Stephen Hadhazi to independently examine their home and provide an estimate. Following Hadhazi’s review, the Falcons sent State Farm a letter claiming that they were entitled to $112,766.59 to pay for all the damages caused by the fire to the property. When State Farm rebuked the Falcons’ claim, they filed a lawsuit alleging the company failed to investigate their claims in good faith and had paid an unfairly low settlement. Mr. Hadhazi, a public adjuster, was called as an insurance expert witness to comment on bad faith practices.
Judge Rejects Testimony of Bad Faith Expert Witness
In response to the Falcons’ attempt to use their independently consulted public adjuster as an expert witness on bad faith and unfair dealing, State Farm moved to strike Hadhazi’s testimony because: 1) it was only based on the fact that his estimate differed from State Farm’s; 2) it was incomplete because he did not review the claims file, the Service Master’s estimate of damages, or the depositions taken in the pre-trial phase; and 3) Mr. Hadhazi could not properly define bad faith. The Falcons countered that Hadhazi’s experience as a public adjuster qualified him to “assess the physical loss of or damage to structural or personal property, and structural or personal property values,” and thus serve as an expert witness in a dispute over a home insurance settlement.
While the trial court agreed that Mr. Hadhazi was qualified in the area of public adjusting and assessing property damage, it ultimately rejected his testimony as an expert witness. First, the court found that Mr. Hadhazi was not acting as a public adjuster in this case, but was performing as an independent consultant for the Falcons – an important distinction because his testimony was driven by guesswork and unsupported statements he made in defense of the damage estimate he provided for the Falcons. Second, the Court was unimpressed with the vague and expansive definition of bad faith Mr. Hadhazi provided during deposition. Hadhazi was unable to clearly identify bad faith behavior, but instead offered a generic analysis that ended with the unhelpful suggestion that the court “look up” the term bad faith. Since expert witnesses are tasked with assisting the jury, Hadhazi’s attempt to point to bad faith were unconvincing and irrelevant. Finally, the court found that because Hadhazi hadn’t even reviewed any of the documents associated with the Falcon’s claim, he could not comment on bad faith practices in the particular case at issue.
The court’s order, found here, also denied the Falcon’s use of a smoke analysis expert witness because his methodology for examining the smoke damage to their home was unreliable and not representative of the damage the residence suffered. State Farm’s expert witness on smoke damage, called to refute the Falcons’ claims regarding the extent of their losses, was accepted for the trial. Given that the Falcons have lost the early battle over expert witnesses, chances of success in their lawsuit against State Farm have been reduced dramatically.