SNR Denton on Nevels v. Deerbrook Insurance Co.: Expert Opinion in Bad Faith Case Admissible Only to Extent of Proper Basis

SNR Denton on Nevels v. Deerbrook Insurance Co.: Expert Opinion in Bad Faith Case Admissible Only to Extent of Proper Basis

 By William T. Barker, Partner, SNR Denton

In Nevels v. Deerbrook Insurance Co., the court held an expert could testify that the insurer should have sooner offered the policy limit, but would not be permitted to testify that failure to do so was bad faith or on what a jury would have awarded.  This commentary examines that decision in light of other law on expert testimony in insurance bad faith cases.

In October, 2005, Nevels was injured when the car in which he was riding (driven by Scott) was struck by lumber from a truck driven by Melton, causing the car to cross into the opposing lane of traffic, colliding with an oncoming car driven by Coffey.  Melton claimed that a phantom motorist pulled out of a gas station in front of him, causing him to brake and lose control of the truck.  Melton's insurer, Deerbrook, initially viewed the case as one of 100% liability, and defense counsel later failed to find any evidence to the contrary.

After Nevels' lawyer submitted a demand package in May, 2006, Deerbrook offered $5000.  When the case went to mediation in May, 2008, Nevels' claim did not settle. But Deerbrook settled in June, 2008, settled with Nevels for $21,700, the amount remaining in the policy limit after settlements with Coffey and Scott.  Nevels then sued under the Kentucky Unfair Claims Settlement Practices Act for bad faith delay in payment, retaining David L. Huff as an expert witness.

As the commentary explains, some of Huff's proposed testimony was permissible:

The court then concluded that Huff was qualified to testify that Deerbrook had sufficient information to settle for policy limits from the start.  He had extensive experience as a claims adjuster, insurance defense attorney, and in-house counsel for an insurance company. Furthermore, his opinion is based largely on the observation that Deerbrook had substantially the same information at the time it made its initial $5,000 offer as it did when it settled with Nevels for $21,700 eighteen months later.

But as the commentary explains, testimony on other points was not admissible:

Huff had no basis to opine on what a Pulaski County jury would have awarded Nevels, because he had no experience in that county and none of jury verdict reporters or other materials he had consulted included any data specific to that county.  Accordingly, he could not substantiate his opinion and Deerbrook would have no meaningful way of cross-examining him on such an opinion....

Huff also could not testify that Deerbrook's conduct amounted to bad faith, because he used an incorrect legal standard in coming to that conclusion.  In particular, he testified that conduct could constitute bad faith, even if not outrageous, if it involved reckless indifference to the rights of the claimant.

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