614 F.Supp.3d 475
N.D. Tex.2022Background
- Nationwide insured commercial property owned/insured by Richard Kim under a policy covering wind and hail (1/7/2020–1/7/2021). A hail-producing storm occurred April 19, 2020; Kim filed a claim.
- Nationwide commissioned two inspections (an independent adjuster and an engineer) that found only minimal hail damage or attributed damage to other causes; Nationwide issued partial denials and paid nothing because its valuation fell below the deductible.
- Kim hired retained expert Fred Lupfer, who inspected the exterior in August 2021 and reported hail-caused damages of $135,827.03; his written report omitted or ambiguously described the facts/data he considered.
- Nationwide removed the case and moved for summary judgment (and, alternatively, for judgment on the pleadings) and moved to strike/exclude Lupfer under Rule 26 and Rule 702; Kim opposed and submitted Lupfer’s deposition and an affidavit.
- The court found Lupfer’s report noncompliant with Rule 26(a)(2)(B)(ii) but declined to fully exclude him, ordering Kim to serve an amended compliant report within 60 days; the court admitted Lupfer’s opinions under Rule 702 as sufficiently relevant and reliable.
- On the merits the court: denied summary judgment on breach of contract without prejudice (pending Texas law on concurrent-cause allocation), granted Nationwide judgment on the pleadings dismissing the pleaded breach-of-contract claim (but allowed Kim to amend), and granted summary judgment for Nationwide on all extracontractual claims (bad faith, DTPA, Texas Ins. Code).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 26 adequacy of Lupfer’s written report | Lupfer disclosed relied-upon evidence at deposition; report’s omissions are immaterial | Report fails to state the "facts or data considered," violating Rule 26(a)(2)(B)(ii) | Report noncompliant; court orders amended report within 60 days (lesser sanction than exclusion) |
| Rule 702/Daubert admissibility of Lupfer’s causation and cost opinions | Lupfer’s inspection, methodology, weather data and cost explanations make opinions reliable and helpful | Lupfer cannot date/segregate damage, used limited photos and a weather website, and made speculative cost assumptions | Opinions admissible: testimony relevant, methodology and cost estimates sufficiently reliable; deficiencies go to weight, not admissibility |
| Summary judgment on breach of contract (insufficient evidence of covered loss) | Lupfer’s opinions create fact issue that April 19, 2020 hail caused covered damage | Nationwide argues no covered loss within policy period and moves for summary judgment | Denied without prejudice as Lupfer remains admissible; factual dispute remains |
| Concurrent-causation (allocation between covered hail and excluded wear-and-tear) | Lupfer attempted to attribute damage to April 19 storm and ruled out other causes | Nationwide says plaintiff failed to segregate covered vs non-covered damage, invoking concurrent-cause doctrine as fatal | Court declines final ruling pending Texas Supreme Court guidance on concurrent-cause; summary judgment denied without prejudice; parties to update court after that decision |
| Rule 12(c) motion on pleadings (breach of contract pleading sufficiency) | The petition adequately alleges a covered storm and refusal to pay | Allegations are conclusory and fail to identify which policy provision was breached | Court grants judgment on the pleadings and dismisses breach claim for failure to plead plausibly, but grants leave to amend within 28 days |
| Extracontractual claims (bad faith, DTPA, Tex. Ins. Code) | Denial was unreasonable; disputes of fact create jury question | Nationwide had a bona fide coverage dispute based on two expert reports, so no bad faith or statutory liability | Court grants summary judgment for Nationwide on bad-faith, DTPA, and §541 claims; §542.003 claim dismissed (no private right of action). |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (summary judgment burden-shifting rule)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Sup. Ct. 1986) (genuine-issue standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (pleading must show entitlement to relief)
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (Sup. Ct. 1993) (expert admissibility framework)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (Sup. Ct. 1999) (Daubert applies to all expert testimony)
- Gen. Elec. Co. v. Joiner, 522 U.S. 136 (Sup. Ct. 1997) (exclude opinions with an analytical gap)
- Lyons v. Millers Cas. Ins. Co. of Tex., 866 S.W.2d 597 (Tex. 1993) (burden to allocate damage between covered and excluded perils)
- Overstreet v. Allstate Vehicle & Prop. Ins. Co., 34 F.4th 496 (5th Cir. 2022) (certified question re concurrent-causation to Texas Supreme Court)
- Viterbo v. Dow Chem. Co., 826 F.2d 420 (5th Cir. 1987) (bases of expert opinion generally affect weight, not admissibility)
- Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456 (5th Cir. 1997) (elements of insurer bad-faith and bona fide dispute doctrine)
- State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42 (Tex. 1998) (insurer breaches duty when liability is reasonably clear)
- Travelers Indem. Co. v. McKillip, 469 S.W.2d 160 (Tex. 1971) (need for reasonable basis to allocate damages between causes)