Free Response to Motion - District Court of Arizona - Arizona

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Richard T. Treon (No. 002064) TREON, AGUIRRE & NEWMAN, P.A. 2700 N. Central Avenue, Suite 1400 Phoenix, Arizona 85004-1133 Telephone: (602) 285-4400 Facsimile: (602) 285-4483 Daniel B. Treon (No. 014911) Douglas G. Shook (No. 005950) Stephen E. Silverman (No. 016757) TREON & SHOOK, P.L.L.C. 2700 N. Central Avenue, Suite 1000 Phoenix, Arizona 85004-1133 Telephone: (602) 265-7100 Facsimile: (602) 265-7400 Attorneys for Defendants/Counterclaimants

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA AMERICAN FAMILY INSURANCE COMPANY, Plaintiff/Counterclaim Defendant, v. ROBERT and JOY DUNN, NO. CV2003-1277 PHX SRB

RESPONSE TO MOTION IN LIMINE RE ALLEGEDLY "UNQUALIFIED EXPERT TESTIMONY"

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Defendants/Counterclaimants.

I.

Introduction.

Defendants/Counterclaimaints Robert and Joy Dunn oppose American Family's
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motion in limine to exclude opinions formed and held by its own consultants: Robert Burttram of Dusty Creek Builders and Paul Leon of Cereus Irrigation. One of American Family's principal defenses in this case is that it at all times considered the Dunns' interests equal to its own, and that it fully and fairly investigated the claim.

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Notwithstanding this assertion, American Family ignored and buried its own consultants' opinions that were contrary to American Family's interests. In July of 2000, Robert Burttram told American Family that he believed the damage to the Dunns' residence was caused by earth movement. He asked to write up the damage; Steve Greaves instructed him not to on the basis of "coverage" issues.1 Its

geotechnical engineer, Ninyo & Moore, reached a different conclusion but had no qualifications with respect to structure damage questions. In May of 2002, Paul Leon inspected the Dunn residence, and found no problems in the irrigation lines and no evidence of exterior erosion caused by drainage or anything else. Despite this, American Family's experts intend to testify that irrigation and drainage are likely causes of the Dunns' structural damage.

The only "coverage" issue that Mr. Greaves could have contemplated at that time was denying the claim on the basis of the "earth movement" exclusion; otherwise his instruction to Mr. Burttram to ignore the earth-movement caused damage on the basis of "coverage" issues makes no sense. Even American Family's expert, Steven Plitt, agrees that Mr. Greaves was investigating whether the reported damage was caused by earth movement, and thereby (wrongfully) excluded on the basis of the earth movement exclusion. [See Dunn SOF § 141]
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II.

Mr. Burttram's and Mr. Leon's observations are critical to evaluating the reasonableness of its investigation and evaluation of the Dunns' claim.

American Family's motion misstates the record with respect to its engagement of these two consultants. American Family's motion ignores that the consultants' conclusions are relevant to the reasonableness of its investigation: during the adjustment of the claim, two of its own witnesses told American Family information that was favorable to the Dunns and supported coverage. American Family not only failed to investigate what it had been told, it buried the evidence. These are American Family's consultants, not the Dunns. With respect to issues of what opinions Mr. Leon and Mr. Burttram reached, and what they reported to American Family, this information is relevant in its own right. Moreover, American Family has listed both Mr. Leon and Mr. Burttram as trial witnesses, and indicates it may call Mr. Leon "to testify regarding his inspection of the irrigation system at the Dunn residence." [(Joint Proposed Pretrial Order, at K(a)(20)] It also indicates it will call Mr. Burttram to "testify about his estimate for repair of the Dunns' residence and his communications with American Family and the Dunns," indicating it will introduce the same evidence that it seeks to bar the Dunns from using. [Id. at K(a)(12)]

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A.

At the time Mr. Burttram observed the Dunns' residence and reached his opinions in July of 2000, he was by far American Family's most qualified consultant with respect to water damage and structural damage.

After the Dunns reported structural damage to American Family in February of 2000 that they related to the prior water loss claims, American Family re-assigned the file to Mr. Steve Greaves, who adjusted the 1999 water loss claims. Mr. Greaves supervisors instructed him to retain a qualified structural engineer as early as March 2000, and repeated the instruction on other occasions (but failed to follow up when Mr. Greaves refused to do so). [Dunns' June 30, 2005 Statement of Facts (Dunn SOF), § 26] In fact, Mr. Greaves did not hire a structural engineer until approximately September of 2000. However, by July of 2000, American Family had effectively concluded its investigation in the cause of the structural damage at the Dunns' residence. It directed Ninyo & Moore to conduct two separate inspections, including destructive testing to obtain soil samples, whereby American Family reached the conclusions from which it has refused to budge from that point forward: the damage to the Dunns' residence is not the result of the 1999 water losses it had agreed to cover. Ninyo & Moore reduced its "opinions" to writing on June 16, 2000. It "determined" that: "it is our opinion that the subject residence has performed reasonably well since its construction and that the distress features observed at the home are genuinely within construction tolerances." [Dunn SOF § 49] The problem
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with Ninyo & Moore's "opinions" was that it was that the firm was utterly unqualified to offer opinions with respect to the structural damage. And American Family knew Ninyo & Moore was not qualified to render opinions on the structural damage, because Ninyo & Moore told American Family it

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was not qualified to do so. "Due to our limited experience with distress of this nature, we recommend a qualified building contractor, experienced with this type of water related damage, be contacted to evaluate the extent of distress to the walls and flooring resulting from the above slab water leaks." [Exhibit 1 (August 15, 2000 letter from Ninyo & Moore to American Family)]. Even Eric Dixon of American Family acknowledged in May of 2000 that Ninyo & Moore was not qualified to "give direction on structure." [Dunn SOF § 48] In July of 2000, American Family conducted an additional inspection of the Dunn's residence. American Family brought with it Robert Burttram, an insurance restoration contractor with Dusty Creek Builders, and someone who fit Ninyo & Moore's recommended experience as a contractor knowledgeable on water damage claims, and Steve Nowaczyk of Ninyo & Moore. American Family did not bring a

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structural engineer, despite the prior claim file notes indicating Mr. Greaves was to do so. Between Steve Greaves of American Family and Steve Nowaczyk of Ninyo & Moore, a jury can reasonably conclude that the member of the American Family

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contingent at the Dunn's residence with the most experience and knowledge of structure damage issues in July of 2000 was Robert Burttram. [Compare Dunn SOF § 83, with §§ 62-65 (Ninyo & Moore admits it employs no structural engineers, but Mr. Burttram has worked in the construction industry for over thirty years, has seen

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"thousands" of residences damaged by water, and 50-100 where the water intrusion was sufficient to cause structural damage, and knows how structural damage from subsurface earth movement manifests itself).] Robert Burttram fits the profile of construction contractor with water damage experience. His opinions were offered to American Family, and summarily rejected. [Dunn SOF §§66-75] In light of Ninyo & Moore's acknowledgment that a

construction contractor's opinion was deserving of consideration, and American Family instead buried Mr. Burttram, this evidence is centrally relevant to the Dunns' bad faith claim and, if believed by the jury, would disprove American Family's assertion that it gave the Dunns' equal consideration and fully and fairly investigated their claim. B. Paul Leon's Testimony is Relevant.

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Paul Leon was hired by Ninyo & Moore to inspect the external features of the Dunns' residence in connection with Ninyo & Moore's 2002 investigation at the Dunn residence. Mr. Leon, a landscape architect with 29 years of experience, "absolutely" knows how to identify drainage and irrigation problems, and actually conducted the

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only inspection of the soils adjacent to the foundation and the landscaping lines by anyone on behalf of American Family. [Dunn SOF § 118]. Mr. Leon concluded that neither the irrigation nor drainage contributed to any subsurface soil problems. [Id.] Robert McMichael of Ninyo & Moore admitted that a landscape architect could

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have the requisite ability to render opinions on these subjects, and that Mr. Leon's opinions, if accepted by the jury, would undercut Ninyo & Moore's conclusions. [Dunn SOF § 121] Mr. Leon's services were paid for by American Family, but his opinions where never communicated to American Family's other consultants, investigated further, or rebutted by additional investigation. (Mr. McMichael did testify that Ninyo & Moore's practice is to inform its principal that it has hired a consultant, and that it reports back to its principal on the results of any work it commissioned. [Dunn SOF § 120]) This information is part of the investigation conducted by American Family, and therefore relevant to impeach American Family's claim that at all times during its investigation, it fully and fairly investigated the Dunns' claim and looked for ways to find coverage.

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III.

Mr. Leon and Mr. Burttram Are Qualified.

In any event, Mr. Leon and Mr. Burttram are qualified to testify to the opinions they reached. American Family omitted critical portions of the deposition record, in which its consultants explain their education, training and background. The pertinent

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sections were previously submitted in connection with the Dunns' Statement of Facts at paragraphs 62 to 65, 74 to 77, and 119, and Exhibit 47 at page 22. Both witnesses have the requisite education, training and background to offer opinions based upon their personal observations.

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Neither Mr. Leon or Mr. Burttram said they would automatically defer to somebody simply because he or she had an engineering license. Mr. Leon testified that "if an engineer were to say that the irrigation system had provided a reason to suspect it for structural damage" (something both Ninyo & Moore and Starling plan to speculate on at trial), Mr. Leon would not blindly rely on the engineers. Instead, he would "have to have a lengthy discussion with him to find exactly why he felt that way. I wouldn't just take it on face value. I'd have to say, `Can you show me what you think, what area or what is that's causing it'? Before I can say, `You're right.'" [Dunn SOF at Exhibit 47, page 22] Mr. Burttram testified that he expected the insurance company would hire an engineer qualified to look at the structure, something it did not do when it rejected his opinions. [Dunn SOF §§ 74-75] Ninyo & Moore, by its own admission, was not

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qualified, and American Family did not hire a structural engineer until approximately three months after it rejected Mr. Burttram's opinions. Even then, American Family took steps to make sure that Mr. Burttram never talked to a structural engineer, so his opinions that the Dunns had suffered earth movement related structure damage on and

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before July of 2000 never made it Mr. Starling, who assumes all of the earth movement related damage occurred post July 2000. [Dunn SOF §§ 78-80, 103] The Court has already considered this issue in connection with the summary judgment motions. Although the Court rejected the Dunns' argument that Mr. Leon's

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opinions undercut Ninyo & Moore's and Mr. Starling's opinions so severely that American Family's engineering experts should be excluded altogether, the Court did note that Mr. Leon's opinions were proper for impeaching American Family's evidence: "It sounds like a factual dispute that you have some really good facts about." [Transcript of February 4, 2005, at 11] IV. Conclusion.

American Family is trying to have it both ways. It asserts that it hired competent, unbiased experts to assist it. But it buried the opinions of the experts it hired when those experts reached conclusions that supported coverage for the Dunns, and now argues its own experts are unqualified. The motion in limine should be denied. DATED this 21st day of September, 2005. TREON, AGUIRRE & NEWMAN, P.A. By: s/Richard T. Treon Richard T. Treon, Esq. 2700 North Central Avenue, Suite 1400 Phoenix, Arizona 85004 and
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TREON & SHOOK, P.L.L.C. By: s/Stephen E. Silverman Daniel B. Treon Douglas Shook Stephen E. Silverman 2700 North Central Avenue, Suite 1000 Phoenix, Arizona 85004 Attorneys for Defendants/Counterclaimants ORIGINAL of the foregoing electronically filed this 21st day of September, 2005, with: U.S. District Court Clerk COPY hand delivered this 21st day of September, 2005, to: The Honorable Susan R. Bolton United States District Court By: s/Barbara Bopp

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