New Jersey District Court Strikes Insured’s Expert Report but Refuses to Dismiss Complaint in Sandy Coverage Dispute

In a recent Hurricane Sandy action, the United States District Court for the District of New Jersey granted an insurer’s motion to strike the insured’s expert report and exclude the expert’s testimony as to the cause of damage to the insured’s property, but denied the insurer’s motion to dismiss the complaint. The insured had originally reported a claim for roof damage to his property that was allegedly caused by Hurricane Sandy. The insurer claimed that it sent a claims representative to inspect the property, and determined that the damage was due to age and deterioration, which are causes excluded from coverage under the policy. Subsequently, the insured filed suit against the insurer, asserting causes of action for breach of contract, breach of the duty of good faith and fair dealing, bad faith, and violations of the New Jersey Consumer Fraud Act.

The insurer moved to strike the insurer’s expert, and argued that the expert’s estimate was unreliable because it was prepared without any knowledge of the property conditions prior to Sandy or the weather conditions to which the property was subjected during Sandy. Additionally, the insurer failed to distinguish between damage caused by Sandy and preexisting damage. In granting the insurer’s motion to strike, the court applied the Daubert test, and noted that the expert never inspected the property and could not articulate a sufficient methodological or factual basis for his conclusions.

The insurer also moved to dismiss the insured’s complaint on the basis that the insured failed to fully comply with discovery obligations. In denying the motion to dismiss, the court considered the factors set forth in Poulis v. State Farm Casualty Co., including the plaintiff’s personal responsibility, prejudice to defendants, history of dilatoriness, willfulness or bad faith, effectiveness of alternative sanctions, and meritoriousness of the claims. Ultimately, the court found that, on balance, the factors did not warrant dismissal, as the insured had produced the majority of the requested discovery and provided explanations for several outstanding documents.

The case is Wehman v. State Farm Fire & Cas. Co., Civil Action No. 14-1416 (FLW/DEA), 2015 U.S. Dist. LEXIS 117445 (D.N.J. September 3, 2015) (Arpert, J.)