January 2006 Bad Faith Cases: Claims Adjuster Permitted to Testify as Bad Faith Expert For Plaintiff Subject to Certain Litimations (Western District)

In Gallatin Fuels, Inc. v. Westchester Fire Ins. Co., a loss payee sought payment for mining equipment that was destroyed or rendered unrecoverable when the mine in which it was being used returned to its natural water level because the power to the mine was shut off after the insured failed to pay outstanding utility bills.  Plaintiff, who was a named loss payee under the policy, also alleged bad faith against the insurer.  The Court was presented with the issue of whether to allow a claims adjuster to testify as an expert on bad faith for the plaintiff.  The Court ruled that the adjuster could testify concerning: insurance claims procedures; whether or not the insurer had a reasonable basis for denying the loss payee’s claim; and as to whether or not the carrier had complied with various insurance statutes (which were not directly at issue in this case), and other industry customs and standards.  The expert could not: testify as to whether the loss payee’s loss was actually covered by the policy; give his opinion as to the insurer’s subjective intent; nor could he give his opinion as to the ultimate issue in the case — the insurer’s bad faith.  The Court reasoned that these impermissible areas of testimony would involve the offering of legal conclusions which would not assist the jury, because purely legal questions would be outside the expert’s area of expertise, and would concern subjective intent (“An expert simply is not in any better position than the jury to assess another’s subjective intent”).  The remainder of the testimony would be within the specialized knowledge of the adjuster and helpful to the jury, and therefore it was allowed.
Date of Decision: January 18, 2006
Gallatin Fuels, Inc. v. Westchester Fire Ins. Co., United States District Court for the Western District of PA, No. 03-cv-1552, 410 F. Supp. 2d 417, 2006 U.S. Dist. LEXIS 1538 (W.D. Pa. January 18, 2006) (Ambrose, J.)