Brasher v. Allstate Indemnity Company
Filing
123
REDACTED 122 MEMORANDUM OPINION AND ORDER - For the reasons stated above, the court GRANTS IN PART and DENIES IN PART Allstate's motion to exclude the opinion testimony of Mr. Hatcher and Mr. Wells. (Doc. 75 ). The court DENIES as MOOT Mr. Br asher's motion to exclude to the opinion testimony of Mr. Odom. (Doc. 78 ). The court DENIES as MOOT Mr. Brasher's motion to exclude Mr. Roberts' opinions, to the extent Mr. Brasher challenges the cited portions of her testimony (Doc. 79 ). The court DENIES as MOOT Allstate's motion to exclude paragraphs 6 and 7 of Colby Graff's declaration. (Doc. 72 ). The court DENIES Mr. Brasher's motion to strike paragraphs 9, 10, 11, and 13 of Mr. Odom's declaration. (Doc. 82 ). And the court DENIES Mr. Brasher's motion for class certification. (Doc. 64 ). Signed by Judge Annemarie Carney Axon on 8/12/2020. (KEK)
FILED
2020 Aug-12 PM 02:59
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
DONALD BRASHER, individually }
and on behalf of all others similarly }
}
situated,
}
}
Plaintiff,
}
}
v.
}
}
ALLSTATE INDEMNITY
}
COMPANY,
}
}
Defendant.
Case No.: 4:18-cv-00576-ACA
MEMORANDUM OPINION AND ORDER
A storm damaged Plaintiff Donald Brasher’s home in St. Clair County,
Alabama. Mr. Brasher filed a property damage claim with Defendant Allstate
Indemnity Company (“Allstate”).
Under the terms of Mr. Brasher’s policy,
Allstate settles claims on an “actual cash value” basis.
Allstate denied Mr.
Brasher’s claim because after depreciating the cost of materials and labor, the
actual cash value of Mr. Brasher’s claim was less than his deductible.
Mr. Brasher filed this putative class action lawsuit claiming that by
depreciating labor costs, Allstate breached the terms of his insurance contract and
was unjustly enriched. 1
He seeks to represent similarly situated Allstate
policyholders in Alabama who also had labor depreciation deducted from actual
cash value claim payments.
Pending before the court is Mr. Brasher’s motion for certification of a Rule
23(b)(3) class for breach of contract and appointment of class counsel. (Doc. 64).
In addition, the parties have filed the following motions to exclude the
others’ experts pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993): (1) Allstate’s motion to exclude
the opinion testimony of Chris Hatcher and Jason Wells (doc. 75); (3) Mr.
Brasher’s motion to strike and exclude the opinion testimony of Don Odom (doc.
78); and (3) Mr. Brasher’s motion to exclude the opinion testimony of Victoria
Roberts (doc. 79).
The parties also have filed two other motions to strike the other’s evidence:
(1) Allstate’s motion to strike paragraphs 6 and 7 of Colby Graff’s declaration
(doc. 72) and (2) Mr. Brasher’s motion to strike paragraphs 9, 10, 11, and 13 of
Mr. Odom’s declaration (doc. 82).
The court held a hearing on the motions on June 17, 2020.
Having
considered the parties’ written and oral arguments, the court issues this opinion to
explain why class certification is not appropriate.
1
In his complaint, Mr. Brasher also asserted a conversion claim against Allstate. The
court has dismissed that claim. (Doc. 29).
2
First, with respect to the parties’ evidentiary challenges, the court:
(1) GRANTS in part and DENIES in part Allstate’s motion to exclude the
opinion testimony of Mr. Hatcher and Mr. Wells. (Doc. 75). The court DENIES
as MOOT the motion, to the extent Allstate seeks to exclude Mr. Hatcher’s
opinion that labor should not be depreciated because the court has not considered
this opinion for purposes of ruling on class certification. The court GRANTS the
motion, to the extent Allstate seeks to exclude Mr. Hatcher’s opinion about the
amount of labor depreciation applied to class members’ property damage claims
because the opinion in unreliable. The court GRANTS the motion to exclude Mr.
Wells’ testimony, to the extent his calculations are based on Mr. Hatcher’s
unreliable opinion;
(2) DENIES Mr. Brasher’s motion to exclude the opinion testimony of Mr.
Odom (doc. 78), to the extent Mr. Brasher seeks to exclude the opinion for failure
to provide a written report and DENIES as MOOT the motion, to the extent Mr.
Brasher’s claims the opinions do not pass a Daubert test because the court has not
relied on Mr. Odom as an expert witness for purposes of ruling on class
certification;
(3) DENIES as MOOT Mr. Brasher’s motion to exclude Ms. Roberts’
opinions (doc. 82), to the extent Mr. Brasher challenges the cited portions of her
3
testimony because the court has not relied on those opinions for purposes of ruling
on class certification;
(4) DENIES as MOOT Allstate’s motion to exclude paragraphs 6 and 7 of
Colby Graff’s declaration (doc. 72) because the court has not relied on the disputed
portions of Mr. Graff’s declaration in ruling on class certification; and
(5) DENIES Mr. Brasher’s motion to strike paragraphs 9, 10, 11, and 13 of
Mr. Odom’s declaration (doc. 82) because the declaration does not contain new or
contradictory opinions, and even if it did, Mr. Brasher is not prejudiced by the new
opinions because the court has not relied on the disputed portions of Mr. Odom’s
declaration for purposes of ruling on class certification
Second, the court DENIES Mr. Brasher’s motion for class certification (doc.
64) because Mr. Brasher has not established that common issues predominate over
individual questions as required by Federal Rule of Civil Procedure 23(b)(3).
I.
BACKGROUND
Mr. Brasher purchased a Manufactured Home Policy from Allstate, with an
effective date of May 18, 2014. (Doc. 119-10). Pursuant to the Policy, Allstate
agreed to “pay when a covered loss exceeds the deductible shown on the Policy
Declarations. We will then pay only the excess amount, unless we have indicated
otherwise in this policy.” (Doc. 119-10 at 40). Mr. Brasher’s deductible was
4
$2,500.00, so Allstate would pay for a covered loss to the premises when the loss
exceeded the $2,500.00 deductible. (Doc. 119-10 at 2).
The Policy contains a section titled “How We Pay For a Loss.” (Doc. 11910 at 41). As amended by a Policy Endorsement, this provision of the Policy
provides:
Loss to property insured by this policy under Coverage A – Dwelling
Protection, Coverage B – Other Structures Protection, and
Coverage C – Personal Property Protection will be settled on an
actual cash value basis. This means there may be a deduction for
depreciation. Payment will not exceed the smallest of:
a)
b)
c)
the actual cash value of the damaged, destroyed or stolen
property at the time of loss;
the amount necessary to repair or replace the damaged,
destroyed or stolen property with other of like kind and quality;
or
the limit of liability applicable to the damaged, destroyed or
stolen property.
(Doc. 119-10 at 53) (emphasis in original).
In a document attached to the Policy that outlines the provided coverage,
Allstate explains how it calculates the actual cash value (“ACV”) of a property
damage claim.
(Doc. 119-10 at 11).
If Allstate determines that damage is
“repairable” or a “partial loss,” then Allstate “generally determines ACV through
the method of replacement cost at the time of loss, less depreciation.” (Id.). If
Allstate determines that damage is “non-repairable” or a “total loss,” then Allstate
“may determine ACV through the method of replacement cost at the time of loss,
5
less depreciation, or it may determine ACV by securing and considering a
residential appraisal, which may include an analysis of market value.” (Id.).
The Policy includes a definition section that defines certain terms that appear
in the Policy.
(Doc. 119-10 at 24–25).
Neither “actual cash value” nor
“depreciation” is defined. (See id.).
In November 2014, a storm caused a tree limb to fall on Mr. Brasher’s
property. (Doc. 119-17 at 18–19). The limb damaged Mr. Brasher’s roof, fence,
and bathroom. (Doc. 119-11; Doc. 119-17 at 18–20). Mr. Brasher submitted a
claim to Allstate, and an Allstate adjuster inspected the property for loss and
prepared an estimate for repairs. (Doc. 119-11; Doc. 119-17 at 22–23). Allstate
estimated that repairing Mr. Brasher’s property would cost $5,040.58. (Doc. 11911 at 5).
Allstate calculated the “actual cash value” of Mr. Brasher’s claim by
depreciating materials and non-materials from the repair estimate. Using this
calculation – repair estimate ($5,040.48) minus depreciation ($2,594.51) – Allstate
concluded that the “actual cash value” of the claim ($2,446.07) was less than Mr.
Brasher’s $2,500.00 deductible. (Doc. 119-11 at 5). Therefore, although Allstate
determined that coverage existed for the claim, Mr. Brasher did not receive
payment from Allstate for the repairs because the “actual cash value” was less than
Mr. Brasher’s deductible. (Id.; Doc. 119-19 at 23).
6
Mr. Brasher filed this lawsuit, alleging that by depreciating labor costs from
the actual cash value of his claim, Allstate breached the Policy and was unjustly
enriched. (Doc. 1). Mr. Brasher now seeks to represent the following class of
individuals:
[A]ll Allstate Indemnity Company property insurance policyholders
who submitted a claim for structural property damage in Alabama,
and whose ACV payment was reduced by the withholding of labor
depreciation and who did not receive a subsequent replacement cash
value payment for the amount of that withheld labor depreciation, or
whose claim failed to meet the deductible after labor depreciation was
deducted from the claim estimate, during the time period from
February 28, 2012, to the date of trial. 2
(Doc. 65 at 9).
Members of the proposed class purchased one of the following nine policy
types that Allstate sells in Alabama: (1) Deluxe Homeowners Policy; (2) Deluxe
Plus Homeowners Policy; (3) Standard Homeowners Policy; (4) Deluxe Select
Homeowners Policy; (5) Standard Select Value Homeowners Policy; (6)
Manufactured Home Policy; (7) Standard Mobilehome Policy; (8) Deluxe
Mobilehome Policy; or (9) Landlord Package Policy. (Docs. 119-1; 119-2; 119-3;
119-4; 119-5; 119-6; 119-7; 119-8; 119-9).
2
Certain classes of policyholders are excluded from the class. Relevant to this analysis,
excluded classes include policyholder who received their full policy limits; policyholders who
received a subsequent payment for the RCV that included all amounts withheld for labor
depreciation; and policyholders whose ACV amount does not exceed the deducible amount after
removal of labor depreciation.
7
Seven of the nine policies—the Deluxe Homeowners Policy, the Deluxe
Plus Homeowners Policy, the Standard Homeowners Policy, the Deluxe Select
Homeowners Policy, the Standard Select Value Homeowners Policy, the
Manufactured Home Policy, and the Landlord Package Policy—are commonly
called “replacement cost value” policies or RCV policies. (Docs. 119-1; 119-2;
119-3; 119-4; 119-5; 119-6; 119-9). RCV policies provide an insured with “the
cost of replacement or repair of property covered under the contract.” (Doc. 11919 at 7).
RCV policyholders generally receive payment for covered losses in two
phases. Unless Allstate chooses to make a payment for a covered loss before the
insured repairs, rebuilds, or replaces the damaged property, Allstate first pays a
claim on an “actual cash value” basis. (Doc. 119-1 at 15; Doc. 119-2 at 15–16;
Doc. 119-3 at 12; Doc. 119-4 at 15; Doc. 119-5 at 12; Doc. 119-6 at 18; Doc. 1199 at 13). The RCV policies state that an “actual cash value” payment “means there
will be a deduction for depreciation.” (Doc. 119-1 at 15; Doc. 119-2 at 16; Doc.
119-3 at 12; Doc. 119-4 at 15; Doc. 119-5 at 12; Doc. 119-6 at 18; Doc. 119-9 at
13).
Then, if the insured repairs or replaces the damaged property “within 180
days of the actual cash value payment,” Allstate may make an additional payment
to the insured for the replacement cost if the insured submits a claim for payment
8
in addition to the “actual cash value” amount. (Doc. 119-1 at 15–16; Doc. 119-2 at
16; Doc. 119-3 at 12–13; Doc. 119-4 at 16; Doc. 119-5 at 12–13; Doc. 119-6 at 18;
Doc. 119-9 at 13).
The replacement cost payment includes any amounts
depreciated from the actual cash value payment. (Doc. 119-19 at 41).
Two of the nine policies—the Standard Mobilehome Policy and the Deluxe
Mobilehome Policy—are known as “actual cash value” policies or ACV policies.
(Docs. 119-7; 119-8). An ACV policy “is one that pays actual cash value of
covered damages or loss at the time of settlement with no benefit for replacement
cost recovery, a recovery for depreciation.” (Doc. 119-19 at 7).
The ACV
policies contain a provision stating that “[i]n making an actual value settlement,
payment will not exceed the smallest of the following amounts: a) The actual cash
value at the time of the loss; b) The amount necessary to repair or replace the
damaged property; or c) The limit of liability applying to the property.” (Doc.
119-7 at 9; Doc. 119-8 at 10).
In addition, Allstate offers an ACV endorsement to some of its RCV
policies, which replaces the “replacement cost value” language and states that
losses are settled on an “actual cash value” basis. (Doc. 119-19 at 14). For
example, Mr. Brasher’s policy was a RCV Manufactured Home Policy with an
ACV endorsement. (Doc. 119-10 at 53). Like the ACV policies, Mr. Brasher’s
9
ACV endorsement states that an ACV payment will not exceed the smallest of the
actual cash value, the actual cost of repair, or the limit of liability. (Id.).
When Allstate adjusts a property claim, Allstate calculates the actual cash
value payment “similarly for all policy types.” (Doc. 119-19 at 14). Generally,
Allstate calculates actual cash value by deducting depreciation from the
replacement cost value. (Doc. 119-19 at 24). 3
To make that determination, an Allstate adjuster creates an estimate using
property adjustment software called Xactimate. (Doc. 119-21 at 10–11; Doc. 11919 at 25). Consistent with Allstate’s general practice, Xactimate automatically prepopulates depreciation settings to include depreciation for materials, non-materials,
tax, overhead, and profit. (Doc. 119-19 at 35–37; Doc. 119-41). When selected,
the non-material depreciation setting in Xactimate applies depreciation to three
different costs of a line item: labor, equipment, and market conditions.
(Doc.
119-19 at 48; Doc. 119-25 at 6).
Once an ACV estimate is completed in Xactimate, it is uploaded to
Allstate’s claims processing system. (Doc. 119-19 at 17, 30). The Xactimate ACV
estimate can, but does not always, match the actual ACV payment that a policy
3
If a claim involves a total loss, then Allstate might calculate actual cash value based on
market value or a broad evidence rule. (Doc. 119-19 at 24). But Allstate’s corporate
representative is not aware of any claims in Alabama in which actual cash value was determined
using fair market value. (Id.).
10
holder receives for a covered property damage claim. (Doc. 119-19 at 22, 51–52;
Doc. 119-21 at 19, 22).
II.
EVIDENTIARY CHALLENGES
1.
Daubert Motions
Both parties have proffered experts in support of their respective positions
on class certification, and both parties challenge the admissibility of the other’s
expert testimony. Federal Rule of Evidence 702 and the Supreme Court’s decision
in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), governs
admissibility of expert testimony.
Under Rule 702, a qualified witness may offer expert opinion testimony if:
“(a) the expert’s scientific, technical, or other specialized knowledge will help the
trier of fact to understand the evidence or to determine a fact in issue; (b) the
testimony is based on sufficient facts or data; (c) the testimony is the product of
reliable principles and methods; and (d) the expert has reliably applied the
principles and methods to the facts of the case.” Fed. R. Evid. 702.
“A trial court assessing the reliability of an expert’s evidence” under Rule
702 must “perform a ‘gatekeeping’ function by conducting ‘a preliminary
assessment of whether the reasoning or methodology underlying the testimony is
scientifically valid and of whether that reasoning or methodology properly can be
applied to the facts in issue.’” Hendrix ex rel. G.P. v. Evenflo Co., Inc., 609 F.3d
11
1183, 1194 (11th Cir. 2010) (quoting Daubert, 509 U.S. at 592–93).
The
performance of this function requires courts in this circuit to conduct a “rigorous
three-part inquiry” evaluating whether:
(1) the expert is qualified to testify competently regarding the matters
he intends to address; (2) the methodology by which the expert
reaches his conclusions is sufficiently reliable as determined by the
sort of inquiry mandated in Daubert; and (3) the testimony assists the
trier of fact through the application of scientific, technical, or
specialized expertise, to understand the evidence or to determine a
fact in issue.
Hendrix ex rel. G.P. v. Evenflo Co., Inc., 609 F.3d 1183, 1194 (11th Cir. 2010)
(quoting United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004)).
The Eleventh Circuit has suggested that the district court must engage in a
Daubert analysis if an expert’s testimony is critical to resolving class certification
issues. See Local 703, I.B. of T. Grocery & Food Emps. Welfare Fund v. Regions
Fin. Corp., 762 F.3d 1248, 1258 n. 7 (11th Cir. 2014) (citing Am. Honda Motor
Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010)); Sher v. Raytheon Co., 419 F.
App’x. 887, 890-91 (11th Cir. 2011) (adopting the Seventh Circuit’s American
Honda rationale and vacating a grant of class certification for failure to conduct a
Daubert analysis).
12
a.
Allstate’s Motion to Exclude Testimony of Chris Hatcher and
Jason Wells (Doc. 75)
i.
Chris Hatcher
In support of his motion for class certification, Mr. Brasher relies on expert
testimony from Chris Hatcher concerning the determination of the amounts of
labor depreciation applied to class members’ property damage claims. (Doc. 11924; Doc. 119-25).
Mr. Hatcher is the founder, CEO, and Lead Trainer of Top Adjuster which
specializes in the private training in property adjustment and Xactimate
Certification courses for property insurance professionals. (Doc. 119-25 at 1).
Allstate attacks two of Mr. Hatcher’s opinions. First, Allstate challenges
Mr. Hatcher’s opinion that labor should not be depreciated when calculating actual
cash value. (Doc. 107 at 7, 16–20). This opinion is not necessary to establish a
Rule 23 requirement, and the court has not considered it for purposes of ruling on
the motion for class certification.
Therefore, the court DENIES as MOOT
Allstate’s motion to exclude Mr. Hatcher’s testimony, to the extent Allstate seeks
to exclude Mr. Hatcher’s opinion about whether labor should be depreciated.
Allstate may renew its motion on this basis, if necessary, at a later stage in the
proceeding.
Second, Allstate challenges Mr. Hatcher’s opinion that “through the use of
Xactimate and Next-Gen, it is feasible to determine . . . whether labor depreciation
13
was applied to a particular claim and to calculate what the ACV amount, if any,
would have been for policyholders had Allstate not depreciated labor costs.” (Doc.
107 at 20–21) (quoting Doc. 119-25 at 10). Allstate argues that this opinion is not
reliable. The court agrees.
The non-material depreciation setting in Xactimate is comprised of three
components: labor, equipment costs, and market conditions. (Doc. 119-24 at 20;
Doc. 119-25 at 6). Xactimate does not separate labor depreciation from equipment
costs and market conditions depreciation, and a user is unable to turn off a labor
depreciation component of the non-material depreciation category because it does
not exist. (Doc. 119-24 at 20-21, 26–27). Therefore, Mr. Hatcher is unable to use
Xactimate to identify the amount of labor depreciation for any class claim and
isolate that value from depreciation for equipment and market conditions to
determine what a policy holder’s ACV payment would have been but for the
depreciated labor cost.
Mr. Brasher responds that in Mr. Hatcher’s opinion, “non-material
depreciation is entirely labor cost.” (Doc. 91-1 at 13) (citing Doc. 119-25 at 6).
However, this opinion is unreliable as well.
Mr. Hatcher states that non-material depreciation is exclusively labor cost
because both equipment and market conditions are rarely used by field adjusters
and estimators, and if they are, would be very small amounts and are almost never
14
depreciated. (Doc. 119-25 at 6). Mr. Hatcher bases this conclusion on 20 years of
experience as a field adjuster for various insurance companies and his “spot check”
of six sample class claims.
(Doc. 119-24 at 3–5, 21, 25–26). But both of these
methodologies are inadequate to support the conclusion that non-material
depreciation is exclusively labor depreciation.
Although Mr. Hatcher has two decades of experience adjusting property
insurance claims, Mr. Hatcher has never adjusted claims for Allstate and cannot
“speak to what Allstate does” with respect to equipment costs and market
conditions components of non-material depreciation.
(Doc. 119-24 at 21).
Accordingly, Mr. Hatcher cannot provide a reliable opinion about how frequently
or infrequently Allstate adjusters depreciate equipment costs and market
conditions.
With respect to the “spot check” of sample claims, Mr. Hatcher reviewed 44
sample class claims. (Doc. 119-24 at 23). Of those 44 claims, 23 had depreciation
applied. (Doc. 119-24 at 23–24). Of the 23 claims that had depreciation applied,
Mr. Hatcher states that six had zero values for market conditions and equipment
depreciation. (Doc. 119-24 at 25–26). Mr. Hatcher “took that to mean that none of
[the class claims] had” market conditions and equipment depreciation applied.
(Doc. 119-24 at 25). This conclusion is problematic for at least two reasons.
15
First, Mr. Hatcher’s own testimony undermines his ability to quantify the
specific value assigned to any of the three components of non-material
depreciation for the claims he reviewed. For example, Mr. Hatcher stated that the
reports he examined did not isolate labor depreciation from the other non-material
components. (Doc. 119-24 at 26). In fact, Mr. Hatcher testified that the only way
to isolate the labor component from equipment and market conditions and confirm
those amounts is for Xactware, Xactimate’s parent company, to provide that
information which has not been done for the class claims in this case. (Doc. 11924 at 26–27).
Therefore, Mr. Hatcher does not adequately explain how he was
able to conclude that six of the sample claims had zero values for market
conditions and equipment depreciation.
This analytical gap compromises the
reliability of Mr. Hatcher’s conclusion.
Second, and independently, a finding that approximately 25% of the sample
claims where depreciation was applied (six of 23) did not have values for
equipment and market conditions cannot meaningfully predict that the remaining
75% of the claims (17 of 23) likewise would have zero values for those nonmaterial depreciation components. Moreover, Mr. Hatcher offers no basis for his
assumption that the claims he reviewed are representative of the class claims.
Mr. Brasher contends that if Mr. Hatcher had data for the class claims from
Xactware in the company’s proprietary .ESX format, then Mr. Hatcher could run a
16
variation report and identify any claims that had market conditions and equipment
depreciation applied. (Doc. 91-1 at 15) (citing Doc. 119-24 at 21). However, this
assertion is belied by Mr. Hatcher’s own testimony that the .ESX data does not
contain labor depreciation amounts, only non-material depreciation. (Doc. 119-24
at 25). And again, by Mr. Hatcher’s own admission, non-material depreciation
includes labor and two other components. Therefore, even if he had the .ESX files,
Mr. Hatcher could not determine the amount of labor depreciation applied to each
claim.
This leaves Mr. Hatcher’s opinion that Xactware has the ability to isolate the
amount of labor depreciation applied on a particular claim. (Doc. 119-24 at 25).
Mr. Hatcher’s opinion is based exclusively on the representations made by an
Xactware employee. (Doc. 119-24 at 25, 29). But this hearsay statement is
undermined by other undisputed evidence. For instance, Mr. Hatcher testified that
despite having the purported ability to provide labor depreciation amounts for the
class claims, Mr. Hatcher has not asked Xactware to do so, and he personally is
unaware if the company ever has done so. (Doc. 119-24 at 25). In addition, the
hearsay statement lacks reliability because as Mr. Hatcher acknowledges, the .ESX
Xactimate files that contain raw data do not isolate labor depreciation amounts
from equipment costs and market conditions. (Doc. 119-24 at 25). And Mr.
Hatcher offers no evidence about his contact’s familiarity with Xactimate files or
17
on what basis this individual claims that Xactware can provide isolated labor
amounts when the company’s files do not identify that information.
Because Mr. Hatcher’s opinions about the amount of labor depreciation
applied to the class members’ property damage claims do not pass Daubert muster,
the court GRANTS Allstate’s motion to exclude Mr. Hatcher’s testimony on that
basis.
ii.
Jason Wells
In support of his motion for class certification, Mr. Brasher relies on opinion
testimony from certified public accountant Jason Wells regarding a formula for the
determination of the class members’ economic damages. (Doc. 119-26 at 5; Doc.
119-27 at 1).
Allstate argues that Mr. Wells’ calculations are unreliable because his
opinion is based on Mr. Hatcher’s unreliable opinion. (Doc. 107 at 28–30). The
court agrees.
In creating his formula and calculating the amount of economic damages for
sample class claims, Mr. Wells relied on Mr. Hatcher’s report and opinion that
non-material depreciation is entirely labor cost. (Doc. 119-27 at 2). In addition,
Mr. Wells relied on Mr. Hatcher’s report for the labor depreciation numbers that he
included in his calculations. (Doc. 119-26 at 5–6).
18
Because the court has found that Mr. Hatcher’s opinion about the amount of
labor depreciation of each class claim is unreliable, Mr. Wells’ opinion also is
inadmissible. See Rink v. Cheminova, Inc., 400 F.3d 1286, 1294 (11th Cir. 2005)
(affirming district court’s exclusion of expert testimony when that testimony was
based on unreliable opinions of another expert).
Therefore, the court GRANTS Allstate’s motion to exclude Mr. Wells’
testimony, to the extent it is based on Mr. Hatcher’s unreliable opinion. 4
b.
Mr. Brasher’s Motion to Exclude Expert Opinions and
Testimony of Don Odom (Doc. 78)
Don Odom is Allstate’s corporate representative. Mr. Brasher deposed Mr.
Odom in that capacity on September 26, 2019. (Doc. 119-19). On December 13,
2019, Allstate designated Mr. Odom as a non-retained expert and stated that he is
expected “to testify as to the facts and opinions expressed in his deposition and
within the scope of topics in his deposition notice, including but not limited to the
individual nature of RCV claims and Allstate’s inability to identify labor
depreciation.” (Doc. 119-28 at 2).
Mr. Brasher seeks to exclude Mr. Odom’s opinion testimony on two
grounds. First, Mr. Brasher argues that Mr. Odom does not qualify as a non4
Allstate also argues that Mr. Wells’ opinion concerning a class members’ date of loss
for purposes of calculating interest on any damages award lacks a reliable methodology. (Doc.
107 at 27–28. The court need not resolve that issue because Mr. Wells’ formula for calculating
the amount of damages is unreliable as it based on Mr. Hatcher’s unreliable labor depreciation
figures.
19
retained expert pursuant to Federal Rule of Civil Procedure 26(a)(2)(C) and
therefore, the court should exclude his opinion testimony because he failed to
provide a written report. (Doc. 78-2 at 10–15). Second, Mr. Brasher argues that
Mr. Odom’s purported opinion testimony does not satisfy a Daubert analysis.
(Doc. 78-2 at 15–25).
The court is not persuaded by Mr. Brasher’s first argument. Federal Rule of
Civil Procedure 26(a)(2) requires that an expert provide a report “if the witness is
one retained or specially employed to provide expert testimony in the case or one
whose duties as the party’s employee regularly involve giving expert testimony.”
Fed. R. Civ. P. 26(a)(2)(B). Mr. Odom is not specially employed or retained to
provide expert testimony in this case, and his duties as an Allstate employee do not
regularly involve giving expert testimony. (See Doc. 119-19 at 3, 5). Accordingly,
the court will not exclude Mr. Odom’s purported opinion testimony for failure to
provide a written report.
As to Mr. Brasher’s second argument that Mr. Odom’s opinions do not pass
a Daubert test, the court need not address the issue at this stage because the court
has not relied on any opinions from Mr. Odom for purposes of ruling on class
certification. The court has relied only on Mr. Odom’s fact testimony in his
capacity as Allstate’s corporate representative.
20
Therefore, the court DENIES Mr. Brasher’s motion to exclude Mr. Odom’s
opinion testimony for failure to provide a written report. The court DENIES as
MOOT Mr. Brasher’s motion to exclude Mr. Odom’s opinion testimony, to the
extent he challenges the testimony under Daubert. Mr. Brasher may renew his
Daubert challenges to Mr. Odom’s testimony, if necessary, at a later stage in these
proceedings.
c.
Mr. Brasher’s Motion to Exclude Expert Opinions and
Testimony of Victoria Roberts (Doc. 77)
In opposition to class certification, Allstate relies on the opinions of Victoria
Roberts. (Doc. 119-30).
Ms. Roberts is an attorney and principal at Roberts Claim Consultants, LLC
in Scottsdale, Arizona. Allstate hired Ms. Roberts “to review and provide opinions
as to whether Allstate’s investigation, evaluation, and handling of Donald
Brasher’s property damage claim is consistent with industry standards” and “to
look at what kind of review would be required to retroactively look at thousands of
claims tendered under both Actual Cash Value and Replacement Cost Value
policies in order to re-calculate Actual Cash Value if labor was not depreciated.”
(Doc. 119-30 at 1). Ms. Roberts also examined “whether Allstate’s claim handling
practices were reasonable and complied with industry standards.” (Doc. 119-30 at
1).
21
In its brief in opposition to class certification, Allstate cites Ms. Roberts’
report or testimony only four times. (Doc. 74 at 11, 13, 15, 20). In ruling on class
certification, the court has not relied on any of the cited testimony from Ms.
Roberts. Accordingly, the court DENIES as MOOT Mr. Brasher’s motion to
exclude Ms. Roberts testimony, to the extent he asks the court to exclude the
portions of Ms. Roberts’ testimony upon which Allstate relies to oppose class
certification.
Mr. Brasher may renew his Daubert challenge to Ms. Roberts’
opinions, if necessary, at a later stage in these proceedings.
2.
Motions to Strike
a.
Allstate’s Motion to Strike Paragraphs 6 and 7 of Colby
Graff’s Declaration (Doc. 72)
In support of his motion for class certification, Mr. Brasher submitted a
declaration from Colby Graff, an Account Manager for Xactware. (Doc. 119-32).
Allstate moves to strike paragraphs 6 and 7 of Mr. Graff’s declaration.
(Doc. 72). The court has not relied on the challenged portions of Mr. Graff’s
declaration for purposes of resolving Mr. Brasher’s motion for class certification.
Therefore, the court DENIES as MOOT Allstate’s motion to strike paragraphs 6
and 7 of Mr. Graff’s declaration.
22
b.
Mr. Brasher’s Motion to Strike Paragraphs 9, 10, 11, and 13
of Don Odom’s Declaration
In support of its opposition to class certification, Allstate submitted a
declaration from Mr. Odom. (Doc. 119-31).
Mr. Brasher moves to strike paragraphs 9, 10, 11, and 13 of Mr. Odom’s
declaration because he claims that these paragraphs contain new, distinct, and
contradictory opinions.
(Doc. 85-2 at 3–10).
Mr. Brasher also claims he is
prejudiced by Mr. Odom’s declaration. (Doc. 85-2 at 10–12).
Having carefully reviewed Mr. Odom’s deposition and his declaration, the
court finds that Mr. Odom’s declaration does not offer new, distinct, or
contradictory opinions. Rather, Mr. Odom offers additional detail that clarifies the
substance of his deposition testimony. Nevertheless, the court has not relied on the
challenged portions of Mr. Odom’s declaration for purposes of ruling on class
certification. Therefore, even if the declaration contains new or contradictory
opinions, Mr. Brasher is not prejudiced at this juncture by the opinions.
Accordingly, the court DENIES as MOOT Mr. Brasher’s motion to strike
paragraphs 9, 10, 11, and 13 of Mr. Odom’s declaration. Again, Mr. Brasher may
renew specific challenges to Mr. Odom’s opinions, if necessary, at a later stage in
these proceedings.
23
III.
CLASS CERTIFICATION
Federal Rule of Civil Procedure 23 governs the standard for class
certification. “As an initial matter, a plaintiff seeking to represent a proposed class
must demonstrate that the class is ‘adequately defined and clearly ascertainable.’”
Sellers v. Rushmore Loan Mgmt. Servs., LLC, 941 F.3d 1031, 1039 (11th Cir.
2019) (quoting Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir.
2012)). The class representative must then satisfy the four Rule 23(a) prerequisites
by demonstrating that: “(1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of law or fact common to the class; (3) the
claims or defenses of the representative parties are typical of the claims or defenses
of the class; and (4) the representative parties will fairly and adequately protect the
interests of the class.” Id.
In addition to meeting the Rule 23(a) requirements, “the plaintiff must show
that the proposed class satisfies at least one of the class types under Rule 23(b).”
Sellers, 941 F.3d at 1039.
Mr. Brasher seeks class certification under Rule
23(b)(2), which requires that “the questions of law or fact common to class
members predominate over any questions affecting only individual members, and
that a class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).
24
As the party seeking class certification, Mr. Brasher has the burden of
proving “that the requirements [of Rule 23] are ‘in fact’ satisfied.” Brown v.
Electrolux Home Prods., Inc., 817 F.3d 1225, 1234 (11th Cir. 2016) (quoting
Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013)). “[I]f doubts remain about
whether the standard is satisfied,” then the court should deny class certification.
Id. at 1233.
The court’s analysis of the Rule 23 factors “will frequently entail overlap
with the merits of the plaintiff’s underlying claim.” Comcast Corp., 569 U.S. at
33–34 (quotation marks omitted); see Valley Drug Co. v. Geneva Pharmaceuticals,
Inc., 350 F.3d 1181, 1188 (11th Cir. 2003) (“Although the trial court should not
determine the merits of the plaintiffs’ claim at the class certification stage, the trial
court can and should consider the merits of the case to the degree necessary to
determine whether the requirements of Rule 23 will be satisfied.”). For example,
“if a question of law or fact is relevant to [the Rule 23] determination, then the
district court has a duty to actually decide it and not accept it as true or construe it
in anyone’s factor.” Brown, 817 F.3d at 1234 (emphasis omitted).
As explained below, Mr. Brasher cannot establish that common issues
predominate over individual questions. Therefore, the court begins and ends its
inquiry into the propriety of class certification with a predominance analysis under
Rule 23(b)(3).
25
Rule 23(b)(3) requires the court “to consider whether the issues in the class
action that are subject to generalized proof and thus applicable to the class as a
whole, . . . predominate over those issues that are subject only to individualized
proof.” Sellers, 941 F.3d at 1040 (quotations omitted). “To determine whether the
requirement of predominance is satisfied, a district court must first identify the
parties’ claims and defenses and their elements.” Brown, 817 F.3d at 1234. “The
district court should then classify these issues as common questions or individual
questions by predicting how the parties will prove them at trial.” Id. “Common
questions are ones where the same evidence will suffice for each member, and
individual questions are ones where the evidence will vary from member to
member.” Id. (quotations and alteration omitted).
“After identifying the common and individual questions, the district court
should determine whether the common questions predominate over the individual
ones.” Brown, 817 F.3d at 1234–35. “Common issues can predominate only if
they have a direct impact on every class member’s effort to establish liability that
is more substantial than the impact of individualized issues in resolving the claim
or claims of each class member.” Carriuolo v. Gen. Motors Co., 823 F.3d 977,
985 (11th Cir. 2016) (quotations omitted). Alternatively, “common issues will not
predominate over individual questions if, as a practical matter, the resolution of an
26
overarching common issue breaks down into an unmanageable variety of
individual legal and factual issues.” Id. (quotations omitted).
As an initial matter, when examining whether class treatment is proper for
breach of contract claims, the Eleventh Circuit has “required at the threshold that
all of the subject contracts be ‘materially similar.’” Sacred Heart Health Sys., Inc.
v. Humana Military Healthcare Servs., Inc., 601 F.3d 1159, 1171 (11th Cir. 2010)
(quoting Allapattah Servs., Inc., v. Exxon Corp., 333 F.3d 1248, 1261 (11th Cir.
2003)).
Allstate claims that Mr. Brasher cannot establish that the nine policies at
issue are “materially similar” because seven of the nine policies are “replacement
cost value” policies; two of the policies are “actual cost value” policies; and some,
like Mr. Brasher’s, are “replacement cost value” policies with “actual cash value”
endorsements. (Doc. 74 at 31). Still, all of the policies at issue state that payments
for covered property losses will be paid “on an actual cash value basis,” and none
define the terms “actual cash basis” or “depreciation.” (Doc. 119-1 at 15; Doc.
119-2 at 15–16; Doc. 119-3 at 12; Doc. 119-4 at 15; Doc. 119-5 at 12; Doc. 119-6
at 18; Doc. 119-7 at 9; Doc. 119-8 at 10; Doc. 119-9 at 13). And all of the
potential class policies include identical language concerning actual cash value
payments for covered losses. Therefore, as it relates to the general allegation that
Allstate breached the policies by depreciating labor costs from the actual cash
27
value payments due under the policies, the operative provisions are materially
similar and do not vary in substance.
But despite the materially similar language concerning actual cash value
payments under the policies, it is clear that the individual inquiries necessary to
establishing both the elements and defenses of the breach of contract claim
preclude certification of Mr. Brasher’s proposed class.
The class breach of contract claim requires proof of four elements: “(1) the
existence of a valid contract binding the parties in the action, (2) his own
performance under the contract, (3) the defendant’s nonperformance, and (4)
damages.” City of Gadsden v. Harbin, 148 So. 3d 690, 696 (Ala. 2013).
Mr. Brasher submitted no evidence or argument about whether the first and
second elements of the breach of contract claim involve common or individual
questions. Whether a class member had a valid policy in effect at the time he or
she filed a property damage claim cannot be established through generalized proof.
In addition, the inquiry into whether class members can establish their own
performance under the relevant contract would almost certainly be an
individualized one. Therefore, the first two elements of the breach of contract are
individual issues.
With respect to the third element of the class claim, Mr. Brasher first
contends that the policies can be examined at once to determine if the actual cash
28
value payment provision in each policy is ambiguous under Alabama law. Mr.
Brasher contends next that he can prove Allstate’s breach of the relevant policies
on a class-wide basis through generalized proof of Allstate’s common practice of
labor depreciation. (Doc. 67 at 33–34). The court has doubts about the merits of
these arguments. Although Allstate’s general practice is to depreciate labor (see
doc. 119-19 at 36), evidence before the court demonstrates that Allstate does not
always do so (doc. 119-19 at 36, 38, 52). Because Allstate might not always apply
depreciation to claims, it is questionable whether common proof exists to establish
that Allstate breached every class policy. Moreover, even if breach is a common
question, a number of individual questions so clearly predominate over this issue
that class certification is not appropriate.
The first individual questions relate to damages. Although individualized
damages do not always defeat predominance, they can, if, as here “computing them
will be so complex, fact-specific, and difficult that the burden on the court system
would be simply intolerable.” Brown, 817 F.3d at 1240 (quotation marks omitted).
The first hurdle for Mr. Brasher is that his damages model does not
“establish that damages are capable of measurement on a classwide basis.”
Comcast Corp., 569 U.S. at 34. If class members were to prevail on their breach
of contract claims, they would only be entitled to damages resulting from
depreciated labor costs. As explained above, Mr. Brasher’s damages model is
29
based on Mr. Hatcher’s unreliable opinion that non-material depreciation consists
entirely of labor cost and on Mr. Wells’ calculations based on Mr. Hatcher’s
methodology. See supra pp. 13–19. Because Mr. Brasher has not shown that he
can isolate the amount of labor depreciation withheld from each class claim, he has
offered no “formula . . . or other easy or essentially mechanical method” for
computing damages.
Sacred Heart, 601 F.3d at 1179 (quotation omitted).
Therefore, under the circumstances of this case, individualized damages are too
complex to give way to any common issues.
Moreover, even if the court were to accept Mr. Hatcher’s opinion that nonmaterial depreciation is exclusively labor cost, individual damage issues would
arise with respect to class members who filed claims based on estimates completed
before 2013 or 2014. Prior to 2013 or 2014, Allstate used a version of Xactimate
that did not have separate settings for material and non-material depreciation.
(Doc. 119-31 at ¶ 12). Mr. Hatcher’s proposed damages model determines the
amount of labor depreciation in each claim by comparing estimates in Xactimate
with and without the non-material depreciation setting applied. (Doc. 119-25 at 7–
8). Thus, even if Mr. Hatcher’s methodology for determining labor depreciation
was reliable, his methodology would not identify the labor depreciation amounts
for class members who filed property damage claims while Allstate used the
previous version of Xactimate that contained only one depreciation setting.
30
The second hurdle for Mr. Brasher is that for class members who had ACV
policies or for class members with ACV endorsements to RCV policies, individual
questions arise concerning whether, and to what extent, these policyholders
suffered damage for any alleged breach of contract. Citing Mr. Brasher’s policy,
Allstate claims that individualized analysis is required because its obligation under
the ACV policies and ACV endorsements is limited to a calculation based on the
“amount necessary to repair or replace the property with like kind and quality.”
(Doc. 74 at 27) (citing Doc. 119-10 at 53). 5 This language appears on the policy
endorsement page to Mr. Brasher’s policy. The provision states that the actual
cash value payment “will not exceed the smallest of: a) the actual cash value of the
damaged, destroyed or stolen property at the time of loss; b) the amount necessary
to repair or replace the damaged, destroyed or stolen property with other of like
kind and quality; or c) the limit of liability applicable to the damaged, destroyed or
stolen property.” (Doc. 119-10 at 53)
5
Allstate argues that the issue concerns the class members’ ability to establish breach or
alternatively, that the issue relates to Allstate’s defense that it paid a policy holder’s full cost of
repair. (Doc. 74 at 26–27, 30). The court disagrees. The court finds that the issue is properly
characterized as one of damages. If depreciating labor costs is wrongful under Alabama law, then
Allstate breached the terms of the policies by depreciating those amounts from policy holders’
ACV payments. The question is whether an ACV policyholder was damaged by the breach. As
stated below, if a class member had an ACV policy or an ACV endorsement and completed
repairs for less than the amount of his or her ACV payment, then the class member cannot
establish the fourth element of the breach of contract claim. Regardless of how the issue is
framed, the result is the same: the question involves an individual inquiry.
31
This language is identical to that contained in the two ACV policies. Both
the Standard Mobilehome Policy and the Deluxe Mobilehome Policy state that
“[i]n making an actual value settlement, payment will not exceed the smallest of
the following amounts: a) The actual cash value at the time of the loss; b) The
amount necessary to repair or replace the damaged property; or c) The limit of
liability applying to the property.” (Doc. 119-7 at 9; Doc. 119-8 at 10).
Because the proposed class excludes policy holders who received policy
limits, policy holders with ACV policies or ACV endorsements to RCV policies
would be limited to recovering either the actual cash value of the amount necessary
to repair or replace their property. Thus, assuming that depreciating labor breaches
the policies, if a class member with one of these policies made repairs for less than
their ACV payment, then the class member would unable to establish damage
caused by the breach. This inquiry into whether these class members made repairs
and for what amount is an individual damages issue, which combined with Mr.
Brasher’s lack of a reliable damages model, precludes class certification.
Another individual issue arises with respect to Allstate’s defenses to the
breach of contract claim.
“[I]ndividual affirmative defenses generally do not
defeat predominance,” but they can if they “raise complex, individual questions” or
if they are “coupled with several other individual questions.” Brown, 817 F.3d at
1240–41; see also Sacred Heart, 601 F.3d at 1170 (“[I]f the defendant has non32
frivolous defenses to liability that are unique to individual class members, any
common questions may well be submerged by individual ones.”). To make that
determination, the court must consider “the type of evidence that the parties will
submit to prove and disprove” a particular defense. Id. at 1240.
Allstate contends that it intends to raise the following affirmative defenses
against every class member: accord and satisfaction, offset, set off, and
recoupment. (Doc. 74 at 30). Allstate has not explained how offset, set off, and
recoupment apply to the class breach of contract claim. However, to the extent
offset, set off, and recoupment are non-frivolous affirmative defenses, these
defenses would require individual proof about whether Allstate undertook a joint
obligation with respect to a class member which would entitle Allstate to an offset
or set off or whether the circumstances surrounding an individual class member’s
property damage claim demonstrates that Allstate is entitled to recoup an amount
of damages based on some reciprocal obligation that the class member owes to
Allstate.
Allstate’s accord and satisfaction affirmative defense likewise is an
individual question.
Under Alabama law, “[a]n accord and satisfaction is an
agreement reached between competent parties regarding payment of a debt the
amount of which is in dispute. There can be no accord and satisfaction without the
intentional relinquishment of a known right.”
33
Newson v. Protective Indus. Ins.
Co. of Ala., 890 So. 2d 81, 87 (Ala. 2003). “Like any other contract, a valid accord
and satisfaction requires consideration and a meeting of the minds regarding the
subject matter.” Id. Allstate’s accord and satisfaction defense would require an
individual inquiry into any agreement that a class member reached with Allstate
concerning the ACV payment that Allstate owed to the class member. In addition,
individual proof would be required to establish that a class member knowingly
relinquished his or her right to recover some other amount to which he or she
otherwise would have been entitled but for the agreement.
In sum, the court cannot find that any common issues regarding the class
members’ ability to establish liability predominate over the individual issues
concerning the existence of valid contracts; class members’ own performance
under the policies; class members’ damages; and Allstate’s affirmative defenses.
Accordingly, Mr. Brasher cannot establish that the class breach of contract claim
satisfies Rule 23(b)(2)’s predominance requirement.
IV.
CONCLUSION
For the reasons stated above, the court GRANTS IN PART and DENIES
IN PART Allstate’s motion to exclude the opinion testimony of Mr. Hatcher and
Mr. Wells. (Doc. 75). The court DENIES as MOOT Mr. Brasher’s motion to
exclude to the opinion testimony of Mr. Odom. (Doc. 78). The court DENIES as
MOOT Mr. Brasher’s motion to exclude Mr. Roberts’ opinions, to the extent Mr.
34
Brasher challenges the cited portions of her testimony (Doc. 79).
The court
DENIES as MOOT Allstate’s motion to exclude paragraphs 6 and 7 of Colby
Graff’s declaration. (Doc. 72). The court DENIES Mr. Brasher’s motion to strike
paragraphs 9, 10, 11, and 13 of Mr. Odom’s declaration. (Doc. 82).
And the court DENIES Mr. Brasher’s motion for class certification. (Doc.
64).
DONE and ORDERED this August 12, 2020.
_________________________________
ANNEMARIE CARNEY AXON
UNITED STATES DISTRICT JUDGE
35
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?