Hatch v. State Farm Fire & Casualty Co.

930 P.2d 382 (1997)

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Nature of the Case

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Facts

A fire was discovered in the basement of D's house about 2:00 a.m. on August 4, 1987. The fire started in the southwest corner of the house. Gasoline was found in carpet samples after the fire. The nearest source of ignition was a wood-burning stove fifteen feet away which had a hot firebox twelve inches off the floor. Firemen found a gasoline container in the garage, lying on its edge under a chair, with the broadside against the garage wall. An explanation for how gasoline was detected in the basement was that the family dog knocked the gas can over and the contents ran through a crack in the garage floor, down the outside of the basement wall, then under the wall and into the basement. D denied the insurance claim and P was charged with arson. A jury returned a not guilty verdict. Ps then sued Ds for a breach of good faith and fair dealing with respect to Ps’ policy claims and for intentional infliction of emotional distress. During their case in chief, Ps offered the discovery deposition testimony of an expert witness, Carrol M. Cloyd (Cloyd), because Cloyd had died before the trial. Cloyd had been qualified as an expert on insurance industry standards for good faith and fair dealing in the investigation and handling of insurance claims. Cloyd had identified thirteen areas in which, in his opinion, D failed to meet the industry standards for investigation and handling of Ps’ claim. His testimony was relied upon to demonstrate that D's investigation and handling of the claim did not comply with industry standards. The court summarized and then excluded ten of the thirteen areas of Cloyd's testimony. The court ruled that the testimony was beyond Cloyd's area of expertise because he had not been qualified to testify on the severity of emotional distress and no foundation had been laid to demonstrate that he was an expert in arson, nor had there been available to him the opinions of other experts in that area when he testified. The jury found for Ds and Ps appealed.