The court denied the insurer's motion to strike the insureds' expert witnesses, and denied the insurer's motion to dismiss all claims raised under the state's unfair claims settlement act. Gerstman v. Crestbrook Ins. Co., 2025 U.S. Dist. LEXIS 108705 (N.D. Tex. June 9, 2025).
The insureds' property suffered damage when, during a hail and wind storm, a tree branch fell onto the property. The insureds made a claim with their insurer, Crestbrook Insurance Company. Crestbrook inspected the property and estimated damages totalling $6,061.68. Because the sum was less than the $25,000 deductible, Crestbrook did not make a payment.
The insureds hired a public adjuster who estimated repair costs totalling $137,545.19, including a full replacement of the roof. Crestbrook then reinspected and increased the damage estimate to $10,093.45, which was still below the deductible.
The insureds sued asserting breach of contract, violations of the Texas unfair claims settlement act, and bad faith. The insureds alleged that the actual amount of damage to the property was misrepresented in order to keep the amount of covered damage below the policy deductible. Crestbrook moved to strike the insureds' two experts, Dr. Neil Hall and Kevin Funsch, and for summary judgment.
Crestbrook moved to strike Dr. Hall's opinions because they were irrelevant. Dr. Hall's opinion regarding the full replacement of the roof should be excluded because it was unreliable and lacked a clear or verifiable methodology. The court disagreed. Because the insureds had to prove that there was covered damage to the property, Dr. Hall's opinions regarding the cause of the damage were relevant. His opinions would assist the jury to understand the evidence or to determine a fact in issue. The court was also satisfied that the insureds had shown that the opinions at issue were reliable. Crestbrook's motion to strike the opinions and testimony of Dr. Hall was denied.
Crestbrook contended that the insureds' second expert had opinions related to the full replacement of the roof which were irrelevant because they would not assist the jury in determining whether Crestbrook underpaid the claim. Crestbrook maintained that Funsch's opinions were unreliable insofar as they relied on Dr. Hall's opinion that the roof may need to be completely replaced if there were not sufficient matching tiles with which to replace the damaged tiles. The court disagreed. Because there remained a genuine issue of fact as to whether Crestbrook was required to pay the cost of replacing the entire roof in the absence of availability of matching tiles, Funsch's estimate regarding the cost of replacing the roof was relevant. Funsch's opinions were also reliable because he included in his damages calculation the cost of replacing the roof based on Dr. Hall's opinion that the entire roof may need to be replaced.
Crestbrook next argued it was entitled to summary judgment on the insureds' breach of contract claim because the evidence was insufficient to establish that Crestbrook breached the policy by declining to pay the insureds' claim. Crestbrook contended that the insureds could not prove that their damage exceeded the policy deductible. The policy provided that, in the event of a covered loss to the insured dwelling, Crestbrook would "pay the cost of repair or replacement." The policy also stated that the insureds agreed to "repair or replace the Dwelling with materials of like kind and quality on the Residence Premises." The parties disputed whether replacement tiles that did not match the other tiles on the roof were materials of "like kind and quality." Whether this phrase required that the roof tiles be uniform in colour was a genuine dispute and prevented Crestbrook's motion for summary judgment dismissing the insureds' breach of contract claim.
Crestbrook was granted summary judgment on the bad faith claim because there was a bona fide coverage dispute. Nevertheless, two claims under the Texas unfair claims settlement act survived summary judgment. First, the claim that Crestbrook failed to provide a prompt and reasonable explanation of the basis in the policy for underpayment and denial of the claim survived. Second, the claim that Crestbrook failed within a reasonable time to affirm or deny coverage of a claim was not dismissed on summary judgment.