In Coates v. Metropolitan Property and Casualty Insurance Company, the District Court of the Eastern District of Pennsylvania addressed a situation where an insured attempted to name his public adjuster (“PA”) as an expert to testify to the cause of a property damage loss and coverage under the policy. In granting the insurer’s motion in limine to preclude the PA’s report and testimony, the judge found that while the PA meet the “qualification” prong under FRE 702, he failed to meet the “reliability” and “fit” prongs. Accordingly, the PA’s report and testimony were barred.

The loss at issue in this case was the failure of a retaining wall, which collapsed after being struck by a skid steer operated by plaintiff. The insurer denied plaintiff’s claim on the basis that the loss was not covered under the wear and tear exclusion as well as the earth movement exclusion of the policy. In its denial, the insured relied upon a report from an engineer, who inspected the wall and found that it failed due to its age, wear and tear, exposure, lack of a proper drainage system, decay, and lack of proper maintenance. Plaintiff sued the insurer, arguing that the collision with the skid steer was the root cause of the collapse. Plaintiff relied on the report of his PA, who opined that the cause of damage to the wall was the vehicle impact and that such a cause was covered under the policy. The PA had the following qualifications to render his opinion: he was licensed as a PA in multiple states, he was a contractor specializing in building and repairing retaining walls, he earned a “Retaining Wall Builder of the Year” award from a retaining wall manufacturer, he worked as an insurance inspector and an apprentice home inspector, he was certified as a restoration technician for water damage, and he was a member of the American Association of Public Insurance Adjusters.

During discovery, the insurer took the deposition of the PA. While testifying, he acknowledged that he is not a licensed engineer or architect, that he has no professional licenses, that he did not sign an expert witness agreement, and that he is not qualified to offer an opinion as a professional engineer. He further testified that his expertise was in understanding the insurance process as a public adjuster and actually rebuilding walls that were built improperly and building new walls that have failed. Based on this testimony, the insurer moved to preclude the PA’s report and testimony and argued that they were not admissible under Federal Rule of Evidence 702.

The court then examined Rule 702 and relevant case law and determined that the Third Circuit explained that the Rule embodies a “trilogy of restrictions” on the admissibility of expert testimony: (1) qualification, (2) reliability, and (3) fit. The judge then addressed each of these factors in turn. With respect to the “qualification” prong, the court noted that a licensed public adjuster normally cannot offer an opinion on the cause of a particular occurrence. However, the court found that the PA was not merely a licensed public adjuster; rather he had some expertise in opining on the cause of retaining wall collapses. Namely, he worked on various construction remodeling/repair projects, specialized in retaining walls of various sizes in different soil conditions, and replaced improperly installed and failed walls. Recognizing that the Third Circuit has a liberal interpretation of the “qualification” prong—which requires that a proffered expert witness on causation must possess skills or knowledge greater than the average layman—the court held that the PA’s practical experience gave him the requisite knowledge to qualify him to offer an opinion on causation.

The court next considered the “reliability” prong of the test. Under this prong, the court must consider up to eight separate criteria, including whether a method consists of a testable hypothesis, whether the method has been subject to peer review, the known or potential rate of error, and the existence and maintenance of standard controlling the technique’s operation. The reliability restriction also prohibits too great a gap between the data and the opinion proferred. Examining the evidence, the court held that the PA’s methods for ascertaining the cause of the retaining wall collapse did not implicate an actual testable hypothesis, had not been subjected to peer review, did not have a known or potential rate of error, was not subject to controlling standards, was not generally accepted, and was not related to reliable methods. The court further found that the PA did not provide any specific factual support for his broad assertions of sufficient facts and data and reliable principles and methods. For these reasons, the court held that the PA’s causation opinion did not satisfy the reliability requirement.

The “fit” prong requires that causation testimony help the trier of fact to understand the evidence or to determine a fact in issue. Finding that the gap that existed between the data and methodology on the one hand and the conclusions rendered on the other hand, the court held that the PA’s opinion would not assist the trier of fact in the case. Thus, the “fit” requirement was not met. With respect to plaintiff’s argument that the PA could opine on whether the policy covered the loss. The court made short shrift of this argument, pointing out that under Pennsylvania law the interpretation of insurance contracts is a question of law for the courts to decide and that expert testimony regarding the interpretation of an insurance policy is impermissible. For all of these reasons, the court granted the insurer’s motion to preclude the PA’s testimony and report on causation and coverage.