“yo mama” Nationwide, she wants a real man like O’Leary on her side

As first evident in Politz v Nationwide, the Company’s attorneys – including those in skirts – are difficult to distinguish from a gang of thugs.  In Sunquest v Nationwide, it has become a distinction without a difference.

This past December SLABBED published Judge Senter completes his appraisal – Order says Nationwide on wrong side with objection to Lewis O’Leary and reported an Order that Judge Senter issued in the Sunquest case. More recently SLABBED provided an update on Sunquest v Nationwide in the post Chip Merlin’s “Gulf Coast case law update that ended with my saying, “I’ve read nothing in any document that indicates Lewis O’Leary is anything other than faithful – faithful to the truth”.  I still haven’t; but, before reporting on recent events in this case, a bit of background is due and, for that, we turn to the Complaint:

The Plaintiff is a corporation organized under Louisiana law with its principal place of business at 3 Bancroft Circle, Monroe, LA 71201…At all material times, the Plaintiff was an insured for the buildings and property known as Carriage House Apartments, 1625 Martin Bluff Rd., Gautier, Jackson County, Mississippi 39553 under Nationwide’s Policy No. 63BP139742004 (the “contract”)…On August 29, 2005, the contract provided multiple coverages for windstorm damage to the buildings or damage by collapse.

The contract provides for multiple coverages, including coverage for direct physical loss of, or damage to, the apartment buildings described in the contract; personal property used to maintain or service the buildings or structures on the premises; business personal property; debris removal; actual loss of business income; and other property…On August 29,2005, Hurricane Katrina struck the Mississippi Gulf Coast and caused substantial damage to the insured property…

The contract provides for appraisal of the loss if the parties disagree on the value of the property or the amount of “loss.” The Plaintiff submitted a Hurricane Katrina insurance claim to Nationwide because of damage to the Plaintiff s home and other property caused by Hurricane Katrina. The Plaintiff made written demand on Nationwide for an appraisal of the loss under the contract on the Plaintiff’s Hurricane Katrina insurance claim. Nationwide has refused to agree to appraisal of the loss, unless the Plaintiff agrees to conditions and qualifications that are not in the contract and unless the Plaintiff agrees to Nationwide’s unilateral determination of “items of damage” listed in Nationwide’s damage estimates.

Nationwide’s attempt to make the appraisal process illusory and of little benefit to the Plaintiff is a breach of Nationwide’s duty of good faith and fair dealing with the Plaintiff.

Fast forward from August 29, 2005 to March 2010 and you’ll find the claim still not settled and the case in court.  Although Nationwide did eventually participate in an appraisal process, the commitment to the process was “illusory” at best.  Consequently, a second and more complete appraisal was required by order of Judge Senter, who also selected the umpire. (see linked SLABBED posts above).   Faced with a court-ordered appraisal and unable to defend its claims handling, Nationwide’s gang of thugs intensified the Company’s attack on O’Leary.  Cheap shot after cheap shot was aimed at the credibility of Lewis O’Leary.  To his credit, and true to form, O’Leary deflected Nationwide’s cheap shots and held his ground – hence the title of this post: “yo mama” Nationwide, she wants a real man like O’Leary on her side.

In the transcript of Nationwide’s January 15, 2010, deposition of O’Leary, you see evidence of what some consider the “standard ploy” on page 31: – “put the insured in such a tough position by paying a small part of the claim, and paying it late; then savage the insured for not making partial repairs with the little bit of money they’ve received”.  Then, beginning on 55, you see the Company’s “yo mama’s boy” (Q) admitting the Company’s bad faith claims handling ploy in the questions he asked about O’Leary’s (A) report on Sunquest property damage:

Q. You see you have the very last paragraph? You write, “It was further reported that with extended delays in what funding finally did occur” — or, “did finally occur, this delay allowed the water damage to continue to manifest itself in a considerably worse scope”? (page 55)


Q. Who is it that reported that there were extended delays in the funding?

A. The insured.

( page 55)

Q. In your view is that an extended delay given the magnitude of this property?

A. You couldn’t even begin to replace those roofs with that kind of money

Q. That’s not my question.  Do you consider that to be an extended delay?

A. Yes, because it’s not enough money to do hardly anything with a property this size.

Q. Okay. That’s money they could have used to get started making repairs and renovations, isn’t it?

(page 56-57)

A. It’s also money that could make up for the void, in terms of the income that you’re losing when you — you’ve lost a lot of your units.

Q. That–

A. But, tell me, that’s just building repair money or both?

Q. Regardless of whether it’s building repair money or lost income, it’s money that they could use to make repairs, is it not?

A. Or keep your doors open by making the three — three payments that you’re behind on at this point. You’re asking me a hypothetical question, and I’m — I’m trying to answer it as best I can. On a property this size, when you’re losing money as badly as they were losing money, you have to apply some of it toward the payments you’re supposed to be making to your lender. There’s a variety of things besides Sheetrock and shingles that you need money for at that stage in late October.

Q. These weren’t poor people, were they, the plaintiffs?

(pages 57-58)

Nationwide went after O’Leary from all sides.  The Company accused him of lying about his compensation agreement with Sunquest; claimed he altered his report; attempted to have his his testimony striken and requested sanctions be imposed.  Nonetheless, O’Leary stood firm on his convictions.  When the paper stopped flying, Judge Senter stepped in with a series of orders that tell more of the story. We begin with the first :

The present order will dispose of the following:  Nationwide’s Motion to Reconsider, as well as its Motion for Sanctions (and related Motion to File Supplemental Reply); and Plaintiffs’  Motion to File Supplemental Sur-rebuttal in opposition to the motion for sanctions and their Motion to Enforce Judgment Ordering Appraisal.

“The Federal Rules do not recognize a ‘motion for reconsideration’ in haec verba.” …Nationwide cites the availability of new evidence not previously available (Fed. R. Civ. P. 60) in support of the relief it requests. The “new evidence” Nationwide relies upon is contained in supplemental discovery responses submitted by Plaintiffs (which is also a part of Nationwide’s [213] Motion for Sanctions, discussed infra). Nationwide would have this Court draw inference upon inference to now find that Plaintiffs’ chosen appraiser has a pecuniary interest in the outcome of the litigation or the appraisal.

However the payment arrangement between Plaintiffs and O’Leary is labeled or described (whether as hourly or subject to a maximum amount), the Court remains convinced that O’Leary is a disinterested appraiser, even while serving as Plaintiffs’ retained expert on the issue of covered damages… The Court has made it abundantly clear on numerous occasions that the appraisal process is to determine the total loss (from all causes) sustained by the insured property during Hurricane Katrina….The evidence in the record does not contravene the Court’s findings that O’Leary is disinterested and that his compensation for services rendered in this matter (for which payments have been made periodically) is not contingent on the outcome of this cause of action, much less the outcome of the appraisal. The appraisal will not establish Plaintiffs’ entitlement to damages for covered losses under the subject insurance policy. Nationwide’s “motion to reconsider” is not well taken.

Nationwide’s Motion for Sanctions incongruously demands a range of punishment against Plaintiffs (with dismissal of the cause of action as the most severe) for withholding documents during the initial discovery process, while using that very same material supplied by Plaintiffs in supplemental responses to principally support the Motion to Reconsider, which the Court has found to be without merit. This confirms the Court’s ruling and that the appraisal process can proceed. Dismissing the action, precluding Plaintiffs from pursuing appraisal, and  disqualifying O’Leary as Plaintiffs’ appraiser are not warranted under Fed. R. Civ. P. 37. Nationwide’s motion for sanctions will be denied. (citations omitted, emphasis added)

Senter’s first Order of the day set the stage for his Order and Opinion Memorandum on Motions Concerning Expert Witnesses also issued on the 26th of February 2010.

In reviewing the record…I learned that the discovery process has brought to light facts concerning the extent of covered damages that were known to neither Plaintiffs nor Nationwide at the time this suit was filed. I also learned there is a controversy concerning O’Leary’s and Wiggins’s access to photographs and other documents that were generated during Nationwide’s adjustment of Plaintiffs’ claim.

As a result of the way the Nationwide adjustment documents were handled (regardless of who was responsible for the delay in getting these documents into Wiggins’s and O’Leary’s hands), O’Leary’s and Wiggins’s opinions concerning the extent of covered damages are inaccurate because their opinions failed to take some of the facts disclosed in these Nationwide adjustment documents into consideration.

Given how many times I’ve mirrored my own parents and told my children some variation of “I don’t care who started it, stop it right now”, Judge Senter appears to consider the controversy childish – akin to hiding your brother’s shoes so he’ll get in trouble for losing them.  In this case, O’Leary was presented with evidence that better identified damage after his report had been prepared and entered in the record.  O’Leary, man of integrity that he is, then revised his report accordingly.  Nationwide’s gang of thugs then accused O’Leary of wrongly inflating covered damage until confronted with evidence his earlier report had ignored.  Judge Senter’s parental voice tells more:

Plaintiffs’ motion [201] presents the question how to deal with this situation in a way that is fair and equitable to both parties. Nationwide urges the Court to preclude O’Leary’s testimony because his initial opinions are admittedly inaccurate; Plaintiffs ask the Court to allow O’Leary to supplement his expert opinions with revisions that take into consideration the Nationwide adjustment documents and other facts brought to light in the discovery process.

In my view, Plaintiffs’ suggested course of conduct is more likely to result in a fair adjudication of this dispute.

…during this litigation Nationwide has twice learned,through the work of its own experts, additional relevant facts concerning the extent of covered damage the insured property sustained during Hurricane Katrina. These discoveries led to Nationwide’s making two substantial additional payments (one of $179,363.71 and one of $109,579.25) of benefits due under the policy at issue.

Nationwide’s own need to twice “inflate” the Company’s assessment of damage stands in sharp contrast to its claim that O’Leary likewise amending his assessment was wrongful conduct – but such is the way the “standard ploy” plays.  As  Judge Senter’s Order indicates, the risk of getting caught pales to the rewards when the ploy plays out and pays out:

It is clear to me, from the materials I reviewed in considering Nationwide’s motion for summary judgment, that Nationwide has put a great deal of effort into investigating and adjusting Plaintiffs’ insured loss. The loss involves substantial damage to eighteen buildings, and the evaluation of the loss both in amount and causation has been a substantial undertaking. Nationwide has used not only its own adjustors but also engineers and outside experts to evaluate the covered damage in this case. Because Nationwide began the adjustment process soon after the storm, the adjustment materials it compiled are the best currently available evidence of the condition of the property in the months immediately after the storm.

This is far from the first time Judge Senter has given an insurer the benefit of the doubt.  While I find it hard to believe he doesn’t see Nationwide’s “standard ploy” and bad faith, he would have had to step over the issue to reach his balanced decision:

I will allow O’Leary (and the Nationwide damage expert if he chooses) fourteen days following the confection of the final appraisal report to supplement his opinions concerning the extent of the covered loss, and I will permit Wiggins to reconsider his own findings during this same time period should he wish to do so. I will allow an additional thirty days within which Nationwide may take O’Leary’s and/or Wiggins’s depositions concerning the supplementation of their opinions and the basis for that supplementation.While the appraisal issue was in controversy, the parties conducted extensive discovery, and the current controversy developed. In order to afford both parties the opportunity to present the best available evidence concerning the extent of the covered loss, I will reopen discovery for both parties for a period of forty-five days after the appraisal report is finalized to allow supplementation of expert opinions concerning damage to the insured property and to permit depositions of all expert witnesses who render supplemental opinions. All supplemental opinions must be served within two weeks after the final appraisal report is signed, and all expert depositions concerning the supplemental opinions rendered must then be completed within the following thirty days.

Should any of Nationwide’s expert witnesses wish to supplement their opinions in light of the fact established during the discovery process, such supplementation (and subsequent deposition opportunities) shall be allowed on this same schedule. I will defer the decision to schedule a formal hearing to ascertain whether O’Leary’s qualifications and the methods O’Leary followed in formulating his expert opinions meet the standards established by the holding in Daubert.

I will deny Nationwide’s motions to disqualify O’Leary from further participation in this litigation as an expert witness on behalf of Plaintiffs.

I will strike Myers’s expert report, and I will not permit Myers to testify as an expert in this action.

Judge Senter’s decision to strike the Myers expert report and not allow Myers to cure the deficiency is something to note and move on to his final order.

Plaintiffs have filed an Emergency Motion to Set Status Conference, which is related to the appraisal to be conducted in this cause of action. Attached to the motion is an email indicating that one of Defendant’s counsel “will be present at Monday and Tuesday’s appraisal meetings. His intent is not to participate nor ask questions–but rather to observe the process and discussions.”

Also attached to Plaintiffs’ current motion is an order entered by United States District Judge Sarah S. Vance of the United States District Court of the Eastern District of Louisiana.

In an obvious effort to further Nationwide’s goal of tarnishing O’Leary’s reputation, the Company intended to “take names” at the court-ordered second and full appraisal.  As expected, “Plaintiffs object to the presence of counsel (or participation in any manner) during any part of the appraisal process”.  Judge Senter agreed and issued a related Order, the last of the series he issued on the 26th of February 2010.

It was dropping names, however, that foiled the Nationwide plot. In Nationwide’s response in opposition to the Sunquest motion, the Company told the Court Sunquest  “misplaced reliance” on Judge Vance’s Order in a Louisiana case:

…an unpublished order from Louisiana is neither relevant nor binding in this case, where Mississippi law controls and nothing in Mississippi statutes or case law prevents counsel from attending the meetings of party-appointed appraisers and an appraisal umpire.

While Nationwide’s opposition claimed having the Company’s counsel observe would ward off “danger of undue influence or a particular advantage to either party” and professed the Company “does not understand the appraisal process to be the proverbial backroom, smoke and mirrors type of discussion”.  However, the record to date suggests Nationwide’s comments are misdirected at Sunquest and, instead, a reflection of the Company’s own smoke and mirrors tactics.

Judge Senter’s Order indicates Nationwide’s  strategy to discount the relevance of  Judge Vance’s order in a related Louisiana case won’t fly – suggesting that the similar strategy of the insurer defendants in Branch, known to SLABBED readers as the Qui Tam Olympics will not get any medals:

This Court agrees with Judge Vance’s finding “that the purpose of the appraisal provision would be seriously compromised by counsel’s participation in the appraisal process.” The same conclusion applies even if “participation” is limited to “observ[ing] the process and discussions”…Counsel for any party shall not participate or be present in any manner during the appraisal panel’s hearings, meetings, or deliberations…The only participants in the appraisal process shall be the two appraisers and the umpire.

A related docket entry (text only) suggests that Judge Senter had second thoughts about the schedule as he delayed the upcoming trial and did not set a date.  Considering Nationwide’s success at dragging out the case thus far, it may very well be five years following Katrina before this case settles – and following along behind, Sunquest also has a second Jackson County apartment complex with a Katrina claim in litigation with O’Leary as an Expert Witness is that case, too.

3 thoughts on ““yo mama” Nationwide, she wants a real man like O’Leary on her side”

  1. Great post. Lawyer thugs doing the bidding of a corporate bully.

    This brings up an interesting issue: lawyers attending any type of property inspection. In Louisiana Katrina litigation, State Farm took to videotaping many property inspections. The videographers would be instructed by State Farm’s lawyers to keep the audio off. And although the State Farm lawyers were present, appeared on video, and were talking to the “experts” during the inspections; the video never revealed what the lawyers were instructing the expert to do because there was no sound. This should be partial spoilation of evidence, but good luck convincing a Fed. judge of this.

    The courts have to draw some kind of line regaring the presence of lawyers at expert inspections.

  2. Thanks, Sock. I ran across some case law recently that said there can be no claim of privilege when an attorney is involved in his/her insurer-client’s claims handling process. That said, I’m horrified by what you report. Shoot me an email if you know of cases where this conduct was presented to a judge.

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