Experts: Testify Remotely Without Losing Influence

Dr. Ken Broda-Bahm | Persuasive Litigator

So the expert has arrived in town for trial. Their testimony could come today…or maybe by Thursday, and it isn’t unthinkable that it could get pushed into next week. Meanwhile, the waiting, and the billing, continues. This is just one of the factors that makes litigation expensive, creating unequal access and at times, pushing clients toward settlements that the facts might not warrant. It is also entirely a product of the expectation for in-person testimony. If the expert could just testify by Zoom, then it creates quite a lot of flexibility. With the coronavirus came the realization that many things can be done remotely, often with as much or more effectiveness. Now that the Omicron variant has brought us back to the pandemic peaks, there’s the potential that judges will continue to be more open to remote testimony. In the short run, remote testimony minimizes travel and exposure danger. But in the longer-term, remote testimony could also create a more economical and even playing field for litigants.

But is remote expert testimony as effective? According to a study in a forthcoming psychology dissertation from the University of Southern Mississippi (Jones, 2023), the answer is “Yes.” The author, Ashley Jones, used an experimental approach to test the effects of viewing testimony and cross-examination of a forensic psychology expert under three conditions. The expert was shown testifying either physically in a courtroom, by telephone with audio only, or via two-way videoconferencing. The result was that, while there were fewer characteristics of witness efficacy endorsed in the phone-only condition, there were no differences in the participants’ perceptions of the expert or the opinions offered in the video and the in-person conditions. She concludes, “Psychology experts can use remote technology and expect their credibility and effectiveness on the stand to remain largely intact, with minimal risk that the method of testimony will influence legal decisions.” In this post, I will take a look at the research and its implications.

The Research: So Far, Pretty Equivalent 

Courts have long applied a strong presumption against remote testimony. Before the pandemic, that presumption had only recently weakened in cases involving immigration, child victims, or terrorism. But the empirical foundation for the belief that effective testimony and “confrontation” of witnesses could only occur in-person has been notoriously under-researched. A handful of studies, some dating back to the 1970’s, tended to show a general equivalence in the effects of in-person and videoconference communication. Other research, focusing on asylum hearings in one instance, showed less effectiveness when the testimony was remote.

The problem is that much of this research is theoretical or practice-based, lacking a clear control group. In the present study, the researcher controlled for the expert and the testimony itself, varying only the mode of communication in order to assess the expert’s credibility, efficacy, and social presence, as well as the weight assigned to testimony when making a decision. Finding that the “overwhelming majority agreed with the expert regardless of how she testified,” she concluded that the research buttresses the case for normalizing the option to present remote expert testimony during and after the coronavirus pandemic.

The Implications: Communicate Well Whatever the Mode 

Interestingly, the research does point to several factors that matter more than the medium of testimony. For example, the study showed that something called “social presence” predicted more expert influence than the mode of testimony as either in-person or remote. Social presence refers to the tendency to be perceived as sociable rather than unsociable, warm rather than cold, personal rather than impersonal, and sensitive rather than insensitive. The greater the social presence, the greater the credibility. “Social presence,” she concludes, “may be an especially important factor for ensuring an expert’s opinion is valued in court — one that is not necessarily depreciated by the use of technology.”

In addition, the researcher found that experts who are seen as being invested in the testimony (interested and committed, as opposed to being dispassionate and removed) encourage jurors to put more weight on their testimony when making a decision.

So ultimately, the takeaway is that attorneys and experts shouldn’t assume that remote testimony means less effectiveness. The takeaway is also that communication matters more than technology, and experts should strive to communicate well no matter the mode of testimony.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Owner’s Design Defects Can Excuse Contractor’s Own Defective Performance

James Yand | Miller Nash

Generally, the implied warranty of the adequacy of the plans and specifications, also known as the Spearin Doctrine, allocates risk to the owner for any defect in the design of the project. This influential federal decision has been applied by state courts across the country, including its adoption as part of Washington construction law.

Recently, the Washington Supreme Court, in Lake Hills Investments, LLC v. Rushforth Construction Co., Inc., affirmed the long standing precedent that limits a contractor’s liability for defects when the contractor follows the owner provided plans and specifications. This tracks Washington’s public policy that allocates risk and liability on construction projects between the owner, architect and contractor based on each party’s role. The decision affirms the rule that a contractor can apply the Spearin defense to reduce its liability even if some of the defects were caused in part by its own defective work.

The owner in Lake Hills had withheld millions of dollars in progress payments and proceeded to file suit against the contractor for breach of contract. The contractor responded to this lawsuit by claiming that the delays and defects had resulted from faulty design specifications and plans provided by the owner and its design team. After a two month trial, the jury returned a split decision.

On appeal, the Court of Appeals found that the jury instruction for the affirmative defense of faulty plans or specifications was misstated and therefore, prejudiced the owner. The question before the Washington Supreme Court was whether the use of the word “solely” in the Spearin Doctrine jury instruction was incorrect.

The Supreme Court explained that the Spearin defense is “based on control” or lack thereof by the contractor. Specifically, where an owner is contractually responsible for providing the design and it provides defective or incomplete plans, a contractor should not be responsible for damage caused since it was “not the source of the defects.” As applied, the Spearin Doctrine is a “complete defense” to design defect claims only if the damage is “solely due” to the defective design. If the defect is not due solely to defective design, the jury must allocate between design and installation defects. Each side bears the risk for their role in the defects.

This decision clarifies that Spearin still applies even if the owner is able to point to areas that contractor failed to properly perform.

Practice Tip

Contractors should be aware of the many implied obligations in construction contracts when they negotiate their scope of work with owners and other contractors. A contractor generally has a contractual duty to perform work in a workmanlike manner and free from defects in materials or workmanship. An owner who furnishes plans and specifications for the work impliedly warrants to the contractor that they will be sufficient for the intended purpose. Each side normally bears the burden of performing their respective obligations.

Be aware of contract clauses that seek to override the implied warranty of the adequacy of plans and instead shifts the design responsibility onto the contractor. This leaves the contractor holding the bag for any defects, even if the root cause was the flawed plans and specification prepared by the owner.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

No Expectation of Privacy for Representative of Insurance Company Performing an Appraisal

Denise Marra DePekary and Kenneth Sharperson | Weber Gallagher Simpson Stapleton Fires & Newby

Sometimes there is a disagreement between an insurer and an insured regarding the valuation of a property damage claim. To resolve these disputes, many homeowners and commercial property insurance policies contain appraisal provisions that provide an option for the insured or the insurer to resolve disputes regarding the value of a claim without resorting to litigation.  

The appraisal language in an HO3 policy typically reads as follows:

Appraisal. If you and we fail to agree on the actual cash value, amount of loss, or cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent, appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actual cash value and loss to each item.

Once the appraisal clause/provision is invoked, the insured’s appraiser and the insurer’s appraiser will estimate the damage and try to come to an agreement on the amount of loss. Typically, a win-win for both parties.  

Although the process generally runs smoothly without any major roadblocks, a recent decision by the Florida Fourth District Court of Appeal highlighted an issue that may affect the appraisal process nationwide.

In Silversmith v. State Farm Ins. Co., 46 Fla. L. Weekly 1592 (Dist. Ct. App. 2021), the court held that an insured may electronically record an insurer’s appraiser during an inspection of the insured’s property. In Silversmith, the insured filed a first-party property insurance claim related to storm damage to her home. After the insured and the insurer disagreed about the scope of damage and the cost of repairs, the insurer made a written demand for an appraisal pursuant to the terms of the policy.

In response, the insured filed a lawsuit seeking a declaration that she had a right to record the appraiser while he inspected her property. The insurer’s appraiser objected on privacy grounds.

The trial court, relying on Section 934.03 of the Florida Statutes (the two-party consent rule), denied the request. The court found that Florida privacy laws prohibited the recording of oral conversations, noting that “no one may audio/video record the inspection unless all participants consent.” 

On appeal, the appellate court reversed the trial court finding that the insurer’s appraiser did not have a legitimate expectation of privacy while performing an appraisal at the insured’s property and noted that “nothing in the policy precluded [the videotaping] of an appraisal inspection.” The appellate court also noted that the insurer did not identify any law that would validly preclude a homeowner from openly recording an inspection of her own home. 

The appellate court further noted its decision was consistent with a prior Florida decision which denied certiorari review of an order allowing a homeowner to record an inspection.

Comment: Although this decision focused on whether the insurer’s appraiser had a reasonable expectation of privacy in the insured’s home, it is not clear whether this decision would allow an insurer to videotape the insured’s appraiser performing an inspection. Because the court decided the case on a legitimate expectation of privacy in the insured’s home, the issue of whether a court will hold the insured’s own appraiser to this same privacy standard is unresolved.  

In New Jersey and New York, however, the recording laws stipulate that it is a one-party consent state. Thus, only one party needs to consent to a recording. You are legally allowed to record a conversation if you are a contributor, or with prior consent from one of the involved parties, barring any criminal intentions. Therefore, it appears that the result would be the same since only one party needs to consent to be recorded, and that the insured’s appraiser would be able to be recorded. 

Under Pennsylvania law it is a felony to record an oral or telephone communication without the consent of all parties. Therefore, an insured cannot record an appraisal with the consent of the appraiser.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

What Goes Around Comes Around

Jonathan Bank, Matthew Murphy and Ernesto Rafael Palomo | Locke Lord

In 1990, the Second Circuit in Bellefonte Reinsurance Co. v. Aetna Casualty & Surety Co., 903 F.2d ‎‎910 (2d Cir. 1990), affirmed a District Court judgment that reinsurers were not obligated to pay ‎additional sums for defense costs over and above the limits of liability specified in a facultative ‎reinsurance certificate. Since then, the Bellefonte rule acted as a de facto cap for both indemnity and ‎expense under a facultative certificate. This issue of ‘limits’ had been hotly contested, and Bellefonte ‎seemed to put it to rest. ‎

BUT NOT SO FAST: After several intervening decisions cast doubt on the continued viability of the ‎Bellefonte rule, the Second Circuit recently ruled that Bellefonte “no longer constitute[s] the law” of ‎the Second Circuit.‎

In Global Reinsurance Corporation of America v. Century Indemnity Company, No. 20-1476, 2021 WL ‎‎6122136 (2d Cir. Dec. 28, 2021), cedent Century sought reinsurance payments from Global ‎Reinsurance under facultative reinsurance certificates. Global filed a declaratory judgment action for ‎application of the Bellefonte rule – that the stated policy limits of the reinsurance certificates “capped ‎Global’s reinsurance obligations with respect to both losses and defense costs.” Id. at *1. The District ‎Court applied the Bellefonte rule and the holding in Unigard Security Insurance Co. v. North River ‎Insurance Co., 4 F.3d 1049 (2d Cir. 1993) to hold in favor of Global.‎[1] Century appealed, arguing that ‎the reinsurance certificates did not impose a cap on litigation expenses because the certificates ‎‎“were written to be ‘concurrent with,’ or the same as,” the policies that Century issued to its insured, ‎which provided that defense expenses were not subject to the policies’ limits. Id.‎

The Second Circuit certified the question to the New York Court of Appeals, and then remanded the ‎case to the District Court after the New York Court of Appeals answered that New York law does not ‎impose a rule of construction or presumption that “a reinsurance certificate’s liability limit caps the ‎reinsurer’s liability with respect to both indemnity losses and defense costs regardless of whether the ‎underlying policy being reinsured is understood to cover defense costs in excess of the policy’s ‎liability limit.” Id. at *2. On remand, and after conducting an evidentiary hearing that included ‎testimony from six industry experts, the District Court held that the language of the reinsurance ‎certificates did not cap Global’s obligation “to pay its proportionate share of Century’s defense costs ‎when Century suffers indemnity losses.” Id. The District Court explained that “concurrent treatment of ‎defense costs was incorporated into the certificates through each certificate’s ‘follow-form’ clause, ‎which made Global’s reinsurance subject to the same terms and conditions of the underlying ‎Century policies except as otherwise specifically provided.” ‎

Upon examination of the reinsurance certificates’ “unambiguous language as well as the testimony ‎of Century’s experts confirming that a strong presumption of concurrency prevailed in the ‎reinsurance market at the time the certificates were issued”, the Second Circuit affirmed the District ‎Court’s decision, and acknowledged that Bellefonte and Unigard “have been undermined” by the ‎answer of the New York Court of Appeals.‎

Following the Global Reinsurance decision, depending on the wording of a facultative certificate, ‎reinsurers may now find themselves at risk of increased exposure to payment of cedents’ defense ‎costs where the cedent has made an indemnity payment. This decision presents another ‎reminder that when negotiating the terms of reinsurance agreements, do not simply accept ‎boilerplate wording, but take care to be sure that the ‘wording’ reflects what both parties intend, ‎because you’ll never know in advance whether ‘what goes around comes around’.‎

[1] In Unigard, the Second Circuit applied the Bellefonte rule to conclude that the follow-form clause in a reinsurance certificate “did not ‎‎‘override the limitation on liability’ and that therefore the reinsurer was not liable for expenses in excess of the liability limit.” ‎4 F.3d ‎at ‎‎1070-71.‎

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Florida’s Statute Of Repose – Elimination Of Stale Claims

Anthony S. Wong and Lee H Jeansonne | Wood, Smith, Henning & Berman

Big changes may be on the horizon for Florida statute of repose for construction claims. Florida SB 2022-736 proposes to amend Fla. Stat. §95.11(3)(c) to eliminate the distinction between patent and latent claims and apply a uniform four year statute of repose to protect the construction industry from stale claims and prolong litigation many years after control of the project has been turned over by the developer or contractors.

SB 2022-736 proposes to eliminate an often litigated issue: whether a defect is patent or latent, and apply a uniform statute of repose for construction claims. Additionally, as discussed below, SB 2022-736 seeks to give teeth to the right to repair with the intention to help the parties settle and resolve construction defect claims without having to engage in drawn out litigation.

The Current State of Florida’s Statute of Repose

Florida’s statute of repose is intended to provide finality and certainty to builders and other construction professionals by ensuring that claims are brought in a timely manner, and they are not subject to liability indefinitely. Different jurisdictions have established differing statutes of repose, but the goal is finality. Ten year statutes of repose are considered on the longer end of the spectrum, as defects in the as-built conditions would assuredly manifest well before that time. Distinguishing between true construction defects and maintenance/wear and tear issues is almost always a battle and more so as the building ages.

In Florida, a claim based on the design, planning, or construction of an improvement to real property is subject to a four year statute of repose starting from when the owner taking possession, the issuance of a certificate of occupancy, abandonment of the project if not complete or when the contract is completed or terminated, whichever is later. However, if the claim involves a “latent defect”, then the four year statute of repose operates as a statute of limitations and the claim is instead subject to a ten year statute of repose starting from when the owner taking possession, the issuance of a certificate of occupancy, abandonment of the project if not complete or when the contract is completed or terminated, whichever is later.

Although not defined by statute, Florida Courts have held that a latent defect is a hidden or concealed defect which is not discoverable by reasonable and customary inspection, and the owner has no knowledge. Significantly, the test for patency is not whether the condition was observable by the owner. Rather, the test for patency is whether the “defective nature” was apparent to the owner. This test results in difficult jury questions regarding when an owner knew or should have known of a defect and whether such a defect would be apparent to the owner. Additionally, the ten year exception for latent defects allow owners to conflate legitimate construction issues with normal wear and tear and lack of maintenance. As a result, developers and contractors are often forced to litigate the old claims and are denied the finality that the Legislature intended to provide when the statute of repose was first adopted.

What is the Difference Between a Statute of Limitations and a Statute of Repose

Both a statute of limitation and a statute of repose bar lawsuits from being filed after a certain amount of time has passed. However, the major difference in the two come in the way they are triggered. The more common statute of limitations typically being to run when the injury occurs and could be subject to the discovery rule if the injury is hidden. In contrast, a statute of repose is triggered by specific events and can being to run even before an injury occurs. For example, in a personal injury case, a person may be injured by a latent defect 11 years after the completion of the building; however, while the person would ordinarily have 4 years to bring a personal injury claim under the statute of limitations, the claim, to the extent it relates to the original construction would be barred by the statute of repose under current Florida law.

New Legislation Pending in the Florida Legislature Would Eliminate the Ten Year Exception to the Current Statue of Repose

SB 2022-736 proposes to amend Fla. Stat. § 95.11(3)(c) by eliminating the current latent defect exception to the statute of repose for construction defect claims. If the amendment is adopted, a four year statute of repose will apply to all construction claims regardless of whether the defect is patent or latent. This will ensure that legitimate construction claims are brought in a timely manner, provide finality to the construction industry and reduce the amount of claims related to maintenance and wear and tear.

New Provision for the Rejection of Settlement Offers

The proposed bill requires claimants who reject a valid settlement offer to do so in writing and include the reasons for rejecting the offer. The claimant must include details on any portions of their claim that they feel were not addressed in the settlement offer and must also identify any portions they find unreasonable and clearly state the reasons why the offer is unreasonable from their perspective.

After a written notice of rejection of the settlement offer, the opposing party must be given 15 days to propose a supplemental offer to repair and/or submit payment to cover claimed damages or losses. If the claimant also rejects the supplemental offer, that should also be in writing and include detailed reasons as to why the supplemental offer is not sufficient to cover the claim. Any action filed without following these procedures may be stayed by the court upon a timely motion by the opposing party.

Limitation of Attorney Fees

If a claimant chooses to reject a settlement offer or supplemental settlement offer to remedy a construction defect, under the new law this rejection will limit the claimant’s ability to recover attorney fees from the defendant. In order to overcome this limitation, the claimant will need to show by a preponderance of the evidence (more probable than not that the claim is true) that at the time of the offer, the repairs and payment offered were not sufficient to remedy the construction defects. Attorney fees stemming from a contract between the parties is not impacted by this section of the law.

Acceptance by Claimant of a Supplemental Offer

Under the provisions of the proposed law, claimants who accept the initial or supplemental offer by the contractor or other construction professional will be required to enter into a contract to define the terms by which the construction defect will be remedied. This contract must be in place within 90 days after the acceptance of the offer. In addition, the offeror or insurer must pay the contractor for the work directly and such repairs must be made within 12 months of entry into the contract between the parties, unless the parties agree otherwise.

Use of Experts

Once an action has been filed, the Court is required to appoint a neutral expert to inspect and opine on the validity or extent of the construction defect claimed. However, an expert will not be appointed if all of the parties object, or if the Court finds that the appointment costs will exceed any possible benefits to the successful determination of the case. Any experts appointed by the Court must communicate and coordinate the inspection of the construction defect with all parties as directed by the court. The expert must submit a written report to the Court within 15 days after the inspection defect, unless otherwise indicated by the court. The following is required of the expert and the parties:

  • A description of how the expert conducted the examination of the alleged defect.
  • Identification of the persons present at the site while the expert conducted the inspection.
  • Include photographs or other documentation of the alleged defect including any relevant test results.
  • State whether the damages claimed by a claimant are more likely than not the result of a construction defect, another identified cause, or a construction defect and another identified cause.
  • Address other matters related to the alleged defect as directed by the court.
  • If the expert concludes that the damages are wholly or partially the result of a construction defect, the report must state the actions necessary to repair the defect and any repairs related to the defect, provide an estimate of the reasonable cost of repairs, and state the anticipated time needed for the repairs under the current market conditions for construction services and materials.

The parties are responsible for compensating the expert, but the prevailing party is entitled to reimbursement from the non-prevailing party. The expert appointed by the Court may not be employed to repair the alleged defect or recommend contractors to repair the defect in order to prevent a conflict of interest.

Duty to Repair the Defect

Fla. Stat. §558.0046, imposes a duty to repair the construction defect once the claimant receives compensation to complete the repair. If the claimant fails to use the funds to fully repair the defect, the claimant will be liable to any purchaser of the property for any damages that occur due to the failure to completely repair the defect and not disclosing such defect.

Required Notice to Mortgagee or Assignee

Under the new statute, claimants will be required to provide notice to a mortgagee or assignee if a notice of claim alleging a construction defect is made with respect to real property to which a mortgagee or an assignee has a security interest. The claimant must, within 30 days after service of the notice of claim on the contractor, subcontractor, supplier, or design professional, provide the mortgagee or assignee with a copy of the notice of claim by certified mail, return receipt requested.

If repairs relating to the defect are completed after notice to a mortgagee or assignee is provided, or if any settlement, partial settlement, arbitration award, or judgment is obtained by the claimant, the claimant must provide an additional notice to the mortgagee or assignee, by certified mail, return receipt requested, within 60 days after completion of the repairs or any settlement, partial settlement, arbitration award, or judgement, whichever is later.

Noteworthy Takeaways

  • This law will effectively eliminate the current 10 year latent defect exception to the statute of repose.
  • It will remove the latent construction defect exception and require all construction defect claims to be raised within the standard four (4) year statute of repose that is in place for all other construction defect claims.
  • This reduced time to initiate claims will limit stale claims and reduce the amount of claims related to maintenance and wear and tear.
  • This elimination of the latent defect exception should give more strength to offers to repair alleged defects and reduce the number of claims engaged in drawn out litigation.
  • Plaintiff’s are likely to benefit from these changes as repairs will occur quicker and prevent additional damage while the case is in pending litigation.
  • The law will allow for the contractor to make an offer to repair the defects and if the Claimant rejects the offer, the contractor is permitted to make a supplemental offer.
  • If the claimant rejects the offers, they must explain in detail why they are rejecting the offer and list exact reasons including the fact that additional remedies were required and not satisfied by the offer to repair.
  • If a claimant rejects a supplemental offer they may not be able to collect attorney fees, unless claimant can prove additional repairs were necessary beyond the settlement offer.
  • If a settlement offer is accepted the claimant MUST enter into a contract with the correct, licensed contractors to remedy the defects and the party making the offer must make payments directly to the contractor, and repairs must be completed within 12 months of the agreement.
  • The court will now be required to appoint an expert to inspect the alleged defect and report back to the court as well as the parties.
  • The Plaintiff must provide notice of the defects claimed or repaired, to the mortgagee or assignee.

The previously discussed changes to the construction defect law appear on the surface to be designed to reduce the backlog of claims in the courts and encourage the parties to resolve the claims with repairs rather than litigation. Defect claims must be made in a tighter time frame and therefore, claims that have historically been based on maintenance or normal wear and tear will likely be reduced and the court’s time will be focused on cases where significant issues are at dispute.

The changes also put statutory requirements on homeowners who make claims. Homeowners will now be required to give actual reasoning as to why they are rejecting settlement offers from the contractor with accompanying proof; and if they do actually accept an offer to repair, they are required by statute to contract with an appropriate contractor for the repairs, and the party paying for the repairs pays that contractor directly instead of sending the settlement money to the homeowner.

These changes seem to be designed to strengthen the prelitigation 558 Notice of Claim process and the opportunity to repair, by giving more teeth to offers to repair made by developers and contractors and encourage plaintiffs to resolve claims outside of formal litigation. The removal of the latent defect exception is likely to reduce the large volume of claims that stem from normal wear and tear, along with lack of maintenance.

If one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.