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Jeffers v. Farm Bureau Property & Casualty Insurance Co.

United States District Court, D. Arizona

September 4, 2014

Willard G. Jeffers, Plaintiff,
Farm Bureau Property & Casualty Insurance Company, Defendant.

ORDER AND OPINION [Re: Motions at Dockets 56, 57, 58, 59, and 60]

JOHN W. SEDWICK, Senior District Judge.


At dockets 56, 57, 58, 59, and 60 defendant Farm Bureau Property & Casualty Insurance Company ("Farm Bureau") moves for orders precluding plaintiff Willard G. Jeffers ("Jeffers") from presenting certain evidence at trial. Jeffers opposes all of the motions in a single combined response at docket 61. Farm Bureau filed no reply. Oral argument was not requested and would not assist the court.


Jeffers' Glendale property was one among thousands of Phoenix-area properties damaged in a hail storm on October 5, 2010. Jeffers reported the damage to his property insurance company Farm Bureau. The insurer sent adjuster Michael Shearer to investigate. Shearer inspected the property on either October 18 or October 19 and made notes of the damage he observed.[1] Shearer inspected Jeffers' house, shed, gazebo, detached office, and pigeon loft. Shearer waited two to four days to enter his notes into Farm Bureau's online database.[2]

Shearer's notes described damage to Jeffers' dwelling and pigeon loft but "[n]o other damages to other structures."[3] Shearer arranged for a roofer to inspect Jeffers' foam roof, who concluded that the roof had to be replaced.[4] Shearer made a list of damages and associated cost of repair in two "damages worksheets." These worksheets list damage to foam and tile roofs on Jeffers' house, to the fiberglass roof on Jeffers' pigeon loft, and to a wood fence. They also list unspecified "tree removal/cleanup."[5] On October 23, Farm Bureau issued its first payment on Jeffers' claim. It issued another payment on December 23 for recoverable depreciation after repairs were preformed.[6]

In January 2011, a heating and cooling contractor inspected Jeffers' air conditioning units. The contractor concluded that one of the units had extensive hail damage and should be replaced, while the other unit had "some hail damage" that "may be able to be combed out."[7] Jeffers submitted a claim to Farm Bureau. On January 8, Farm Bureau paid Jeffers 50 percent of the replacement value of the air conditioner that needed to be replaced (with the other 50 percent payable upon repair) and the full value of repair to the other unit.[8] In March 2011, Jeffers obtained a quote for the installation of a new roof for his shed due to hail damage. Jeffers submitted the quote to Farm Bureau seeking payment. Farm Bureau paid Jeffers the full amount.[9]

In September 2012 an independent adjuster, Austin Insurance Services, inspected Jeffers' property, [10] and its report concluded that Jeffers' property required $50, 936.86 in repairs due to hail damage.[11] Jeffers sued Farm Bureau in Arizona court in November 2012, alleging that Farm Bureau breached the insurance contract and the implied covenant of good faith and fair dealing. Farm Bureau removed the case to federal court. III. DISCUSSION

A. Motion at Docket 56

At docket 56, Farm Bureau asks the court to exclude evidence regarding the manner in which its adjusters are paid on the grounds that it is not relevant and that even if relevant, such evidence would be likely to confuse and mislead the jury. Jeffers responds saying that "Farm Bureau incentivizes its adjusters to underpay claims under the guise of performance reviews' [which] is highly relevant and not near prejudicial to warrant preclusion at trial."[12] Plaintiff does not address Farm Bureau's assertion that evidence of the compensation scheme would confuse the issues or mislead the jury.

To support his proposition that Farm Bureau "incentivizes" its adjusters to low-ball claims, Jeffers cites to an extract from the deposition of adjuster Michael Shearer.[13] The court has carefully read the deposition extract and finds that it does not provide very good support for the proposition that Shearer's compensation is improved if he low balls claims. Rather, it is clear that his compensation is determined by a myriad of factors and that the "leakage, " which is his reference to situations in which the adjuster pays for something that should not have been paid-such as paying to paint a wall that did not need to be painted-is but one among many considerations. In any event, even though "leakage" is one among many factors affecting adjuster compensation, the court agrees with Farm Bureau that the risk of confusing the issues and misleading the jury into putting inordinate emphasis on the compensation scheme substantially outweighs the rather modest probative value of the evidence which would be required to fully describe the compensation scheme. For that reason, the motion will be granted pursuant to Fed.R.Evid. 403.

B. Motion at Docket 57

At docket 57 Farm Bureau seeks to exclude evidence regarding the passing of plaintiff's wife four months prior to the hail storm on the grounds that it is not relevant. The court agrees, provided that Farm Bureau does not seek to introduce evidence or argument that Jeffers was dilatory. If it does so, then for the reasons set out in Jeffers' reply-reasons which under that circumstance, the court finds ...

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