The inadmissibility of hearsay is well-established. “‘Hearsay’ is a statement, other than one made by the declarant while testifying at [a] trial or hearing, offered in evidence to prove the truth of the matter asserted.”1 If a witness testifies about something he or she heard from another person, rather than something he or she witnessed firsthand, then that testimony constitutes hearsay. Florida’s Third District Court of Appeal recently overturned a jury verdict in a first-party property case based on this rule.
In Mesa v. Citizens Prop. Ins. Corp., 48 Fla. L. Weekly 465 (Dist. Ct. App. 2023), the Third District found Citizens’s corporate representative’s testimony about the contents of a field adjuster’s report to be hearsay. Moreover, the report about which she testified was not admitted into evidence under the business records exception to the hearsay rule. After determining that the hearsay testimony persuaded the jury to find for Citizens, the court reversed and remanded for a new trial.
The primary issue at the lower court level was whether wind had created an opening in the insureds’ roof. This factual determination was key because it decided the principal dispute between the parties – whether Citizens’s claim denial was correct. The insureds had requested coverage for interior rainwater damage and Citizens denied the claim based on a policy exclusion. The exclusion provided that the policy barred coverage for damage from rainwater unless the rainwater entered through an opening created by a covered peril (like wind). If the jury found that there was no wind-created opening, therefore, then the policy supported the denial and Citizens was not liable.
At trial, Citizens presented a range of evidence to establish that the roof lacked a wind-created opening: the testimony of multiple experts, deposition testimony of the insureds’ roofer who stated there was no storm damage, and its own corporate representative’s testimony. The hearsay objection that led to reversal was based on the corporate representative’s testimony. Specifically, the representative testified about the contents of a field adjuster’s report that Citizens had used to deny the insureds’ claim. In fact, Citizens had denied coverage “[b]ased solely on the field adjuster’s documentation of wear and tear, and the field adjuster’s determination that there was no wind-created opening in the roof . . . .” The field adjuster did not testify at trial. Nor did Citizens attempt to introduce the report into evidence as a business record.
The field adjuster’s findings were only presented through the corporate representative, who “testified that, after viewing the field adjuster’s photos (that were admitted at trial) and the field adjuster’s ‘documented . . . findings within the file’ – including documentation of ‘wear and tear, prior repairs to the roof, deteriorated areas on the roof[,] . . . water pooling on the roof’ and ‘no evidence of wind damage to the roof’ – [the insurer] had agreed with the field adjuster’s determination that ‘during his inspection, he didn’t find any covered loss to the roof.’”
Although the corporate representative said that she was testifying as “the voice of Citizens” who had “come to advise [the jury] what happened throughout the claim,’” the appellate court found her testimony to be inadmissible hearsay because Citizens failed to: (1) establish that she had personal knowledge of the facts about which she testified, or (2) have the field adjuster’s report admitted into evidence as a business record.2 The jury’s reliance on the inadmissible hearsay made the court reverse and remand.
But why did the court do so when Citizens had presented other evidence, such as the testimony of experts and the insureds’ own roofer? Because that evidence was less valuable than the corporate representative’s testimony. According to the court, “[the] experts [who testified at trial] did not have the opportunity to inspect the roof near the time that [the] Insureds made their claim, and their expert opinions did not have an impact on [the insurer’s] decision to deny the claim.” Moreover, the court found the roofer’s testimony to be vague and less persuasive than that of the corporate representative. The appellate court concluded that the jury undoubtedly relied on the invalid corporate representative’s testimony; that testimony was critical to Citizens’s success at trial.
Mesa offers several lessons for first-party property insurers. It highlights how and when hearsay objections may be successful in property insurance litigation. Mesa also underscores the value of the business records exception. Insurers and their attorneys should seek the business records exception whenever appropriate, as the bar to establishing that exception is not particularly steep. Insurers may wish to consider partially or fully waiving the work-product privilege with respect to field adjuster reports; the necessary portions of such reports can then be presented on the record. Alternatively, insurers could obtain sworn affidavits from field adjusters verifying their observations.
Mesa also illustrates the relative values of different types of evidence. It highlights the premium placed on evidence that an insurer used at the time of its claim determination. The fundamental question in cases such as Mesa is whether the insurer breached the insurance policy during the settlement of the claim. Evidence it used at that time, such as the field adjuster’s report, seems more valuable to this determination. Through these lessons, Mesa serves to enlighten and help first-party property insurers improve their litigation strategies.
1 Fla. Stat. § 90.801(1)(C) (2021).
2 Specifically, the court stated that “[a]bsent Citizens’ introduction of [the report] . . . as a business record, [the corporate representative] was only competent to testify from her personal knowledge of the condition of the home’s roof.” However, “Citizens did not seek to establish that [she] possessed such personal knowledge at trial, nor did [her] testimony reveal that she was testifying based on personal knowledge.”