Insurer’s Failure To Supplement Deficient Damages Evidence Not Invited Error

Michael Carey and James Fann owned a mixed-use building (residential and dental office) in Chicago, Illinois. The building was substantially damaged in a fire. Carey and Fann made a claim to their insurer, American Family Insurance, but the company denied coverage. Carey and Fann sued American Family. After a bench trial, Carey and Fann were awarded more than $427,000.

American Family appealed. At trial, Carey’s and Fann’s damages expert neglected to put in evidence of depreciation of the building, a required element under Illinois law. Carey and Fann argued that American Family waived the argument that the damages evidence was deficient. Their argument relied on the “invited error” doctrine − American Family’s acceptance of the damages calculation and the company’s failure to put in its own evidence of depreciation.

The First District Illinois Appellate Court rejected Carey’s and Fann’s position. The court ruled there had been no “invited error” or waiver: American Family sufficiently reserved the right to dispute damages and it was not the insurer’s responsibility to assure the building owners’ damages evidence was appropriate. Here is the court’s rationale:

It is true that defendant [American Family] agreed to waive all foundational requirements regarding the admission of Spoerlein’s [Carey’s and Fann’s damages expert] testimony and report. However, defendant specifically reserved objection to the testimony and report on all other bases. Further, defendant subjected Spoerlein to cross-examination regarding her estimate and in particular the lack of a calculation considering depreciation. During closing argument, defendant specifically argued that plaintiffs [Carey and Fann] failed to sustain their burden of proving damages to the subject building under the policy because the only evidence submitted concerning damage to the subject building was Spoerlein’s testimony of replacement cost rather than actual cash value called for by the policy.

Plaintiffs’ [Carey and Fann] argument regarding defendant’s American Family] failure to produce evidence of depreciation is similarly unpersuasive. As noted, it is a plaintiff’s burden to prove damages to a reasonable degree of certainty … Defendant had no burden of proof and was not required to prove plaintiffs’ case.

Even though the damages evidence was inadequate, instead of an outright reversal the appellate court sent the case back to the trial court for a new trial on damages. Read the whole case, Carey v. American Family Brokerage, No. 1-07-3261 (5/11/09), by clicking here.