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Arizona Court of Appeals Notes “Good Reasons to Suspect Arson”? and Disregards Insured’s Expert Affidavit in Bad Faith Case

by | Aug 8, 2017 | Insurance

Epperson v. AAA Fire & CAs. Ins Co., WL 406144 (Ariz.App January 31, 2017)

Memorandum Decision, an insurance bad faith case arising from a fire claim, the Arizona Court of Appeals affirmed the trial court’s grant of summary judgment to an Insurer, despite the Insurer paying the claim over 15 months after the fire occurred.

The Insured’s argued the trial court erroneously ruled there was no bad faith as a matter of law because the trial court improperly:

  1. Dismissed evidence that the Insurer failed to contact witnesses and develop information that might support the Insured’s claim; and
  2. Disregarded the Insured’s expert affidavit.

The Arizona Court of Appeals held the Insurer had “good reason to suspect arson” and the Insured’s expert affidavit did not raise a material question of fact, which precluded summary judgment.

The Arizona Court of Appeals noted the following undisputed evidence indicated both “good reason to suspect arson” and no material fact to issue regarding bad faith:

  1. The Insurer promptly interviewed relevant witnesses, performed an investigation of the fire scene, and sought relevant public documents;
  2. When the Insurer’s initial investigation revealed the fire was of suspicious origin, it asked the Insured’s to provide verifying documents and statements under oath;
  3. The Insured’s did not immediately cooperate with the Insurer’s investigation and failed for several months to both provide the requested information and submit to sworn examination; and
  4. After the Insured’s examinations under oath, the Insurer conducted follow-up investigation: it conducted follow-up interviews, obtained additional records, and attempted to contact witnesses identified by the Insured’s.

The Epperson opinion also provides a detailed account of the Insurer’s investigation and the “red flags” surrounding the Insured’s claim.

Regarding the Insured’s expert affidavit, the Court of Appeals:

  1. Noted the trial court’s ruling that the expert opinion was not evidence that created a material fact; and
  2. Cited Florez v. Sargeant, 185 Ariz. 521, 527, 917 P.3d 250 (1996), which held that conclusory expert affidavits do not create a triable facts issue if they:
  • do not cite facts to support an expert’s opinion, or
  • list facts which do not support the expert’s legal conclusion do not create a triable fact issue.

What are the takeaways for an Arizona Insurer investigating a suspicious fire claim and/or defending bad faith cases arising from the same?

  • Epperson provides a detailed summary of a prompt, reasonable investigation of a fire claim, which Arizona insurers can use as a guide.
  • At least one Arizona court stayed a bad faith case to allow an Insurer to complete its investigation of a fire claim. But see A.R.SCt. 111(c).
  • Despite numerous “red flags” and “good reason to suspect arson,” an Insurer should still promptly attempt to interview witnesses and investigate facts that may support an Insured’s claim.
  • An Insured’s conclusory expert affidavit may be insufficient to defeat an Insurer’s motion for summary judgment.

Nathan Meyer

Nathan Meyer

Nate is a partner at Jaburg Wilk in Phoenix, Arizona. His practice focuses on insurance coverage, bad faith litigation, commercial litigation, general liability litigation and professional liability litigation. He represents insurance companies, contractors, policy holders, global corporations, insurance adjusters, business owners, insurance agents and professionals. If you have questions about insurance law contact Nate at 602-248-1032 or