Holiday Lanes Bad Faith Report Example

Holiday Lanes, L.L.C. v. Scottsdale Insurance Company and Markel Insurance Company

Report Details

• Date: January 26, 2026
• Addressee: Stephen Kreller, The Kreller Law Firm, New Orleans, Louisiana
• Court: 26th Judicial District Court for the W.D. of Louisiana
• Matter: Holiday Lanes, L.L.C. v. Scottsdale Insurance Company and Markel Insurance Company
• Case No.: 5-25-cv-00820
• Category: Bad faith report example
• Report Type: Expert report concerning insurance industry standards and claims handling

Engagement Summary

JSA was retained by The Kreller Law Firm on behalf of attorneys for petitioner Holiday Lanes, L.L.C. to give expert opinions regarding insurance industry standards and the claims handling of Scottsdale Insurance Company and Markel Insurance Company.

The report states that discovery was not complete and reserves the right to change, amend, supplement, or modify the opinions expressed based on additional information.

Background and Qualifications

The report identifies Jim Schratz's business address, attaches his current resume as Exhibit A, and attaches the list of reviewed documents as Exhibit B. It also identifies his standard hourly rate for non-testimony, deposition testimony, and trial testimony work.

Jim graduated from the University of San Francisco Law School in 1976, where he was Editor-in-Chief of the Law Review, and then entered private practice. In 1980, he joined the General Counsel's Office at Fireman's Fund Insurance Company, where he performed both litigation and transactional work.

In 1984, he joined the Claims Department and shared responsibility for supervising lawsuits nationwide alleging improper claims handling or insurance bad faith. In that role, he reviewed hundreds of claims files to determine whether Fireman's Fund claim handlers had properly documented, investigated, and handled claims and met or exceeded the industry standard.

The report explains that the measurement used in determining whether a claim had been properly investigated and handled was whether the insurance company gave as much consideration to the insured's interests as to its own.

In approximately 1986, Jim established the Major Litigation Unit at Fireman's Fund, responsible for complex, high-profile, high-exposure, labor-intensive cases around the country. He later served as Assistant Vice President and then Vice President, Major Claims, where his duties expanded to any matter worldwide reserved at $3 million or more.

In January 1994, Jim started Jim Schratz and Associates, providing consulting and expert witness services on behalf of both insurance companies and insureds. The report states that over the past 32 years he has reviewed thousands of claims files, claims manuals, and cases from around the country relating to proper claims handling and the duty of good faith and fair dealing.

Industry Standards and Customs for Proper Claims Handling

The report explains that carriers adhere to standards and customs in investigating claims, including a standard of reasonableness or fairness often stated as the equal consideration standard. Under that standard, the carrier must give equal consideration to the insured's interests as to its own.

The report states that a properly documented claims file should reflect the adjuster's work at key decision points, including coverage, causation, liability, and damages decisions. At each point, the file should reflect a fair, thorough, prompt investigation and show that the insured's interests received equal consideration.

Specific Practices Identified in the Report

• The carrier must treat its policyholder's interests with equal regard as its own interests.
• The carrier should assist the policyholder with the claim.
• The carrier must disclose all benefits, coverages, and time limits that may apply to the claim.
• The carrier must conduct a full, fair, thorough, and prompt investigation of the claim at its own expense.
• The carrier must fully, fairly, and promptly evaluate and adjust the claim.
• The carrier must pay all amounts not in dispute within a reasonable time period.
• The carrier may not deny a claim or part of a claim based on insufficient information, speculation, or biased information.
• The carrier must give a written explanation if it partially or totally denies a claim, pointing out facts or policy provisions supporting the denial.
• The carrier must not misrepresent facts or policy provisions.
• The carrier may not make unreasonably low settlement offers.
• The carrier owes a duty to act in good faith and deal fairly with the insured.
• The carrier owes a duty not to unreasonably withhold payments due under the policy.
• Subject to case law, the duty of good faith and fair dealing continues into litigation with the insured.
• The carrier must act in open candor and transparency toward the insured.
• The carrier must properly document its actions so supervisory personnel and independent third parties can review whether the carrier met the industry standard.

Methodology

The report states that the methodology used to determine whether Scottsdale and Markel met the industry standard is the same methodology Jim used at Fireman's Fund when reviewing claims files and the same methodology he uses now when reviewing claims files on behalf of insureds or insurance companies.

That methodology includes reviewing documents such as the insurance policy, depositions, claims notes, emails, internal memos, proof of loss, and supporting documents where appropriate. The standard applied is whether the insurance carrier acted reasonably.

Background of the Claim

Holiday Lanes owns a bowling alley at 3316 Old Minden Road in Bossier City, Louisiana. The property is described as a 39,236-square-foot masonry framed building on a concrete foundation with masonry veneer, ribbed metal siding, and a rolled asphalt single membrane roofing system.

The insured property sustained two weather-related losses: the first on April 15, 2023 and the second on February 11, 2024. Scottsdale insured the property during the first loss, and Markel insured the property during the second loss. K&K Insurance Group acted as claims administrator for both insurers during both losses.

First Loss - April 15, 2023

The report states that a severe weather event affected the Bossier City area on April 15, 2023. A weather report prepared by meteorologist Jeffrey M. Medlin concluded that a severe hail shaft with hail measuring 1.25 to 1.5 inches impacted the insured property during the late afternoon.

Holiday Lanes timely reported the claim. K&K Insurance assigned the claim to Engle Martin. After inspection, Senior Property Adjuster Sean Murphy estimated the damage to the roof at approximately $350,000. He noted that the roofing system appeared to be in fair condition on higher rounded areas and poor condition in lower valleys, but that the thick elastomeric coating prevented him from determining whether hail exposure damaged the rolled asphalt mat.

J.S. Held was retained to evaluate the property. Its report concluded that hail impacts caused infrequent chips on the roof coating material, but that the roof coating was aged and deteriorated throughout and that the hail-related chips did not diminish the performance of the already deteriorated coating. K&K later denied the claim on March 5, 2024, while payment for neon sign damage was issued approximately six months after the claim.

Second Loss - February 11, 2024

The report states that another severe weather event affected the Bossier City area on February 11, 2024. A weather report prepared by Mr. Medlin described a severe bow echo with hailstones measuring between 1.235 and 1.55 inches and damaging straight-line winds with gusts up to 63 mph.

Markel assigned the claim to Crawford and Company. EFI Global inspected the property and concluded that the modified bitumen membrane had not been damaged by hail, that no repairs were needed because of hail activity, that dents to metal roofs were cosmetic, and that leakage was likely caused by long-term weathering rather than storm activity. Based on that report, K&K sent a denial letter on May 27, 2024.

Premier Claims later submitted a rebuttal letter with photographs, weather reports, and a damage estimate. K&K recommended review and reinspection, and Markel agreed. After reinspection, EFI Global maintained its prior opinions, and K&K sent another denial on December 4, 2024.

Forced Insurance Litigation

Holiday Lanes filed suit against Scottsdale and Markel on April 15, 2025. Holiday Lanes retained Gurtler Bros. Consultants, Inc. to inspect the insured property and evaluate damage. The report states that Gurtler concluded that impact and excessive wind forces caused substantial damage to the modified bitumen roof coverings and that accumulated rainfall was penetrating damaged roof covering and collecting in interior ceilings.

Findings and Opinions

Based on Jim's experience as an adjuster, supervisor, assistant vice president, and vice president at Fireman's Fund, and his experience as an expert for both insurance carriers and policyholders, the report states that Scottsdale and Markel failed to meet the industry standard for proper claims handling in a number of areas.

Opinions Regarding Scottsdale

• Scottsdale failed to conduct a full, fair, thorough, and prompt investigation following the April 15, 2023 hailstorm and timely notice of loss.
• Scottsdale failed to communicate that its adjuster estimated $350,000 in damage after inspecting the property.
• Scottsdale failed to timely make a tender payment for roof damage after its adjuster found $350,000 in property damage.
• Scottsdale failed to timely make a tender payment for signage damage until approximately six months after the damage claim was made.
• Scottsdale failed to give equal consideration to Holiday Lanes's interest.
• Scottsdale failed to look for ways to provide coverage and instead looked for ways to deny coverage.
• Scottsdale ignored evidence of damage, ignored findings of its field adjuster, and retained an insurance industry engineering firm to support a claim denial.
• As a consequence of failing to conduct a full, fair, thorough investigation, Scottsdale failed to document that such an investigation had been performed.
• Scottsdale agreed to extend roof coverage after underwriting only to deny the roof damage claim based on alleged preexisting conditions.

Opinions Regarding Markel

• Markel failed to properly evaluate the Holiday Lanes property before agreeing to insure it and then used predecessor opinions and conclusions to deny or disclaim coverage.
• Markel failed to conduct a full, fair, thorough, and prompt investigation following the February 11, 2024 hail and windstorm and timely notice of loss.
• Markel failed to communicate the findings of the initial adjuster after the initial property inspection.
• Markel failed to timely make a tender payment for damages to roof structures and appurtenances.
• Markel failed to give equal consideration to Holiday Lanes's interest.
• Markel failed to look for ways to provide coverage and instead looked for ways to deny coverage.
• Markel ignored evidence of damage, withheld findings of its field adjuster, and retained an insurance industry engineering firm to support a claim denial.
• As a consequence of failing to conduct a full, fair, thorough investigation, Markel failed to document that such an investigation had been performed.
• Markel agreed to extend roof coverage after underwriting only to deny the roof damage claim based on alleged preexisting conditions.

Conclusion

The report concludes that, based on the reviewed documents and Jim's experience as an adjuster, supervisor, vice president, consultant, and expert, Scottsdale and Markel failed to meet the industry standard in a number of areas. The opinions are based on currently available documents and information and may be supplemented based on later information provided.

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