Working PIby Tony Jones, Former Senior Editor
It’s not unusual for private investigators (PIs) to be hired by corporate defendants in lawsuits involving product liability and/or personal injury; however, it is unusual for the PIs to be pulled into the lawsuit itself, then abandoned by the company who hired them in the midst of the pre-trial proceedings.
That’s exactly what’s happened in a wild and weaving lawsuit that is headed to a jury trial in January 2025 in Clark County, Nevada. A reputable PI firm was allegedly double-crossed by its own client—who settled with the plaintiffs while reportedly encouraging them to pursue the PIs for additional compensation.
Diaz-Toler/Villafana v. Elite Investigations Inc., and TeraFlex Inc. is representative of what can go wrong for PIs who are doing surveillance in high stakes litigation.
What started as a product liability and injury case has evolved into a lawsuit targeting a private investigation firm, its CEO and one of its investigators, leaving them at risk of significant financial and professional loss, even though they had nothing to do with the underlying circumstances that spawned the initial litigation.
Here’s the story.
Background
In February 2018, plaintiff Aiden Diaz-Toler was struck by the front end of a 2017 Jeep Wrangler that was outfitted with an aftermarket bull bar. In the collision, the metal bar directly struck Diaz-Toler, leaving him with a broken pelvis and “other serious and permanent injuries,” including head trauma, according to court documents.
Bull bars are designed to go in front of a vehicle’s bumper to protect the car or truck against damage from collisions. They’re controversial because of the potential damage the bar can inflict on animals and pedestrians. Also known as “roo bars,” they were ” originally intended” to “deflect bulls in the countryside or kangaroos in [ Australia’s] Outback” when a collision occurs, the plaintiffs argued.
In this particular case, the bull bar was manufactured by Chinese company Qing Dao Hong Tuo Machinery Co. and distributed in the United States by TeraFlex Inc. Diaz-Toler and his mother, co-plaintiff Jennifer Villafana, claimed the bull bar was “defective, unfit and unreasonably dangerous for its foreseeable use” and sued Qing Dao and TeraFlex, along with the firm that exported the device to the U.S. and the company that installed it on the Jeep.
The initial suit was essentially a product liability case. The plaintiffs cited multiple product studies alongside steel bull bar bans in the United Kingdom and all 27 European Union countries as evidence that such bull bars were more likely to increase the severity of injury in a collision due to their rigidity. They also maintained that the defendants should have had clear product warnings visible to potential customers, but such messaging was either insufficient or nonexistent. In contrast, marketing content was quoted as saying the bull bars had “won a good reputation [at] home and abroad.”
PIs Hired
After Diaz-Toler and Villafana sued the companies connected to the bull bar installed on the Jeep that hit Diaz-Toler (the driver of the Jeep was also named a defendant), TeraFlex hired Elite Investigations Inc. to surveil the plaintiffs prior to trial. Elite conducted surveillance on Diaz-Toler, Villafana, and the owner of the 2017 Jeep Wrangler that was involved in the accident. Two incidents occurred that would become a central focus of the claims against Elite.
Driveway Encounter: On Nov. 22, 2021, a woman approached Villafana and Diaz-Toler on the driveway of their home, saying that she knew Diaz-Toler and that she was looking for a Hispanic friend of Diaz-Toler’s who had supposedly stolen some tools. Diaz-Toler replied that he didn’t know anyone by that name. When the encounter ended, Villafana said she took a photograph of the vehicle she thought the woman was driving.
Hospital Eavesdropping: On Nov. 23, 2021, an Elite PI tailed the plaintiffs to a hospital and followed them into the lobby. Inside the lobby, he says he overheard Villafana and Diaz-Toler having a conversation with medical personnel to check in Diaz-Toler for surgery. The PI testified that he followed them inside because he was attempting to confirm Diaz-Toler’s identity and called the defense counsel when he learned of the surgery.
The encounter on the driveway rattled Diaz-Toler and Villafana, who suspected the woman was a private investigator. A few months later and shortly before the trial was set to start, TeraFlex used the surveillance video of Diaz-Toler on Nov. 22 and 23, 2021, to have its damages expert, Dr. David Fish, testify that Diaz-Toler had “no ongoing brain injury,” which was the central damages issue in the lawsuit.
Diaz-Toler and his attorneys felt blindsided by the fact that the surveillance hadn’t been disclosed to them previously and was now being revealed on the eve of the trial. The surveillance produced and shared with the plaintiff’s attorneys was only three minutes and 12 seconds, but Dr. Fish testified he had reviewed hours of surveillance and that there was so much surveillance ” he could not download it.” Realizing that the surveillance was taken on the same day he and his mother were approached on the driveway, Diaz-Toler filed a motion to compel the production of the complete surveillance.
Diaz-Toler argued that because of the “extreme gravity of the allegations of illicit contact with Plaintiffs by a defense investigator” and TeraFlex’s untimely production of surveillance, that TeraFlex’s expert witness testimony should be thrown out, the Elite Investigation PIs should be deposed, and that TeraFlex should be ordered to produce “all surveillance and all metadata related to the surveillance.”
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Perjury Allegations
Here’s where things got interesting. In a sworn affidavit dated March 10, 2022, the Elite Investigations CEO indicated only one Elite employee (a male) had conducted surveillance on Diaz-Toler, that no one from Elite had approached or spoken to Diaz-Toler or Villafana on Nov. 22, and that he had “no knowledge or information regarding the identity of the person” who approached Diaz-Toler on the driveway.
In his deposition on March 12, 2022, the Elite PI who had conducted the surveillance testified that he didn’t see anyone approach Villafana or Diaz-Toler while conducting surveillance on Nov. 22 and that he hadn’t been instructed to “engage in a ruse” with either plaintiff. It was during this deposition that the PI revealed he had followed Villafana and Diaz-Toler into the hospital and overheard discussion of Diaz-Toler’s upcoming surgery.
However, just three days later, on March 15, 2022, Elite turned over some metadata and three more “clips” taken a little before 10 a.m. on Nov. 22, which was about the time Villafana had testified she was approached by the woman on her driveway.
The Elite PI testified again, this time denying he had worked with a partner or made contact with Villafana. While the PI was being examined by the defense counsel, the plaintiffs discovered an audio clip in the metadata from Nov. 22 that was a conversation between a man and woman, according to the complaint. The transcript reads as follows:
Female: Far enough he should be trying to get in that car with her.
Male: Yeah.
Female: It’s a tall white kid, but he said his name was Aiden Diaz though they don’t know Jose Hernandez that took my tools. I—the lady would not tell me her name.
Male: That’s fine. But he—he did say Aiden Diaz?
Female: Yeah. He did say he was Aiden Diaz. Yeah.
Male: OK cool. That’s all I need to know.
Female: OK cool.
Male: Alright. Thank you so much.
Female: Yeah. No problem—is that all I do? Now what do I do? I just love this (laughs).
Male: Yeah. Yeah. No so, where did they go?
The PI subsequently confirmed he was the male voice captured in the audio clip. The plaintiffs argued that he PI’s admission meant both the Elite PI and its CEO had earlier committed perjury when they denied they had any connection to the woman who had approached Villafana and Diaz-Toler outside their home. According to the complaint, the PI was read his Fifth Amendment rights—presumably regarding the protection against self-incrimination—at the request of the defense counsel for TeraFlex.
PIs Added to Lawsuit
On April 13, 2022, the plaintiffs filed an amended, second complaint that added Elite Investigations, its CEO, and the surveilling PI to the lawsuit, suing them for invasion of privacy, defamation, negligent misrepresentation and civil conspiracy (false testimony under oath). All of the charges alleged by Villafana and Diaz-Toler stem from the driveway and hospital incidents, in conjunction with Elite’s testimony and additional evidence uncovered during the March 2022 evidentiary hearing.
Elite’s denials of any connection to the woman on the driveway are at the heart of the plaintiffs’ claims of defamation (that Villafana had lied in her affidavit and testimony about the encounter), negligent misrepresentation and civil conspiracy. In addition to maintaining that their privacy was violated on the driveway and in the hospital, Villafana and Diaz-Toler contend that Elite deliberately misled the court about the driveway encounter and that delayed the case, led to two full jury panels being dismissed because the evidentiary/sanctions hearing was drawn out, and hurt plaintiffs’ ability to settle their product liability lawsuit against TeraFlex and the bull bar manufacturer.
PIs Answer Back
In Elite Investigations’ answer back to the plaintiffs’ lawsuit, they categorically denied the claims against them, arguing that the actions they took in relation to their investigation were protected by “absolute litigation privilege” with respect to the defamation claims and that the plaintiffs lacked “any objectively reasonable expectation of privacy” in their driveway as well as “in conversations capable of being overheard in a publicly accessible hospital lobby.” Though the plaintiffs’ characterized the PI’s actions in the hospital as “surreptitious eavesdropping,” the key detail in this incident is that the PI followed Villafana and Diaz-Toler into a “publicly accessible” space.
The PIs pushed back against the notion of intrusion, arguing that the “Plaintiffs did not even know PI had followed them into the lobby until after the fact. By definition, the degree of intrusion of that alleged intrusion was nonexistent. As to the alleged driveway intrusion, there was nothing ‘intrusive’ about the unknown woman approaching Plaintiffs in the driveway in front of their home.”
Tailing a subject into a public area as part of surveillance is a common PI technique. That the setting happened to be a hospital lobby vs. a hotel lobby is irrelevant except for the gray area of being within earshot to hear private medical details. Additionally, in personal-injury cases, investigators following subjects into publicly accessible medical spaces is customary—some PIs actually use a target’s hospital appointments as a way to locate the target and tail them as they leave the hospital.
As to the “eavesdropping” claim, the PIs point to legal precedent that holds that “no reasonable expectation of privacy exists in a conversation when the plaintiff knows that other persons can overhear,” such as a conversation one has in line in a public place—like a waiting room or lobby!
Additionally, despite the PI acknowledging that it was his voice on the audio clip revealed during the evidentiary hearing, Elite continues to maintain there was no proof that either Elite’s CEO or the surveilling PI himself had engaged the woman who approached Villafana and Diaz-Toler:
With respect to the alleged “intrusion” in Plaintiffs’ driveway in front of their home, they do not allege that [we] perpetrated this incident. Instead, they allege it was “a woman” and an “investigator/agent working for the defense.” … Plaintiffs failed to state any cognizable legal theory by which [we] can be held to account for an “intrusion” that they [did] not physically commit.
In the court documents, the Elite investigators acknowledge that their own company policy precluded them from contacting the plaintiffs directly because they were represented by counsel. This is in line with standards and ethics laid out by the American Bar Association (ABA) and included in many state rules and regulations. ABA guidelines stipulate that “in representing a client, a lawyer shall not communicate about the subject of the representation with a party the lawyer knows to be represented by another lawyer in the matter,” unless they have consent from the other lawyer or are authorized by law.
Private investigators are typically treated as “agents” of the attorney, meaning that if a PI had approached Diaz-Toler or Villafana at the direction of defense counsel, it could have put those attorneys at risk of disciplinary action. But it’s worth noting this ABA guideline is specific to conversations about “the subject of the representation.” Asking someone their name is hardly a conversation about the details of the case.
While Diaz-Toler repeatedly alleges that Elite “violated Nevada statutes, regulations, industry standards and its own internal procedures” by having a woman approach them on their driveway, Elite rightly calls their bluff, pointing out that they cite “no specific Nevada statutes, regulations, or industry standards that were allegedly violated [and] presented no admissible evidence to establish that any of the Elite Defendants spoke directly with Plaintiffs” or engaged the woman to speak to them.
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Corporate Veil
In addition to naming Elite Investigations in the lawsuit, Elite’s CEO and the surveilling PI were also named individually. Here, Elite raises the specter of the corporate veil to both shield the PIs from individual liability as well as attack the civil conspiracy claim, asserting that there could be no civil conspiracy because “agents and employees of a corporation cannot conspire with their corporate principal or employer where they act in their official capacities on behalf of the corporation and not as individuals for their individual advantage. … All of the alleged ‘concerted actions’ of the PIs occurred as employees of Elite in the context of their engagement for this case.” Elite Investigations Inc. is a Nevada corporation, according to the plaintiff’s complaint.
Turn of Events
Six days after the Elite defendants filed their motion to dismiss the claims against them, TeraFlex and the other bull-bar defendants announced they had reached a settlement with the plaintiffs—effectively leaving the private investigators out in the cold and potentially on the hook for any remaining liability.
The Elite defendants quickly fired off a motion in opposition to the settlement, arguing that the “proposed settlement was disproportionately lower than TeraFlex’s fair share of damages a s compared to that (if any)” of Elite and its PIs. “While the amount that TeraFlex agreed to pay appears to be significant in a vacuum, it represents only a small fraction of the damages alleged by Plaintiffs, which according to TeraFlex, may be as much as $86.4 million. … In no way does the proposed settlement represent a ‘fair share’ when compared to the potential exposure (if any) of the Elite Defendants,” they wrote.
Further, Elite also contended that the settlement was “the product of blatant collusion between Plaintiffs and TeraFlex aimed at injuring the interests of the Elite Defendants—namely, exposing them to damages for which they are not responsible and conspiring to strip them of contribution and indemnity rights.” Elite maintains that after the purported misconduct by the investigators was discovered, the plaintiffs and TeraFlex entered mediation and devised a plan to “implicate” Elite as part of the settlement and entangle them in civil liability. This allegedly included an exchange of drafts of the plaintiffs’ amended complaint that added Elite to the lawsuit, during which TeraFlex allegedly shared “concepts” to help the plaintiffs assert claims against Elite and provided “input” to how claims against Elite “could be presented” in the amended complaint.
Though the amount of the settlement between the plaintiffs and TeraFlex isn’t public, court documents indicate the settlement was approved.
In another twist, Nova Casualty Co. and The Hanover Insurance Group Inc., the insurers for TeraFlex, tried to join the lawsuit against the private investigators seeking subrogation to recoup the funds it had to pay out as part of the settlement. The insurance carriers argued that Elite’s “bad acts and fatally bungled investigation” forced TeraFlex into an “exorbitant settlement in what would have otherwise been a defensible case,” but their motion to intervene was denied.
The lawsuit against Elite, its CEO, and the surveilling PI is expected to go to trial next year.
Protection for PIs
Isaac Peck, president of OREP Insurance, a national provider of liability insurance for private investigators nationwide, says that this case provides a good example of why private investigators should focus on protecting themselves. “It will be interesting to see if this case goes to trial next year or is settled beforehand. The allegations made against the PIs seem very dramatic for what amounts to pretty routine surveillance,” says Peck. “To the extent the plaintiffs are claiming invasion of privacy and ‘highly offensive’ intrusions on seclusion, these claims are a little mind-boggling since both of the incidents involved were in public places, i.e. a home’s driveway and the lobby of a hospital. This is why we are always telling PIs: Even if you don’t do anything wrong, you can still end up in a lawsuit. That’s why carrying liability insurance as a private investigator is so important.”
The rule of thumb in the liability insurance industry is that the average cost to defend against a frivolous claim is roughly $25,000, assuming you can win it quickly. But Peck says defense costs for complex litigation can easily exceed $100,000 (and beyond), even if you win! “Dozens of filings have been made by both sides so far, experts have been hired, depositions scheduled, and the activity will likely continue leading up to trial. We’re talking about serious money before a case like this even makes it to trial. And trials themselves are often incredibly expensive,” Peck surmises.
Most private investigators can get $1 million in liability insurance for less than $800 per year, making protection incredibly affordable, notes Peck.
This case is also a good example of how the digital age is changing how discovery is done. “It’s notable that the discovery order included ‘metadata’ in this case and that the plaintiffs were able to locate the audio file in question in the data. Technological advances in digital forensics make discovery orders that much more powerful—photos, video, audio, all of it is fair game in litigation, and PIs and their clients are at risk of serious legal consequences if they fail to turn over the data. We frequently counsel PIs to ‘assume discovery’ in their surveillance and operations. Looking at it that way can help inform your strategy on a case going in, especially if your work is being questioned or you’re called into a deposition,” advises Peck.
A jury trial date was originally set for Jan. 6, 2025, but the date has since been pushed back, which is not unusual in cases like these. Stay tuned.
This is a developing story, visit us online at WorkingPImag.com and subscribe to our digital newsletter to get the latest news and information delivered directly to your email inbox.
About the Author
Tony Jones is the former Senior Editor of Working PI magazine, published by OREP, a leading provider of liability insurance for private investigators. In his career, he has planned, researched, written and edited countless feature articles and news pieces that delivered industry insight, best practices and timely news to readers. Based in San Jose, California, he has nearly 30 years of business publishing experience and graduated with a bachelor’s degree in journalism from the University of Arizona.
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