Lexington Ins. Co. v. Newbern Fabricating, Inc.

LEXINGTON INSURANCE COMPANY; GAVILON FERTILIZER, LLC;

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON;and GAVILON GRAIN, LLC, Plaintiffs, v. NEWBERN FABRICATING, INC., and BAUCOM CONCRETE CONSTRUCTION, INC., Defendants,andNEWBERN FABRICATING, INC., Third-Party Plaintiff, v. DOVELAND ENGINEERING CO., Third-Party Defendant.

Case No. 14-CV-0610-CVE-TLW

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

March 14, 2017

OPINION AND ORDER

Now before the Court is the report and recommendation (Dkt # 329) of Magistrate Judge T. Lane Wilson recommending that the Court grant Baucom Concrete Construction, Inc.'s (Baucom) motion to exclude or limit the testimony of Brian Bretz (Dkt. # 147). Lexington Insurance Company (Lexington) filed an objection (Dkt. # 337) to the report and recommendation, and Baucom filed a response (Dkt. # 340).

I.

This action arises from the collapse of a wall of a storage facility at the Tulsa Port of Catoosa. Gavilon Grain owned the building, which Gavilon Fertilizer used to store fertilizer.¹ Dkt. # 147, at 2. In 2004, Gavilon Grain contracted with Newbern Fabricating, Inc. (Newbern), a construction company that builds river terminals and equipment, to build a concrete storage facility. Id. Baucom worked as the subcontractor responsible for the concrete work on the project. Id. On March 7, 2013, a concrete wall of the building collapsed, resulting in damage to the wall itself and the master control center (MCC Room), an adjacent room that housed controls, motors, and electronics that controlled the building's conveyer system. Id. Plaintiffs Lexington and Lloyd's of London paid a number of claims related to the losses sustained from the wall collapse. Dkt. # 54, 4-5. Plaintiffs filed this action against defendants Newbern and Baucom, asserting that the damages were caused by inadequate design and installation of the concrete columns. Id. at 5-9.

Lexington hired the firm Cunningham Lindsey to act as insurance adjuster for the Gavilon claim. Dkt. # 185-3, at 7. Cunningham Lindsey hired Bretz soon after the wall collapse to conduct a preliminary inspection of damage and estimate the cost of repairs. Id.; Dkt. # 147-2, at 4. Bretz conducted a field inspection on March 20, 2013. Dkt. # 147-2, at 5. On March 28, 2013, Bretz sent a preliminary inspection report (preliminary report) to Cunningham Lindsey that described the damage and included a "rough order-of-magnitude reserve estimate." Id. at 8. On May 21, 2013,Bretz sent Cunningham Lindsey a "scope of damage repairs and associated cost estimate" (second report), which included a one-page "preliminary estimate summary" (May estimate). Id. at 11-13. At some point between May 21, 2013 and September 25, 2013,² another one-page "preliminary estimate summary" was prepared (September estimate), which is identical to the May estimate except for the estimate for "electrical" is approximately $1,000 less. Id. at 17-23. The September estimate also includes a six-page detailed estimate. Id. Both reports and estimates were produced to Baucom during discovery in this case.

Lexington identified Bretz as an expert in repair cost estimation and produced a report of Bretz pursuant to Federal Rule of Civil Procedure 26(a)(2)(B) on September 30, 2015 (expert report). Bretz's expert report includes a paragraph describing his educational background and history with his current employer, a summary of how Bretz was hired and his visit to the site of the collapse in May 2013, and a list of the major repairs needed to restore the building to its pre-loss condition. Dkt. # 147-1, at 1-3. The second-to-last paragraph contains the following sentence: "The above report and associated estimate of damage repairs did not take into account any code upgrade requirements which were unknown at the time of this original report." Id. at 3.

Counsel for Baucom emailed counsel for Lexington to ask about Bretz's expert report in December 2015. Baucom's counsel noted that cost estimates were mentioned in the report but not attached, and no statement of compensation, list of publications, or list of previous cases was included. Dkt. # 147-2, at 3. Lexington's counsel responded with six previously produced documents, stating that Baucom should refer to them for "documentation containing the damageamount and analysis." Id. at 1. These documents included Bretz's preliminary report, second report and accompanying May estimate, two copies of the September estimate, and a invoice for Bretz's consulting expenses for April 2013. Id.

Baucom now asks the Court to exclude Bretz's testimony because his expert report failed to meet the requirements of Rule 26(a), and because his cost estimate methodology is unreliable. Dkt. # 147, at 3. Lexington responds that Bretz's expert report complies with Rule 26(a) and his methodology is reliable. Dkt. # 185, at 3.

II.

The Court may refer any pretrial matter pending before it to a magistrate judge for a report and recommendation. 28 U.S.C. § 636(b)(1)(A). However, the parties may object to the magistrate judge's recommendation within fourteen days of service of the recommendation. Schrader v. Fred A. Ray, M.D., P.C., 296 F.3d 968, 975 (10th Cir. 2002); Vega v. Suthers, 195 F.3d 573, 579 (10th Cir. 1999). The Court "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). The Court may accept, reject, or modify the report and recommendation of the magistrate judge in whole or in part. Fed. R. Civ. P. 72(b).

III.

Baucom asks the Court to exclude Bretz's testimony for two reasons: (1) Bretz's expert report failed to comply with Rule 26(a), and (2) Bretz's methodology is unreliable. The magistrate judge recommended that Bretz's testimony should be excluded because Bretz's expert report did not comply with Rule 26(a), and that failure was not substantially justified or harmless. Dkt. # 329, at 7. Because the magistrate judge recommended Baucom's motion be granted on Baucom's Rule 26(a)argument, the magistrate judge did not address Baucom's argument regarding Bretz's methodology. Id. Lexington objects to the report and recommendation, arguing that Bretz's expert report complied with Rule 26(a) and that any alleged deficiencies were harmless. Dkt. # 337. Baucom responded to Lexington's objection, arguing that Lexington's harmlessness argument is waived because it was not raised before the magistrate judge. Dkt. # 340, at 3-4.

A.

The Court first addresses Bacuom's Rule 26(a) argument.³ Rule 26(a)(2)(B) governs expert reports, and requires each report to contain the following:

(i) a complete statement of all opinions the witness will express and the basis and reasons for them;

(ii) the facts or data considered by the witness in forming them;

(iii) any exhibits that will be used to summarize or support them;

(iv) the witness's qualifications, including a list of all publications authored in the previous 10 years;(v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and

(vi) a statement of the compensation to paid for the study and testimony in the case.

Fed. R. Civ. P. 26(a)(2)(B). "The purpose of Rule 26(a)(2)'s expert disclosure requirements is to eliminate surprise and provide the opposing party with enough information regarding the expert's opinions and methodology to prepare efficiently for deposition, any pretrial motions and trial." Cook v. Rockwell Int'l Corp., 580 F. Supp. 2d 1071, 1122 (D. Colo. 2006) (citing Sylla-Sawdon v. Uniroyal Goodrich Tire Co., 47 F.3d 277, 284 (8th Cir. 1995); Nguyen v. IBP, Inc., 162 F.R.D. 675, 682 (D. Kan. 1995)).

The original expert report of Bretz supplied to Baucom does not comply with Rule 26(a). It does not include all of Bretz's opinions or exhibits because the cost estimates are not included. The description of Bretz's qualifications is deficient because it does not include a list of publications authored in the previous 10 years. Additionally, a list of cases for which Bretz was a witness in the previous 4 years and a statement of compensation are entirely missing. Bretz's expert report is clearly insufficient under Rule 26(a), and the fact that the cost estimates were part of a prior document production does not cure the expert report's deficiencies. The expert report requirements of Rule 26(a) are in place so that the parties have a clear statement of the qualifications, opinions, and methodology of each expert the other party plans to call to testify at trial. Requiring a party to piece together an expert's report from among the multitude of documents produced during litigation is antithetical to the purpose of Rule 26(a). This is especially true in this case where several of the documents later proffered by Lexington as part of Bretz's report were not readily identifiable as being authored by Bretz. See Dkt. # 147-2, at 17-56 (cost estimates that neither bear Bretz's name nor are attached to such documents). Thus, Bretz's expert report fails to comply with Rule 26(a).

Rule 37 addresses failures to comply with discovery rules. Under Rule 37(c)(1):

If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless.

Fed. R. Civ. P. 37(c)(1). "The determination of whether a Rule 26(a) violation is justified or harmless is entrusted to the broad discretion of the district court." Jacobsen v. Deseret Book Co., 287 F.3d 936, 953 (10th Cir. 2002) (quoting Woodworker's Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999)). A district court need not make explicit findings regarding the harmlessness or substantial justification of a Rule 26(a) violation. Woodworker's Supply, 170 F.3d at 993. However, the district...