Navigators Ins. Co. v. Goyard, Inc.

608 F.Supp.3d 44

NAVIGATORS INSURANCE COMPANY, Plaintiff,

v.GOYARD, INC., Defendant.

20 Civ. 6609 (AKH) (GWG)

United States District Court, S.D. New York.

Signed June 21, 2022

Frank Jordan, Mendes & Mount, LLP, New York, NY, for Plaintiff.

Brett Van Benthysen, Leo George Kailas, Reitler Kailas & Rosenblatt, L.L.C., New York, NY, for Defendant.

OPINION & ORDER

GABRIEL W. GORENSTEIN, United States Magistrate Judge

Plaintiff Navigators Insurance Company ("Navigators") brings this action against Goyard, Inc. seeking a declaratory judgment that certain losses incurred by Goyard are not within an insurance policy provided by Navigators. Goyard has moved to strike the expert report of Robert V. Comegys.¹ For the following reasons, Goyard's motion is granted.

I. BACKGROUND

On December 16, 2019, Navigators issued a marine cargo insurance policy (the "Policy") to Goyard, with coverage beginning January 1, 2020. See Complaint, filed Aug. 18, 2020 (Docket # 1) ("Comp."), ¶ 7; Answer, filed Nov. 25, 2020 (Docket # 13) ("Answer"), ¶ 7; Ocean Marine Open Cargo Policy, dated Dec. 16, 2019, annexed as Ex. 2 to Benthysen Decl. ("Policy"). The Policy provided Goyard with insurance coverage for goods during shipping and when held in certain specified locations. See Policy at 3. On June 2, 2020, goods held by Goyard were damaged and/or stolen from Goyard's location at 20 East 63rd Street in New York, New York. See Comp. ¶¶ 8-9; Answer ¶¶ 8-9. Goyard then submitted a claim under the Policy seeking to recover for losses associated with the damage and theft of its goods. See Comp. ¶ 9; Answer ¶ 9.

Navigators initiated this action on August 18, 2020, seeking a declaratory judgment that the losses were not covered under the Policy. See Comp. Navigators argues that coverage is unavailable as a result of language in the Policy that Navigators claims excepts from coverage losses caused by "Strikes, Riots, and Civil Commotions," or "SR&CC." See id. ¶¶ 29-35. Goyard contests this interpretation and has filed counterclaims for (1) declaratory judgment that the Policy covers Goyard's losses in full, and (2) breach of contract. See Amended Answer, filed Feb. 16, 2021 (Docket # 28), at *13-16.

The parties then engaged in discovery. On April 14, 2022, Navigators served on Goyard a report prepared for Navigators by expert witness Robert V. Comegys. See Def. Mem. at 3; Pl. Mem. at 4; Report of Robert V. Comegys, annexed as Ex. 3 to Benthysen Decl. ("Comegys Report"). Comegys's report details his 28 years of experience in the insurance industry and his involvement in "modernizing" the language used in marine insurance policies. See Comegys Report at 1-2. Comegys's report opines on the meaning and effect of the various provisions of the Policy as they apply to "[t]he subject claim." Id. at 3.

More specifically, the report "explains why no claim is payable under the circumstances of this event." Id. Comegys states that "[n]o claim is payable under [the Policy] ... as ‘Endorsement No. 4 – Storage Coverage’ included in the Policy specifically excludes the perils of ‘Risks excluded by the F.C. & S. [Free of Capture and Seizure] and SR & CC [Strikes, Riots and Civil Commotions] warranties contained in the open policy, to which this coverage is attached.’ " Id. Comegys's report is premised on the largely unexplained conclusion that Goyard's claim involves a loss of merchandise "that was stolen by looters who were participating in riots," id. — a factual issue contested by the parties. Comegys states his opinion that the Policy's Declarations exclude "[t]he perils of strikes, riots and civil commotions," but that such coverage is " ‘bought back’ by endorsement and for the payment of additional premium." Id. at 4. Comegys opines that the SR&CC Warranty portion of the Policy contains "the actual wording that excludes [SR&CC] from the Policy," because it "excludes damage caused by riots or acts of any person or persons taking part in such occurrences or disorders." Id. at 5. This coverage is then "bought back" by Endorsement No. 1 through the payment of additional premium, but only "on a limited basis" — specifically, for "ocean transit and inland transit and NOT to Storage Coverage." Id. As for Storage Coverage — the portion of the Policy which Comegys states applies to the subject claim — Comegys highlights policy language in Clause 9 of Endorsement No. 4, "Perils Excluded," which provides that

Notwithstanding anything written or printed above or elsewhere herein, and in addition to the perils excluded in the policy to which this endorsement is attached, the following perils are excluded from coverage:

.... (E) Risks excluded by the F.C. & S and SR & CC warranties contained in the open policy, to which this coverage is attached.

Id. at 6. Comegys focuses on the use of the word "[n]otwithstanding" in this clause, stating that "this is a bold word, and its use signifies that despite the fact that there is an SR&CC Endorsement No. 12A in the Policy, coverage under SR&CC will not apply to goods insured under the Storage Coverage Endorsement No. 4." Id. Comegys states that this exclusion "is standard practice in the United States cargo insurance market, in that coverage for [SR&CC] is only provided while goods are in transit but not while being detained or stored at a warehouse that is named and insured under the Policy." Id.

Comegys concludes that "[t]here is no coverage for loss or damage caused by or resulting from rioting and looting at 20 E. 63rd Street New York, New York." Id.

II. LEGAL STANDARD

Under Federal Rule of Evidence 702,

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

Rule 702 incorporates the principles enunciated in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), in which the Supreme Court held that trial courts have a "gatekeeping" function to "ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable," and in Kumho Tire Co. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999), in which the Supreme Court held that Daubert’s general gatekeeping obligation "applies not only to testimony based on ‘scientific’ knowledge, but also to testimony based on ‘technical’ and ‘other specialized’ knowledge," id. at 141, 119 S.Ct. 1167 (citing Fed. R. Evid. 702).

The party seeking admission of expert testimony "has the burden to establish these admissibility requirements, with the district court acting as a ‘gatekeeper’ to ensure that the ‘expert's testimony both rests on a reliable foundation and is relevant to the task at hand.’ " In re Pfizer Inc. Sec. Litig., 819 F.3d 642, 658 (2d Cir. 2016) (quoting United States v. Williams, 506 F.3d 151, 160 (2d Cir. 2007) ). "The district court has broad discretion to carry out this gatekeeping function." Id. A court will grant a motion to strike an expert report if the report is inadmissible under Rule 702, whether the motion is presented as a standalone motion to strike or as part of a summary judgment motion. See generally Davis v. Carroll, 937 F. Supp. 2d 390, 411 (S.D.N.Y. 2013).

The requirement that expert testimony help the trier of fact is "akin to the relevance requirement of Rule 401, which is applicable to all proffered evidence[, but] ... goes beyond mere relevance ... because it also requires expert testimony to have a valid connection to the pertinent inquiry." In re Rezulin Prod. Liab. Litig., 309 F. Supp. 2d 531, 540 (S.D.N.Y. 2004). As with all testimony, expert testimony not only must be relevant under Fed. R. Evid. 401, see, e.g., Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir. 2002), but is also subject to exclusion under Fed. R. Evid. 403 where its probative value is substantially outweighed by the danger of unfair prejudice or other factors, see, e.g., Nimely v. City of New York, 414 F.3d 381, 397 (2d Cir. 2005).

Additionally, Rule 702 requires that expert testimony rest on "specialized knowledge," which is more than "subjective belief or unsupported speculation." See Atl. Specialty Ins. v. AE Outfitters Retail Co., 970 F. Supp. 2d 278, 284, 289 (S.D.N.Y. 2013) (citing Rezulin, 309 F. Supp. 2d at 543 ). Accordingly, expert testimony that is "speculative or conjectural" is inadmissible. Id. at 289 (citing Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 (2d Cir. 1996) ). Similarly, expert opinions that are "conclusory" must be excluded. See Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 311 (2d Cir. 2008) (rejecting expert's conclusory statement where it was not accompanied by "any evidentiary citation" or followed by any elaboration of the expert's reasoning).

Normally, "the use of expert testimony is not permitted if it will ‘usurp either the role of the trial judge in instructing the jury as to the applicable law or the role of the jury in applying that law to the facts before it.’ " United States v. Duncan, 42 F.3d 97, 101 (2d Cir. 1994) (quoting United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir. 1991) ); accord United States v. Felder, 993 F.3d 57, 74 (2d Cir.), cert. denied, ––– U.S. ––––, 142 S. Ct. 597, 211 L.Ed.2d 370 (2021). Thus, an expert report that "applies ... legal principles to the facts" of the case is "not permitted" because it "usurps the jury's role in finding the facts and applying those facts to the law as instructed by the court." Highland Capital Mgt., L.P. v. Schneider, 379 F. Supp. 2d 461, 470-71 (S.D.N.Y. 2005) ; accord Marx & Co., Inc. v. Diners’...