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Burroughs Diesel, Inc. v. Baker Petrolite, LLC

United States District Court, S.D. Mississippi, Eastern Division

October 22, 2019

BURROUGHS DIESEL, INC. PLAINTIFF
v.
BAKER PETROLITE, LLC, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          KEITH STARRETT UNITED STATES DISTRICT JUDGE.

         For the reasons provided below, the Court rules as follows:

1. The Court grants the Baker Defendants' Motion to Strike [174] portions of the affidavit of Plaintiff's expert, Fernando Lorenzo.
2. The Court grants in part and denies in part the Baker Defendants' Motion to Exclude [145] the testimony of Plaintiff's expert, Fernando Lorenzo. Specifically, the Court grants the motion with respect to Lorenzo's opinions regarding the remaining useful life of the metal buildings' roofing panels and side panels, and with respect to Lorenzo's opinions regarding several miscellaneous repair invoices. The Court denies the motion in all other respects.
3. The Court denies Defendant Poly Processing Company, LLC's (“Poly”) Motion to Exclude [137] certain testimony by Plaintiff's experts, Fernando Lorenzo and Roger Craddock.
4. The Court denies Plaintiff's Motion to Exclude [140] certain testimony by Baker's expert, Gale Hoffnagle.
5. The Court denies as moot Plaintiff's Motion to Exclude [142] certain testimony by Baker's expert, James Koerber.
6. The Court grants in part and denies in part Poly's Motion for Summary Judgment [135]. The Court grants the motion with respect to Plaintiff's design defect claim, but the Court denies it in all other respects.
7. The Court grants in part and denies in part Baker's Motion for Summary Judgment [147]. The Court denies the motion with respect to Plaintiff's claimed cleanup costs, tire inventory, tools and equipment, and halogen lights, but the Court grants the motion in all other respects.

         I. Background

         This case arises from a hydrochloric acid (“HCl”) spill. Defendants Baker Petrolite, LLC and Baker Hughes Oilfield Operations, Inc. (collectively, “Baker”) owned a 6, 100 gallon polyethylene storage tank which was designed and manufactured by Defendant Poly Processing Company, LLC (“Poly”). Baker used the tank to store HCl. Plaintiff, Burroughs Diesel, Inc., owned property adjacent to Baker's property. In October 2016, approximately 5, 300 gallons of HCl leaked from a crack in the bottom of the tank.

         Plaintiff alleges that the spill created a cloud of HCl vapor that traveled to and engulfed its property for hours, causing extensive damage to buildings, vehicles, inventory, tools, machines, and equipment. Plaintiff contends that the spill had two causes. First, Plaintiff alleges that the storage tank had a manufacturing defect - a void, or air bubble, in the polyethylene that created a weak spot at the bottom of the tank. Second, Plaintiff alleges that Baker was negligent in its maintenance/use of the tank. Plaintiff claims that Baker failed to inspect the tank as recommended by the manufacturer, and that Baker routinely over-filled the tank, creating excess pressure which caused a crack to develop at the spot weakened by the manufacturing defect, which grew over time and eventually ruptured.

         Plaintiff asserted state-law claims of negligence, gross negligence, trespass, and nuisance against Baker, as well as a claim under CERCLA, 42 U.S.C. § 9607, for recovery of its response costs. Plaintiff also asserted a product liability claim against Poly. The parties filed numerous dispositive motions, all of which are ripe for the Court's review.

         II. Motion to Strike [174]

         Baker argues that the Court should strike portions of Dr. Fernando Lorenzo's affidavit [162-2], presented in support of Plaintiff's responses to Baker's Motion for Summary Judgment [147] and Motion to Exclude [145] his testimony. Baker contends that the affidavit contains new, previously undisclosed expert opinions. Plaintiff claims that the opinions were timely disclosed.

         A. Fair Market Value of the Burroughs Buildings

         First, Baker argues that the Court should strike Lorenzo's opinion that the reduction in useful life of the metal buildings' roofs and side panels “is proportionate to the reduction in the fair market value of the buildings after the spill.” Exhibit 2 to Response at 6, Burroughs Diesel, Inc. v. Baker Petrolite, LLC, No. 2:18-CV-26-KS-MTP (S.D.Miss. July 19, 2019), ECF No. 166-2. Lorenzo provided specific numbers: “[T]he diminution in value of the buildings after the spill is 65% of the pre-spill fair market value ($4, 427, 770), which is $2, 878, 050.50, leaving a post-spill fair market value of 35% or $1, 549, 719.50.” Id.

         Plaintiff argues that another expert provided an appraisal of the buildings' value before the spill, which was disclosed to Baker along with Lorenzo's opinions regarding the useful life of the buildings. Therefore, Plaintiff contends that Lorenzo's simple application of his own estimate of the buildings' remaining useful life to another expert's appraisal of the buildings' pre-spill value is not, in fact, a new opinion. The Court disagrees.

         The Court closely examined Lorenzo's report [145-2], the transcript of his deposition [145-3], and the exhibits referred to in each. Although he provided estimates regarding the useful life of the buildings' roofs and side panels, he never expressed any opinion regarding the fair market value of the buildings. In fact, based on his report and deposition, one would not anticipate the possibility of Lorenzo expressing an opinion regarding the buildings' market value because such opinions are wholly dissimilar from his proposed area of expertise. Therefore, the opinions regarding the fair market value of the buildings in section 4, sub-paragraph (D) of his affidavit are new opinions, first disclosed in response to Baker's motion for summary judgment.

         Rule 26 provides that “a party must disclose to the other parties the identity of any witness it may use at trial to present” expert testimony. Fed.R.Civ.P. 26(a)(2)(A). “Unless otherwise stipulated or ordered by the court, this disclosure must be accompanied by a written report - prepared and signed by the witness - if the witness is one retained or specially employed to provide expert testimony in the case . . . .” Fed.R.Civ.P. 26(a)(2)(B). “A party must make these disclosures at the times and in the sequence that the court orders.” Fed.R.Civ.P. 26(a)(2)(D). Local Rule 26 provides that a “party must make full and complete disclosure as required by Fed.R.Civ.P. 26(a) and L.U.Civ.R. 26(a)(2)(D) no later than the time specified in the case management order.” L.U.Civ.R. 26(a)(2).

         Additionally, “[t]he parties must supplement these disclosures when required under Rule 26(e).” Fed.R.Civ.P. 26(a)(2)(E). “[A] party is required to supplement its expert disclosures if the court so orders or if the party learns that in some material respect the information disclosed is incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.” Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., Inc., 73 F.3d 546, 570 n. 42 (5th Cir. 1996) (quoting Fed.R.Civ.P. 26(e)(1)). “[T]he party's duty to supplement extends both to information included in the report and to information given during the expert's deposition. Any additions or changes to this information must be disclosed by the time the party's pretrial disclosures under Rule 26(a)(3) are due.” Fed.R.Civ.P. 26(e)(2). “Unless the court orders otherwise, ” pretrial disclosures must be made at least thirty days before trial.” Fed.R.Civ.P. 26(a)(3). Local Rule 26 provides that a “party is under a duty to supplement disclosures at appropriate intervals under Fed.R.Civ.P. 26(e) and in no event later than the discovery deadline established by the case management order.” L.U.Civ.R. 26(a)(5) (emphasis added).

         Therefore, if Plaintiff wanted to supplement the information provided in Lorenzo's expert report and deposition, it was required to do so by the discovery deadline. Here, Plaintiff first disclosed Lorenzo's opinions regarding the fair market value of the buildings in response to Baker's motion for summary judgment. Therefore, the new opinions were not timely disclosed.

         Rule 37 provides: “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). When determining whether to strike an expert's testimony for a party's failure to timely disclose it, the Court considers the following factors:

(1) the importance of the witnesses' testimony;
(2) the prejudice to the opposing party of allowing the witnesses to testify;
(3) the possibility of curing such prejudice by a continuance; and (4) the explanation, if any, for the party's failure to comply with the discovery order.

Sierra Club, 73 F.3d at 572; see also Reliance Ins. Co. v. La. Land & Exploration Co., 110 F.3d 253, 257 (5th Cir. 1997).

         First, the testimony is important. Plaintiff has another expert, John Adamson, who provided an appraisal of the property's value before the spill. See Exhibit D to Motion for Summary Judgment, Burroughs Diesel, Inc. v. Baker Petrolite, LLC, No. 2:18-CV-26-KS-MTP (S.D.Miss. June 20, 2019), ECF No. 147-4. But Plaintiff apparently has no appraisal of the property's post-spill value.

         However, allowing Lorenzo to provide expert testimony regarding the fair market value of the properties would be prejudicial to Baker. Baker was unable to question Lorenzo regarding any such opinions during his deposition, and it had no opportunity to obtain rebuttal opinions from its own experts. Moreover, there is no time to cure the prejudice because the pretrial conference is imminent. The Court will not reopen discovery at this late stage of the proceedings. At this point, the parties should be focused on preparation of a pretrial order and for trial.

         Finally, Plaintiff has not provided any satisfactory explanation for its failure to timely disclose Lorenzo's opinions regarding the market value of the buildings. Therefore, the Court concludes that they should be excluded. Plaintiff is not allowed to rely on them in support of or response to a motion, at a hearing, or at trial.

         B. Cost to Repair and the Repaired Condition

         Next, Baker argues that the Court should exclude Lorenzo's opinions regarding the cost to repair the buildings' roofs and side panels, his opinion that the cost to repair them would exceed the diminution in the buildings' value, and his opinion that repaired roofs and side panels would be inferior to their pre-spill condition. These opinions are in section 5 of Lorenzo's affidavit. See Exhibit 2 [166-2], at 6-8.

         In response, Plaintiff argues that Lorenzo did, in fact, address these issues in his deposition. Plaintiff also argues that repairing the roofs and side panels would be essentially the same as replacing them, and, therefore, Lorenzo's opinion regarding the cost of replacement is sufficient notice to Defendants of his opinions regarding the cost of repair.

         During Lorenzo's deposition, Baker's counsel asked him whether “regalvanizing” the roof panels would fix the problems allegedly caused by exposure to HCl. Exhibit C to Motion in Limine at 47, Burroughs Diesel, Inc. v. Baker Petrolite, LLC, No. 2:18-CV-26-KS-MTP (S.D.Miss. June 20, 2019), ECF No. 145-3. Lorenzo answered, “Yes.” Id. But he noted that “galvanizing is . . . a process that is made during the [production] of the roof panels.” Id. Later, counsel asked whether “repainting” the side panels would fix the problems allegedly caused by exposure to HCl. Id. at 49. Lorenzo answered, “It is possible, yes. You will have to sandblast, prepare the surface, and then . . . repaint the side panels. Chances are that you may not get the exact . . . same finish because as you know, those panels are factory made, not painted after they are prepared.” Id. But he confirmed that “[w]ith the proper preparation, . . . it will . . . re-coat the panels.” Id.

         The Court closely examined Lorenzo's report, the transcript of his deposition, and the exhibits referred to in each. Although he provided opinions regarding the cost to replace the buildings' roofs and side panels, Lorenzo did not provide any opinions regarding the cost to repair the buildings' roofs and side panels. Plaintiff's argument that the two costs must be essentially the same because they will require similar labor requires an inferential leap - without enough supporting testimony or evidence - that the Court declines to make. Also, Lorenzo did not testify that the quality of the repaired roofs and side panels would be inferior to their pre-spill condition. Rather, he stated that repainting the side panels would probably not produce the “same finish.” Id. In fact, he explicitly affirmed that “regalvanizing” the roof panels would fix whatever problems were caused by the HCl, id. at 47, and that repainting the side panels would “probably” fix them. Id. at 49.

         Therefore, the Court concludes that most of the opinions expressed in section 5 of Lorenzo's affidavit are new, previously undisclosed opinions. As noted above, if Plaintiff wanted to supplement Lorenzo's disclosed testimony, it was required to do so by the discovery deadline. Plaintiff first disclosed Lorenzo's opinions regarding the cost to repair the buildings' roofs and side panels, his opinion that the cost to repair them would exceed the diminution in the buildings' value, and his opinion that repaired roof and side panels would be inferior to their pre-spill condition in response to Baker's motion for summary judgment. Accordingly, the opinions were not timely disclosed.

         The Court will assume the testimony is important, but allowing Lorenzo to provide the new opinions would be prejudicial to Baker. Baker was unable to question Lorenzo regarding any such opinions during his deposition, and it had no opportunity to obtain rebuttal opinions from its own experts. Moreover, there is no time to cure the prejudice because the pretrial conference is imminent. The Court will not reopen discovery at this late stage of the proceedings. At this point, the parties should be focused on preparation of a pretrial order and preparing for trial.

         Finally, Plaintiff has not provided any satisfactory explanation for its failure to timely disclose Lorenzo's opinions regarding the cost to repair the buildings' roofs and side panels, his opinion that the cost to repair them would exceed the diminution in the buildings' value, and his opinion that repaired roof and side panels would be inferior to their pre-spill condition. Therefore, the Court concludes that they should be excluded. Plaintiff is not allowed to rely on them in support or response to a motion, at a hearing, or at trial. The Court excludes the expert testimony contained in section 5 of Lorenzo's affidavit, except insofar as Lorenzo addressed “regalvanizing” and repainting during his deposition, as cited above. But Lorenzo may not say anything on the subject that he did not say during the deposition.

         For these reasons, the Court grants Baker's Motion to Strike [174] portions of the affidavit of Plaintiff's expert, Fernando Lorenzo.

         III. Motion to Exclude Testimony of Fernando Lorenzo [145]

         Baker filed a Motion to Exclude [145] the testimony of Plaintiff's expert, Dr. Fernando Lorenzo, concerning the damages to Plaintiff's property. Baker contends that Lorenzo is unqualified to testify as an expert, and that his opinions are neither reliable nor relevant.

         Rule 702 provides:

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.

Fed. R. Evid. 702. Therefore, “when expert testimony is offered, the trial judge must perform a screening function to ensure that the expert's opinion is reliable and relevant to the facts at issue in the case.” Watkins v. Telsmith, Inc., 121 F.3d 984, 988-89 (5th Cir. 1997).

         In Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the Supreme Court provided a nonexclusive list of “general observations intended to guide a district court's evaluation of scientific evidence, ” including: “whether a theory or technique can be (and has been) tested, whether it has been subjected to peer review and publication, the known or potential rate of error, and the existence and maintenance of standards controlling the technique's operation, as well as general acceptance.” Watkins, 121 F.3d at 989 (punctuation omitted).

Not every guidepost in Daubert will necessarily apply . . ., but the district court's preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue is no less important.

Id. at 990-91 (punctuation omitted).

         Expert testimony must be supported by “more than subjective belief or unsupported speculation.” Paz v. Brush Eng'red Materials, Inc., 555 F.3d 383, 388 (5th Cir. 2009). It “must be reliable at each and every step or it is inadmissible. The reliability analysis applies to all aspects of an expert's testimony: the methodology, the facts underlying the expert's opinion, the link between the facts and the conclusion, et alia.” Seaman v. Seacor Marine LLC, 326 Fed.Appx. 721, 725 (5th Cir. 2009). “Overall, the trial court must strive to ensure that the expert, whether basing testimony on professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” United States v. Valencia, 600 F.3d 389, 424 (5th Cir. 2010).

         But the Court's role as gatekeeper is not meant to supplant the adversary system because “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596. The Court should focus solely on the proposed expert's “principles and methodology, not on the conclusions that they generate.” Id. at 595. But “nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence connected to existing data only by the ipse dixit of the expert.” GE v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997).

         In summary, the proponent of expert testimony must demonstrate that the proposed expert is qualified, that the testimony is reliable, and that it is relevant to a question of fact before the jury. United States v. Hicks, 389 F.3d 514, 525 (5th Cir. 2004). The proponent must prove these requirements “by a preponderance of the evidence.” United States v. Fullwood, 342 F.3d 409, 412 (5th Cir. 2003).

         A. Qualification

         First, Baker argues that Lorenzo is not qualified to provide expert testimony concerning the damage to Plaintiff's property because he has insufficient experience, education, or training regarding HCl. In response, Plaintiff cites Lorenzo's education and experience in the fields of metallurgy and mechanical engineering.

         Rule 702 provides that an expert may be qualified by “knowledge, skill, experience, training, or education . . . .” Fed.R.Evid. 702. Expert testimony “serves to inform the jury about affairs not within the understanding of the average man.” United States v. Moore, 997 F.2d 55, 57 (5th Cir. 1993). Therefore, “[a] district court should refuse to allow an expert witness to testify if it finds that the witness is not qualified to testify in a particular field or on a given subject.” Wilson v. Woods, 163 F.3d 935, 937 (5th Cir. 1999).

         A proposed expert does not have to be “highly qualified in order to testify about a given issue. Differences in expertise bear chiefly on the weight to be assigned to the testimony by the trier of fact, not its admissibility.” Huss v. Gayden, 571 F.3d 442, 452 (5th Cir. 2009). Likewise, lack of personal experience “should not ordinarily disqualify an expert, so long as the expert is qualified based on some other factor provided by Rule 702 . . . .” United States v. Wen Chyu Liu, 716 F.3d 159, 168 (5th Cir. 2013). Moreover, an “expert witness is not strictly confined to his area of practice, but may testify concerning related applications; a lack of specialization does not affect the admissibility of the opinion, but only its weight.” Id. at 168-69. Regardless of its source, “the witness's . . . specialized knowledge, ” must be “sufficiently related to the issues and evidence before the trier of fact that the witness's proposed testimony will help the trier of fact.” Id. at 167.

         Baker notes that Lorenzo admitted that he has only worked on one insurance claim involving an HCl spill, and that he has no other training, experience, or education concerning HCl spills. See Exhibit C [145-3], at 32-33. However, Lorenzo is a metallurgist, and he has a Ph.D. in “Materials Science and Engineering.” Exhibit 2 [166-2], at 25. He has worked with insurance companies providing damage estimates to commercial property owners. Exhibit C [145-3], at 49.

         The Court believes that Lorenzo has sufficient education and experience to provide expert testimony regarding the damage to Plaintiff's property caused by the HCl spill. His expertise in mechanical engineering and metallurgy is applicable to the issues presented here, and he has experience providing damage estimates on commercial properties. His admitted lack of specific experience with HCl goes to the weight of his testimony, rather than its admissibility.

         B. Reliability

         Next, Baker argues that Lorenzo's opinions are not reliable. The reliability of proposed expert testimony “is determined by assessing whether the reasoning or methodology underlying the testimony is scientifically valid.” Knight v. Kirby Inland Marine, Inc., 482 F.3d 347, 352 (5th Cir. 2007). As noted above, “the expert's testimony must be reliable at each and every step or it is inadmissible.” Seaman, 326 Fed.Appx. at 725. Baker made several arguments regarding the reliability of Lorenzo's opinions. The Court will address each in turn.

         1. Errors in Report

         First, Baker argues that Lorenzo's opinions regarding the damage to Plaintiff's property are unreliable because his report includes several factual errors. Lorenzo admitted the errors during his deposition and corrected them. Exhibit C [145-3], at 27-29. “[A] few scattered errors in an expert report are not necessarily grounds for exclusion, ” particularly where the expert admitted the errors and corrected them during discovery. Moore v. Int'l Paint, LLC, 547 Fed.Appx. 513, 516 (5th Cir. 2013); cf. Marsh v. Wallace, 2008 WL 4000809, at *6-*7 (S.D.Miss. Aug. 22, 2008) (in bench trial, court declined to exclude ...


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