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Burroughs Diesel, Inc. v. The Travelers Indemnity Company of America

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

October 25, 2019

BURROUGHS DIESEL, INC. PLAINTIFF
v.
THE TRAVELERS INDEMNITY COMPANY OF AMERICA DEFENDANT

          MEMORANDUM OPINION AND ORDER

          KEITH STARRETT UNITED STATES DISTRICT JUDGE

         For the reasons provided below, the Court grants in part and denies in part Travelers' Motion to Strike [124] an affidavit from Plaintiff's expert, Dr. Fernando Lorenzo, and the Court grants in part and denies in part Travelers' Motion to Exclude [105] the testimony of Plaintiff's expert, Dr. Fernando Lorenzo.

         I. Background

         This is an insurance coverage dispute arising from a hydrochloric acid (“HCl”) spill. On October 14, 2016, approximately 5, 300 gallons of HCl leaked from a storage tank on property adjacent to that owned by Plaintiff, Burroughs Diesel, Inc. 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.

         At the time of the spill, Plaintiff was insured under a property insurance policy issued by Defendant, Travelers Indemnity Company of America. Plaintiff filed a claim shortly after the spill. On October 26, 2016, Travelers' engineer investigated the damage to Plaintiff's facilities and property. One week later, the adjuster sent Plaintiff an e-mail denying the claim, citing the policy's pollution exclusion. Over the next year or so, Plaintiff continued to request that Travelers pay the claim, and Travelers continued to deny it.

         Plaintiff filed this suit against Travelers, claiming that Travelers wrongfully denied coverage, and that it failed to fully and timely investigate the claim. Plaintiff asserted the following claims: breach of contract, breach of the duty of good faith and fair dealing, and tortious breach of contract. Plaintiff seeks an award of benefits under the policy, punitive damages, attorney's fees, and interest. Travelers filed two evidentiary motions, which the Court now addresses.

         II. Motion to Strike Affidavit [124]

         Travelers filed a Motion to Strike [124] an affidavit [116-4] from Plaintiff's expert, Dr. Fernando Lorenzo, presented in support of Plaintiff's response [116] to Traveler's Motion to Exclude [105] the testimony of Plaintiff's experts. Although Travelers contends that the entire affidavit constitutes new, previously undisclosed expert testimony, it only addressed several specific topics from the document.

         A. Side Panels' Loss of Useful Life

         First, Travelers contends that Lorenzo articulated a new basis for his opinion that the painted side panels on Plaintiff's metal buildings had lost 50% of their useful life. In the affidavit, he stated:

It is also my opinion that 50% of the protective baked-on enamel painted coating on the steel side panels of the 10 buildings was reduced due to the acid exposure. The baked-on enamel paint is recognized as providing corrosion protection by the Majestic Steel publication . . ., but is less resilient to corrosion than galvanized zinc coatings. As explained in my deposition . . ., my original 50% metal reduction calculation (with a thicker coating) reasonably reflects the estimated 50% amount of paint loss in the protective enamel paint coatings on the side panels.

Exhibit 4 to Response at 4-5, Burroughs Diesel, Inc. v. Travelers Ind. Co. of Am., No. 2:18-CV-48-KS-MTP (S.D.Miss. July 19, 2019), ECF No. 116-4. Lorenzo cited two PDL Handbooks in support of this opinion. Id. at 5 n. 1.

         During his deposition, Lorenzo also testified that 50% of the paint on the metal buildings' side panels had been corroded. Exhibit BB to Motion for Summary Judgment at 48, Burroughs Diesel, Inc. v. Travelers Ind. Co. of Am., No. 2:18-CV-48-KS-MTP (S.D.Miss. June 17, 2019), ECF No. 108-28. When directly asked, Lorenzo stated that the only basis for this opinion was an article from a do-it-yourself home repair website. Id. at 48-49. When discussing the paint on the side panels, he made no mention of a Majestic Steel publication or PDL Handbooks. Therefore, the Court concludes that Lorenzo's citation of these sources as support for his opinion regarding the loss of useful life in the metal buildings' side panels is new testimony, previously undisclosed.

         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 of May 31, 2019. See Amended Case Management Order, Burroughs Diesel, Inc. v. Travelers Ind. Co. of Am., No. 2:18-CV-48-KS-MTP (S.D.Miss. Nov. 8, 2018), ECF No. 37. Here, Plaintiff first disclosed Lorenzo's reliance on the Majestic Steel publication and PDL Handbooks to support his opinion regarding the side panels' loss of useful life on July 19, 2019, in response to Travelers' motion to exclude Lorenzo's testimony. See Response to Motion to Exclude, Burroughs Diesel, Inc. v. Travelers Ind. Co. of Am., No. 2:18-CV-48-KS-MTP (S.D.Miss. July 19, 2019), ECF No. 116. Therefore, the new testimony was 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).

         The Court will assume that the proposed testimony is important, but admitting it at this late stage of the case would be prejudicial to Travelers. Lorenzo cited the additional sources in response to Travelers' motion to exclude his testimony for, among other purported reasons, lack of support. Travelers has not had a chance to cross-examine Lorenzo concerning the new sources, to investigate them before filing its dispositive motions, or to acquire a rebuttal opinion from its own expert. There is no time to cure the prejudice, because the pretrial conference is imminent. Finally, Plaintiff has not provided any explanation for its failure to timely disclose these sources.

         Therefore, the Court concludes that Lorenzo's late citation of these additional sources in support of his opinions regarding the side panels' loss of useful life should be excluded. The Court strikes sub-paragraph (C) of Section 3 of Lorenzo's affidavit. See Exhibit 4 [116-4], at 4-5. Plaintiff is not allowed to rely on this evidence or testimony in support of or response to a motion, at a hearing, or at trial.

         B. Total Loss of Remaining Useful Life

         Next, Travelers argues that Lorenzo asserted a new opinion regarding the total loss of remaining useful life for Plaintiff's metal ...


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