COURT STRIKES EXPERT OPINION THAT SURETY ACTED AS A “DE FACTO CONTRACTOR”

Posted on November 5, 2023November 5, 2023 by David Adelstein

Designating and admitting experts is a vital component of any construction dispute. Many construction disputes require experts. Many construction disputes can only be won with the role of an expert. Thus, experts and construction disputes go hand-in-hand. No doubt about it! Time needs to be spent on developing the right expert opinions to support your burden of proof. This means you want to designate the right expert that can credibly and reliably render an expert opinion.

It is common for one party to move to strike the testimony and expert opinions of another party. This is referred to as a Daubert motion. Sometimes the motion is about gamesmanship. Sometimes it is to see how the judge rules on the issue. Sometimes there is a legitimate reason associated with the expert opinion. And, sometimes, it is a combination of the above. Regardless of the reason, parties know the weight expert opinions can have and, therefore, treat the opinions seriously prompting the Daubert motion.

A recent opinion out of the Southern District of Florida, Berkley Insurance Co. v. Suffolk Construction Co., 2023 WL 7010001 (S.D.Fla.2023), deals with the trial court striking a portion of a general contractor’s expert opinion. The dispute involved a general contractor and a subcontractor and subcontractor’s performance bond surety. The general contractor refused to pay the subcontractor and the subcontractor’s performance bond surety, in furtherance of mitigating damages, funded the subcontractor’s continued performance. The surety then sued the general contractor to recover losses and the non-payment.

One of the expert opinions the general contractor offered was that the subcontractor’s performance bond surety acted as a “de factor subcontractor.” This opinion was based off the surety “requesting all payment for [the subcontractor], from [the surety’s] agents’ presence at onsite meetings on the project, and from its decisions mandating certain manpower and other resources to be applied to the project after [the subcontractor] breached. [The surety] exercised complete control over [the subcontractor] to such extent that [the surety] became a ‘de factor subcontractor.’” Berkley Ins. Co., 2023 WL at *8.

The trial court, however, was not buying this expert opinion. At all. “Remarkably, however, [the expert] has never before attempted to develop the theory he advances of a surety becoming a ‘de facto contractor.’ His ‘customized’ expertise was allegedly generated to advocate for the specific legal arguments of counsel but without any objectively verifiable basis….” Berkley Ins. Co., supra, at *8. The trial court further explained:

An expert must show how his experience leads to the conclusion reached and why that experience is a sufficient basis for the opinion. But in this Report, [the expert] claims that a surety may become a “de facto contractor” even though he admitted that, in his entire career, there had not been one time where he had experience evaluating a surety as being a “de facto contractor.” Furthermore, [the expert] states that he has never seen, known, or even heard about a “de facto contractor” before this case. And as we stated before, he has no experience acting as a surety in any meaningful way.

To admit this opinion under Rule 702 [of the Federal Rules of Evidence] we must find there to be some showing of how his experience led to or reliably supported his conclusions. While [the expert] conveyed that he reviews industry standards and articles “every day, it’s just a normal course of my … daily routine”, he cannot cite a single industry standard or article that he has seen in his entire career that discusses the “de facto contractor” theory. With no experience to point to and no industry recognition of the “de facto contractor” theory, there is no link between his experience and his opinion besides “I think it’s just something that is understood in the industry.” [The expert] failed to show how his experience may render a reliable opinion before the trier of fact and nothing in our review of this record can save him on this score.

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So, in short, we have an “expert opinion” that effectively clothes [the general contractor’s] legal conclusions that will be presented in the case. The facts supporting that legal conclusion can be, and certainly will be, presented at trial through testimony of fact witnesses with personal knowledge. To bolster that testimony with an expert opinion, [the general contractor] must present a witness with experience as a surety (which [the expert] does not have) or with practical experience of a contractor who has faced that dilemma (which [the expert] admits he also does not have). So the Court on this record has zero basis to find, preliminarily or otherwise, that a reliable expert opinion can be forthcoming through this expert. As to this “de facto subcontractor” opinion, he is not an expert at all. Hence, his testimony in this regard must be excluded.

Berkley Ins. Co., supra, at *8-*9 (internal citations omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

THINKING ABOUT A DAUBERT MOTION TO CHALLENGE AN EXPERT OPINION?

Posted on January 29, 2023January 29, 2023 by David Adelstein

When you receive an expert opinion, one of the first things you are considering is whether it is worth filing a Daubert motion / challenge. A Daubert motion is a generally a pretrial motion you are using to challenge the admissibility of the expert opinion. Keep in mind this deals with the admissibility, not the credibility, of the expert opinion. A Daubert motion is based on three prongs that must be answered: 1) is the witness qualified to render the expert opinion?; 2) is the expert’s opinion reliable?; and 3) is the expert’s opinion relevant?.

A Daubert motion is premised after Federal Rule of Evidence 702 that 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.

The qualification prong is the foundational prong. It is based on whether the witness has the “knowledge, skill, experience, training, or education” to render to expert opinion. It’s a more liberal standard to determine whether the expert is qualified to testify competently as to his/her opinions. “This inquiry is not stringent, and so long as the expert is minimally qualified, objections to the level of the expert’s expertise [go] to credibility and weight, not admissibility.” See Clena Investments, Inc. v. XL Specialty Ins. Co., 280 F.R.D. 653 (S.D.Fla. 2012) (internal quotations and citations omitted).

The reliability prong is generally the prong where focus is placed. Focus is whether the expert opinion is “based on scientific, technical, or other specialized knowledge and not on belief or speculation, and inferences must be derived using scientific or other valid methods.” See Nease v. Ford Motor Co., 848 F.3d 219, 229 (4^th Cir. 2017) (internal quotation and citation omitted). “Under the reliability requirement, the expert testimony must have a reliable basis in the knowledge and experience of the relevant discipline. To ensure reliability, the Court assess[es] the [expert’s] reasoning or methodology, using as appropriate such criteria as testability, publication in peer reviewed literature, and general acceptance.” See JH Kelly, LLC v. AECOM Technical Services, Inc., 2022 WL 1817415, *3 (N.D.Ca. 2022) (internal citations and quotations omitted). There are various guideposts the court uses to determine the reliability of the opinion and there is not necessarily a one-size-fits-all model applied universally to all experts.

The relevance prong is simply based on whether the expert’s opinion will assist the fact-finder to understand evidence and/or determine an issue in dispute. See JH Kelly, supra (internal citations and quotations omitted).

These prongs allow the trial court to serve as a gatekeeper to ensure the fact-finder (jury) hears admissible expert opinions. Just remember, a Daubert challenge is based on these three prongs: qualification, reliability, and relevance. Thus, when making a Daubert challenge, you want to focus on which of the prongs you are using to challenge the admissibility of the expert’s opinion. It could be one prong. It could be them all. Again, the focus is on the admissibility, not on the weight of the expert’s opinion because trial courts will view the weight of the expert’s opinion as a credibility issue that can be attacked through rigorous cross-examination.

JH Kelly is an example of a construction dispute out of the Northern District of California where a prime contractor and a subcontractor each filed Daubert motions. There were multiple experts and numerous challenges. Most of the Daubert motions were denied as the trial court found they were really credibility arguments, not admissibility arguments. However, there were a couple of rulings worth pointing out here.

The subcontractor moved to strike expert opinions from one of the prime contractor’s experts that was opining that the subcontractor “is not entitled to recover its: (1) post-project completion damages; (2) change management support fees; and (3) costs for changed work due to untimely and insufficient notice based on the Subcontract provisions….” The subcontractor claimed these opinions were a question of law and nothing more than attorney argument masked as an expert opinion. The trial court agreed.

[T]he Court agrees with [subcontractor] that although these opinions are purportedly based on [expert’s] reading of the Subcontract, they are at bottom attorney argument dressed up as expert opinion. [Expert’s] opinion that various provisions of the Subcontract preclude [subcontractor] from recovering its costs is just straightforward contract interpretation, and as such it permissibly treads on ultimate issues of law.

JH Kelly, supra, at *12.

The general contractor wanted to strike one of the subcontractor’s experts that was opining on lost productivity damages due to excessive changes to the project. The expert used four different methods to calculate lost productivity (e.g., measured mile, IBBS Curves, MCAA factors, and Modified Total Cost). The general contractor claimed all such calculations were not reliable – they were subjective and unsubstantiated. However, the court found that the flaws in the expert’s analysis go to the weight of the opinion, and not on admissibility, and can be vetted through incisive cross-examination. “The major theme here is that while the Court agrees that some of [contractor’s] criticisms of [expert’s] analysis have significant force, it will ultimately allow the jury to determine how much weight to assign his opinions.” JH Kelly, supra, at *6.

There are numerous considerations, including strategic, when filing a Daubert motion.

QUICK NOTE: …BACK TO THE DAUBERT STANDARD FOR EXPERT TESTIMONY

Posted on May 24, 2019April 24, 2020 by Edward Garber

In what has previously appeared to be a game of moving chairs, the Florida Supreme Court formally adopted the Daubert standard to determine the admissibility of expert testimony. This allows Florida to move on from the Frye standard and the moving chairs associated with which standard should apply to the admissibility of expert opinions. A good discussion on the Florida Supreme Court’s recent application of the Daubert standard can be found here. The Daubert standard determines the admissibility of expert testimony / opinions in federal court and now it is officially back in Florida to apply to Florida state court litigation. This is important to know, particularly in the construction context, because many construction-related disputes utilize the services of an expert witness to render expert opinions.

APPLICATION OF FRYE TEST TO DETERMINE ADMISSIBILITY OF EXPERT

Posted on February 2, 2019February 2, 2019 by Edward Garber

Florida went back to the Frye test/standard, instead of the Daubert test utilized in federal court, to determine the admissibility of expert testimony. The Frye test is more favorable to plaintiffs because it applies when an expert renders an opinion based on new or novel scientific principles. See D.R. Horton, Inc. v. Heron’s Landing Condominium Ass’n of Jacksonville, Inc., 44 Fla.L.Weekly D109b (Fla. 1^stDCA 2018) (“The supreme court has described the Frye test as one in which the results of mechanical or scientific testing are not admissible unless the testing has developed or improved to the point where the experts in the field widely share the view that the results are scientifically reliable as accurate. Stated differently, under Frye, the proponent of the evidence has the burden of establishing by a preponderance of the evidence with the general acceptance of the underlying scientific principles and methodology. However, as stated, the Frye standard only applies when an expert attempts to render an opinion that is based upon new or novel scientific principles.”).

In D.R. Horton, Inc., a condominium association sued the developer and general contractor (same entity) for construction defects that included claims in negligence, violation of building code, and breach of statutory warranties. The developer/general contractor moved in limine / to strike the association’s experts under, at the time, a Daubert analysis, but which became a Frye analysis during the pendency of the appeal. The expert opined as to construction defects and damage and the appropriate repairs – really, no different than any construction defect dispute, from what it appeared. The trial court denied the motion and during trial the experts testified and a sizable damages judgment was entered against the developer/contractor prompting the appeal. One issue on appeal was the admissibility of the expert’s opinion. The appellate court noted that a Frye analysis is not necessary because the experts used a scientifically reliable and peer-reviewed methodology.

A smart tactic, and I mean SMART tactic, that the association’s counsel seemed to utilize was to engage a third-party engineer to testify during a hearing that the methodology used by the association’s experts was industry standard methodology and generally accepted. Thus, the opinions were not based on new or novel scientific principles and the appellate court affirmed the trial court’s denial of the contractor/developer’s motion in limine.

AN EXPERT’S QUALIFICATIONS ARE IMPORTANT

Posted on December 15, 2018April 24, 2020 by Edward Garber

An expert’s qualifications are important. Please remember this the next time you retain an expert to analyze documents or data and render an opinion based on that information. An expert must be qualified to render an opinion. Otherwise the expert will not be allowed to render the opinion you may be looking for or need for purposes of trial, as discussed below.

A recent personal injury case, White v. Ring Power Corp., 43 Fla.L.Weekly D2729a (Fla. 3d 2018), involved a crane operator that became severely injured when operating a leased crane. The case proceeded to trial against only the equipment lessor of the crane based on the plaintiff’s contention that there were deficiencies with the crane. The plaintiff intended on using expert witnesses to interpret the crane’s load movement indicator (referred to as LMI) and render opinions that the LMI data showed prior overloads of the crane which resulted in the injury to the operator of the crane.

During a pre-trial motion, the trial court held that the experts were NOT qualified to interpret the LMI data and, therefore, were not qualified to render opinions based on this data. The experts were not allowed to render such expert testimony at trial. After the trial, the plaintiff appealed this ruling. The Third District Court of Appeal affirmed this pre-trial ruling.

The trial court’s decision to exclude portions of White’s [plaintiff] experts’ testimony was based upon a finding that these witnesses were unqualified to interpret the LMI data or offer opinions on its significance. This finding is supported by competent substantial evidence, including the experts’ own deposition testimony, in which they acknowledged, for example:

· Expert witness Barth: He has never been trained to interpret LMI data, never took a course on LMI systems, and stated he “self-trained” regarding LMI data by reviewing the instant accident and reading depositions of other witnesses. Barth acknowledged he was not proficient in reading LMI data, and a review of the deposition establishes that Barth was unfamiliar with the LMI system and had difficulty answering basic questions about its purpose and use.

· Expert witness Barbe: Although he certifies crane operators, he does not certify crane maintenance workers, is not a certified crane inspector, and none of his training specifically involves wire ropes. The cranes he inspects do not use LMI systems. He did not know how to download the LMI data on the crane in question, received no training on how to read LMI data, and was unfamiliar with many of the LMI codes contained in the data.

· Expert witness Mankins: He conceded to “not being an expert on LMI or this type of data”; “I wouldn’t know an LMI if I saw one”; “I have no personal experience with LMI systems, nor do I profess to have any expertise associated with such a system.” Mankins did not know the significance of a one-, two- or four-parts line on a crane, and acknowledged “I essentially know nothing about cranes.”

None of the three experts had ever interpreted LMI data or used LMI data to investigate the cause of a crane accident or wire rope failure. Instead, all three of White’s expert witnesses accepted the LMI data at face value without sufficient knowledge, training or expertise to interpret the data or opine as to its significance. We conclude that the trial court did not abuse its discretion in excluding that portion of their proposed testimony.

COMPETING EXPERT WITNESSES IN AN INSURANCE COVERAGE DISPUTE

Posted on April 2, 2018April 2, 2018 by Edward Garber

Oftentimes, insurance coverage disputes involve competing expert witnesses. The experts render different expert opinions regarding a topic that goes to coverage and/or damages. An example of competing expert witnesses can be found in the recent property insurance coverage dispute, Garcia v. First Community Ins. Co., 43 Fla.L.Weekly D671a (Fla. 3d DCA 2018).

In this case, an insured submitted a claim under her homeowner’s policy for water damage due to a roof leak. She claimed her damage was approximately $23,000. The insurer denied coverage and an insurance coverage dispute ensued.

The insured’s policy, akin to many homeowner’s policies, contained exclusions for loss caused by:

h. Rain, snow, sleet, sand or dust to the interior of a building unless a covered peril first damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.

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i. (1) Wear and tear, marring, deterioration;

The insurer sent an engineer to inspect the insured’s property and the engineer (expert) opined that the water intrusion was not covered under the policy based on the aforementioned exclusions. Her opinion was that the water intrusion through the roof was the result of deterioration from age, tree branch abrasions, and construction defects based on how nails were installed into the shingles. Based on this opinion, the insurer was denying coverage based on the (i) wear and tear, marring and deterioration exclusion and (ii) rain intruded through the roof based on a peril (construction defect) that was not covered under the policy.

The insured, as expected, had a competing expert that opined that a hail impact or high wind uplift (covered peril) in the days leading up to the rain event caused water to intrude through the roof and cause interior damage. Under this opinion, the insured was presenting an expert opinion for coverage and why the insurer’s exclusions were inapplicable.

In this case, surprisingly, the trial court granted summary judgment in favor of the insurer. However, this was reversed on appeal because the competing opinions as to coverage and the cause of the insured’s loss created a genuine issue of material fact. Summary judgment cannot be granted if there are genuine issues of material fact. See Garcia, supra, (“Given this conflict in the material evidence as to the cause of the loss, the trial court erred in entering final judgment in favor of First Community [insurer].”).

Another argument the insurer raised was that its engineer inspected the property within months after the date of loss whereas the insured’s expert is basing an opinion on an inspection that occurred three years after the fact. This fact, albeit true, does not create a genuine issue of material fact. Rather, it goes to the credibility of the experts at trial. Which expert is more credible regarding the cause of the loss: the insurer’s expert that inspected the property a few months after the loss or the insured’s expert that inspected the property years after the loss. Well, the issue of credibility and how a jury / trier of fact weighs this in consideration of other evidence is not appropriate in determining a motion for summary judgment. See Garcia, supra.

Experts are an important part of construction disputes including insurance coverage disputes and it is not uncommon for there to be competing expert opinions as to the cause of a loss, a defect, and, of course, damages.

UTILIZING EXPERT WITNESSES FOR CONSTRUCTION DISPUTES

Posted on January 14, 2015January 14, 2015 by Edward Garber

Expert witnesses are an integral part of construction disputes. An expert assists a party in proving or disproving liability or damages. In construction disputes, an expert could be used relating to a construction or design defect, a delay, an inefficiency, the standard of care, building code violations, the repair protocol, etc. Irrespective of the basis for retaining an expert, oftentimes the expert generates a report with his/her opinions (and documentation relied on to form those opinions), is deposed, and, if the case proceeds to trial, is relied on to provide expert opinion testimony.

Recently, I wrote an article about the Daubert test which is a court’s gatekeeping test to determine whether the expert opinion testimony is admissible. Parties utilizing experts in construction disputes need to understand this Daubert test. Please take a look at this article to familiarize yourself with Daubert to ensure you are engaging and preparing the right expert.

Additionally, I wrote another article on expert opinion testimony including the standard of appellate review if a court strike’s expert opinion testimony or allows an expert to testify subject to an objection. Please take a look at this article because it is common for a party prior to trial to move to strike an opposing expert or portions of that expert’s opinion testimony.