Opinion
1:19-CV-00381-ELR
07-09-2020
Mark SCHEINFELD and Patricia Scheinfeld, Plaintiffs, v. LM GENERAL INSURANCE COMPANY, Defendant.
David H. Flint, Sarah Richards Smith, Mary Ellen Lighthiser, Schreeder Wheeler & Flint, LLP, Atlanta, GA, for Plaintiffs. Brent J. Kaplan, Hilary Wayne Hunter, Isenberg & Hewitt, P.C., Atlanta, GA, for Defendant.
David H. Flint, Sarah Richards Smith, Mary Ellen Lighthiser, Schreeder Wheeler & Flint, LLP, Atlanta, GA, for Plaintiffs.
Brent J. Kaplan, Hilary Wayne Hunter, Isenberg & Hewitt, P.C., Atlanta, GA, for Defendant.
ORDER
Eleanor L. Ross, United States District Judge
Presently before the Court are several matters. The Court's rulings and conclusions are set out below.
All facts noted herein are undisputed unless otherwise indicated.
This case involves an alleged breach of Plaintiffs Mark and Patricia Scheinfeld's insurance contract by Defendant LM General Insurance Company. Compl. [Doc. 1]. The Court first provides the relevant factual background before turning to the procedural history.
A. Factual Background
In 1990, Plaintiffs built a house located at 10300 Kinross Road, Roswell, Georgia 30076, to own and operate as a rental property (the "Property"). Def.’s Statement of Undisputed Material Facts ¶¶ 1–2, 7 [Doc. 51-1] ("Def.’s SOMF"); Pls.’ Statement of Material Facts as to Which Present Genuine Issues for Trial ¶ 1 [Doc. 58] ("Pls.’ SOMF"). At all times relevant to this litigation, the Property was covered by a homeowner's insurance policy issued by Defendant bearing policy number H3S-258-503609-40 ("the Policy"). Policy at 4 [Doc. 1-1]; Def.’s SOMF ¶ 3; Pls.’ SOMF ¶ 2.
In 2017, Plaintiffs’ tenants moved out of the Property, rendering the Property vacant at the time of the events giving rise to this litigation. Def.’s SOMF ¶ 10; Pls.’ SOMF ¶ 3. After the tenants departed, Mr. Scheinfeld discontinued the Property's power and ensured that the water to the property was turned off at the meter. Def.’s SOMF ¶ 11; Pls.’ SOMF ¶ 3. Mr. Scheinfeld testified that he either personally turned off the water, or he instructed his maintenance contractor to do so, and subsequently personally checked to make sure it was done. Def.’s SOMF ¶ 12; Pls.’ SOMF ¶¶ 3–4.
Generally, Mr. Scheinfeld drives by each of the rental properties he owns once a month. Def.’s SOMF ¶ 14; Pls.’ SOMF ¶ 5. The last time Mr. Scheinfeld visited the Property prior to the events giving rise to this litigation was during the end of March 2018 or the beginning of April 2018. Def.’s SOMF ¶ 15; Pls.’ SOMF ¶ 6. During that visit, Mr. Scheinfeld inspected the house to determine what work would need to be done before renting the Property to a new tenant, and observed no water leaks, damage, or mold at that time. Pls.’ SOMF ¶ 7.
Mr. Scheinfeld next visited the Property on June 20, 2018. Id. ¶ 8; Def.’s SOMF ¶ 17. When he entered the home, he could hear water running. Def.’s SOMF ¶ 18; Pls.’ SOMF ¶ 8. As he walked toward the kitchen, he could see water pouring out of the ceiling. Def.’s SOMF¶ 19; Pls.’ SOMF ¶ 8. Mr. Scheinfeld turned the water off to the house and immediately notified Defendant's agent of the loss. Def.’s SOMF ¶ 22; Pls.’ SOMF ¶¶ 9, 12.
On June 27, 2018, Defendant assigned Brianna Demar as the adjuster for Plaintiffs’ claim. Def.’s SOMF ¶ 24; Pls.’ SOMF ¶ 14. The same day, Defendant engaged Rytech, Inc. to determine the extent of the damage as well as the necessary remediation. Def.’s SOMF ¶ 25. After its on-site inspection, Rytech confirmed the extensive presence of visible mold and water damage to the Property, including in the main level bathroom, second-floor master bathroom, master bedroom, foyer, main level hallway, laundry area, and kitchen (where the damages included collapsed ceiling drywall as well as mold and water damage throughout the cabinetry). Id. ¶ 26.
In an effort to mitigate the damages, Mr. Scheinfeld restored power to the Property, rented and installed two carpet blowers and two dehumidifiers, and hired David Lindhal to remediate the mold caused by the water leak. Id. ¶ 29; Pls.’ SOMF ¶¶ 21–22. Mr. Lindhal completed the remediation on July 13, 2018, and informed Mr. Scheinfeld that the probable source of the leak was a supply line to the vanity in the master bathroom. Pls.’ SOMF ¶ 23.
Due to the significant mold, Defendant retained Mr. Jared Powell, P.E., of Donan Engineering, to inspect the Property and determine "the cause and duration of [the] mold damage." Id. ¶ 20; Def.’s SOMF ¶ 28. Mr. Powell inspected the Property on July 16, 2018, and issued a report summarizing his conclusions on July 19, 2018. Def.’s SOMF ¶ 34; Pls.’ SOMF ¶¶ 24, 26; see Rep. of Jared Powell [Doc. 47-3] ("Powell Report"). At the end of his investigation, Mr. Powell concluded that: (1) water overflowing one or more master bathroom fixtures caused water damage; (2) the lack of climate control caused conditions favorable for fungal growth; and (3) the fungal growth had been ongoing for at least six months. Def.’s SOMF ¶¶ 42–45; Pls.’ SOMF ¶ 29.
The Powell Report states that Mr. Scheinfeld discovered the leak on May 20, 2018, rather than June 20, 2018. Def.’s SOMF ¶ 36; Pls.’ SOMF ¶ 26. However, the Powell Report is the only document that references the May 20th date, and Mr. Powell admitted that his reference to May 20, 2018, may have been incorrect. Pls.’ SOMF ¶ 27.
In accordance with the Powell Report, Defendant denied coverage of Plaintiffs’ insurance claim on August 10, 2018, "due to repeated seepage and leakage of water, rot, fault installation of gutter, insects, and surface water." Def.’s SOMF ¶ 67; Pls.’ SOMF ¶ 37. In denying Plaintiffs’ claim, Defendant relied on the Seepage Exclusion Endorsement in the insurance contract, which provides:
SECTION I – PERILS INSURED AGAINST
Coverage A – Dwelling and Coverage B – Other Structures
Paragraph 2.e(9) is added:
(9) Seepage, meaning a gradual, continuous, or repeated seepage or leakage of water, steam or fuel over a period of 14 days or more, resulting in damage to the structure. This exclusion applies unless such seepage or leakage of water, steam or fuel and the resulting damage is unknown to all "insureds" and is hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure.
Policy at 29; Def.’s SOMF ¶ 46; Pls.’ SOMF ¶ 39.
Plaintiffs’ loss also implicated the Amendatory Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus Endorsement (the "Mold Endorsement") in the Policy. Def.’s SOMF ¶ 47. The Mold Endorsement provides, in pertinent part:
The following definition is added to the DEFINITIONS section:
9. "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" means any type or form of fungus, rot, virus or bacteria. This includes mold, mildew and any mycotoxins (meaning a toxin produced by a fungus), other microbes, spores, scents or byproducts produced or released by mold, mildew, fungus, rot, bacteria, or viruses.
SECTION I – PROPERTY COVERAGES
Additional Coverages
The following Additional Coverage is added:
11. Remediation of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" Resulting Directly From Any Covered Loss
We will pay, up to the Basic Policy Limits or Option shown in the Declarations, for the "Remediation" of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" resulting directly from any covered loss.
We will pay, up to the Basic Policy Limits or Option shown in the Declarations, for the "Remediation" of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" resulting directly from any covered loss.
"Remediation" means the reasonable and necessary treatment, containment, decontamination, removal or disposal of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" as required to complete the repair or replacement of property, covered under Section I of the policy, that is damaged by any covered peril insured against, and also consists of the following:
1. The reasonable costs or expense to remove, repair, restore, and replace
that property including the costs to tear out and replace any part of the building as needed to gain access to the "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus"; and
***
SECTION I – EXCLUSIONS
Exclusion 1.i. is added:
i. Except as provided by Additional Coverage 11, loss consisting of or caused by "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" is excluded, even if resulting from a peril insured against under Section I. We do not cover "Remediation" of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus," even if resulting from a peril insured against under Section I, except as provided by Additional Coverage 11.
Policy at 26–27; Def.’s SOMF ¶¶ 47–48. Defendant submits that Plaintiffs’ loss is not covered under any provision of the Policy. Def.’s SOMF ¶¶ 49–50, 53.
On November 21, 2018, in light of Defendant's denial, and pursuant to O.C.G.A. § 33-4-6, Plaintiffs’ counsel sent Defendant a demand letter. Id. ¶ 68. Thereafter, Plaintiffs filed this case. See Compl. In conjunction with this litigation, Plaintiffs retained Eva Ewing, an industrial hygienist and asbestos building inspector, as an expert. Def.’s SOMF ¶ 55; Pls.’ SOMF ¶ 46. Ms. Ewing inspected the Property on August 19, 2019, and prepared a report of her findings. Def.’s SOMF ¶ 55; Pls.’ SOMF ¶ 46; Rep. of Eva M. Ewing, CIH [Doc. 56-12]. She opined that it was reasonable to conclude that the leak originated from the water supply line in the master bathroom vanity because the piping had been removed during the remediation efforts and there were no leaks when she tested the water during her inspection of the Property. Pls.’ SOMF ¶ 47–48. She also testified that it was not possible to determine when the leak started or how long it continued based only on the available photographs in this case because "[t]here are so many variables that can affect the appearance—the water staining, the extent of the mold growth—that the development of the methodology for a time period would be very difficult." Id. ¶ 50.
Mr. Scheinfeld has estimated the total damages to the Property to be $80,000. Id. ¶ 52; Def.’s SOMF ¶ 63. This figure includes $5,500 in costs that Plaintiffs have already incurred for mold remediation, with the remaining $75,833.08 representing the amount Mr. Scheinfeld estimates it will cost to finish the repair of the Property. Pls.’ SOMF ¶ 52. Plaintiffs produced invoices and other documents during the discovery period showing the amounts they have already spent remediating the damage to the Property. Id. ¶ 53. Additionally, Mr. Scheinfeld submitted an affidavit itemizing his calculation of the costs that he believes will be associated with repairing the damages caused by the leak. Id. ¶ 54; Aff. of Mark Scheinfeld [Doc. 56-3] ("Scheinfeld Aff.").
B. Procedural History
Plaintiffs filed this case on January 22, 2019. Compl. In the Complaint, Plaintiffs bring the following claims: Count I – Breach of Contract; Count II – Bad Faith and Attorneys’ Fees pursuant to O.C.G.A. § 33-4-6 ; and Count III – Attorneys’ Fees and Expenses of Litigation pursuant to O.C.G.A. § 13-6-11. See Compl. After eight (8) months of discovery, Plaintiffs filed the instant Motion to Exclude the Expert Testimony of Jared Powell. [Doc. 47]. Additionally, Defendant filed a "Motion for Summary Judgment or in the Alternative for Partial Summary Judgment." [Doc. 51]. In conjunction with their response to Defendant's motion, Plaintiffs filed the above-referenced Scheinfeld Affidavit [See Doc. 56-3], to which Defendant objects. [Doc. 61]. These matters have been fully briefed and are ripe for the Court's review.
II. Motion to Exclude [Doc. 47]
The Court turns first to Plaintiffs’ motion to exclude. [Doc. 47]. In this motion, Plaintiffs seek to exclude the anticipated testimony of Mr. Jared Powell, P.E. The Court first sets out the relevant legal standard before addressing the bases for the motion.
A. Legal Standard
Federal Rule of Evidence 702, which governs the admissibility of expert testimony, 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. Although the rule, on its face, provides the Court with only limited guidance, the United States Supreme Court's opinion in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), is instructive. "Unlike an ordinary witness, ... an expert is permitted wide latitude to offer opinions, including those that are not based on firsthand knowledge or observation." Daubert, 509 U.S. at 592, 113 S.Ct. 2786. Unfortunately, a jury may find it difficult to evaluate an expert's opinion. See id. Trial courts are therefore tasked with acting as "gatekeepers" to exclude inadmissible testimony by ensuring that a proposed expert's testimony is not only relevant, but reliable. Id. To that end, district courts are "charged with screening out experts whose methods are untrustworthy or whose expertise is irrelevant to the issue at hand." Corwin v. Walt Disney Co., 475 F.3d 1239, 1250 (11th Cir. 2007).
As the gatekeeper, the trial court must make a "rigorous three-part inquiry" to determine whether:
(1) the expert is qualified to testify competently regarding the matters he intends to address; (2) the methodology by which the expert reaches his conclusions is sufficiently reliable as determined by the sort of inquiry mandated in Daubert ; and (3) the testimony assists the trier of fact, through the application of scientific, technical, or specialized expertise, to understand the evidence or to determine a fact in issue.
United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004) (quoting City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 562 (11th Cir. 1998) ). Although there is inevitable overlap among the three prongs of this analysis, trial courts must be cautious not to conflate them, and the proponent of expert testimony bears the burden to show that each requirement is met. Id.; Cook ex rel. Estate of Tessier v. Sheriff of Monroe Cty., Fla., 402 F.3d 1092, 1113–14 (11th Cir. 2005).
While many factors bear on the Court's inquiry, there is no definitive checklist. Maiz v. Virani, 253 F.3d 641, 665 (11th Cir. 2001) ; see also United States v. Scott, 403 F. App'x 392, 397 (11th Cir. 2010) (finding that Daubert provides only general guidelines and that the trial judge has "considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable") (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ). There are multiple ways, for instance, that an individual may be qualified to give expert testimony. Indeed, the text of Rule 702 makes clear that expert status may be based on "knowledge, skill, experience, training, or education." FED. R. EVID. 702 (emphasis added); FED. R. EVID. 702 advisory committee's note (2000 amends.) ("Nothing in this amendment is intended to suggest that experience alone ... may not provide a sufficient foundation for expert testimony.").
Likewise, Daubert sets forth a list of "general observations" regarding the reliability of a proposed expert's methodology. Factors to be considered include: (1) whether the expert's theory can be and has been empirically tested; (2) whether the expert's theory has been subjected to peer review and publication; (3) the known or potential error rate of the expert's theory and whether that rate is acceptable; and (4) whether the expert's theory is generally accepted in the scientific community. Daubert, 509 U.S. at 593–94, 113 S.Ct. 2786. Importantly, not every factor "will apply in every case, and in some cases other factors will be equally important in evaluating the reliability of proffered expert opinion." Frazier, 387 F.3d at 1262 ; accord FED. R. EVID. 702 advisory committee's note (2000 amends.). Thus, the trial court has considerable leeway to determine whether proffered expert testimony is reliable for the purpose of admissibility. See Frazier, 387 F.3d at 1262.
Finally, the district court must assess whether the expert testimony will assist the trier of fact. Put another way, the court must ask whether the expert testimony "concerns matters that are beyond the understanding of the average lay person." Id. If the proffered expert testimony "offers nothing more than what lawyers for the parties can argue in closing arguments," it should not be admitted. Id. at 1262–63.
B. Analysis
Having laid out the Daubert standard, the Court now turns to the Parties’ arguments. Defendant identified Mr. Jared Powell as a retained expert to determine "the cause and duration of [the] mold damage" to the Property. Powell Report at 1. Specifically, Mr. Powell opines that the mold was caused by water overflowing in one or more master bathroom fixtures which led to the inundation of the subflooring, underlying ceiling, and lower-level flooring components. Id. at 9. His report indicates that the lack of climate control in the vacant house, combined with a water loss in the master bathroom, caused conditions favorable for fungal growth. Id. Finally, as to the mold's duration, Mr. Powell determined that, based on the extent of the damage, the fungal growth had been ongoing for at least six (6) months. Id. at 10.
For ease of reference, the Court uses the page numbers from Mr. Powell's report rather than the pagination given by the Court's CM/ECF system.
Plaintiffs challenge Mr. Powell's qualifications, the reliability of his opinions, and whether his testimony would be helpful to the trier of fact. [See Doc. 47]. The Court addresses each of Plaintiffs’ arguments below.
i. Qualifications
The Court first sets forth the undisputed qualifications of Mr. Powell. Mr. Powell, a civil engineer, has over nineteen (19) years of construction, design, and facilities management expertise. See Jared Powell CV at 1 [Doc. 48-1] ("Powell CV"). In 2007, he became a professional engineer (P.E.) which involved four (4) years of training, the procurement of several professional recommendations, and an examination. Dep. of Jared Powell at 130:1–131:5 [Doc. 47-4]. ("Powell Dep."). Mr. Powell holds two (2) degrees: a Bachelor of Science degree in Civil Engineering from Georgia Technology University and a Masters in Business Administration from the University of Baltimore. Id. at 131:18–19; Powell CV at 2.
In addition to his certification as a P.E., Mr. Powell is also a certified professional inspector with the International Association of Certified Home Inspectors ("InterNACHI"). Powell Dep. at 128:4–7. InterNACHI is an accredited post-secondary school which requires coursework and testing on issues such as plumbing, roofing, electrical, heating and cooling, structure, exterior, interior, insulation and ventilation, fireplace and chimney, wood destroying organisms, environment, inspection methods, reporting, and professional practice. Aff. of Jared Powell ¶ 5 [Doc. 48-4] ("Powell Aff"). Mr. Powell also completes continuing education classes such as "Biodeterioration of Wood," "How to Perform Mold Inspections," and "How to Inspect for Moisture Intrusion." Id. ¶¶ 4, 6, 8. Finally, Mr. Powell is designated as a Certified Mold Inspector through the International Association of Certified Air Consultants. Id. ¶ 7.
Despite these credentials, Plaintiffs argue that Mr. Powell lacks the necessary qualifications to opine on mold growth. [Doc. 49 at 2]. While Plaintiffs concede that Mr. Powell has "some background in mold inspection," they argue that this background does not constitute expertise. [Id. at 6–7].
In response, Defendant argues that Mr. Powell's formal education need not be in the area of his expertise or opinion; instead, his experience and training qualify him to render these opinions. [See generally Doc. 48]. In support of its position, Defendant points out that Mr. Powell has conducted nearly 800 forensic engineering investigations over the past twenty (20) years. Powell Aff. ¶ 10. Of those, over 200 were specifically focused on water intrusion issues, flood damage analysis, or the analysis of mold or mold-related damage. Id. ¶ 11. Lastly, at least thirty (30) investigations were specifically focused on mold analysis or duration of water losses and the subsequent development of mold. Id.
The Court agrees that reliance on a proposed expert's experience and training, rather than formal education, is permissible. FED. R. EVID. 702 ("knowledge, skill, experience, training, or education") (emphasis added); FED. R. EVID. 702 advisory committee's note (2000 amends.) ("Nothing in this amendment is intended to suggest that experience alone ... may not provide a sufficient foundation for expert testimony."). Defendant sufficiently highlights the precise experience Mr. Powell has that is relevant to this case. While Mr. Powell may not have formal education on this topic, Plaintiffs’ argument on this point ultimately addresses the weight and credibility of Mr. Powell's proffered testimony, rather than its admissibility. Hendrix v. Evenflo Co., 255 F.R.D. 568, 578 (N.D. Fla. 2009), aff'd sub nom., 609 F.3d 1183 (11th Cir. 2010) ("[S]o long as the expert is at least minimally qualified, gaps in his qualifications generally will not preclude admission of his testimony, as this relates more to witness credibility and thus the weight of the expert's testimony, than to its admissibility."); see also United States v. Everglades College, Inc., No. 12-60185-CIV-DIMITROULEAS/SNOW, 2014 WL 11531790, at *4 (S.D. Fla. May 27, 2014) (finding that an expert who was a CPA, Chairman, and CEO of an accounting firm had credentials that satisfied the qualifications prong under Daubert and "any inexperience [he] may have with damages in the specific context of federal student loans [was] an issue of credibility rather than admissibility").
Accordingly, the Court finds that Defendant has provided sufficient explanation of Mr. Powell's training and experience, qualifying him to opine on the cause and duration of mold growth. For the foregoing reasons, the Court finds Mr. Powell is qualified to render his proffered opinions.
ii. Reliability
Plaintiffs next challenge Mr. Powell's methodology as not sufficiently reliable. [See Doc. 47-1]. Specifically, Plaintiffs highlight two (2) articles that Mr. Powell relies on in his report. [Id. at 11]. Plaintiffs contend that Mr. Powell did not follow the parameters of the articles and impermissibly expanded them to reach his conclusion. [Id. at 14–16]. Thus, Plaintiffs contend while "[t]he authors of the articles limit[ed] the application of their studies consistent with the principles of good science," Mr. Powell "expand[ed] the application beyond good science" by not following the procedures set out in them. McClain v. Metabolife Int'l, Inc., 401 F.3d 1233, 1245 (11th Cir. 2005).
In its response, Defendant does not address Plaintiffs’ contentions as to whether Mr. Powell followed the methodology set forth in the relied-upon articles. [See Doc. 48]. Instead, relying on Mr. Powell's report and affidavit, Defendant submits that Mr. Powell, utilizing the scientific method, primarily relied on his own experience to form his opinions, and only used the above-mentioned articles as support. [Id. at 14–15]. Thus, Defendant argues that Mr. Powell's methodology is sufficiently reliable. [Id. at 14].
The Court agrees with Defendant that experience may serve as the basis for an expert's opinion. See FED. R. EVID. 702 advisory committee's note (2000 amends.) ("Nothing in this amendment is intended to suggest that experience alone ... may not provide a sufficient foundation for expert testimony."). However, as explained by the Eleventh Circuit Court of Appeals in Frazier, more is required if an expert is relying solely or primarily on experience as the basis for his opinions:
[T]he Committee Note to the 2000 Amendments of Rule 702 expressly says that, "[i]f the witness is relying solely or primarily on experience, then the witness must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts. The trial
court's gatekeeping function requires more than simply ‘taking the expert's word for it.’ " Fed. R. Evid. 702 advisory committee's note (2000 amends.) (emphasis added); see also Daubert v. Merrell Dow Pharmaceuticals, Inc. (on remand), 43 F.3d 1311, 1316 (9th Cir. 1995) (observing that the gatekeeping role requires a district court to make a reliability inquiry, and that "the expert's bald assurance of validity is not enough"). If admissibility could be established merely by the ipse dixit of an admittedly qualified expert, the reliability prong would be, for all practical purposes, subsumed by the qualification prong.
387 F.3d at 1261 (emphasis in original).
Here, the Court is not presented with how or why Mr. Powell's experience leads him to his proffered conclusions. While Defendant cites to Mr. Powell's report and affidavit to demonstrate that he allegedly used his experience in conjunction with the scientific method, a closer analysis shows otherwise. For example, in his affidavit, Mr. Powell states:
Defendant does not cite to Mr. Powell's deposition to support its argument and the Court will not scour the record in search of it. See Boyd v. Province Healthcare Co., No. CIV. A. 04-0825-WSD, 2005 WL 3132394, at *4 n. 15 (S.D. Ala. Nov. 22, 2005) ("The Court will not scour these deposition transcripts sua sponte for uncited evidence that might lend support to the plaintiff's position.").
During the course of my investigations and evaluations, I utilize a methodology known generically as the "scientific method," whereby I generally follow specific steps of identifying the problem to be addressed; defining the scope of that problem; collecting data; analyzing data; forming hypotheses; testing those hypotheses against the existing data and the body of knowledge, experience, and education I have obtained; and forming a conclusion following that analysis. This methodology is universally accepted as reliable throughout the scientific world.
Powell Aff. ¶ 14. However, this generalized statement of the universal "scientific method" does not demonstrate that he employed the method, in connection with his experience, to this case. Mr. Powell's affidavit is void of that explanation.
An examination of Mr. Powell's report fares no better. In his report, Mr. Powell begins with basic observations and data he considered. Powell Rep. at 1–5. He then transitions to a portion of the report called "Key Concepts" wherein he discusses general principles related to the duration of water exposure, wood stains, fungal decay, and site drainage. Id. at 5–8. Additionally, this section and also references the two (2) articles mentioned above. Id. Following "Key Concepts," the next sections are entitled "Conclusions," and "Summary of Conclusions." Id. at 8–10. Noticeably absent from the report is an analysis or application section. See id. In other words, Mr. Powell omits in his report how and why these "Key Concepts," combined with his experience, lead him to his conclusions. "[P]resenting a summary of a proffered expert's testimony in the form of conclusory statements devoid of factual or analytical support is simply not enough" to demonstrate reliability. Cook ex rel. Estate of Tessier v. Sheriff of Monroe Cty., 402 F.3d 1092, 1113 (11th Cir. 2005).
In sum, the Court finds that Defendant has not carried its burden to demonstrate that Mr. Powell's opinions satisfy the reliability prong. Accord Frazier, 387 F.3d at 1260 (noting that the proponent of expert testimony bears the burden to show that each prong of the Daubert analysis is satisfied). Accordingly, the Court excludes his testimony.
Because the Court finds that Defendant has not carried its burden on the reliability prong, the Court need not reach the final prong which asks if the expert's testimony is helpful to the trier of fact.
III. Motion for Summary Judgment [Doc. 51]
Having ruled on Plaintiffs’ motion to exclude, the Court turns next to Defendant's "Motion for Summary Judgment or in the Alternative for Partial Summary Judgment." [Doc. 51]. The Court first sets out the legal standard before turning to the substance of the Defendant's arguments.
A. Legal Standard
The Court may grant summary judgment only if the record shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A factual dispute is genuine if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is material if resolving the factual issue might change the suit's outcome pursuant to the governing law. Id. The motion should be granted only if no rational fact finder could return a verdict in favor of the non-moving party. Id. at 249, 106 S.Ct. 2505.
When ruling on a motion for summary judgment, the Court must view all the evidence in the record in the light most favorable to the non-moving party and resolve all factual disputes in the non-moving party's favor. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). The moving party need not positively disprove the opponent's case; rather, the moving party must establish the lack of evidentiary support for the non-moving party's position. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets this initial burden, to survive summary judgment, the non-moving party must then present competent evidence beyond the pleadings to show that there is a genuine issue for trial. Id. at 324–26, 106 S.Ct. 2548. The essential question is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251–52, 106 S.Ct. 2505.
B. Analysis
Having provided the relevant legal standard, the Court turns now to an assessment of Defendant's motion. Defendant moves for summary judgment on Plaintiffs’ three (3) claims. The Court will address each claim in turn.
i. Breach of Contract
The Court begins with Plaintiffs’ claim for breach of contract. "The elements for a breach of contract claim in Georgia are the (1) breach and (2) the resultant damages (3) to the party who has the right to complain about the contract being broken." Kuritzky v. Emory Univ., 294 Ga.App. 370, 669 S.E.2d 179, 181 (2008). Here, the contract at issue is an insurance policy, which "is simply a contract, the provisions of which should be construed as any other type of contract." Yeomans & Assoc. Agency, Inc. v. Bowen Tree Surgeons, Inc., 274 Ga.App. 738, 618 S.E.2d 673, 677 (2005). When language in the insurance policy "is explicit and unambiguous, the court's job is simply to apply the terms of the contract as written, regardless of whether doing so benefits the carrier or the insured." Ga. Farm Bureau Mut. Ins. Co. v. Smith, 298 Ga. 716, 784 S.E.2d 422, 424 (2016). "This is so because Georgia law permits an insurance company to ‘fix the terms of its policies as it sees fit, so long as they are not contrary to the law,’ thus companies are free to ‘insure against certain risks while excluding others.’ " Id. (citations omitted). "[T]he words used in the policy are to be given their usual and common significance and are to be construed in their ordinary meaning." Larson v. Ga. Farm Bureau Mut. Ins. Co., 238 Ga.App. 674, 520 S.E.2d 45, 46 (1999) (quotation and citation omitted); see also O.C.G.A. § 13-2-2(2) ("Words generally bear their usual and common signification; but technical words, words of art, or words used in a particular trade or business will be construed, generally, to be used in reference to this peculiar meaning.").
Under Georgia law, the rights of the parties to an insurance policy should not be expanded beyond the terms of the policy. Baldwin v. State Farm Fire & Cas. Co., 264 Ga. App. 229, 590 S.E.2d 206, 208 (2003). "In applying the rules of construction to an insurance contract, the test is not what the insurer intended its words to mean, but rather what a reasonable person in the insured's position would understand them to mean." W. Pac. Mut. Ins. Co. v. Davies, 267 Ga. App. 675, 601 S.E.2d 363, 368–69 (2004) (quotation marks and citation omitted).
Where the language of the contract is unambiguous and only one reasonable interpretation is possible, the contract must be enforced as written. Sapp v. State Farm Fire & Cas. Co., 226 Ga. App. 200, 486 S.E.2d 71, 73 (1997). However, when a policy is ambiguous, or is capable of two reasonable interpretations, it is construed in the light most favorable to the insured and against the insurer. Davies, 601 S.E.2d at 369 ; Erie Indem. Co. v. Lascala, 206 Ga. App. 283, 424 S.E.2d 820, 821-22 (1992). Indeed, "[p]olicies of insurance will be liberally construed in favor of the object to [be] accomplished, and conditions and provisions therein will be strictly construed against the insurer, as they are issued upon printed forms, prepared by experts at the insurer's instance, in the preparation of which the insured has no voice." Davis v. United Am. Life Ins. Co., 215 Ga. 521, 111 S.E.2d 488, 492 (1959) (quotation marks and citation omitted)....
In addition, the interpretation of an insurance policy, including the determination and resolution of ambiguities, is a question of law for the court to decide. O.C.G.A. § 13-2-1 ; Claussen v. Aetna Cas. & Sur. Co., 888 F.2d 747, 749 (11th Cir. 1989).
Giddens v. Equitable Life Assur. Soc'y of U.S., 445 F.3d 1286, 1297 (11th Cir. 2006) (omissions and alterations in original).
In accordance with this law, Defendant puts forth three (3) arguments concerning Plaintiffs’ breach of contract claim, each of which the Court now addresses. [See generally Doc. 51-2].
a. Seepage Exclusion
First, Defendant argues that the Policy excludes Plaintiffs’ loss pursuant to the seepage exclusion. [Id. at 13]. As noted above, the Policy at issue contains a Seepage Exclusion Endorsement, which provides:
SECTION I – PERILS INSURED AGAINST
Coverage A – Dwelling and Coverage B – Other Structures
Paragraph 2.e(9) is added:
(9) Seepage, meaning a gradual, continuous, or repeated seepage or leakage of water, steam or fuel over a period of 14 days or more, resulting in damage to the structure. This exclusion applies unless such seepage or leakage of water, steam or fuel and the resulting damage is unknown to all "insureds" and is hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure.
Policy at 29. Thus, according to the plain language of this exclusion, Plaintiffs’ loss is not covered under the Policy if the leakage of water at the Property continued over a period of fourteen (14) days or more. Id. Because Defendant seeks to rely on this exclusion, it has the burden of demonstrating its applicability. See Old Republic Nat'l Title Ins. Co. v. RM Kids, LLC, 352 Ga.App. 314, 835 S.E.2d 21, 26 (2019) ("[A]n insurer seeking to defeat a claim based on a policy exclusion has the burden of proving that the exclusion is applicable.").
To demonstrate that the Seepage Exclusion applies—that is, that the leak continued for over fourteen (14) days—Defendant relies solely on the proposed testimony of Mr. Powell. [See Doc. 59 at 4] ("There is only one qualified opinion on the duration of the water leak ... and that is from Jared Powell."). However, as noted supra , the Court excludes Mr. Powell's testimony. Accordingly, there remains a genuine issue of material fact regarding the duration of the leak, and subsequently, whether this exclusion applies. See United Servs. Auto. Ass'n v. Lucas, 200 Ga.App. 383, 408 S.E.2d 171, 173 (1991) ("USAA failed to show that the facts of the case came within the exclusion contained in its policy, and the trial court did not err in denying its motion [for summary judgment]."). Thus, Defendant's argument for summary judgment based on the Seepage Exclusion fails.
b. Damages
Second, Defendant argues that in the event the Court were to decline to enter summary judgment in its favor based upon the Seepage Exclusion, then the Court should enter partial summary judgment on the issue of actual damages. [Doc. 51-2 at 17]. As noted above, "[t]he elements for a breach of contract claim in Georgia are the (1) breach and (2) the resultant damages (3) to the party who has the right to complain about the contract being broken." Kuritzky, 669 S.E.2d at 181. Thus, to survive partial summary judgment on the issue of actual damages, Plaintiffs must present "evidence by which a jury could determine actual damages." St. James Entm't LLC v. Crofts, 837 F. Supp. 2d 1283, 1290 (N.D. Ga. 2011).
Here, it is undisputed that Plaintiffs produced invoices and other documents during the discovery period showing the amounts they have already spent remediating the damage on the Property. Pls.’ SOMF ¶ 53. Defendant does not dispute that this documentation is sufficient to calculate a damages award. Accordingly, the Court finds that Plaintiffs have presented evidence by which a jury could determine actual damages. Cf. St. James Entm't, 837 F. Supp. 2d at 1290 ("Plaintiff has failed to present any evidence by which a jury could determine actual damages, and therefore summary judgment is appropriate as to Plaintiff's claim for actual damages.").
The Parties vigorously dispute whether Plaintiffs may rely on the Scheinfeld Affidavit to further evince Plaintiffs’ alleged damages. Indeed, Defendant filed a separate objection to the affidavit which the Parties fully briefed. [Doc. 61]. Because the Court finds that Plaintiffs’ invoices and other documentation are sufficient to withstand Defendant's motion for partial summary judgment, the Court does not reach the issues presented by the Parties surrounding Mr. Scheinfeld's affidavit. To be clear, while this matter may be appropriate for a later motion in limine , the Court makes no ruling on the admissibility of this testimony at this time. Accordingly, the Court overrules Defendant's objection as moot.
c. Mold Endorsement
Finally, Defendant argues, in the alternative, that the Court should enter partial summary judgment pursuant to the Mold Endorsement and limit Plaintiffs’ potential recoverable damages for remediation to $12,545, the amount provided in the Mold Endorsement. [Doc. 51-2 at 20–21]. As noted above, the Mold Endorsement reads as follows:
9. "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" means any type or form of fungus, rot, virus or bacteria. This includes mold, mildew and any mycotoxins (meaning a toxin produced by a fungus), other microbes, spores, scents or byproducts produced or released by mold, mildew, fungus, rot, bacteria, or viruses.
SECTION I – PROPERTY COVERAGES
Additional Coverages
The following Additional Coverage is added:
11. Remediation of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" Resulting Directly From Any Covered Loss
We will pay, up to the Basic Policy Limits or Option shown in the Declarations, for the "Remediation" of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" resulting directly from any covered loss.
We will pay, up to the Basic Policy Limits or Option shown in the Declarations, for the "Remediation" of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" resulting directly from any covered loss.
"Remediation" means the reasonable and necessary treatment, containment, decontamination, removal or disposal of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus" as required to complete the repair or replacement of property, covered under Section I of the policy, that is damaged by any covered peril insured against, and also consists of the following:
2. The reasonable costs or expense to remove, repair, restore, and replace that property including the costs to tear out and replace any part of the building as needed to gain access to the "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus"; and
***
SECTION I – EXCLUSIONS
Exclusion 1.i. is added:
ii. Except as provided by Additional Coverage 11 loss consisting of or caused by "Mold, Fungus, Wet Rot,
Dry Rot, Bacteria, or Virus" is excluded, even if resulting from a peril insured against under Section I. We do not cover "Remediation" of "Mold, Fungus, Wet Rot, Dry Rot, Bacteria, or Virus," even if resulting from a peril insured against under Section I, except as provided by Additional Coverage 11.
Policy at 26–27. Defendant contends that because "any arguably covered loss was caused by mold," the Policy's Mold Endorsement limit applies. [Doc. 51-2 at 1].
The Court disagrees. Plaintiffs point to evidence in the record that indicates that in addition to mold damage, there was water damage to the property. Specifically, Mr. Scheinfeld testified that when he arrived at the Property "the ceiling was down and you could see the water lines running in the ceiling." Scheinfeld Dep. at 59:23–60:5. Additionally, Rytech, Defendant's remediation company, provides a description of the loss as "water damage to ceiling [and] cabinets [with] mold forming." Rytech Rep. at 47 [Doc. 51-9]. Viewing this evidence in the light most favorable to Plaintiffs, the Court finds a jury could determine that water caused at least some of the damage and it was not attributable solely to mold, which would trigger the exclusive application of the Mold Endorsement. Accordingly, the Court denies partial summary judgment on this basis.
In sum, the Court finds that none of Defendant's proffered arguments warrant partial or full summary judgment on Plaintiffs’ breach of contract claim. Accordingly, this claim remains.
ii. Bad Faith and Attorneys’ Fees pursuant to O.C.G.A. § 33-4-6
The Court turns next to Plaintiffs’ claim for bad faith and attorneys’ fees made pursuant to O.C.G.A. § 33-4-6.
Plaintiffs also seek attorneys’ fees and expenses of litigation pursuant to O.C.G.A. 13-6-11. See Compl. The Parties do not address this claim, presumably because it is derivative of Plaintiffs’ breach of contract claim. J. Andrew Lunsford Properties, LLC v. Davis, 257 Ga.App. 720, 572 S.E.2d 682, 685 (2002) (explaining that a claim made pursuant to O.C.G.A. § 13-6-11 is derivative of a substantive cause of action). Because the Court finds that Plaintiffs’ substantive claim for breach of contract remains, Plaintiffs’ claim for attorneys’ fees and expenses of litigation likewise remains. Cf. Gilmour v. Am. Nat. Red Cross, 385 F.3d 1318, 1324 (11th Cir. 2004) (holding that a claim for attorneys’ fees pursuant to § 13-6-11 requires an underlying claim).
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To establish a claim of bad faith on the part of the insurer under Georgia law, "the insured must prove two conditions: (1) that a demand for payment was lodged against the insurer at least 60 days prior to filing suit and (2) that the insurer's failure to pay was motivated by bad faith." Primerica Life Ins. Co. v. Humfleet, 217 Ga. App. 770, 458 S.E.2d 908, 910 (Ga. App. 1995) ; O.C.G.A. § 33-4-6. "A refusal to pay in bad faith means a frivolous and unfounded denial of liability. If there are any reasonable grounds for an insurer to contest the claim, there is no bad faith " Swyters v. Motorola Emps. Credit Union, 244 Ga. App. 356, 535 S.E.2d 508, 510 (Ga. App. 2000) (quotation omitted).
Mahens v. Allstate Ins. Co., 447 F. App'x 51, 56 (11th Cir. 2011) (emphasis added). The question of whether an insurer acted in bad faith ordinarily is for the jury. Homick v. Am. Cas. Co., 209 Ga.App. 156, 433 S.E.2d 318, 318 (1993). However, "when there is no evidence of unfounded reason for the nonpayment, or if the issue of liability is close, the court should disallow imposition of bad faith penalties." Id. Here, it is undisputed that Plaintiffs demanded payment at least sixty (60) days prior to filing suit. Def.’s SOMF ¶ 68. Accordingly, the Court focuses its assessment on whether Defendant's denial was motivated by bad faith.
Upon review of this case, the Court finds that Defendant had reasonable grounds for denying coverage. Put simply, Plaintiffs suffered a leak at the Property that caused extensive damage. Examining the damage, reasonable minds could disagree as to how long the leak was present, which is the material fact at issue to determine if the Seepage Exclusion applies. " ‘Penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact.’ " Southern Fire & Cas. Ins. Co. v. Northwest Ga. Bank, 209 Ga.App. 867, 434 S.E.2d 729, 730 (1993) (quoting Fortson v. Cotton States Mut. Ins. Co., 168 Ga.App. 155, 308 S.E.2d 382, 385 (1983) ).
Plaintiffs point to several facts which they contend demonstrate that Defendant specifically sought to deny their claim, including Defendant's reliance on Mr. Powell's opinion. However, despite the legal shortcomings in Mr. Powell's report, the Court does not find it unreasonable that Defendant relied on his expertise. See Johnston v. Companion Prop. & Cas. Ins. Co., 318 F. App'x 861, 868 (11th Cir. 2009) (affirming summary judgment on bad faith claim were insurer "had a legitimate, although ultimately unsuccessful, challenge to [the insured]’s claim"). Thus, the Court grants Defendant's request for summary judgment on Plaintiffs’ bad faith claim.
IV. Summary and Referral to Mediation
In sum, after a thorough review of the Parties’ briefing and arguments, the Court grants Plaintiffs’ motion to exclude [Doc. 47], grants in part and denies in part Defendant's motion for summary judgment [Doc. 51], and overrules Defendant's objection. [Doc. 61]. In light of these rulings, Plaintiffs’ claims for breach of contract and attorneys’ fees and expenses of litigation pursuant to O.C.G.A. 13-6-11 remain.
Pursuant to Local Rule 16.7, the Court's review of this case has led it to conclude that mediation may provide savings in time and costs to the litigants without sacrificing the quality of justice. The Court also finds that the Parties should share the costs of mediation. Therefore, the Court directs the Parties to either each file with the Court a notice of a list of three (3) possible mediators, from which the Court will choose a mediator, or to file a joint notice indicating the mediator agreed upon by all the parties. See LR 16.7F(1)-(2), NDGa. After the Parties’ submission(s), the Court will appoint a mediator and direct the Parties to participate in mediation.
V. Conclusion
For the foregoing reasons, the Court GRANTS Plaintiffs’ Motion to Exclude the Expert Testimony of Jared Powell [Doc. 47] and GRANTS IN PART AND DENIES IN PART Defendant's "Motion for Summary Judgment or in the Alternative for Partial Summary Judgment." [Doc. 51]. The Court grants summary judgment on Plaintiffs’ bad faith claim but denies the motion as to Plaintiffs’ remaining claims. Additionally, the Court OVERRULES Defendant's objection. [Doc. 61].
Finally, the Court DIRECTS the Parties, within twenty-one (21) days from the date of entry of this order, to either (A) each file with the Court a notice of a list of three (3) possible mediators, from which the Court will choose a mediator, or (B) file a joint notice indicating the mediator agreed upon by all Parties. See LR 16.7F(1)-(2), NDGa. After the Parties’ submission(s), the Court will appoint a mediator and direct the Parties to participate in mediation. The Court DIRECTS the Clerk to resubmit this case after twenty-one (21) days.
SO ORDERED, this 9th day of July, 2020.