Opinion
Civil Action 17-cv-00346-PAB-MEH
08-17-2021
OWNERS INS. CO., Plaintiff, v. 11380 EAST SMITH ROAD, LLC, 3555 MOLINE, LLC, Defendants.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Michael E. Hegarty, United States Magistrate Judge
Before the Court is Defendants' Motion to Amend Pretrial Order (ECF 109) in which they seek to convert a fact witness to an expert witness. The matter is fully briefed, and oral argument would not materially assist in its adjudication. For the reasons that follow, the Court respectfully recommends that the Motion be denied.
BACKGROUND
I. Claims for Relief
As the Final Pretrial Order (“FPTO”) describes it (ECF 72), this lawsuit concerns a commercial property insurance policy that Plaintiff issued to Defendants to insure two buildings. The insured Defendants asked their insurer Plaintiff to pay for hailstorm-related damage to the buildings' roofs under the policy's terms. Later, the first Defendant, 11380 East Smith Road LLC, went through a bankruptcy reorganization and foreclosure (which began in February 2018 and concluded a year later in February 2019). The second Defendant, 3555 Moline, LLC, sold its building to a third party in December 2016.
Plaintiff admits general insurance coverage and some loss. Otherwise, the parties dispute what the proper amount of loss is, whether as a matter of contract interpretation (what kind of coverage do the various policy provisions permit), damage valuation (based on facts over the roofs' pre-existing condition, the damage that the hailstorm caused directly, and repair costs), or waiver (with respect to Defendants' later request to add lost operating cash as damages). In other words, as the Court summarized in its Order at ECF 97, the parties dispute the scope of the alleged damage, the scope of the associated repairs, and the scope of coverage under the policy. The parties litigate those disputes through their respective claims for relief. Plaintiff seeks to resolve the disputes in its favor through a declaratory judgment. Defendants bring counterclaims for breach of contract and bad faith. Plaintiff contests Defendants' standing to assert those claims.
The Court dismissed Defendants' claim for mandatory appraisal, thereby resolving the dispute over the enforceability of the policy's appraisal provision in Plaintiff's favor. ECF 20; ECF 94; ECF 95 at 4, n.2. Defendants seek reconsideration of that dismissal and argue that appraisal would render moot the parties' dispute over the amount of loss. ECF 96 at 4.
II. Procedural History
The Scheduling Order was entered on July 26, 2017. ECF 19. It set January 15, 2018 as the deadline to “designate the witness and provide opposing counsel with all information specified in Fed.R.Civ.P. 26(a)(2).” That deadline applied to “[t]he party bearing the burden of persuasion on the issues for which opinion is to be offered under FRE 702.” Id. at 20. It was extended to March 16, 2018. ECF 22. It was not extended again, although other discovery-related and pre-trial deadlines were.
The Court held a Pretrial Conference on March 26, 2019 at which the issue of Defendant 11380 East Smith Road LLC's bankruptcy arose. The lawsuit was stayed until the question of how the bankruptcy proceeding affected Defendant's ownership of the insurance claim was answered. The Court gave Plaintiff leave to move to reopen discovery, if needed, afterwards. ECF 43. Beginning in April 2019, the parties filed monthly status reports to keep the Court informed. I held a Status Conference on November 6, 2019 at which the Final Pretrial Conference was set for December 12, 2019 (ECF 68) which was later reset to December 17, 2019 (ECF 70).
Upon entry of the FPTO, a Trial Preparation Conference was scheduled for July 17, 2020 and a jury trial to begin on August 3, 2020. ECF 73. The parties were instructed to file motions to exclude expert testimony sixty days before the Trial Preparation Conference.
On February 28, 2020, Defendant 11380 East Smith Road LLC filed a Notice to inform the Court that it had settled its bankruptcy case. ECF 75.
On March 11, 2020, the Court reset the Trial Preparation Conference to October 2, 2020 and the jury trial to October 26, 2020. ECF 77. The deadline for filing motions to exclude expert testimony remained the same (sixty days before the Trial Preparation Conference). Within that time frame, on August 3, 2020, Plaintiff moved to exclude the testimony of Defendants' expert witness, Edward Fronapfel. ECF 78.
A Status Conference was held on September 24, 2020, at which the Trial Preparation Conference was reset to October 1, 2021 and the trial to October 18, 2021. ECF 93. The trial was continued for COVID-related reasons. ECF 96 at 4.
The Court also asked the parties to state their preference for how to try the remaining declaratory judgment claims. ECF 94. Plaintiff answered that several of its declaratory judgment claims could be ruled upon as a matter of law by way of a dispositive motion rather than by trial (whether to the court or to the jury). ECF 95. Plaintiff conceded the need for the Court to grant leave to file dispositive motions for that approach. ECF 95 at 2, n.1. Alternatively, Plaintiff suggested that its declaratory judgment claims be tried first, to the court, and try all remaining claims thereafter to the jury. Defendants agreed that the declaratory relief claims raise questions of law that the Court may resolve without a jury. ECF 96. Defendants added that “the dispositive motion deadline has long since passed.” Id. at 1, n.1. The parties filed their notices on October 22, 2020.
On March 17, 2021, the Court granted Plaintiff's motion to exclude the opinion testimony of Edward Fronapfel, Defendants' expert witness. The subject of Mr. Fronapfel's opinion was the reasonableness of the repair estimate for Defendants' roofs which in turn was based on his opinions about the extent of roof damage, its cause, and the necessity for repair. The Court excluded his opinion that the $340,000 cost credit is reasonable. ECF 97.
Nearly four months later, on July 12, 2021, Plaintiff sought permission to file a motion for summary judgment, the basis of which was the exclusion of Mr. Fronapfel's opinion. ECF 100. As Plaintiff summarized its argument, Defendants have no other expert witness “to opine on the cost of these complex roof repairs” and without such expert opinion evidence, “Defendants cannot prove their essential element of damages for their breach of contract claim.” ECF 98-2 at 1. I recommended against granting Plaintiff leave to file its proposed summary judgment motion. ECF 108. There was no manifest injustice to prevent, that required the filing of the proposed motion, and there was an insufficient need that warranted interfering with the trial preparation process.
Defendants also are reacting to the striking of Mr. Fronapfel's opinion. Whereas Plaintiff sought to file a summary judgment motion to take advantage of Defendant's loss of important evidence, Defendants seek leave to replace Mr. Fronapfel with a new witness.
LEGAL STANDARD
The FPTO contained the lists of witnesses and exhibits that the parties intended to use at trial which Defendants now seek to amend. A FPTO's purpose, the Tenth Circuit explained in Monfroe v. Phillips, 778 F.3d 849, 851 (10th Cir. 2015), is to disclose a party's trial intentions. Accordingly, a party waives any claims, issues, defenses, or theories of damages not included in the FPTO. Murphy-Sims v. Owners Ins. Co., 947 F.3d 628, 631 (10th Cir. 2020); Wilson v. Muckala, 303 F.3d 1207, 1215 (10th Cir. 2002).
The FPTO itself sets the standard for whether to permit amendment. From the time of its entry on December 18, 2019, it “will control the subsequent course of this action and the trial, and may not be amended except by consent of the parties and approval by the court or by order of the court to prevent manifest injustice .” ECF 72 at 44 (emphasis in the original). See Fed. R. Civ. P. 16(e) (“The Court may modify the order issued after a final pretrial conference only to prevent manifest injustice.”). The Court also will apply the standard set forth in Koch v. Koch Indus., Inc., 203 F.3d 1202, 1223 (10th Cir. 2000), the standard upon which Defendants base their request for relief.
In other words, the Court does not apply the good cause standard for amending the pre-trial deadlines that the Scheduling Order established. Instead, it applies the FPTO's standard for amending the list of anticipated trial witnesses.
ANALYSIS
I. Timeliness
One factor for the Court to consider is whether Defendants seek the amendment in a timely fashion. Id. (“This Court should also consider whether the party . . . timely moved for such modification in the trial court.”) What prompted Defendants to change Mr. Behrens' designation was the Court's exclusion of Mr. Fronapfel's expert opinion. That Order was rendered after the issuance of the FPTO. Four and a half months later, Defendants seek a replacement witness, presumably in reaction to Plaintiff's proposed summary judgment motion which informed them of the gap in their evidence. As it did with Plaintiff, the Court finds no bad faith on Defendants' part in the delayed reaction to the exclusion of Mr. Fronapfel's expert opinion, but even if the Court were to find the instant Motion timely, Defendants still would not meet the FPTO amendment standard on the merits.
II. Koch Factors
The factors relevant to a request to amend a FPTO are: (1) prejudice or surprise to the opposing party, (2) the ability to cure any prejudice, (3) disruption to an orderly and efficient trial, and (4) bad faith by the party seeking the modification. Koch, 203 F.3d at 1222. Although the requested modification in Koch was the addition of a new issue (and not the redesignation of a witness), the parties frame their arguments in reference to the Koch factors. This Court follows suit and applies the Koch factors as well, adjusted to reflect the nature of Defendants' request.
A. Prejudice
Defendants go to great lengths to show Plaintiff's familiarity with Andrew Behrens. He was an adjuster who worked on the insurance policy claim during the adjustment process, investigating the property damage and preparing a repair cost estimate. In the FPTO, Defendants disclosed him (without objection) as one of their non-expert witnesses who they may call at trial pursuant to Fed.R.Civ.P. 26(a)(3)(A). Defendants described him as one of their “public adjusters who may testify regarding the investigation of the damage to the properties and preparation of the C3 Group estimate.” ECF 72 at 35. Records from that adjustment process, such as C3 Group communications with Plaintiff, damages estimates, and videos of roof tests, were provided to Plaintiff in discovery. Plaintiff did not depose Mr. Behrens for purposes of this lawsuit, but it did depose Taylor Bezek, another C3 Group adjuster. Moreover, Plaintiff's counsel deposed Mr. Behrens in another insurance coverage dispute in which he investigated and estimated the cost to repair hail damage to a building.
The dispositive issue here is that Defendants did not disclose Mr. Behrens as an expert witness. Evidence about whether hail damaged real property and the cost of repairs and replacement must come from the testimony of an expert witness. Nesavich v. Auto-Owners Ins. Co., No. 16-cv-01493-PAB-STV, 2018 WL 3729513, at *5-6 (D. Colo. Aug. 6, 2018). There are certain procedures and requirements before a party may rely on someone as an expert witness. Rule 26(a)(2)(B). Defendants seek to bypass the written report requirement by designating Mr. Behrens under Rule 26(a)(2)(C). However, the prejudice to Plaintiff remains. For Defendants to be able to use him as an expert witness, Plaintiff is entitled to:
receipt of a proper full and complete disclosure of Behrens' opinions along with the Rule-required specific facts and bases he relied upon to achieve his opinions; allowing [it] time to depose Behrens; allowing [it] time to challenge Behrens' opinions under Rule 702, and; allowing [it] time to potentially disclose a rebuttal expert based upon Behrens' disclosure and deposition contents.ECF 112 at 11. In other words, Plaintiff is entitled to the same procedures to test Mr. Behrens'anticipated opinion as it did with Mr. Fronapfel.
Allowing Defendants to use Mr. Behrens in Mr. Fronapfel's place would prejudice Plaintiff. Defendants rely on Summers v. Missouri Pac. R.R. Sys., 132 F.3d 599 (10th Cir. 1997) to show the contrary. It is true that Summers allowed plaintiffs to use a new expert witness after their previous designees were stricken and within a similar time frame (eighty days before the start of trial) as this case. However, Summers is distinguishable. As the Summers court itself emphasized, the expert witnesses who were stricken-two medical doctors-were the doctors to whom the defendant had chosen to send the plaintiffs, and their “disputed diagnoses were in part a function . . . of defendant's actions.” Id. at 605. Summers saw “unique facts that demanded” the requested relief. Id. No such uniquely compelling circumstances are present here. The expert witness upon whom Defendants expected to rely was stricken. Defendants seek to replace him with a new expert witness, but the discovery deadline long since has passed.
B. Cure
The most effective cure to the resulting prejudice would be to reopen discovery. Doing so in turn would necessitate postponement of the Trial Preparation Conference and trial date, given the two months' time remaining before trial begins. However, I lack the authority to change the trial schedule that Chief Judge Brimmer has created.
Even if the parties were given leave to develop Mr. Behrens as an expert witness, it would be difficult to do so within the limited time remaining. Indeed, Defendants themselves saw insufficient time to draft a response to Plaintiff's proposed summary judgment motion. In its previous Recommendation, this Court did not doubt Defendants' assertion that permitting that motion's filing would cause them “substantial unfair prejudice.” ECF 106 at 2. In their opposition, Defendants' counsel explained that he “has numerous pending matters with existing deadlines and long-standing schedules that would all have to shift, leading to delays in numerous other cases, in order to allow simultaneous work in this case to respond to the proposed motion while continuing to prepare for the trial.” Id. at 3. Presumably those same time constraints would pose a hindrance with respect to this task.
C. Disruptive Effect
For the same reasons that the request would prejudice Plaintiff (by allowing Mr. Behrens to serve as an expert witness without an opportunity to test his opinion) or cause burden by undertaking that exploration of his opinion within the limited time remaining, granting the Motion would disrupt pretrial preparations.
D. Bad Faith
The Court sees no bad faith behind Defendants' request. They lost the ability to use Mr. Fronapfel, and they need to a new expert witness to replace him. Perhaps Defendants should have acted sooner, but even if no bad faith is evident in their delayed reaction, the other reasons the Court discusses above militate against granting the Motion.
CONCLUSION
More so than denying Plaintiff leave to file a summary judgment motion, denying Defendants the ability to convert Mr. Behrens from a fact to expert witness has a dramatic effect on the case. Without any expert witness, Defendants face substantial difficulty in establishing causation and damages. However, that does not constitute manifest injustice. Defendants were given fair opportunity to develop evidence to support their position, and through that process, they offered Mr. Fronapfel as their expert witness. However, the Court later struck him after Fed.R.Evid. 702 review. Even if Plaintiff already is familiar with Mr. Behrens and the work he did adjusting the claim, it simply is too late to convert him to an expert witness.
Accordingly, the Court respectfully RECOMMENDS that the Motion [filed August 2, 2021; ECF 109] be denied in part with respect to Defendants' request to use Mr. Behrens as their expert witness. However, the Court RECOMMENDS that the Motion be granted in part, in regards to their unopposed request to amend their exhibit list.
Be advised that all parties shall have fourteen (14) days after service hereof to serve and file any written objections in order to obtain reconsideration by the District Judge to whom this case is assigned. Fed.R.Civ.P. 72. The party filing objections must specifically identify those findings or recommendations to which the objections are being made. The District Court need not consider frivolous, conclusive or general objections. A party's failure to file such written objections to proposed findings and recommendations contained in this report may bar the party from a de novo determination by the District Judge of the proposed findings and recommendations. United file written objections to the proposed findings and recommendations within fourteen (14) days after being served with a copy may bar the aggrieved party from appealing the factual findings of the Magistrate Judge that are accepted or adopted by the District Court. Thomas v. Arn, 474 U.S. 140, 155 (1985); In re Garcia, 347 Fed.Appx. 381, 382-83 (10th Cir. 2009).