Fireman's Fund Ins. Co. v. Holder Constr. Grp., LLC

• Citation: 362 Ga.App. 367,868 S.E.2d 485
• Decision Date: 26 January 2022
• Docket Number: A21A1558
• Parties: FIREMAN'S FUND INSURANCE COMPANY v. HOLDER CONSTRUCTION GROUP, LLC et al.
• Court: United States Court of Appeals (Georgia)

362 Ga.App. 367

868 S.E.2d 485

FIREMAN'S FUND INSURANCE COMPANY

v.HOLDER CONSTRUCTION GROUP, LLC et al.

A21A1558

Court of Appeals of Georgia.

January 26, 2022

Robert E. Jones, Atlanta, for Appellant.

James Theodore Hankins III, Katherine India Barton, Atlanta, for Appellee.

Brown, Judge.

In this subrogation action, Fireman's Fund Insurance Company ("Fireman's") appeals the trial court's order excluding the testimony of its expert and granting summary judgment to Holder Construction Group, LLC, and McKenney's, Inc. (collectively "Defendants"), on Fireman's claim for gross negligence. For the reasons set forth below, we affirm in part and reverse in part.

"Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law." (Citation and punctuation omitted.) Smith v. Tenet HealthSystem Spalding , 327 Ga. App. 878, 761 S.E.2d 409 (2014). "A defendant moving for summary judgment may prevail by showing the court that the documents, affidavits, depositions and other evidence in the record reveal that there is no evidence sufficient to create a jury issue on at least one essential element of plaintiff's case." (Citation and punctuation omitted.) Stewart v. Brown , 343 Ga. App. 190, 190-191 (1), 806 S.E.2d 640 (2017). "We review a trial court's grant of summary judgment de novo, construing the evidence, and all reasonable conclusions and inferences drawn from it, in favor of the nonmovant." (Citation and punctuation omitted.) City of College Park v. Paradies-Atlanta, LLC , 346 Ga. App. 63, 63-64, 815 S.E.2d 246 (2018).

The relevant facts of this case are largely undisputed by the parties. The record shows that the Hotel Indigo in Atlanta underwent renovations in 2015, with Holder Construction Group, LLC, acting as the construction manager and McKenney's, Inc., as a subcontractor.

During the renovation, McKenney's installed two roof-top air handling units called RTU 2-1 and RTU 2-2, as well as the computerized building management system which controlled the heating, ventilation, and air conditioning system.

On January 22, 2016, temperatures in Atlanta dropped below freezing and remained there until around 11:00 a.m. on January 24, 2016. The freezing temperatures prompted both air handling units to enter freeze protection mode. When this mode is triggered, the steam valve and chilled water valve should open, the supply fan should stop, the return air damper should open, and the outside air damper should close. In spite of the freezing temperatures, however, the steam and chilled water valves on RTU 2-1 closed at around midnight on January 24, and remained closed for the next 12 hours. In addition, it is undisputed by the parties that a McKenney's employee locked open the outside air damper prior to January 24, and thus the damper was unable to close when the freeze protection mode was triggered. Water froze inside the coils of RTU 2-1, causing the coils to burst and water to pour into the hotel. Fireman's provided insurance coverage to Portman 230, LLC, the owner of the hotel and building, paying out a total of $1,306,470.86 for the loss, according to Fireman's complaint.

Fireman's brought this subrogation action against Holder Construction Group, LLC, and McKenney's, Inc., as well as various other defendants who have since been dismissed. On August 9, 2019, the trial court granted summary judgment in favor of Defendants on all of Fireman's claims apart from gross negligence. Defendants subsequently filed a motion to exclude the testimony of Jeffrey Edwards, an expert retained by Fireman's, on the basis that Edwards’ testimony went to the ultimate issue and that his causation testimony was "speculative" and "unreliable." Defendants simultaneously filed a motion for summary judgment on Fireman's remaining gross negligence claim, asserting that without Edwards’ testimony, no genuine issue of material fact remained as to causation. Following a hearing, the trial court granted both motions in a detailed, 13-page order. Fireman's now appeals, contending that the trial court erred in excluding the testimony of its expert, Jeffrey Edwards, and in granting summary judgment to Defendants.¹

1. In related enumerations of error, Fireman's asserts that the trial court erred in (1) excluding the entirety of Edwards’ testimony as unreliable under OCGA § 24-7-702 ; and (2) excluding as an impermissible legal conclusion Edwards’ opinion that the actions of the McKenney's employee in locking open the air damper constituted a failure to exercise reasonable care. We begin with a summary of the testimony from both Fireman's’ expert and Defendants’ expert.

Testimony of Fireman's’ Expert

In his deposition, Edwards, testified that he was a professional engineer licensed in multiple states, including Georgia, and owned a forensic consulting company focusing on mechanical engineering. Edwards testified that he inspected RTU 2-1 on January 27, 2016, days after the incident, and visited the property a total of three times. Based on his review of data from the two units, Edwards testified that both the chilled water valve and the steam valve should have stayed open during freeze protection mode, but that the valves closed for around 12 hours on January 24. Edwards also indicated that the outside air damper, which had been locked open, should have been closed during freeze protection mode. He testified that hypothetically if the outside air damper had been closed, "it's possible [the freeze still would have occurred]. It would be less likely for it to occur if there had not been a continuous stream of cold air into this unit [from the open air damper]." According to Edwards, "[t]here are a lot of different ingredients to the causation of this leak," including the closing of the chilled water valve and steam valve. When pressed, Edwards stated, "I see there being four significant contributing factors to this freeze: cold temperatures outside, closed chilled water valve, closed steam valve, open outside air damper[ ]," but "the primary cause of this freeze failure is water in a cold environment."

In opposition to Defendants’ motion for summary judgment, Fireman's submitted an affidavit from Edwards, in which he averred that it was his "opinion within a reasonable degree of engineering certainty that ... locking open the outside air damper was the cause of the coil freeze and water damage from RTU 2-1[.]" Edwards based his opinion on the following:

Despite the exposure of RTU 2-2 to the same freezing weather, and despite substantially similar failures of the steam valve and cooling valve[ ] to open completely to follow the freeze protection procedure ... no splits developed in the metal coils, and no water flowed from RTU 2-2....

Deposition testimony of McKenney's Senior Project Manager ... indicates that other than unlocking the outside air damper of RTU 2-1, no other changes were made to RTU 2-1 or RTU 2-2 after this incident. Although there have been subsequent extended periods of cold outdoor temperatures, there have been no further occurrences of coil ruptures or water leaks from either RTU.... The evidence in this case shows that when the outside air dampers are allowed to modulate as originally installed, both RTU 2-1 and RTU 2-2 can endure extended periods of freezing outdoor temperatures, regardless of whether or not the steam valve or cooling valve operate in accordance with the specified freeze protection control sequence.

Edwards also averred that the actions of the McKenney's employee "in locking open the outside air damper constitute a failure to exercise the level of reasonable care which would be expected of an experienced HVAC contractor, or even the simple level of common sense and slight diligence that a reasonable person would use to protect his own property."

Testimony of Defendants’ Expert

Defendants retained Gregory Schober — a mechanical forensic engineer and professional engineer licensed in the majority of the country, including Georgia — to conduct a forensic analysis into the cause of the water loss incident. Schober never personally inspected the unit, but reviewed the same data as Fireman's’ expert.² He testified that the "overarching problem" was the failure of the "steam system" as well as the chilled water valve, and that the outside air damper being locked open was a contributing factor. Schober disagreed with Edwards’ causation conclusion and testified that if the rest of the freeze protection mode had worked properly, the open outside air damper would not have been an issue.

(a) The admissibility of expert testimony is governed by OCGA § 24-7-702, which pertinently provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise, if:

(1) The testimony is based upon sufficient facts or data;

(2) The testimony is the product of reliable principles and methods; and

(3) The witness has applied the principles and methods reliably to the facts of the case which have been or will be admitted into evidence before the trier of fact.

OCGA § 24-7-702 (b) (1)-(3). This Code section "requires that the trial court act as gatekeeper to ensure the relevance and reliability of expert testimony." (Citation and punctuation omitted.) Cash v. LG Electronics , 342 Ga. App. 735, 736 (1), 804 S.E.2d 713 (2017). "In this role, the trial court assesses both the witness’ qualifications to testify in a particular area of expertise and the relevancy and reliability of the proffered testimony." (Citation and punctuation omitted.) Emory Univ. v. Willcox , 355 Ga. App. 542, 543 (1), 844 S.E.2d 889 (2020). We review a trial court's determination under OCGA § 24-7-702 for an abuse of discretion. See Cash , 342 Ga. App. at 736 (1), 804 S.E.2d 713. Finally, ...