Lead GHR Enters., Inc. v. Am. States Ins. Co., CIV. 12-5056-JLV

CourtUnited States District Courts. 8th Circuit. United States District Courts. 8th Circuit. District of South Dakota
Decision Date25 March 2014
Docket NumberCIV. 12-5056-JLV

formerly d/b/a GOLDEN HILLS RESORT,
now d/b/a DAYS INN LEAD, SOUTH DAKOTA Plaintiff,

CIV. 12-5056-JLV


Dated: March 25, 2014

[Docket No. 25]


Plaintiff Lead GHR Enterprises, Inc. (hereinafter "Lead GHR") brings this diversity action alleging claims for breach of contract and bad faith denial of insurance benefits based on the denial by American States Insurance (hereinafter "American States") of a claimed insurance loss arising from an August 3, 2010, hail storm. Docket No. 1-1. American States has filed a motion to strike Lead GHR's rebuttal expert witness disclosure. Docket No. 25. Lead GHR objects to the motion, but also argues in the alternative for leave to designate its rebuttal expert witness as an initial expert witness. Docket No. 33, at 5. The district court, the Honorable Jeffrey L. Viken, Chief Judge, referred American States' motion to strike to this magistrate judge for determination pursuant to 28 U.S.C. § 636(b)(1)(A).

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On December 21, 2012, Lead GHR and American States submitted a "Joint Rule 26(f) Report," which set forth the parties' agreed-upon discovery, motions, and trial deadlines. Docket No. 21. The court issued a scheduling order based upon the parties' submission. See Docket No. 32. In the court's order, the provisions relating to expert witnesses were as follows.

Plaintiff was required to disclose the identity and reports of any retained experts by May 31, 2013. Id. at ¶ 7. Defendants were to make like disclosures by June 28, 2013. Id. Any expert not properly designated in accordance with the court's order is not permitted to testify. Id. A party designating an expert is required to identify the expert, state the subject matter on which the expert is expected to testify, and disclose the expert's report at the time of designation. Id. at ¶ 8. The expert's report must contain:

a. A complete statement of all opinions the witness will express and the basis and reasons for them;
b. The facts or data considered by the [expert] witness in forming them;
c. Any exhibits that will be used to summarize or support them;
d. The witness's qualifications, including a list of all publications authored in the previous 10 years;
e. A list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and
f. A statement of the compensation to be paid for the study and testimony in the case.

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Id. These requirements are based on Fed. R. Civ. P. 26(a)(2)(B). Id. All discovery, including discovery related to expert witnesses, was required to be completed by October 8, 2013. Id. at ¶ 4.1

Lead GHR did not disclose the identity or report of any expert witnesses by the May 31, 2013 court-ordered deadline. On June 28, 2012, American States designated Timothy Strasser as its expert witness for trial. Docket No. 27-10, at 2. In its disclosure, American States provided Mr. Strasser's curriculum vitae, billing rate, incorporated his December 22, 2010 report (the Haag Engineering report), documenting his opinions and conclusions regarding the condition of the Golden Hills Resort's (hereinafter the "hotel") roof,2 and identified the single case in which Mr. Strasser testified as an expert witness within the last four years. See id. at 2-5.

On July 17, 2013, Lead GHR filed a "Rebuttal Expert Disclosure" wherein it designated Gene Reiling as an expert witness it expected to testify. Docket No.

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27-11. Lead GHR attested that Mr. Reiling is a certified insurance counselor with eleven years of experience as a claims adjustor and twenty-six years of experience as an insurance agent/counselor. Id. at 2. In the Rebuttal Expert Disclosure, Lead GHR stated that "Mr. Reiling is expected to testify concerning the standard of care for insurance companies." Id. Subsequently, in briefing for this motion, Lead GHR clarified that Mr. Reiling's testimony will be used to rebut "[t]he clear implication [of Strasser's testimony] . . . that 'functional damage' is a sufficient basis to deny coverage on an otherwise covered loss." See Docket No. 33, at 4. To date, Lead GHR has not disclosed any written report documenting Mr. Reiling's opinions or the facts and data he considered. See Docket No. 32, ¶ 8; FED. R. CIV. P. 26(a)(2)(B)(i)-(vi).

On September 27, 2013, Mr. Reiling was deposed. Docket No. 40-1, at 2. Prior to the deposition counsel for American States stated that it was his intention to depose Mr. Reiling as a fact witness due to American States' pending motion to strike Mr. Reiling's testimony as an expert witness. See Docket No. 42-1, at 3. At the deposition, counsel for Lead GHR informed counsel for American States that Mr. Reiling could either be deposed as an expert witness, although no written report had been prepared, or as a fact witness. Docket No. 40-1, at 3. Counsel for American States chose to depose Mr. Reiling as a fact witness and reserved the right to depose him again later as an expert witness should this court not grant its motion to strike. See id.

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At the deposition, Mr. Reiling indicated that he had never seen Mr. Strasser's report (the Haag Engineering report), the contents of which Mr. Strasser would be testifying to as an expert witness and Mr. Reiling would supposedly be called upon to rebut. Id. at 5-6. Mr. Reiling further testified that beyond mere oral anecdotes the only document he had reviewed was American States' January 10, 2011 denial of coverage letter. Id. at 5-7. Mr. Reiling also acknowledged that his knowledge of the condition and background of the hotel's roof, at the time Lead GHR contacted him for advice, was relatively limited. Id.

On August 8, 2013 American States filed the instant motion to strike Mr. Reiling's expected expert testimony, asserting that Mr. Reiling's designation was untimely and that Lead GHR had not disclosed the report and accompanying information required by Rule 26 and the district court's scheduling order. See Docket Nos. 25, 26. Thereafter, on August 26, 2013, American States conditionally designated Peter J. Hildebrand as its sur-rebuttal expert witness should the court refuse to strike Mr. Reiling's expert testimony. Docket No. 34-3. American States articulated that it would "expend the time and resources for a full report from [Mr. Hildebrand] only upon the Court's denial of [its] Motion [to strike Mr. Reiling's expected testimony]." Id. at 1.

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A. Expert Witness Disclosure Requirements

As an initial matter, the court finds that the expert witness disclosure requirements of Federal Rule of Civil Procedure 26(a)(2) are equally applicable to initial and rebuttal expert witness disclosures. As explained more fully below, a principal objective of a rebuttal expert witness, as distinguished from an initial expert witness, is "to challenge the evidence or theory of an opponent—and not to establish a case-in-chief." Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 759 (8th Cir. 2006) (citing Cates v. Sears Roebuck & Co., 928 F.2d 679, 685 (5th Cir. 1991) ("Rebuttal must be kept in perspective; it is not to be used as a continuation of the case-in-chief.")); see supra Part A.1. To that end, the disclosure requirements promulgated by the Federal Rules of Civil Procedure do not distinguish between initial expert witnesses and rebuttal expert witnesses. See Complaint of Kreta Shipping, S.A., 181 F.R.D. 273, 276, (S.D.N.Y. 1998) ("[R]ebuttal expert testimony is not excepted from the reporting requirements of Rule 26(a)(2)(B)."); see also Cong. Air Ltd. v. Beech Aircraft Corp., 176 F.R.D. 513, 516-17 (D. Md. 1997).

Lead GHR's expert witness disclosure for Mr. Reiling was insufficient. In the parties' Joint Rule 26(f) Report, both Lead GHR and American States expressly agreed to the "[d]isclosure of the identity of expert witnesses under Rule 26(a)(2)(A) and the full disclosures required by Rule 26(a)(2)(B), accompanied by the written report prepared and signed by the expert witness."

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Docket No. 21, at 2. This requirement was also part of the district court's scheduling order. See Docket No. 32, ¶¶ 7-8. Thus, it is clear that the parties and the district court incorporated Federal Rule of Civil Procedure 26(a)(2)(A) and (B) by reference into the scheduling provisions dealing with expert witness disclosures. See Docket Nos. 21, 32. Moreover, there is no language in either the court's scheduling order or the parties' proposal that would cause the Rule 26(a)(2)(A) and (B) disclosure requirements to apply only to initial expert witnesses as opposed to rebuttal expert witnesses. Such an interpretation would lead to an unfair and incongruous result.

If the court adopted Lead GHR's interpretation that rebuttal experts are exempted from the disclosure requirements of Rule 26, the result would be that the plaintiff need not identify its rebuttal expert witness nor...

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