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Adell Plastics, Inc. v. Mt. Hawley Ins. Co.

United States District Court, D. Maryland

June 19, 2019

MT. HAWLEY INS. CO., Defendant



         This insurance coverage dispute-arising after a fire demolished several buildings at the Baltimore facility of Adell Plastics, Inc.-continues. Adell was the insured under a commercial property insurance policy issued by the Mt. Hawley Insurance Co. But, in January 2017, Mt. Hawley sued Adell, seeking a declaration that, under its insurance policy, Mt. Hawley owed no coverage, and seeking a recoupment of a substantial advance payment. Adell filed a counterclaim, alleging that Mt. Hawley had breached the insurance contract and had acted with a lack of good faith. Trial is set to begin on July 8, 2019. Pending before the Court are the parties' pretrial motions. In this Memorandum, the Court addresses the seven motions to exclude the testimony of eight expert witnesses. The issues have been fully briefed, and no hearing is required.[1] See Local Rule 105.6 (D. Md. 2018). For the reasons set forth below, the Court will grant Adell's motion to exclude the expert testimony of Jeffrey W. Stempel and deny the six other motions, pursuant to Federal Rule of Evidence 702.

         I. Standard of Review

         Rule 702 allows a witness "who is qualified as an expert by knowledge, skill, experience, training, or education" to 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 district court's role is to ensure "that an expert's testimony both rests on reliable foundation and is relevant to the task at hand." Daubert, 509 U.S. at 597. "This entails a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Id. at 592-93. This basic gatekeeping obligation applies to all expert testimony, not just scientific testimony. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999).

         To be relevant, or helpful, an expert opinion must have a valid connection to the pertinent inquiry. Belville v. Ford Motor Co., 919 F.3d 224, 232 (4th Cir. 2019). To be reliable, an "expert opinion must be 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." Oglesby v. General Motors Corp., 190 F.3d 244, 250 (4th Cir. 1999). The district court enjoys wide latitude in determining what indicia of reliability it will require in a given case. See Nease v. Ford Motor Corp., 848 F.3d 219, 229 (4th Cir. 2017). Those indicia may include:

(1) whether a theory or technique can be (and has been) tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) whether a technique has a high known or potential rate of error and whether there are standards controlling its application; and (4) whether the theory or technique enjoys general acceptance within the relevant community.

Fireman's Fund Ins. Co. v. Tecumseh Prods. Co., 767 F.Supp.2d 549, 553 (D. Md. 2011) (quoting Kumho Tire, 526 U.S. at 149-50). II. Analysis Adell moves to exclude six of Mt. Hawley's expert witnesses, and Mt, Hawley moves to exclude two of Adell's expert witnesses, who coauthored a single expert report. The Court assesses the admissibility of each expert opinion in turn.

         a. Mark Newton

         Adell moves to exclude the expert testimony of Mark Newton. (Mot. Exclude Newton, ECF No. 161.) Newton is a Certified Public Accountant, who has testified in over 150 cases and who was retained by Mt. Hawley to evaluate the records related to Adell's insurance claims. (Newton Report at 3, ECF No. 161-7.)

         Adell challenges the relevancy and reliability of Newton's testimony. Adell argues Newton's testimony is irrelevant because Newton does not attempt to calculate the "actual amount" of damage caused by the fire. (Mot. Exclude Newton at 6.) Adell argues the testimony is unreliable because Newton limited his review to incomplete data, (id. at 8), an argument which Mt. Hawley disputes, asserting Newton reviewed the whole record, (Opp. Mot. Exclude Newton at 12-13, ECF No. 185). Adell misunderstands the purpose of Newton's testimony. Newton has employed his accounting expertise to review discovery materials and calculate the loss that Adell has documented. (Newton Report at 3, 7.) Newton readily acknowledges the actual loss may be' more than he has calculated:

I've been asked to address or evaluate the documentation that Adell has produced, and to determine how much of their claimed losses that they're making here I can document. And, so it's far less than what is being claimed-what I've been able to document is far less than what's being claimed. I do think, in my mind, in looking at the documents and reports and so forth that the losses probably exceed what ...

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