Rankin et al v. USAA Casualty Insurance Company

Filing 76

ORDER granting in part and denying in part #68 Motion to Strike Untimely Disclosed Trial Witnesses McLean, Tatlah, Wegen, and Michelson, by Magistrate Judge Scott T. Varholak on 6/19/2017. (jgonz, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 16-cv-00373-WJM-STV
CELIA RANKIN, and
R. TODD RANKIN,
Plaintiffs,
v.
USAA CASUALTY INSURANCE COMPANY,
Defendant.
______________________________________________________________________
ORDER
______________________________________________________________________
Magistrate Judge Scott T. Varholak
This matter is before the Court on Defendant’s Motion to Strike Untimely
Disclosed Trial Witnesses McLean, Tatlah, Wegen, and Michelson (the “Motion”) [#68],
which was referred to this Court [#69].

The Court has considered the Motion and

related briefing, arguments made at the June 8, 2017, Motion Hearing, the case file, and
the applicable case law. For the following reasons, the Court GRANTS IN PART and
DENIES IN PART the Motion.
I.

BACKGROUND
This case arises out of an insurance coverage dispute between Plaintiffs and

their homeowner’s insurance provider, Defendant, related to water damage sustained
by Plaintiffs’ log-style vacation home on February 25, 2014. [#6 at 1] Relevant to the
instant Motion, Plaintiffs contend that the water leak caused checking (cracking) to the
log walls of the vacation home necessitating the replacement of the purportedly

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damaged logs. [#68 at 1-2; #71 at 1-2] Defendant contends that the checking predated and/or was not caused by the water damage. [#68 at 2; #54-12 at 4; #54-13 at 3]
On March 16, 2017, Plaintiffs served Defendant with their Fifteenth Supplemental
F.R.C.P. 26(e) Disclosures, which identified four additional individuals likely to have
discoverable information that Plaintiffs may use to support their claims. [#68-1] Those
individuals—Charandeep Tatlah, Keith Wegen, Paul Mikkelson, and Norm McLean
(collectively, the “Newly Disclosed Witnesses”)—were each identified as having
knowledge of the condition of Plaintiffs’ vacation home prior to the water damage in
February 2014. [Id.] On the same day, Plaintiffs also identified the Newly Disclosed
Witnesses as “may call” witnesses in their proposed trial-witness list. [#68 at 2]
On April 27, 2017, Defendant filed the instant Motion. [#68] Defendant contends
that the disclosure of the Newly Disclosed Witnesses on March 16, 2017—more than
four months after the close of discovery—was untimely and thus that the Newly
Disclosed Witnesses should be stricken from Plaintiffs’ witness list pursuant to Federal
Rule of Civil Procedure 37(c)(1).

[Id. at 2]

On May 18, 2017, Plaintiffs filed their

response, arguing that the disclosure was timely because Plaintiffs had no intention to
call any of the Newly Disclosed Witnesses prior to their disclosure and, even if untimely,
any prejudice to Defendant is readily cured by allowing Defendant to depose the Newly
Disclosed Witnesses. [#71] On June 1, 2017, Defendant filed its reply in support of the
Motion [#74] and, on June 8, 2017, this Court heard oral argument on the Motion [#75].

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II.

LEGAL STANDARD
Federal Rule of Civil Procedure 26 provides, in relevant part:
(a) Required Disclosures.
(1) Initial Disclosure.
(A) In General. Except as exempted by Rule 26(a)(1)(B) or
as otherwise stipulated or ordered by the court, a party must,
without awaiting a discovery request, provide to the other parties:
(i) the name and, if known, the address and telephone
number of each individual likely to have discoverable
information—along with the subjects of that information—
that the disclosing party may use to support its claims or
defenses, unless the use would be solely for impeachment;
...
(e) Supplementing Disclosures and Responses.
(1) In General. A party who has made a disclosure under Rule
26(a)—or who has responded to an interrogatory, request for production,
or request for admission—must supplement or correct its disclosure or
response:
(A) in a timely manner if the party learns that in some
material respect the disclosure or response is incomplete or
incorrect, and if the additional or corrective information has not
otherwise been made known to the other parties during the
discovery process or in writing; or
(B) as ordered by the court.

The Advisory Committee Notes to the 2000 Amendments to Rule 26(a) explain that the
amendments narrow the initial disclosure obligation such that a party is “no longer
obligated to disclose witnesses or documents, whether favorable or unfavorable, that it
does not intend to use.” The Advisory Committee Notes further clarify, however, that
“[t]he disclosure obligation attaches both to witnesses and documents a party intends to
use and also to witnesses and to documents the party intends to use if . . . ‘the need
arises’” (emphasis added).
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Federal Rule of Civil Procedure 37(c) states, in relevant part, that “[i]f a party fails
to provide information or identify a witness as required by Rule 26(a) or (e), the party is
not allowed to use that information or witness to supply evidence on a motion, at a
hearing, or at a trial, unless the failure was substantially justified or is harmless.” “The
determination of whether a Rule 26(a) violation is justified or harmless is entrusted to
the broad discretion of the district court.” Woodworker’s Supply, Inc. v. Principal Mut.
Life Ins. Co., 170 F.3d 985, 993 (10th Cir.1999) (quotation omitted). The Tenth Circuit
has identified the following four factors for the Court to consider in determining whether
the failure to disclose is substantially justified or harmless: (1) the prejudice or surprise
to the party against whom the testimony is offered; (2) the ability to cure the prejudice;
(3) the potential for trial disruption; and (4) the non-disclosing party’s bad faith or
willfulness. Id.
III.

ANALYSIS
A.

Timely Disclosure under Rule 26

Plaintiffs first argue that Rule 37(c) is inapplicable, because Plaintiffs’ disclosure
of the Newly Disclosed Witnesses was not untimely under Rule 26.

[#71 at 3-6]

Specifically, Plaintiffs contend that they were not required to disclose the Newly
Disclosed Witnesses until they made the determination that they might call the
individuals as witnesses at trial, and Plaintiffs purportedly “had no intention to call any of
the 4 witnesses in question prior to their disclosure.” [Id. at 5] Instead, according to
Plaintiffs, “[t]hey simply did not suspect they may call these witnesses and only
considered the possibility of calling them after a thorough review of the challenges to

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the plaintiffs’ credibility that [Defendant] has put forth in its [Motion for Partial Summary
Judgment].” [Id.]
As the Advisory Committee Notes to Rule 26(a) make clear, however, Plaintiffs
were required to disclose not only those witnesses that they presently intended to call to
testify but also those witnesses that they may call to testify “if the need arises.”
Plaintiffs have been aware that Defendant disputed their account of the pre-loss
condition of the logs in the house throughout this litigation. 1 Plaintiffs fail to identify any
specific information disclosed for the first time in Defendant’s Motion for Partial
Summary Judgment that caused Plaintiffs to locate and disclose the Newly Disclosed
Witnesses. To the extent new arguments challenging Plaintiffs’ credibility were raised in
the Motion for Partial Summary Judgment, this still does not justify Plaintiffs’ failure to
disclose the Newly Disclosed Witnesses prior to the close of discovery. Given that
Defendant disputed Plaintiffs’ account of the pre-loss condition of the logs, Plaintiffs
clearly should have anticipated that the “need may arise” for them to call additional
witnesses to support their position.
Moreover, Plaintiffs acknowledge that “one of the main purposes of the
requirement to disclose witnesses that the disclosing party may use to support its claims
or defenses is to assist other parties in deciding which depositions will actually be
needed.” [#71 at 5 (internal quotations omitted)] This purpose would be undermined
entirely if, as Plaintiffs contend here, parties were permitted to delay until after the close
of discovery the decision of which witnesses they may call to testify at trial.

1

The

At the Motion Hearing, counsel for Plaintiffs conceded that the condition of the logs
before and after the water damage has been a “central part” of the parties’ dispute since
even before this lawsuit was filed.
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subjective standard advocated by Plaintiffs would reward parties that fail to exercise
diligence in anticipating and timely disclosing the witnesses they may call to testify “if
the need arises.”

Decisions in this District make clear that counsel must exercise

diligence in identifying and disclosing potential witnesses prior to the close of discovery.
See, e.g., Smith v. Aurora Pub. Sch., 318 F.R.D. 429, 432 (D. Colo. 2016) (imposing
Rule 37(c) sanction where “summary judgment proceedings forced counsel to finally
focus on the merits of the case and prompted further investigation” that resulted in
untimely disclosure of witnesses); Young v. Brock, No. 10-CV-01513-WJM-CBS, 2014
WL 788036, at *3 (D. Colo. Feb. 27, 2014) (excluding untimely disclosed “credibility”
witnesses where “Defendant appears to have been less than diligent in formulating his
defense”).
Accordingly, the Court finds that the Newly Disclosed Witnesses were not timely
disclosed as required pursuant to Rule 26 and thus should be excluded unless the
failure to disclose was substantially justified or is harmless.
B.

Exclusion under Rule 37(c)

To determine whether Plaintiffs’ failure to timely disclose the Newly Disclosed
Witnesses was substantially justified or harmless, the Court considers the four
Woodworker’s factors. Woodworker’s Supply, Inc., 170 F.3d at 993; Ortega v. City &
Cty. of Denver, No. 11-CV-02394-WJM-CBS, 2013 WL 1751944, at *2 (D. Colo. Apr.
23, 2013).
Defendant argues that the untimely disclosure of the Newly Disclosed Witnesses
“severely prejudices” it. [#68 at 4] Specifically, Defendant contends that it had no
knowledge of any of the Newly Disclosed Witnesses prior to the close of fact and expert

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discovery and thus has been foreclosed from (1) deposing the Newly Disclosed
Witnesses, (2) having its experts consider the testimony of the Newly Disclosed
Witnesses, and (3) questioning Plaintiffs’ experts about the impact of the Newly
Disclosed Witnesses’ testimony on their opinions. [#74 at 6-9] The Court agrees that
the expense and inconvenience of deposing four additional witnesses—after the
completion of expert disclosures and the briefing of dispositive motions—constitutes
prejudice to Defendant.
The Court next looks to whether this prejudice may be cured. Trial in this matter
is not set to commence until November 27, 2017, over five months away. [#70] The
Court thus finds that there is sufficient time for Defendant to depose the Newly
Disclosed Witnesses in advance of the trial. Although Defendant would have incurred
the expense of these depositions even if the witnesses had been timely disclosed, the
Court acknowledges that there may be additional costs and inefficiencies associated
with taking the depositions at this late stage in the case, several months after the close
of discovery. Similarly, although there is sufficient time to complete four depositions in
advance of the trial, the Court recognizes that incorporating the testimony of four
additional witnesses into Defendant’s trial plan at this stage in the case may prejudice
Defendant.
The Court finds insufficient evidence in the record, however, to support
Defendant’s argument that the disclosure of the Newly Disclosed Witnesses would
require Defendant to supplement its expert reports and reopen the depositions of
Plaintiffs’ experts.

Defendant contends that, prior to the close of fact discovery,

Plaintiffs properly disclosed seven individuals as having knowledge of the pre-loss

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condition of their vacation home. [#68 at 5 n.2] Defendant fails to provide the Court
with any specific examples of how the testimony of these witnesses was considered by
its own experts or used to challenge the opinions of Plaintiffs’ experts at deposition.
Moreover, neither of the expert reports submitted by Defendant in support of its Motion
for Partial Summary Judgment includes reference to any of Plaintiffs’ witnesses’
testimony concerning the pre-loss condition of the logs. [#54-12 at 4; #54-13 at 3] Nor
does either report identify this testimony as one of the sources considered by the expert
in formulating his opinions as required by Federal Rule of Civil Procedure 26(a)(2)(B). 2
[#54-12 at 3; #54-13] Given that neither of these expert witnesses appears to have
considered the testimony of the previously disclosed witnesses, it is unclear why they
would need to consider the testimony of the Newly Disclosed Witnesses on the same
topic. Even if the testimony of the previously disclosed witnesses had been considered
by the experts, to the extent the testimony of the Newly Disclosed Witnesses is
consistent with the testimony of the previously disclosed witnesses, it is unclear to the
Court why the testimony of the Newly Disclosed Witnesses would also need to be
considered by the experts. Plaintiffs’ counsel represented to the Court at the Motion
Hearing that Plaintiffs’ experts would not rely upon—and their opinions would be
unaltered by—the testimony of the Newly Disclosed Witnesses.
Accordingly, the Court finds that the prejudice to Defendant may be cured by
reducing the number of Newly Disclosed Witnesses and requiring Plaintiffs to pay the
costs associated with the depositions of those witnesses. If, after the completion of

2

Pursuant to Federal Rule of Civil Procedure 26(a)(2)(B), expert witnesses must submit
an expert report that contains, inter alia, “the facts or data considered by the witness in
forming” his/her opinions.
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these depositions, Defendant continues to believe that the supplementation of its expert
reports and/or the reopening of the depositions of Plaintiffs’ experts is necessary, the
Court may reassess whether additional relief is required to cure any prejudice.
Turning to the third factor, the Court finds that the trial would not be disrupted by
the testimony of the Newly Disclosed Witnesses.

Neither party argues that a

continuance of the trial would be required if the Newly Disclosed Witnesses were
permitted to testify. The Court further notes that the length of trial was set after the
disclosure of—and based upon a Final Pretrial Order that included—the Newly
Disclosed Witnesses. [#65, 70] Any potential disruption to the trial would further be
militated by a reduction in the number of Newly Disclosed Witnesses permitted to
testify.
With regard to the final factor, Defendant does not argue—and there is no reason
to believe—that Plaintiffs’ untimely disclosure of the Newly Disclosed Witnesses was
undertaken in bad faith.

At the Motion Hearing, Defendant argued that Plaintiffs’

untimely disclosure was, however, willful in that Plaintiffs were aware of the existence of
the Newly Disclosed Witnesses from the outset of the litigation and intentionally chose
not to disclose them, because they did not anticipate needing them to testify. The Court
finds that Plaintiffs’ conduct constitutes a lack of diligence in formulating their litigation
strategy rather than bad faith or willfulness. Young, 2014 WL 788036, at *3. However,
because the Court “cannot encourage” such a lack of diligence, the Court finds this
factor neutral. Id.
Weighing all the factors, the Court finds that exclusion is not required under Rule
37(c) and striking all four of the Newly Disclosed Witnesses would be too harsh a

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sanction. Although Defendant contends that courts in this District “routinely forbid” trial
testimony by witnesses disclosed under analogous circumstances [#68 at 7], the only
two cases cited by Defendant are readily distinguished. In both Young and Reich, the
trial was less than one month away at the time the court issued its order and thus there
was insufficient time remaining to allow the affected party to depose the witnesses
before trial. Young, 2014 WL 788036, at *3 (noting that trial was set to begin in less
than three weeks); Reich v. Am. Family Mut. Ins. Co., No. 14-CV-01482-KLM, 2015 WL
3619862, at *2 (D. Colo. June 9, 2015) (noting that trial was scheduled to commence in
less than three weeks and thus that reopening discovery would require prolonging the
trial). Indeed, in Young, Judge Martinez expressly noted that, had the issue been raised
with the court earlier, “perhaps the Court could have reopened discovery for the
purpose of allowing Plaintiff to depose the proposed witnesses.”

Young, 2014 WL

788036, at *3. Where, as here, sufficient time remains to allow the untimely disclosed
witnesses to be deposed prior to trial, courts in this District routinely allow at least some
of the undisclosed witnesses to testify. Equal Emp’t Opportunity Comm’n v. JBS USA,
LLC, No. 10-CV-02103-PAB-KLM, 2016 WL 1039907, at *10 (D. Colo. Mar. 16, 2016)
(allowing 30 of 103 untimely disclosed witnesses to testify); Smith, 318 F.R.D. at 433
(allowing five of seven untimely disclosed witnesses to testify); Ortega, 2013 WL
1751944, at *2 (allowing all four untimely disclosed witnesses to testify).
Although the Court finds that striking all four of the Newly Disclosed Witnesses is
too harsh a sanction, the Court finds that some lesser sanction is appropriate both to
cure the prejudice that the untimely disclosure of the witnesses otherwise may impose
on Defendant and to deter the lack of diligence exhibited by Plaintiffs. At the Motion

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Hearing, counsel for Plaintiffs acknowledged that some lesser sanction may be
appropriate and expressly recognized striking a lesser number of the Newly Disclosed
Witnesses and requiring Plaintiffs to reimburse Defendant for the costs of the
depositions of those witnesses and/or for a set amount of expert time necessary to
supplement the expert reports as a potential sanction. As explained above, the Court
believes that this type of lesser sanction would cure any prejudice Defendant otherwise
may suffer as a result of the untimely disclosure of the Newly Disclosed Witnesses. The
Court thus DENIES the Motion to the extent it requests that all four of the Newly
Disclosed Witnesses be stricken. The Court will, however, impose the following lesser
sanction: Plaintiffs will be limited to designating only two of the four Newly Disclosed
Witnesses and, should Defendant elect to depose those witnesses, Plaintiffs shall be
required to reimburse Defendant for the costs of the depositions. If, after the completion
of these depositions, Defendant continues to believe it necessary to supplement its
expert report(s) and/or to reopen the deposition(s) of Plaintiffs’ experts, Defendant may
seek additional relief from this Court pursuant to its discovery dispute procedures. See
Civil Practice Standards, § IV.
IV.

CONCLUSION

For the foregoing reasons, this Court ORDERS that:
(1)

Defendant’s Motion to Strike Untimely Disclosed Trial Witnesses McLean,
Tatlah, Wegen, and Michelson [#68] is GRANTED IN PART and DENIED
IN PART as set forth above;

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(2)

On or before June 30, 2017, Plaintiffs shall designate which two of the
four Newly Disclosed Witnesses Plaintiffs intend to include on their
proposed trial-witness list;

(3)

Fact discovery is reopened through August 10, 2017, solely for the
purpose of Defendant obtaining discovery from or regarding the two Newly
Disclosed Witnesses;

(4)

Should Defendant elect to depose these witnesses, Plaintiffs shall
reimburse Defendant for the costs of the deposition(s). 3 “Costs” in this
context means subpoena and/or witness fees, service of process fees, if
any, and the reasonable costs charged by a court reporting firm, including,
if applicable, the costs associated with videotaping the deposition(s).
“Costs” in this context does not include attorneys’ fees, travel expenses,
copying expenses, or similar charges.

(5)

If, after completion of discovery related to the two Newly Disclosed
Witnesses, Defendant continues to believe that it is necessary to
supplement its expert report(s) and/or to reopen the deposition(s) of
Plaintiffs’ expert(s), the parties shall confer in good faith to try to reach a
mutually agreeable resolution.

If the parties are unable to reach an

agreement, the Court will resolve the dispute on an expedited basis
through its discovery dispute procedures. See Civil Practice Standards, §
IV.

3

Alternatively, the parties may arrange for Plaintiffs to pay these costs directly.
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DATED: June 19, 2017

BY THE COURT:
s/Scott T. Varholak
United States Magistrate Judge

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