Hoopes et al v. Gulf Stream Coach Inc et al
OPINION AND ORDER: GRANTING IN PART AND DENYING IN PART 92 MOTION in Limine To Bar Plaintiffs' Purported Expert Bernie Garceau by Defendant Gulf Stream Coach Inc, as set forth in Order, and DENYING 94 MOTION in Limine To Bar Plaintiffs' Expert Tom Bailey by Defendant Gulf Stream Coach Inc. Signed by Judge Rudy Lozano on 3/25/2016. (lhc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
NATHAN HOOPES and
GULF STREAM COACH, INC.,
OPINION AND ORDER
This matter is before the Court on: (1) Defendant Gulf Stream
Coach, Inc.’s Motion to Bar Plaintiffs’ Purported Expert Bernie
Garceau, filed by the defendant, Gulf Stream Coach, Inc., on August
7, 2015 (DE #92); and (2) Defendant Gulf Stream Coach, Inc.’s
defendant, Gulf Stream Coach, Inc., on August 7, 2014 (DE #94).
For the reasons set forth below, the motion to bar Bernie Garceau
(DE #92) is GRANTED IN PART AND DENIED IN PART as set forth in the
body of this order, and the motion to bar Tom Bailey (DE #94) is
This case was originally brought by the plaintiffs, Nathan and
Devon Hoopes, (collectively “Plaintiffs”) against two defendants,
Gulf Stream Coach, Inc. (“Gulf Stream”) and General RV Center, Inc.
(“GRV”), based on problems they experienced with their recreational
vehicle (“RV”) including, but not limited to, an issue with the
RV’s slide-out room.
GRV filed a Motion for Summary Judgment to
Enforce Arbitration Clause on May 16, 2011.
This Court denied
GRV’s motion to compel arbitration but granted GRV’s motion seeking
dismissal of the claims against it as set forth in Plaintiffs’
Gulf Stream filed its own Motion for Summary
Judgment on December 16, 2013, which was granted in part and denied
in part on September 29, 2014.
The motion was granted as to
Plaintiffs’ Ohio Lemon Law Act, Ohio Consumer Sales Practices Act,
Indiana Lemon Law Act, state law negligence claims, and Plaintiffs’
alternative prayer for relief on the basis of revocation and/or
rescission of the contract.
However, the motion was denied as to
Plaintiffs’ Indiana Deceptive Consumer Sales Act claim.
The matter was referred to Magistrate Judge Susan L. Collins
for purposes of a settlement conference, and several attempts to
settle the case were made in August of 2015 but were concluded
In preparation for trial, Gulf Stream filed
the instant motions to bar the testimony of Plaintiffs’ proposed
Plaintiffs filed their responses in opposition
on October 12, 2015.
On October 19, 2015, Gulf Stream filed its
On November 6, 2015, this Court held an evidentiary
hearing at which Plaintiffs’ challenged experts testified. At the
conclusion of the hearing, the Court took the instant motions under
Federal Rule of Evidence 702, which governs expert testimony,
provides the following:
A witness who is qualified as an expert by
knowledge, skill, experience, training, or
education may 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 upon
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.
Fed. R. Evid. 702 (2011).
In addition, in Daubert v. Merrell Dow
Pharms., Inc., the Supreme Court fashioned a two-prong test of
admissibility for evidence based on the “scientific knowledge”
mentioned in Rule 702.
Daubert v. Merrell Dow Pharms., Inc., 509
U.S. 579, 592 (1993).
To be admissible, evidence must be both
reliable and relevant.
Id. at 589; see also Kumho Tire Co., Ltd.
v. Carmichael, 526 U.S. 137, 152 (1999) (noting the objective of
relevancy of expert testimony).
Under the reliability prong, scientific evidence must be
reliable in the sense that the expert’s testimony must present
genuine scientific knowledge.
Daubert, 509 U.S. at 592-93; Deimer
v. Cincinnati Sub-Zero Prods. Inc., 58 F.3d 341, 344 (7th Cir.
Generally, the expert witness must employ in the courtroom
practice of an expert in the witness’s field.
Kumho, 526 U.S. at
Specifically, a court may, but is not required to, consider
a nonexclusive list of four factors in assessing reliability: (1)
whether the expert’s theories and techniques can be verified by the
scientific method through testing; (2) whether the theories and
techniques have been subjected to peer review and publication; (3)
whether the theories and techniques have been evaluated for their
techniques have been generally accepted by the relevant scientific
Daubert, 509 U.S. at 593-94.
intellectual rigor will vary by the field of expertise and the way
of demonstrating expertise will also vary.”
Mgmt., 102 F.3d 256, 263 (7th Cir. 1996).
Tyus v. Urban Search
As the Seventh Circuit
pointed out in United States v. Allen, 269 F.3d 842, 846 (7th Cir.
2001), the Advisory Committee notes to Rule 702 note that “[i]n
certain fields, experience is the predominant, if not the sole,
basis for a great deal of reliable expert testimony.”
reliability is ‘flexible,’ and Daubert’s list of specific factors
neither necessarily nor exclusively applies to all experts or in
Kumho Tire Co., Ltd., 526 U.S. at 141-42.
Under the relevance prong, the testimony must assist the trier
of fact to understand the evidence in the sense that it is relevant
to or “fits” the facts of the case.
Daubert, 509 U.S. at 591;
Smith v. Ford Motor Co., 215 F.3d 713, 718 (7th Cir. 2000).
other words, the testimony must be such that the jury can apply it
in a meaningful way to the facts at hand.
This “fit” analysis
indistinguishable from the basic evidentiary inquiries into whether
evidence is relevant and, if so, whether its probative value is
nonetheless substantially outweighed by, among others, the danger
of unfair prejudice and jury confusion.
See Daubert, 509 U.S. at
595; Ayers v. Robinson, 887 F. Supp. 1049, 1058-59 (N.D. Ill.
In this case, as noted above, Gulf Stream has objected to the
testimony of Bernie Garceau (“Mr. Garceau”) and Tom Bailey (“Mr.
The Court will address each objection in turn.
Gulf Stream moves to bar the testimony of Mr. Garceau, arguing
that he is “unqualified to render what are essentially engineering
opinions” and that Court should exclude his “biased and unreliable
report and testimony.”
Plaintiffs respond by arguing that Mr.
Garceau is uniquely qualified to testify as to the slide-out system
failure in this case based on his experience and background, that
his report is reliable, and that his alleged bias does not justify
excluding his testimony.
particular issue with the fact that Mr. Garceau has a Bachelor of
Science in finance rather than engineering, and it argues that
because he oversees the “business related aspects of BAL RV
Products Group,” he is not qualified as an expert regarding the
failure of the RV’s slide-out system.
At the evidentiary hearing,
Mr. Garceau testified that he is currently the Brand Manager for
operated a company called Shannon Industries (“Shannon”).
#120, pp. 7-8.)
While at Shannon, Mr. Garceau manufactured
(Id. at 8.)
He designed all of the products that
Shannon had, and he has been involved in design work throughout his
(Id. at 11.)
He eventually left Shannon and has worked
for Norco since 1994 or 1995.
(Id. at 9.)
At Norco, Mr. Garceau
Mr. Garceau later clarified that he is an Executive Vice President
and Brand manager for BAL, which is the RV-related brand for Norco. (DE #120,
Mr. Garceau described a slide-out as a “room that slides out of an RV
or any other type of vehicle that increases the living space. So it’s
basically a -- It has one wall that’s open that’s towards the inside of the
coach, and the mechanism will drive that room out, once the vehicle is parked
in a location, to increase the living space.” (DE #120, p. 8.)
is currently responsible for all manufacturing and engineering
(Id. at 9-10.)
With respect to the slide-out system at issue in this case,
Mr. Garceau testified that a gentleman brought Norco a rough,
unrefined idea for a slide-out in 1998 or 1999, which Mr. Garceau
then took and developed into the current product.
(Id. at 10.)
Mr. Garceau explained that Norco “hold[s] the patents on it.
mechanical workings and how it actually goes together and the
design of it, that was mine.”
Mr. Garceau indicated that it
was his “conception after I took it from the original inventor, and
it was my design to turn it into the product that it is.”
He noted that his name is on the patents.
problems with the slide-out systems.
(Id. at 12.)
reviews warranty claims, and for several years he was the hands on
In that role, Mr. Garceau has
assessed the source of problems with various slide-out systems in
the field, and he examined the specific RV at issue in this case.
(Id. at 12-13.)
Mr. Garceau testified that, based on his design experience and
testing of the slide-out system over the years, installation
instructions were developed to ensure that all component parts were
in the right spot, were employed correctly, and were tightened down
correctly. (Id. at 22.) He also indicated that he was responsible
for supervising the testing of the slide-out system with regard to
load capabilities and screw strength at Norco’s test laboratory,
and that he performed years of testing and years of field analysis
throughout the country to “see how the slide-out is working and
what happens with them.”
(Id. at 22-24.)
Finally, Mr. Garceau
stated that he has been to several locations to teach manufacturers
how to install the slide-out.
(Id. at 24.)
As noted by the Seventh Circuit, “a court should consider a
proposed expert’s full range of practical experience as well as
academic or technical training when determining whether the expert
is qualified to render an opinion in a given area.”
402 F.3d 752, 758 (7th Cir. 2005).
U.S. v. Parra,
That is because, “[w]hile
extensive academic and practical expertise in an area is certainly
sufficient to qualify a potential witness as an expert, Rule 702
specifically contemplates the admission of testimony by experts
whose knowledge is based on experience.”
Id. Gulf Stream asks the
Court to discard all of Mr. Garceau’s opinions because he is not an
In its reply brief, Gulf Stream cites to several cases
in support of its argument that no individual other than an
engineer may testify as to engineering issues.
See Rose v. Truck
Ctr., Inc., 611 F.Supp.2d 745, 749-751 (N.D. Ohio 2009); Smith v.
Ford Motor Co., 215 F.3d 713, 716, 717, 719, 720 (7th Cir. 2000);
Peak v. Kubota Tractor Corp., 924 F.Supp.2d 822, 825, 827, 829
(E.D. Mich. 2013); Fedelich v. Am. Airlines, 724 F.Supp.2d 274, 279
(D. P.R. 2010); U.S. v. 14.38 Acres of Land, More or Less Situated
in Leflore County, State of Miss., 80 F.3d 1074, 1079, 1079 n.4
(5th Cir. 1996).
Yet, with the exception of Rose, none of the
cases cited by Gulf Stream held that an individual was unqualified
to testify because they lacked an engineering degree; rather, the
various courts determined that the individual in question was
qualified to testify, in part, based on their engineering degree.
In Rose, a case involving re-manufactured steering gear that
allegedly caused a truck’s steering to fail, the court did conclude
that a former truck driver turned mechanic lacked the expertise to
testify as to the product defect and causation issue because he was
not an engineer.
Rose, 611 F.Supp.2d at 747, 749-50.
so doing the court noted that the mechanic’s proffered opinions
went “far beyond his expertise in the field of maintenance,” and it
manufactured a steering gear for a truck.”
Id. at 750.
distinguishable from the case at bar because here we have an
individual who manufactured, tested, and designed the particular
slide-out system involved.
In a case cited by neither party that centered around the
industrial machinery, the defendants moved to bar the report and
testimony of the plaintiff’s expert, arguing that a “‘user’ of a
machine-who has no college degree or a degree in mechanical,
electrical, or design engineering-is not thereby qualified to give
expert opinion on design related matters.”
Loeffel Steel Prod.,
Inc. v. Delta Brands, Inc., 372 F.Supp.2d 1104, 1112 (N.D. Ill.
The court reviewed the qualifications of the plaintiff’s
expert which included working as a junior tool engineer, machine
designer, and developer before starting his own company that
manufactured precision blanking and slitting lines.
Id. at 1111-
When the company was bought out by a larger machine tool
manufacturer, he because Vice President and General Manager of that
company before eventually starting a consulting firm. Id. at 1112.
In recognizing the expert’s extensive involvement over fifty years
with companies that manufactured the same type of machine at issue
in the litigation, the court noted that “[n]othing in the text,
purpose, or history of Rule 702 supports the notion that formal
education or training is an indispensable prerequisite to a finding
of testimonial competency.
Indeed, the uncompromisingly plain
language of the Rule refutes it.”
Id. at 1113.
The court held
that an individual who, like the plaintiff’s expert, had “spent a
protracted period running a company that manufactures the kind of
machine involved in this case, has sufficient specialized knowledge
gained through that experience that he can be qualified as an
expert on all manner of things relating to the machinery.”
Procedure § 6265 (1997)).
As to the defendant’s argument that the
engineered or designed the lines [at issue],” the court held that
the lack of specialization or particular degree went to the
testimony’s weight and credibility, not its admissibility.
(emphasis in original).
This Court finds the reasoning in Loeffel Steel persuasive and
It is not disputed that engineers have been repeatedly
deemed qualified to opine as to mechanical engineering issues.
That said, it does not necessarily follow that all non-engineers
should be automatically excluded from testifying regarding such
matters in every situation.
Gulf Stream has not pointed to, nor
has the Court discovered, any Seventh Circuit cases that create
such a bright line rule. Rather, the Court is directed to consider
the expert’s “full range” of practical experience and training.
Smith, 215 F.3d at 718.
Gulf Stream’s myopic approach would ask
this Court to ignore the breadth of Mr. Garceau’s credentials.
While it is true that he is not a licensed engineer and has no
degree in engineering, Mr. Garceau has testified that he has
designed, manufactured, and tested slide-out related systems for
over twenty years, including designing (and patenting) the specific
slide-out mechanism at issue.
As the designer of that mechanism,
with years of experience in evaluating and testing the real-world
and laboratory functionality of the slide-out system in general as
well as examining the subject RV’s slide-out itself, he is uniquely
qualified by knowledge, training, and experience to opine as to the
slide-out system failure in this case despite his lack of a formal
Gulf Stream next argues that Mr. Garceau’s “extreme bias” bars
his report and testimony.
While it is true that Norco was named as
a defendant in this case but was later voluntarily dismissed by
Plaintiffs (see DE #101), questions of potential bias are best left
Pennsylvania v. Ritchie, 480 U.S. 39, 51-52 (1987) (“[T]he right to
cross-examine includes the opportunity to show that a witness is
biased, or that the testimony is exaggerated or unbelievable.”);
U.S. v. Sasson, 62 F.3d 874, 882-83 (7th Cir. 1995) (crossexamination is the proper tool to expose a witness’s motivation in
testifying). Indeed, the Seventh Circuit has clarified that expert
witnesses need not be “disinterested” to give opinions on the
discounting the weight of testimony from a source of perceived or
Braun v. Lorillard Inc., 84 F.3d 230, 237-38 (7th
Cir. 1996) (“A litigant, or a litigant’s CEO, or sole stockholder,
or mother, or daughter is not, by reason of his or her or its
relation to the litigant, disqualified as an expert witness.”);
Tagatz v. Marquette Univ., 861 F.2d 1040, 1042 (7th Cir. 1988)
(fining no impropriety even where the plaintiff testified as his
own expert witness).
Gulf Stream’s request to bar Mr. Garceau’s
testimony on the basis of “extreme bias” is without merit.
Finally, Gulf Stream argues that Mr. Garcaeu’s opinions are
(1) Broken or frayed cables are always an
indication of improper installation or that
there is a design flaw from the coach
manufacturer, but a broken or frayed cable is
not an indication of any design flaw or fault
in the Norco-supplied parts.
(2) [I]t is my opinion within a reasonable
degree of certainty that the malfunctions of
the slideout room experienced in the subject
RV are the result of improperly installed
standoff brackets, improperly adjusted cables,
or potentially, an improperly constructed
slide our box by the coach manufacturer, and
not the fault of any of the parts or design of
the Accu-Slide system itself.
(DE #93-2, pp. 2, 4.)
Plaintiff responds by arguing that Mr.
troubleshooting of slide-out systems lends reliability to his
opinions, especially in light of the fact that, according to
Plaintiffs’ unchallenged engineer expert, the slide-out system is
straight-forward and “kinematically simple.”
(See DE #111-2, p.
In his report, Mr. Garceau states that he is familiar with and
participated in the design, manufacture, and servicing of the type
of slide-out at issue in this case. (DE #93-2, p. 1.)
evidentiary hearing, he greatly expanded upon that statement as was
described by the Court above.
The report notes that he conducted
an inspection of the subject RV as well as a review of the Norco
records relating to the slide-out.
Mr. Garceau’s report
details the inspection he performed and sets forth his observations
related to the condition and installation of the slide-out.
Those observations include descriptions of the standoff
brackets and their position, the condition of the adjustment
brackets which attach the cables from the slide-out room to the
chains from the motor, the lack of anti-vibration blocks, loose jam
nuts on three of the adjustment brackets, a loose cable as a result
of the improperly adjusted jam nut, scrape marks on the adjustment
brackets as they struck one another during the operation of the
slide-out room, a replacement cable that was installed with a ubolt style cable clamp instead of the ferrule provided by Norco,
scrape marks on the u-bolt and the adjustment bracket that came in
contact with the u-bolt as the room was extended and retracted,
standoff brackets that had been replaced, and screws that appeared
to be at a maximum #8 as opposed to the recommend #10 or #12
The report ties the observations to details in the
installation manual and to general properties of the system’s
functionality and operational capabilities.
about his report during the evidentiary hearing, Mr. Garceau
testified that he based his conclusions on observation, experience,
For example, Mr. Garceau indicated that he was
familiar with the load capacities of the cable assembly which led
to his opinion on broken or frayed cables (Id. at 17-19), that he
visually observed the screws on the subject RV in relation to his
experience with the recommended screw size that Norco had tested in
its laboratory for years (Id. at 20-23), and that he relied on
years of testing and years of field analysis “to see how the slideout is working and what happens with them” to form his conclusion
as to the particular slide-out of the subject RV (Id. at 23-24).
The Court agrees with Plaintiffs that this is a case where the
relevant reliability concerns must be focused on the expert’s
knowledge and personal experience rather than a rigid application
of the Daubert factors. Here, as noted above, Mr. Garceau tied his
observations to the installation manual and/or general properties
of the system’s functionality and operational capabilities, and he
pointed out specific variances or problems in the subject RV’s
His opinions were not based on intuition, speculation,
observations, knowledge, and experience.
“Personal observation is
deemed often to be the most reliable source of information.
Experts of all kinds tie observations to conclusions through the
use of what Judge Learned Hand called general truths derived from
. . . specialized experience.”
Loeffel Steel, 372 F.Supp.2d at
methodology (i.e. a description of each of the items he observed
and deemed relevant to the slide-out’s failure along with an
explanation of any noted discrepancies from the usual standard)
before reaching his conclusions as to the subject RV.
cited by Gulf Stream are simply inapposite because none involve
reliability concerns that focus on personal knowledge and practical
experience of the type at issue here.
See Loeffel Steel, 372
F.Supp.2d at 1116-17 (distinguishing the case before it where
expert had personal knowledge and practical experience of the
subject matter from those cases where experts relied mainly on
general field knowledge).3
As in Loeffel Steel, the Court finds
that Mr. Garceau’s detailed physical and visual inspections of a
system that he personally designed and manufactured, coupled with
years of experience testing and observing the workings of such
Gulf Stream also argues that, because Mr. Garceau was advised by Gulf
Stream in connection with the inspection that “the driver’s side slide-out had
experienced a broken cable and one of the standoff brackets had been pulled
out of the wall to which they were attached,” (Id. at 2), he had a
“preconceived theory” as to the cause of the slide-out failure, which led to
bias and unreliability in his conclusions. In the case relied upon by Gulf
Stream to support that position, the district court held that the expert had
developed a preconceived theory and thus lacked the objectivity to produce
reliable scientific results. Viterbo v. Dow Chem. Co., 646 F. Supp. 1420,
1424-25 (E.D. Tex. 1986). The court based that determination on the fact that
the expert’s data was “unreliable and lacking in probative force” because he
had no past experience with the issue, could not find scientific literature to
support his position, and performed tests which failed to establish a causal
link to support his theory. Id. Here, there is no indication that Gulf
Stream’s disclosure, which was verified by Mr. Garceau upon his own detailed
visual inspection, led to any such preconceived theory; Mr. Garceau has years
of experience designing and testing slide-out systems and performed an
inspection of the specific slide-out in question. That Gulf Stream reported
facts regarding the slide-out’s history to Mr. Garceau prior to his own
inspection does not render his own conclusions inadmissible.
system in general, are sufficient to qualify his opinions as
reliable regarding the malfunction of the slide-out system in the
That said, Mr. Garceau’s opinion that broken or frayed cables
are “always” an indication of improper installation and never a
fault of the Norco supplied parts goes beyond the scope of this
particular report and will be excluded.5
Mr. Garceau’s report
lacks sufficiently detailed information, analysis, or data that
would deem such a far reaching and broad conclusion reliable.
Although Mr. Garceau’s knowledge and practical experience serve to
provide an adequate foundation for expounding upon the subject RV
that he personally inspected and described in detail in the report
itself, the Court cannot reasonably assess the reliability of Mr.
Garceau’s statements regarding cable failures in general without
some reference to additional broad based methodology, which is
simply not present.
Mr. Garceau may, however, testify as to his
own personal knowledge, experience, and testing as related to cable
failures (as he did at the evidentiary hearing (see DE #120, pp.
[I]t is my opinion within a reasonable degree of certainty that the
malfunctions of the slideout room experienced in the subject RV are the result
of improperly installed standoff brackets, improperly adjusted cables, or
potentially, an improperly constructed slide our box by the coach
manufacturer, and not the fault of any of the parts or design of the AccuSlide system itself. (DE #93-2, p. 4.)
“Broken or frayed cables are always an indication of improper
installation or that there is a design flaw from the coach manufacturer, but a
broken or frayed cable is not an indication of any design flaw or fault in the
Norco-supplied parts.” (DE #93-2, p. 2.)
18-19)) without taking the extra step of tying those personal
failures in every situation.
Gulf Stream moves to bar the testimony of Mr. Bailey, arguing
that it is both unreliable and irrelevant.
As to relevancy, Gulf
Stream argues that the “appraisal lacks consideration of the
alleged problems at issue in the litigation” because Mr. Bailey’s
report deemed defects other than the driver’s side slide-out
irrelevant for purposes of valuation.6
According to Gulf Stream,
the slide-out failure is not at issue in this litigation because,
“[a]lthough Gulf Stream is the manufacturer of the finished RV
product, it did not manufacture the component part slide-out.”
Thus, Gulf Stream concludes, the slide-out is not covered by the
“Warranty”), and Mr. Bailey’s opinions will not assist the trier of
fact “as they wholly address complaints not at issue in this
litigation and ignore the quibbles that are at issue.”
respond by pointing out that damages are clearly at issue in the
case at bar, and they assert that the Warranty does indeed cover
When asked about why he deemed the other defects irrelevant for
purposes of the appraisal, Mr. Bailey testified at the evidentiary hearing
that, “[t]he Gulf Stream Coach had such minor defects in other areas, that I
didn’t feel -- or didn’t believe that those would be relevant in the overall
picture of this slide-out failure.” (DE #120, p. 56.)
the slide-out, making Mr. Bailey’s testimony relevant to the
subject RV’s valuation.
The Court notes that Gulf Stream could have (and procedurally
should have) raised this argument at the summary judgment stage if
it believed the Warranty excluded all consideration of the slideout
feature, yet it failed to do so.
A Daubert motion is not the
proper medium to raise dispositive contractual disputes, and the
Court refuses to engage in a lengthy analysis of the issue at this
That said, for purposes of this motion, the Court agrees
with Plaintiffs that the Warranty does not automatically preclude
Mr. Bailey’s testimony.
The Warranty provides a “one (1) year
warranty under normal use against defects in Gulf Stream materials
vehicle.” (DE #95-2, p. 1.) The Warranty does not cover, however,
“[a]ppliances and component parts not manufactured by Gulf Stream,
including, but not limited to, auxiliary generator power plants,
invertors, etc.” or “[a]ny component part which possesses its own
warranty from a party other than Gulf Stream.”
(Id. at 2.)
Although the list of appliances and component parts exempted from
coverage is nonexhaustive, the slide-out is not of the same type
and kind as those that are listed.
A slide-out is distinctly
different than a water heater, a refrigerator, or a furnace in that
the slide-out is part of the construction of the overall vehicle
that Gulf Stream delivered to Plaintiffs (i.e. the bolts, brackets,
screws, etc.), while the component parts listed in the Warranty are
stand alone items.
Furthermore, Gulf Stream has presented no
evidence that the slide-out is covered by its own warranty from any
See e.g. Pack v. Damon Corp., 434 F.3d 810, 815-16
(6th Cir. 2006) (finding a rear monitor in an RV was appropriately
excluded from the RV manufacturer’s warranty because it was covered
by its own separate warranty and was the same kind of item as those
specifically listed as not covered; but distinguishing the RV’s
slide-outs that the plaintiff alleged did not close properly,
noting that the manufacturer had attempted to fix the “loose slideout gasket” and finding that the slide-outs did not fall under any
exception to the manufacturer’s warranty).
Even assuming, arguendo, that the slide-out mechanism could be
considered a “component part not manufactured by Gulf Stream,” the
slide-out issue is greater than the mechanism alone.
evidentiary hearing, Mr. Garceau testified that the slide-out
mechanism manufactured by Norco did not include the rough opening
in the RV or the room itself; rather the slide-out mechanism is
“simply the drive for the room that’s provided by somebody else,”
and it was delivered to Gulf Stream in an unassembled state.
#120, pp. 14-15.)
Gulf Stream has not disputed Plaintiffs’
assertion that Gulf Stream bought some of the parts that were used
in the construction of the slide-out portion of the RV, nor has
Gulf Stream disputed that Gulf Stream employees were the ones to
use their workmanship and skill to assemble the slide-out feature
“materials and/or workmanship” is at the heart of the problem with
the slide-out, rather than the slide-out mechanism itself. For his
part, Mr. Bailey testified at the evidentiary hearing that it would
take approximately four-hundred hours to fix the slide-out room in
a manner that would work successfully, which would entail replacing
the slide-out system and modifying the structure including the
(DE #120, pp. 72-73.)
Based on the foregoing, the
Court finds Gulf Stream’s “materials and/or workmanship in the
construction of the [RV]” remains at issue with regard to the
slide-out and is not excluded by the Warranty; thus, Mr. Bailey’s
valuation report is relevant to the issue at hand.
unreliable because it lacks methodology as related to his valuation
Gulf Stream does not take particular issue with Mr.
Bailey’s credentials or experience; rather, they assert that “[h]e
has failed to demonstrate in this particular litigation that he has
principles and methods to reach conclusions that will assist the
Gulf Stream argues that Mr. Bailey’s failure to explicitly
prevents his testimony from being admitted.
Plaintiffs respond by
arguing that Mr. Bailey’s methodology is scattered throughout his
report and that his “studies and certifications, coupled with his
extensive experience, are more than sufficient to provide the
foundation to qualify Mr. Bailey as an expert in RV appraisal
During the evidentiary hearing, Mr. Bailey testified that he
industries, along with investigations of RVs for possible damage.
(DE #120, p. 37.)
He described his background of purchasing
vehicles at auto auctions and then repairing and/or modifying them
before reselling the vehicles for his family’s business.
37-40.) He also indicated that he had experience constructing “toy
hauler” RVs from scratch, essentially converting horse trailers to
vehicles that included total living quarters, and he testified that
he has repaired numerous damaged RVs.
(Id. at 63-65.)
to Mr. Bailey, he has appraised in excess of 2,000 RVs over the
manufacturers, RV dealers, retailers, government agencies, nonprofit organizations, trucking companies, and law firms.
41-42; see also DE #95-1, pp. 23-24.)
Mr. Bailey also indicated
that he took a course at the University of Michigan in RV appraisal
techniques and that he received a certification from the RV
Appraisal Institute of America. (Id. at 46-47.) In light of these
facts along with Gulf Stream’s failure to identify any particular
issue with Mr. Bailey’s qualifications, the Court does not question
that Mr. Bailey possesses the credentials necessary to testify as
an expert witness as to the value of the RV.
With regard to the methodology employed by Mr. Bailey, when
asked what tasks he performed and considered in completing his
report and reaching his conclusions in this case, Mr. Bailey
testified that he reviewed the service records of the subject RV,
conducted a physical inspection, photographed the subject RV and
documented any issues, reviewed the report of Jon S. Gerhardt,
Ph.D, P.E. (the mechanical engineer and professor of mechanical
engineering who also prepared a report in this case (see DE #95-1,
pp. 27-28)), reviewed the RV Purchase Agreement dated January 23,
2010, reviewed Gulf Stream’s Manufacturer Suggested Retail Price
(“MSRP”) for the RV, reviewed the Gulf Stream invoice for the
subject RV, reviewed the Retail Installment Contract for the sale
of the RV to Plaintiffs, reviewed Gulf Stream’s description and
floor plan of the RV, and reviewed the Accu-Slide Designer’s Guide,
Installation Manual, and Service Manual for the slide-out mechanism
installed in the RV.
(DE #120, pp. 53-55.)
Mr. Bailey explained
that his methodology, which has remained consistent since the 1960s
or 1970s, also included looking at the condition of the RV and its
mileage, the geographical location in question, the time of year
the sale was contemplated, the financing rates, supply and demand
issues, fuel prices, repair costs, and the desirability of the
options of the RV in question.
(Id. at 50, 59-67.)
repair costs, Mr. Bailey testified that:
A. I considered what it would entail for me to
take that RV and figure out a means to fix the
slide-out in a manner that would work
successfully. And in doing so, I considered
the hours and the materials.
Q. And do you have experience with both of
those in your work for the RV dealers?
A. Yes, I’ve done this -Q. As well as manufacturers?
A. -- many years in the past.
Q. Okay. Go ahead.
A. The hours -- Well, first of all, I had to
consider what type of slide-out system would
work in that successfully, and I decided on
Q. There are different slide-out systems out
there, aren’t there?
A. Yes. And this is a very good one.
Q. Go ahead.
A. I also considered what modifications would
have to be made to implement that. And in
structure, there’s changes underneath in order
for the hydraulics, and I came to the
conclusion that approximately 400 hours would
Q. From beginning to end?
A. I’m sorry.
Q. From the beginning to the end of that
Q. Go ahead.
A. 400 hours at about a hundred dollars an
hour is approximately $40,000.
Q. How do you know a hundred dollars an hour
is accurate in the industry?
A. I’ve done -- I travel all throughout the
United States on RV cases and met RV dealers,
and I see the rates posted. I know what they
are on the estimates.
Q. All right. So your experiences taught you
A. Yes. That’s -Q. Okay. What do you do next -- Or what did
As to the
you do next?
A. I considered the parts, approximately about
six to seven thousand dollars.
Q. And how do you know that to be accurate?
A. From past experience.
Q. Okay. And next what did you do?
A. I added the two together and come up with
approximately about $47,000. And I subtracted
that from the purchase price and came up with
a figure of $60,000. And I also included a
Q. Okay. So the pieces of it are the repair
cost and the profit and the resulting number;
Q. All right. Now, can you tell the Court how
the specifics of your experience over the
years contributed or led to your valuation
conclusions in this case.
A. Well, the specifics, my past knowledge and
experience of the modifications that I’ve done
over the years.
Q. Have you also seen defects and damages in
RV sales as they occurred?
A. Yes. And I’ve learned over the years that,
when there’s an inherent problem or damage, it
greatly affects the value.
(Id. at 72-74.) Mr. Bailey indicated that, in an attempt to verify
his conclusions with regard to the value of the subject RV, he
contacted numerous RV dealers, disclosed the condition of the
slide-out and failed repair history, and asked them what they would
be willing to purchase the subject RV for.
(Id. at 75-76.)
According to Mr. Bailey, none of the dealers were interested in
buying the subject RV under any circumstances.
With the exception of specific repair costs for the slide-out,
aforementioned testimony either directly or indirectly as having
been considered in estimating the cost of the RV.
pp. 3-7, 10-14, 19-21.)
(See DE #95-1,
The report also delineates generally
accepted definitions for determining fair market value according to
tax law,7 lists three areas of fair market value determination,8 and
references the National Automobile Dealer Association (“NADA”)
(Id. at 7-8, 12-13.)
As to Mr. Bailey’s valuations, he offered methodology details
related to each of the three areas of fair market value conclusions
in his report.
For the fair market value on the date of delivery
if the subject RV was as represented and purchased under normal
retail sales conditions ($180,000), Mr. Bailey’s report indicates
that he considered the MSRP of $195,153.80 and then reduced that
cost to a range of between $180,000.00 and $185,000.00 because
“[d]ealer’s traditionally will sell a product for a little less
(Id. at 19.)
In determining this range and final
conclusion, he considered the “time of year, location, demand of
The report states that “[f]air market value (FMV) is the price that
property would sell for on the open market. It is the price that would be
agreed on between a willing buyer and a willing seller, with neither being
required to act, and both having reasonable knowledge of the relevant facts.”
(DE #95-1, p. 7.)
The three separate areas are listed as: (1) the fair market value as
if the RV was offered and purchased under normal retail sales conditions; (2)
the fair market value as if the RV was offered and purchased in the open
market under discounted or sales conditions, and (3) the fair market value as
if the RV was offered and purchased in the open market after considering the
known product defects. (DE #95-1, pp. 12-13.)
ownerships experience and dealer interaction over the years.”
For the fair market value on the date of delivery under
discounted or sales conditions ($127,420.33), Mr. Bailey’s report
indicates that he considered the purchase price of $127,420.33
shown on the purchase agreement (not including the taxes, fees, and
add-ons) and determined it was a “good purchase value” because it
was several thousand dollars less than the wholesale dealer price
of the RV.
(Id. at 20.)
Finally, for the fair market value of the
subject RV in its condition on the date of delivery ($60,000), Mr.
Bailey’s report indicates that he considered the product defect
(i.e. the malfunctioning slide-out room) in light of the fact that
there had been numerous unsuccessful attempts to fix it along with
the resultant uncertainty on a prospective purchaser who “would
have to accept the fact they must repair the issue at hand not
truly knowing what may be entailed.”
Mr. Bailey also noted
that he contacted eight (8) RV and Marine dealers in Ohio “to
verify if any would accept a trade-in or outright purchase knowing
[of] the slide-out issue,” and each one communicated that they were
not interested in the subject RV in any manner.
(Id. at 20-21.)
Based on the foregoing, the Court agrees with Plaintiffs that,
in this case, the methodology scattered throughout Mr. Bailey’s
report coupled with his undisputed experience in the RV appraisal
industry is sufficiently reliable to allow him to testify as to the
“scientific,” but it was specialized as well as technical, which is
allowable under Rule 702.
See Lees v. Carthage Coll., 714 F.3d
516, 524-25 (7th Cir. 2013) (“Rule 702, . . . does not condition
admissibility on the state of the published literature, or a
complete and flaw-free set of data.”)
As noted recently by a
district court within this circuit when addressing an insurance
field adjuster’s challenged methodology:
The Seventh Circuit has cautioned that the
test for reliability for nonscientific experts
is flexible. Unlike scientific or technical
experts, whose hypotheses can be tested or
subjected to peer review and whose methods can
scrutinized. [The field adjuster’s] opinions
rely on his experience, and expert testimony
is not unreliable simply because it is founded
on [a witness’s] experience rather than on
data; indeed, Rule 702 allows a witness to be
qualified as an expert by knowledge, skill,
experience, training, or education.
Church v. Church Mut. Ins. Co., 13 C 1625, 2016 WL 772787, at *4
(N.D. Ill. Feb. 29, 2016) (internal quotation marks and citations
omitted). Mr. Bailey’s report indicates that he relied on accepted
industry standards (i.e. consulting the NADA guide) and considered
a variety of relevant, recognized factors as described above in
forming his conclusions.
See Pizel v. Monaco Coach Corp., 374 F.
Supp. 2d 653, 656-57 (N.D. Ind. 2005) (district court allowed
valuation based upon his experience in the industry, and consulted
various recognized and approved valuation guides” before assigning
a value to the RV in question).
Importantly, Mr. Bailey’s report
repeatedly emphasizes the role his experience as a multiple, fullline
experience played in determining the various valuations.
Steam complains of a lack of specificity in Mr. Bailey’s report,
but Court finds that appraisals are not an exact science that can
be mechanically scrutinized; rather, as long as an explanation of
appraisers opinion were referenced and the conclusions were not
based on subjective belief or speculation alone, the report passes
See Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748,
761 (7th Cir. 2010).
Here, for the reasons set forth above, Mr.
Bailey’s report meets those standards.
To the extent that Gulf Stream takes issue with Mr. Bailey’s
lack of specificity as to the valuation of the subject RV in its
(allegedly defective) condition, the Court notes that Mr. Bailey’s
report places great emphasis on the unknown repairability aspect of
the slide-out and its resultant impact on a potential purchaser.
The report indicates that, to determine the value of a vehicle with
such defect and safety issues, the appraiser must utilize his own
experience and background in making the final determination.
Court finds this methodology acceptable as it acknowledges the
significance of the “human behavior” factor referenced earlier in
the report, which is not capable of precise quantification.9
report points out that the greatly reduced valuation was validated
interested in the subject RV under any circumstances. Furthermore,
during the evidentiary hearing, Mr. Bailey expanded upon his
methodology with regard to estimated repair costs, testifying that
his experience and background in the RV industry coupled with his
directly led to the valuation reached.10
Mr. Bailey’s report and
testimony are deemed reliable. While Gulf Stream may disagree with
Mr. Bailey’s conclusions, this does not prevent his expert opinions
from being presented to the jury.
See Lapsley v. Xtek, Inc., 689
F.3d 802, 805 (7th Cir. 2012) (“A Daubert inquiry is not designed
to have the district judge take the place of the jury to decide
ultimate issues of credibility and accuracy.
If the proposed
The report indicates that “[t]he value of a Recreational Vehicle is
either created, maintained, modified, or destroyed by the forces that motivate
human behavior. These forces may vary due to governmental regulations,
natural forces, owner neglect, accidental damage, failure of a dealer or
manufacturer to correct normally working items, or obsolescence of a
Recreational Vehicle part. Each force, individually or combined, can have an
adverse effect on value.” (DE #95-1, p. 8.)
While the details of the estimated repair costs were not discussed
in Mr. Bailey’s report, the importance of the potential repair was
acknowledged and cited as a relevant factor. Mr. Bailey’s testimony provided
additional details and put Gulf Stream on notice as to the specifics of his
anticipated testimony. See Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d
748, 762 (7th Cir. 2010) (“The purpose of these [expert] reports is not to
replicate every word that the expert might say on the stand. It is instead to
convey the substance of the expert’s opinion . . . so that the opponent will
be ready to rebut, to cross-examine, and to offer a competing expert if
necessary. They allow attorneys, not experts in the fields at issue, to
prepare intelligently for trial and to solicit the views of other experts.”)
expert testimony meets the Daubert threshold of relevance and
reliability, the accuracy of the actual evidence is to be tested
cross-examination, presentation of contrary evidence, and careful
instruction on the burden of proof.”) (internal quotation marks and
Thus, Gulf Stream’s motion is denied.
For the reasons set forth above, the motion to bar Bernie
Garceau (DE #92) is GRANTED IN PART AND DENIED IN PART as set forth
in the body of this order, and the motion to bar Tom Bailey (DE
#94) is DENIED.
DATED: March 25, 2016
/s/RUDY LOZANO, Judge
United States District Court
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