Meredith v. International Marine Underwriter's

Filing 35

MEMORANDUM. Signed by Judge James K. Bredar on 4/18/11. (dass, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
*
CLIFFORD E. MEREDITH,

*

Plaintiff

*

v.

*

INTERNATIONAL MARINE
UNDERWRITERS,

CIVIL NO. JKB-10-837

*
*

Defendant
*
*

*

*

*

*

*

*

*

*

*

*

*

MEMORANDUM
Clifford E. Meredith (“Plaintiff”) brought this suit against International Marine
Underwriters (“Defendant”), alleging fraud, negligent misrepresentation, breach of contract, and
violation of the Uniform Commercial Code and the Maryland Consumer Protection Laws in
connection with Plaintiff’s insurance policy. (Compl., ECF No. 2). Defendant now moves to
exclude the testimony of Plaintiff’s ten expert witnesses, pursuant to Federal Rule of Civil
Procedure 37(c)(1), on the grounds that Plaintiff allegedly failed to provide expert reports as
required by Federal Rule of Civil Procedure 26(a)(2)(B). (Def.’s Mot. Strike, ECF No. 29). The
issues have been briefed and no oral argument is required. Local Rule 105.6. For reasons
explained below, Defendant’s Motion To Strike Plaintiff’s Expert Designations (ECF No. 29) is
GRANTED IN PART, DENIED IN PART, and HELD IN ABEYANCE IN PART. Sanctions
are denied as to James Renn; the opinions of Captain Morgan and Thomas Babbitt as to
causation and value at the time of the accident are excluded; and, further discovery is ordered as
to all remaining witnesses and any other opinions of Morgan and Babbitt.

1

I. Background
In April of 2009, Plaintiff purchased an insurance policy (“the Policy”) from Defendant,
through the Avon Dixon Agency, LLC (“Avon Dixon”), to insure Plaintiff’s vessel, “the
Eleanor.” (Compl. 2). The Policy contained a “Perils Clause,” which insured the Eleanor for
physical damage, among other things, but a separate “Exclusion Clause” explicitly excluded
from coverage any damage resulting from Plaintiff’s failure to maintain the Eleanor in a
seaworthy condition. Id; (Def.’s Mem. Summ. J. 2, ECF No. 30-1).
In October of 2009, the Eleanor was found partially submerged in Peachblossom Creek
while docked at a private residence in Easton, Maryland (“the Accident”). Shortly thereafter,
Plaintiff submitted a claim under the Policy for damage the Eleanor sustained in the Accident.
(Compl. 2). Defendant assigned a surveyor, J. Stephen Russell (“Russell”), to inspect the
Eleanor and determine the cause of the Accident. (Def.’s Mem. Summ. J. 2). Russell concluded
that the Eleanor was taking on water through a number of “leakage points” that were caused by
normal wear and tear, particularly a two-inch gap between two hull planks. Id. After receiving
Russell’s report, Defendant denied coverage on the grounds that the Eleanor was unseaworthy at
the time of the Accident, and that the damage therefore fell within the Policy’s Exclusion Clause.
Id at 8.
In March of 2010, Plaintiff filed the instant complaint in the Circuit Court for Anne
Arundel County. Id at 3. Plaintiff’s primary contention is that Defendant made representations,
through its alleged agent, Avon Dixon, that the Policy would cover the Eleanor for any damage,
regardless of the cause. (Pl.’s Aff. 1, ECF No. 32, Ex. 1). On that basis, Plaintiff asserts claims
of fraud, negligent misrepresentation, and violations of the UCC and Maryland Consumer
Protection Laws. Id. Additionally, Plaintiff alleges that the Accident was not caused by normal

2

wear and tear or a failure to maintain the Eleanor in a seaworthy condition, and that the damage
is therefore covered under the Policy’s Perils Clause. Id. On that basis, Plaintiff asserts a claim
for breach of contract. Id.
Defendant removed the suit to this Court, invoking federal diversity jurisdiction. During
discovery, Plaintiff disclosed the identities of ten expert witnesses who would offer opinion
testimony regarding the cause of the Accident and damages. Those disclosures are reproduced
here:
•

Captain Ronald Wm. Morgan: “Capt. Ronald Wm. Morgan performed the prepurchase inspection of the subject boat. He will testify as to sea worthiness of the vessel
at that time including the condition of the hull. It is anticipated he will testify the
condition of the hull which resulted in the sinking of the vessel was not as a result of
normal wear and tear given the amount of time of his inspection and the subsequent
sinking. He will also testify as to the value of the vessel at the time of his inspection and
the value at the time of the sinking.”

•

Captains Trevor Harmon and Richard Phillip: “Captains Harmon and Phillip
performed the salvage of the subject vessel. They will testify as to their opinion as to the
cause of the sinking. They will also testify the cause of sinking was not as a result of
failure to properly maintain said vessel nor as a result of normal wear and tear but rather
by third causes. They will testify as to their fees to salvage said boat as well as the value
of the subject boat at the time of the sinking. The [sic] will also testify as to loss of
value.”

•

Charles Smith: “Charles Smith will testify as to repairs he performed on the subject
vessel and the fairness reasonableness and causation of said repairs to the subject sinking.
He will also testify future repairs to the vessel as a result of the sinking will cost
$300,000. He will also testify the sinking was not as a result of failure to properly
maintain said vessel nor as a result of normal wear and tear but as a result of third
causes.”
“Charles Smith will testify as to extensive maintenance performed on said vessel in 2007
and how with said maintenance the damage which caused the vessel to sink was not as
[sic] result of normal wear and tear or failure to maintain.”

•

Captain Carl Thornton: “Captain Carl Thornton was the captain of the Eleanor. He
will testify as to the regular maintenance of the Eleanor and as to her sea worthiness at
the time of the alleged sinking. He will also confirm said sinking was not as a result of
normal wear and tear or failure to maintain.”

3

•

Thomas Babbitt: “Thomas Babbitt was the former owner of the Eleanor and will testify
as to her condition at time of sale and how the said sinking was not as a result of normal
wear and tear or failure to maintain given the condition of the boat at the time of sale.”

•

James Renn: “James Renn will also confirm said sinking was not as a result of normal
wear and tear or failure to maintain. He will have reviewed the IMU surveyor’s report
and state that the loose caulking and boards most likely was caused by the boat sinking
and that it is, within a reasonable degree of marine forensic science [sic], difficult if not
impossible to state that the issues raised in the surveyor’s report were existent before the
sinking.”

•

Michael Kaufman, Robert Geaghan, and Douglas Coupar: “Mr. Kaufman, Geaghan
and Coupar will testify as to the value of the ‘Eleanor’ in hers [sic] present condition, the
cost to return her to her pre-sinking status and her value once all repairs are completed.”

(Pl.’s Disc., ECF No. 31, Ex. 1). Plaintiff also disclosed a 2005 pre-purchase survey of the
Eleanor prepared by Captain Morgan, a report and invoice submitted by Tow Jamm Marine for
the Eleanor’s salvage, and an invoice for $19,523.60 in repairs from Charles Smith. Id. Plaintiff
did not, however, provide an expert report for any witness. (Pl.’s Resp. Opp. Strike 2, ECF no.
31).
On July 26, 2010, Defendant wrote to Plaintiff requesting all disclosures required by
Federal Rule 26(a)(2), including expert reports. (Def.’s Mem. Strike 2, ECF No. 29-1) Plaintiff
responded that “no reports had been generated,” but noted that the witnesses were available for
deposition. (Pl.’s Resp. 2); (Pl.’s Supp. Disc., ECF No. 31, Ex. 4). Defendant deposed one
witness, James Renn, on January 7, 2011, but did not depose any of the other witnesses. (Renn
Dep., ECF No. 31, Ex. 3). Plaintiff’s only additional disclosures consisted of two letters, dated
January 5 and 27, 2011. The first letter announced that “Charles Smith, Yacht Maintenance Co.,
Inc, [sic] 101 Hayward Street, Cambridge, Maryland 21613 will now testify the cost to restore
The Eleanor to her condition on the date of incident will cost $1,000.000.00. [sic],” while the
second included a copy of a yacht maintenance bill in the amount of $4,256.71. (Pl.’s Supp.
Disc.).
4

Defendant now moves that the Court sanction Plaintiff for his failure to produce expert
reports by excluding the testimony of his expert witnesses, pursuant to Federal Rule 37(c)(1).
II. Standard of Review
Federal Rule of Civil Procedure 26(a)(2)(A) requires litigants to disclose “the identity of
any witness [they] may use at trial to present evidence under Federal Rule of Evidence 702, 703,
or 705.” (West 2011). Rule 26(a)(2)(B) further requires litigants to produce written reports for
any witness who is “retained or specially employed to provide expert testimony in the case” or
“whose duties as the party's employee regularly involve giving expert testimony.” Those reports
must include: (i) a complete statement of all opinions the witness will express and the basis and
reasons for them; (ii) the facts or data considered by the witness in forming them; (iii) any
exhibits that will be used to summarize or support them; (iv) the witness' qualifications,
including a list of all publications authored in the previous 10 years; (v) 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
(vi) a statement of the compensation to be paid for the study and testimony in the case.”
Rule 37(c)(1) “gives teeth to the written report requirement of Rule 26(a)(2)(B) by
forbidding a party's use of improperly disclosed information at a trial, at a hearing, or on a
motion, unless the party's failure to disclose is substantially justified or harmless.” Tokai Corp.
v. Easton Enterprises, 632 F.3d 1358 (Fed. Cir. 2011) (citing Yeti By Molly Ltd. v. Deckers
Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001)) (internal quotations omitted).

In

determining whether a party’s failure to disclose was substantially justified or harmless, this
Court is guided by consideration of five factors: (1) the surprise to the party against whom the
evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to
which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5)

5

the non-disclosing party's explanation for its failure to disclose the evidence. Southern States
Rack And Fixture v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003). The party facing
sanctions bears the burden of establishing that its omission was justified or harmless. Carr v.
Deeds, 453 F.3d 593, 602 (4th Cir. 2006).
Because a party’s failure to make the disclosures required by Rule 26(a)(2) “unfairly
inhibits its opponent's ability to properly prepare, unnecessarily prolongs litigation, and
undermines the district court's management of the case,” a district court has “particularly wide
latitude” to order sanctions under Rule 37(c)(1). Id at 604.
III. Analysis
A. The Expert Report Requirement
The Court must first determine whether Plaintiff’s designated experts meet the criteria for
mandatory reporting set out in Rule 26(a)(2)(B). Those criteria are the witness’ being “retained
or specially employed to provide expert testimony in the case” or having “duties as the party's
employee [that] regularly involve giving expert testimony.” For simplicity, the Court refers to
this class of witness as retained experts. By exclusion, these criteria also define a category of
expert witnesses who are not required to file reports: i.e., those who are or have been employed
by the party in some capacity, but not specially for the purpose of giving expert testimony. See,
e.g., Watson v. U.S., 485 F.3d 1100, 1107 (10th Cir. 2007); Tokai Corp. v. Easton Enterprises,
632 F.3d 1358 (Fed. Cir. 2011) (citing Torres v. City of Los Angeles, 548 F.3d 1197, 1214 (9th
Cir. 2008)); Downey v. Bob's Discount Furniture Holdings, 633 F.3d 1, 6 (1st Cir. 2011). These
are referred to as hybrid witnesses (i.e., a hybrid of an expert and a fact witness).1

1

The exemption of hybrid witnesses from Rule 26(a)(2)(B)’s reporting requirement is further established in this
Court’s local rules. See Local Rule 104.10.

6

This Court has previously construed the hybrid exception to be a narrow one, and has
held that a witness may be a hybrid as to certain portions of his testimony and a retained expert
as to others. Sullivan v. Glock, Inc., 175 F.R.D. 497, 500 (D. Md. 1997). The distinction lies in
the source of the facts on which the witness’ expert opinion is based. See id. To the extent that a
witness’ opinion is based on facts learned or observations made “in the normal course of duty,”
the witness is a hybrid and need not submit a report. See id; National R.R. Passenger Corp. v.
Railway Express, 268 F.R.D. 211, 216 (D. Md. 2010) (citing Desrosiers v. Giddings & Lewis
Machine Tools, 2009 WL 4406149 at *5 (D. Md. 2009)). The same witness, however, must
submit a report regarding any opinions formed specifically in anticipation of the litigation, or
otherwise outside the normal course of a duty. Id.
A party seeking to avoid producing an expert report bears the burden of demonstrating
that the witness is a hybrid. Lee v. Valdez, 3:07-CV-1298-D, 2008 WL 4287730 (N.D. Tex.
2008); Cinergy Commc'ns v. SBC Commc'ns, 2006 WL 3192544, at *3 (D. Kan. 2006); See
Tokai, 632 F.3d 1358 (upholding district court’s exclusion of testimony where proffering party
failed to produce evidence that witness was a hybrid). The initial question in this dispute is
therefore whether Plaintiff has carried this burden by demonstrating that his expert witnesses
formed their opinions in the normal course of their duties or activities in connection with the
Eleanor. To the extent he has not so demonstrated, the Court must assume that the witnesses are
retained experts.
Only three of the witnesses present clear-cut cases. First, Plaintiff concedes that it
specially retained James Renn, an expert boat surveyor, to provide an opinion on the cause of the
Accident. (Pl.’s Resp. 3). Renn is thus a retained expert. Second, Plaintiff has disclosed that the
witness Captain Ronald Morgan’s connection to this case is that he performed a pre-purchase

7

inspection of the Eleanor. (Pl.’s Disclosure 2). The Court is confident that Captain Morgan
could not have formed an opinion about the cause of the Accident during his inspection, as the
Accident had not yet occurred, nor could he have formed an opinion about the Eleanor’s value at
an as-yet-unknown point in the future. As to those opinions, therefore, Captain Morgan is a
retained expert. Third, Plaintiff has disclosed that the witness Thomas Babbitt’s connection to
the case is that he was the Eleanor’s former owner. Thus, he too is a retained expert as to any
opinion regarding the cause of the Accident, for the same reason as Captain Morgan.
The issue is murkier for the remaining seven witnesses. It is plausible, for instance, that
the salvors, Captains Harmon and Phillip, formed opinions about the cause of the Accident and
the Eleanor’s value in the course of refloating her; but, it is just as plausible that they formed
these opinions later, after conducting research and making inquiries unrelated to the refloating,
solely to be offered at trial in this case. The same is true of Charles Smith’s opinions as to
causation and the cost of future repairs, of Captain Thornton’s opinion as to causation, and of all
opinions of Messrs. Kaufman, Geaghan, and Coupar. Since Plaintiff has not carried his burden
by affirmatively demonstrating that these opinions were formed in the course of the witnesses’
performing their respective duties, the Court must conclude that they are retained experts as to
those opinions, and Plaintiff was therefore obligated to supply expert reports.
B. Justification and Harmlessness
Having determined that Plaintiff was obliged to provide expert reports for at least some
of each witness’ testimony, the Court must now determine whether the omission of those reports
was “substantially justified or harmless” before considering sanctions, pursuant to Rule 37(c)(1).
The Court applies the Fourth Circuit’s five-factor test, set out previously in this memorandum.
As the party facing sanctions, Plaintiff bears the burden of demonstrating the justification or

8

harmlessness of his omission. See Carr, 453 F.3d at 602. Because the question of whether or
not Defendant deposed the witnesses plays a crucial role in the analysis, the Court will first
assess the nine “un-deposed” witnesses, and will treat separately the single deposed witness,
James Renn.
1. Witnesses Who Were Not Deposed
The first two factors in the Fourth Circuit’s test pertain to the surprise to the party against
whom the evidence will be offered, and that party’s ability to cure the surprise. Southern States,
318 F.3d at 597. Regarding the nine “un-deposed” witnesses, Plaintiff makes the glib assertion
that his failure to produce the expert reports was harmless because he disclosed the “substance”
of the witnesses’ testimony, and because Defendant had the right to depose the witnesses if it
wished. (Pl.’s Resp. 3). The Court finds a ready-made answer to this argument in the Advisory
Committee Notes to Rule 26: in explaining the reasons for the expert reporting requirement in
the 1993 amendment to the rule, the Committee wrote that “[t]he information disclosed under the
former rule in answering interrogatories about the ‘substance’ of expert testimony was frequently
so sketchy and vague that it rarely dispensed with the need to depose the expert...” Fed. R. Civ.
P. 26(a)(2)(B), Advisory Committee Notes (West 2011). The purpose behind requiring expert
reports is thus precisely to compel parties to disclose more than a one or two sentence summary
of a witness’ conclusions (which is what Plaintiff has provided in this case) and to dispense with
the need for full-blown expert depositions. See id (“...the length of the deposition of such experts
should be reduced, and in many cases the report may eliminate the need for a deposition.”).
A party’s failure to disclose, therefore, cannot be considered “justified” or “harmless”
simply because opposing counsel had an opportunity to depose the witness. This would shift to
the opposing party the burden that Rule 26 indisputably places on the party calling the witness.

9

See Carr, 453 F.3d 593 at 605 (“Every litigant in federal court is plainly entitled under Rule
26(a)(2)(B) to be given the information spelled out therein, and none shoulder the burden to
independently investigate and ferret out that information as best they can and at the expense of
their client.”). Plaintiff has therefore failed to demonstrate a lack of surprise to Defendant or an
ability to cure.
The third factor, disruption at trial, is not relevant here, as trial has not yet begun. As to
the fourth factor, the importance of the evidence, Plaintiff makes no argument; but, the
importance of the proposed testimony is clear in light of Defendant’s pending motion for
summary judgment. That motion is based, in part, on Defendant’s claim that Plaintiff can
adduce no evidence of damages or breach of contract if his expert witnesses are excluded.
(Def.’s Mot. Summ. J., ECF No. 30). Thus, the proposed testimony regarding the Eleanor’s
value and the cause of the Accident are crucial components of Plaintiff’s case. Given this, it is
all the more important that Defendant be put on notice of the exact nature of and basis for the
proposed testimony.
Finally, the fifth factor the Court must consider is Plaintiff’s explanation for his failure to
provide the reports. Essentially, he offers none. Indeed, one of the more striking features of this
dispute is Plaintiff’s incredible assertion that he does not have to provide expert reports because
“no reports have been generated” and “IMU has provided no authority, as none exists, which
requires a party to provide an expert report that does not exist.” (Pl.’s Resp. 2-3). The allegedly
nonexistent authority, in fact, can be found in the plain language of Rule 26(a)(2)(B): “disclosure
must be accompanied by a written report.” (emphasis added) Obviously, Plaintiff’s misreading
of the Rules of Civil Procedure does not justify his failure to comply with their terms.

10

For these reasons, the Court finds that Plaintiff’s omission of expert reports for the nine
“un-deposed” witnesses (Morgan, Babbitt, Harmon, Phillip, Smith, Thornton, Kaufman,
Geaghan, and Coupar) was neither harmless nor justified.
2. James Renn
The witness James Renn presents a different case.

Although Plaintiff was clearly

obligated to furnish an expert report from Renn, and although Defendant was just as clearly not
required to depose Renn in order to discover the basis for his opinions, the fact remains that
Defendant did depose him. In reviewing Renn’s deposition transcript, the Court finds that he
provided an explanation of the content and bases of his opinions, the facts he considered, his
qualifications, his litigation experience, and his publications. (Renn Dep. passim, ECF No. 32,
Ex. 5). Essentially, Defendant learned all the information from the deposition that would have
been included in a proper expert report. See Fed. R. Civ. P. 26(a)(2)(B)(i)-(vi). Defendant was
thus able to cure any surprise that would otherwise have resulted from Plaintiff’s omission.
Therefore, the Court finds that the omission was harmless.
C. Sanctions and Further Disclosures
In view of the preceding analysis, the Court concludes that, except as to James Renn,
sanctions under Rule 37(c)(1) are available.

The Court notes, however, that exclusion of

testimony is not the only appropriate sanction under the rule, and that the Court possesses broad
discretion to control the course of discovery, including the authority to order supplemental
disclosure of expert witness information. See Fed. R. Civ. P. 37(c)(1) (“In addition to or instead
of [exclusion of testimony], the court... may impose other appropriate sanctions.”); Fed. R. Civ.
P. 26(e)(1)(B) (“A party who has made a disclosure under Rule 26(a)... must supplement or
correct its disclosure... as ordered by the court.”). With this in mind, the Court rules as follows.

11

First, because the Court has found Plaintiff’s omission to be harmless as to James Renn,
Defendant’s motion for sanctions will be denied as to that witness. The Court emphasizes,
however, that the finding of harmlessness applies only to those facts and opinions that Renn
actually disclosed at the deposition, and that his testimony at trial will therefore be limited
strictly to those facts and opinions.
Second, as to the opinions of Captain Morgan and Thomas Babbitt regarding the cause of
the Accident, and Captain Morgan’s opinion as to the Eleanor’s value at the time of the
Accident, Defendant’s motion will be granted, and the testimony will be excluded.

As

previously noted, it is clear from the record that these are the opinions of retained experts, not
hybrids.
Finally, with regard to the remaining witnesses (Smith, Harmon, Phillip, Thornton,
Kaufman, Geaghan, and Coupar), as well as any other opinions of Morgan or Babbitt not
pertaining to causation or value at the time of the Accident, the Court will hold Defendant’s
motion in abeyance pending further disclosures, which the Court will order. Although Plaintiff’s
failure to carry his burden of proof has obliged this Court to find that these witnesses are retained
experts, the actual record is silent on the point. There is therefore a possibility that excluding
their testimony would remove relevant evidence from the case on account of a technicality,
rather than genuine prejudice to Defendant. To prevent this outcome, the Court will order
Plaintiff to take the following remedial actions.
First, Plaintiff shall make the disclosures required by Rule 26(a)(2)(C) for expert
witnesses not filing reports, which are “the subject matter on which the witness is expected to
present evidence under Federal Rule of Evidence 702, 703, or 705” and “a summary of the facts
and opinions to which the witness is expected to testify.” Fed. R. Civ. P. 26(a)(2)(C) (West

12

2011).

These requirements were added in an amendment to Rule 26 that took effect on

December 1, 2010. By order of the Supreme Court, the amended rule is to be applied in all cases
pending at the time of its enactment, to the extent that doing so is “just and practicable.” 2010
U.S. Order 27 (C.O. 27). This Court finds that application of the new rule in this case poses no
practical difficulties, and that doing so is just for the reasons articulated above. Importantly, the
Court observes, in no uncertain terms, that compliance with this rule will require a more detailed
disclosure than Plaintiff has thus far provided. In particular, the Court understands the rule’s
reference to “facts” to include those facts upon which the witness’ opinions are based, and
“opinions” to include a precise description of the opinion, rather than vague generalizations.2
Second, Plaintiff shall also disclose the following: a description of each witness’
connection to the Eleanor and, if any, to the Accident; a description of how and when each
witness came to form his opinions; a statement whether the witness’ opinions were formed in the
normal course of the witness’ duty or activity in connection with the Eleanor; a statement
whether the opinion was held at the time Plaintiff’s counsel contacted the witness regarding the
present litigation; a statement whether Plaintiff’s counsel requested the witness to form an
opinion; a summary of the witness’ expert qualifications; and, a brief statement of how these
qualifications relate to the witness’ opinions.
Third, if Plaintiff determines, in view of this ruling, that any of the witness are in fact
retained experts, he must produce a complete expert report.
Finally, Plaintiff shall make each witness available for deposition by Defendant. Once all
disclosures have been made and any depositions have been completed, the Court, on motion, will
revisit Defendant’s request for sanctions, in light of the new record.

2

For example, Plaintiff’s description of Captains Harmon’s and Phillip’s opinion that the accident was the result of
“third causes” would not be sufficient, absent a detailed statement of exactly what those causes are or might be.

13

IV. Conclusion
Accordingly, an ORDER shall enter GRANTING IN PART, DENYING IN PART, and
HOLDING IN ABEYANCE IN PART, Defendant’s Motion To Strike Plaintiff’s Expert
Designations (ECF No. 29), and ORDERING further disclosures by Plaintiff as detailed therein.

Dated this 18th day of April, 2011

BY THE COURT:

/s/
James K. Bredar
United States District Judge

14