Hudson Specialty Insurance Company v. Talex Enterprises, LLC et al

Filing 247

ORDER denying 204 Motion to Strike Signed by District Judge David C. Bramlette, III on 09/04/2019 (sl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
Western Division

HUDSON SPECIALTY INSURANCE COMPANY

PLAINTIFF/
COUNTER-DEFENDANT

V.

CIV NO: 5:17-cv-00137-DCB-MTP

TALEX ENTERPRISES, LLC; JUBILEE PERFORMING
ARTS CENTER, INC.; TERRANCE L. ALEXANDER; and the
BOARD OF MAYOR AND SELECTMEN
OF MCCOMB, MISSISSIPPI, et al.

DEFENDANTS/
COUNTER-CLAIMANTS
ORDER

THIS MATTER is before the Court on Plaintiff/CounterDefendant Hudson Specialty Insurance Company (“Hudson”)’s Motion
to Strike Expert Causation Opinions (Doc. 204), and
Defendants/Counter-Claimants Talex Enterprises, LLC (“Talex”);
Terrance L. Alexander (“Alexander”); Jubilee Performing Arts
Center, Inc. (“Jubilee”); and, the Board of Mayor and Selectmen
of McComb, Mississippi (“McComb”)’s Response in Opposition to
Motion to Strike Expert Causation Opinions (Doc. 216). The Court
having examined the motions, memoranda in support, and the
applicable statutory and case law, and being fully advised in
the premises, finds that the Motion to Strike Expert Causation
Opinions should be DENIED.
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BACKGROUND
This is a case arising out of an insurance dispute between
Hudson Specialty Insurance Company and Talex Enterprises, LLC,
Jubilee Performing Arts Center, Terrance L. Alexander and the
City of McComb. The dispute arises out of an incident involving
a property insured by Hudson, the JPAC Building, located at 230232 Main Street, McComb, Mississippi. The JPAC Building is
listed under two policies of insurance issued by Hudson. Talex
owns the JPAC Building and, at the time of the incident, Jubilee
operated a performing arts school out of the building. Alexander
is the principal for both Talex and Jubilee.
Talex is the named insured under one policy, No.
HBD10027329, (the “Talex Policy”), which provides building
property coverage and commercial general liability coverage.
Alexander d/b/a Jubilee is the named insured under the other
policy, No. HBD10019191, (the “Alexander Policy”), which
provides personal property coverage and commercial general
liability coverage.
The JPAC Building collapsed on July 23, 2017. After the
collapse, the remaining portions of the JPAC Building required
immediate stabilization to render them safe. McComb declared an
emergency condition and hired Mr. Laird, an engineer with Laird
& Smithers, Inc., to “prevent further injury and property
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destruction.” McComb designated Mr. Laird as a non-retained
expert for this trial. Mr. Laird’s report claimed that the
collapse was caused by the fact that the JPAC Building “had been
reroofed many times without removal of the degraded underlying
roofing materials; thus adding additional weight to the roof
structure.” (Doc 204-6, Laird Report p. 2).
McComb also designated Steve Cox as a non-retained expert.
Mr. Cox is a local architect who owned property neighboring the
JPAC Building. In the initial disclosure, Mr. Cox opined that
the building collapsed because of the condition of very old
mortar and not because of water standing on the building roof or
because of roof repair.
ANALYSIS
Hudson puts forth two reasons to strike the opinions of
Defendants/Counter-Claimants’ experts: (1) the opinions
challenge or are inconsistent with the ‘admitted’ facts
regarding the partial collapse of the JPAC building, and (2)
Defendants/Counter-Claimants acted in bad faith in designating
its experts. The Court will address each in turn.
I.

Admitted Facts
At issue is the Contract of Assignment of Chose in Action

(Doc. 67-1) (“The Contract” or “The Assignment”). In The

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Assignment Defendants/Counter-Claimants agreed and contracted
that attorney Wayne Dowdy would undertake joint representation
of Alexander; Jubilee; Talex; and McComb in the pending Federal
Court Action filed by Hudson. The Assignment also stated that
the claims of McComb would be made solely under the commercial
general liability coverage of the insurance policies issued by
Hudson. In this contract, the parties agreed that a large amount
of rainwater had collected on the JPAC roof and the weight of
the rainfall was the proximate cause of the collapse. See (Doc.
67-1 Ex. A). Hudson claims that the statement in The Assignment
qualifies as a judicial admission, removing the question of
causation from contention.
A judicial admission is binding upon the party making it. To
qualify as a judicial admission a statement must be (1) made in
a judicial proceeding; (2) contrary to a fact essential to the
theory of recovery; (3) deliberate, clear, and unequivocal; (4)
such that giving it conclusive effect meets with public policy;
and (5) about a fact on which a judgment for the opposing party
can be based. See Heritage Bank v. Redcom Labs., Inc., 250 F.3d
319, 329 (5th Cir. 2001). The effect of a judicial admission is
to withdraw a fact from contention. See Martinez v. Bally’s
Louisiana, Inc., 244 F.3d 474, 476 (5th Cir. 2001).

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Examples of judicial admissions are “admissions in the
pleadings in the case, in motions for summary judgment,
admissions in open court, stipulations of fact, and admissions
pursuant to requests to admit.” See 6 Handbook of Fed. Evid.
§801:26 (8th ed.). A judicial admission is a “formal concession
in the pleadings or stipulations by a party or counsel that is
binding on the party making them.” See Martinez, 244 F.3d at
476–477.

A judicial admission should not be confused with an

evidentiary admission, which may be “controverted or explained
by the party.” See id.
The first requirement of a judicial admission is that it be
made in a judicial proceeding. The Defendants/Counter-Claimants’
statement in The Assignment does not form any part of the
pleadings in this proceeding. The contract at issue was not made
in a pleading, stipulation, deposition, testimony, response to
request for admissions, or in counsel’s statements to the court.
As such, the terms of the contract are not judicial admissions,
but are evidentiary admissions that can be controverted or
explained by the parties.
In addition to not having been made during a judicial
proceeding, The Assignment also fails to be a “deliberate,
clear, and unequivocal” admission. The Assignment contains an
agreement that the proximate cause of the collapse was a

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collection of rainwater, but there is nothing to indicate the
Defendants/Counter-Claimants were foreclosing the possibility of
any other explanation for the collapse. The Assignment was
entered into on December 22, 2017, a little more than a month
after the lawsuit was filed and significantly before the Case
Management Order required the designation of experts. It is not
“deliberate, clear, and unequivocal” that the
Defendants/Counter-Claimants intended this Assignment to be a
judicial admission regarding causation — a highly contested
issue — especially at that stage of the litigation.
Requiring the Defendants/Counter-Claimants to be beholden to
The Assignment as a judicial admission is counter to public
policy. When a party amends a pleading, any statements in the
earlier proceeding that were judicial admissions become
evidentiary admissions if the pleadings are contradictory, i.e.,
an amended pleading supersedes the original pleading. See 188
LLC v. Trinity Industries, Inc., 300 F.3d 730, 736 (7th Cir.
2002).

The party opponent may offer the earlier version of the

pleadings as evidence, but the statement can no longer be
considered a judicial admission. See id.
The reasons that support converting judicial admissions
into evidentiary admissions upon amending a complaint also apply
when considering The Assignment. It goes against public policy

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to bind a party to its original perception of the case before
the party goes through discovery. Therefore, courts approach
this issue with flexibility so that judicial admissions made in
pleadings can be overridden by merely amending the pleading. As
such, this court will approach The Assignment with the same
flexibility. Therefore, the statement regarding causation in The
Assignment is not a judicial admission that takes the issue of
causation out of contention, but is an evidentiary admission
that can be controverted or explained.
Daubert Standard
As the Assignment is not a judicial admission, the Court
must evaluate the expert opinions on their own merit. Hudson
asserts that neither Cox nor Laird’s expert causation opinions
can withstand Daubert scrutiny from either a relevance or
reliability standpoint. See e.g., Daubert v. Merrell Dow
Pharmaceuticals, Inc., 113 S.Ct. 2786 (1993).
Hudson argues that there is no “obvious relevance to expert
causation presentations, much less presentations which
contradict such foundational allegations and binding judicial
admissions.” As this court has found no binding judicial
admission regarding expert causation, this argument fails. The
expert causation opinions are relevant to the issues at hand.
The standard for relevancy is generally a “low bar,” under
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Daubert. See Camowraps, LLC v. Quantum Digital Ventures LLC, No.
13-6808, 2015 WL 403187, *3 (E.D. La. Jan. 28, 2015). Here, the
causation of the collapse is relevant because the Subject
Policies trigger coverage if loss is caused by “building decay
hidden from view and the use of defective materials or methods
in construction or renovation.” Both expert opinions promulgate
building decay as a potential cause of loss, making the
declaration that coverage was triggered more probable than not.
In its Reply, Hudson next argues that the opinions cannot
be relevant because the expert opinions do not put forth a
“Covered Cause of Loss.” To support this argument, Hudson looks
to the Subject Policies which require that there be “defective
renovation materials or methods” and that “hidden decay caused
or contributed to the collapse.” (Doc. 226 at p. 7)(citing 2017
Alexander Policy [Doc. 13-2], at p. 73; Talex Policy [Doc. 133], at p. 72(emphasis added)). Hudson argues that Laird
testified that the weight of built up roofing materials was the
cause of the collapse, but that he did not testify that the past
re-roofing was “defective.” Hudson claims that “Neither Mr. Cox
nor Mr. Laird testified that the mortar decay which allegedly
caused the JPAC building’s collapse was not plainly visible.”
(Doc. 226 at p. 5). As such, the testimony cannot be relevant
because the building decay must be “hidden from view” to trigger
the Subject Policies.
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This court does not agree with Hudson’s claim that this
makes the testimony irrelevant so as to require striking expert
testimony. The Daubert analysis should be restrained to the
process of reaching the expert’s conclusions, not the merits of
the conclusions themselves. The merits should be addressed
through “vigorous cross-examination, presentation of contrary
evidence, and careful instruction on the burden of proof.” See
Bailey v. Stanley Access Technologies, Inc., No. 3:14-cv-72-SAJMV, 2015 WL 6828921, *2 (N.D. Miss. Nov. 6, 2015)(quoting
Daubert, 509 U.S. at 596). Here, the determination on whether
the Policies are triggered will be based of the merits of the
conclusions and should be addressed through cross-examination.
The Court’s role as gatekeeper should not supplant a trial on
the merits. See Pipitone v. Biomatric, Inc., 288 F.3d 239, 250
(5th Cir. 2002)(quoting Daubert 509 U.S. at 596).
Hudson next argues that the opinions are unreliable because
they fail to exclude the weight of rainwater collection as a
“causative factor in the roof collapse.” It is a well settled
principle of law that there can be more than one proximate
causative factor. The rainwater, the mortar deterioration, and
the roofing material accumulation could all have contributed to
the collapse of the roof.

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However, even if there is a single proximate cause of the
collapse, there is no requirement that an expert eliminate every
alternative cause. See Arlington Southern Hills, LLC v. American
Ins. Co., 51 F.Supp.3d 681, 690 (N.D. Tex. 2014)(“While failing
to eliminate other possible causes may diminish the strength of
an expert’s opinion, the admissibility of that opinion is not
affected.”) As the court in Walker v. WTM, Inc. noted, failing
to “exclude all other possible causes of the accident,” is
usually a “matter for cross-examination, not exclusion.” No.
2:09-cv-65-KS-MTP, 2010 WL 4259784, *5 (S.D. Miss. Sept. 30,
2010).
It should be noted that Hudson does not raise any concerns
regarding the procedure or methodology used or the
qualifications of either expert.
II.

Bad Faith

Hudson next alleges that the Defendants/Counter-Claimants
abused the expert discovery process. On September 25, 2018, the
Court entered a Case Management Order [106], setting Plaintiffs’
expert designation deadline as February 1, 2019, and Defendants’
expert designation deadline as March 1, 2019. On February 6,
2019, the Court granted the parties’ joint Motion for Extension
of Time to Designate Experts [136], extending Plaintiffs’ expert
designation deadline to February 22, 2019, and extending
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Defendants’ expert designation deadline to March 22, 2019. See
Order [140]. The Court then granted the Defendants’ unopposed
Motion for Extension of Time to Designate Experts [144],
extending the time another ten (10) days. On March 28, 2019, the
Court conducted a conference with the parties to discuss expert
designations, remaining discovery, and extensions. The Court
directed the parties to submit a proposed schedule and discovery
completion plan, after which, the Court set the Defendants’
expert designation deadline as April 19, 2019. See Order [176].
On April 19, 2019, Defendants filed another Motion for
Extension, requesting an additional seven (7) days. (Doc. 177).
Plaintiffs opposed the Motion and filed its Response. (Doc.
181). This Court granted the Motion and extended another seven
(7) days, making expert designations due on April 26, 2019.
(Doc. 184).
Defendants/Counter-Claimants designated Mr. Laird as a nonretained witness on March 4, 2019. (Doc. 150-1 at p. 6). The
Defendants/Counter-Claimants hired Mr. Laird to provide expert
testimony on February 1, 2019 and, at that time, were aware of
Laird’s opinion that the weight of roofing materials was the
proximate cause of the collapse. Despite this,
Defendants/Counter-claimants wrote in their Expert Designation
[150-1] that “Defendants believe that Mr. Laird is consistent
with the opinion expressed during his deposition by Steve Cox…
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It is believed that Mr. Laird will also state that the building
collapsed because of the condition of the very old mortar, not
because of water standing on the building roof.”
This, of course, is not all that Laird testified to in his
deposition. Instead, he alleged that he told Defendants/CounterClaimants’ attorney around November 2018 that he believed the
possible cause of the roof collapse was “[t]he weight of the
roof and the condition of the exterior load-bearing walls… the
multiple layers of roofing that added weight.” See Laird Depo.
[ECF 204-1], at pp. 54-55. Defendants/Counter-Claimants failed
to disclose this information during their expert designation. As
previously described, Defendants/Counter-Claimants limited
Laird’s proposed testimony to mortar issues, not issues with the
roofing materials.
This Order will address Hudson’s two issues: (1) the
designation of Mr. Laird as a non-retained expert, and (2) the
failure to disclose Mr. Laird’s opinion by the initial
disclosure.
Mr. Laird as a Nonretained Expert
The Federal Rules of Civil Procedure set forth different
requirements for experts who are designated as “retained,”
versus experts designated as “non-retained.” A retained expert
is subject to the requirements of FED. R. CIV. P. 26(a)(2)(B),
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which requires a comprehensive report that includes: (1) a
complete statement of all opinions the witness will express and
the basis and reasons for them, (2) the facts and data
considered, (3) exhibits to be used, (4) qualifications,
including publications, (5) cases in which the expert has
testified, and (6) a statement of compensation to be paid for
the study and testimony. A non-retained expert is not required
to submit the report of a retained expert, but he is required to
present a disclosure of “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 those facts which the witness
is expected to testify.” FED. R. CIV. PRO. 26(a)(2)(C).
The Court should use common sense when evaluating the
designation of an expert as retained or non-retained. See Cooper
v. Meritor, Inc., No. 4:16-cv-52-DMB-JMV, 2018 WL 1513006, *2
(N.D. Miss. March, 27 2018). A retained expert witness is an
expert who, without prior knowledge of the facts giving rise to
litigation, “is recruited to provide expert opinion testimony.”
Id. A witness is “specially employed” under Rule 26(a)(2)(B)
when “he has no personal involvement in facts giving rise to the
litigation, but is engaged to provide opinion testimony,
regardless of whether he is compensated or simply volunteers.”
See Cooper v. Meritor, Inc., No. 4:16-cv-52-DMB-JMV, 2018 WL

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1513006, *2 (N.D. Miss. March, 27 2018)(quoting Tolan v. Cotton,
No. H-09-1324, 2015 WL 5332171, *1 (S.D. Tex. Sept. 14, 2015).
On the other hand, a non-retained expert witness’
testimony, “arises not from his enlistment as an expert, but,
rather, from his ground-level involvement in the events giving
rise to the litigation.” Id. If the expert is “part of the
ongoing sequence of events and arrives at his causation opinion
during treatment, his opinion testimony is not that of a
retained or specially employed expert.” Id.
Mr. Laird is a non-retained expert, despite Hudson’s claims
that he should have been designated as retained. Mr. Laird had
an initial conference call with City officials on July 23, 2017,
the day of the collapse (Laird Depo. p. 13). He then drove to
McComb the next day to meet with the individuals from the
conference call (Laird Depo p. 14). That Monday Mr. Laird,
through Laird & Smithers, Inc., was retained to “get the
building in a safe, stable condition so that they could reopen
Broad Street…” (Laird Depo. p. 14). At that time, Mr. Laird was
not hired to perform a “cause and origin analysis” or “come to
an opinion as to the cause and origin of the roof collapse.”
However, as Mr. Laird described, there is overlap between what
he was hired to do, and the steps taken to provide a cause and
origin analysis. (Laird Depo. p. 16).

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Mr. Laird has “ground-level involvement” with the JPAC
collapse. He and his firm were hired to stabilize the building
and get it in a safe condition. Through his involvement with the
JPAC collapse, Mr. Laird evaluated the causation of the
collapse. The mere fact that he was then retained to provide his
expert testimony does not make him a “specially employed expert”
who is solely retained to provide testimony at trial and is not
involved in other ways with the case. Mr. Laird is testifying as
to the opinion he formed during his employment with the City of
McComb as he worked to stabilize the JPAC building. Therefore,
McComb correctly designated Mr. Laird when they described him as
a non-retained expert.
Failure to Accurately Disclose Mr. Laird’s Opinion
Defendants/Counter-Claimants argue that Hudson has waived
its complaint about the “failure to properly disclose expert
opinions.” Hudson opposed Defendants/Counter-Claimants request
for a seven-day extension of Defendants expert designation
deadline to serve Mr. Laird’s expert report. Hudson argued that
the Motion was an attempt to cure the failure to properly and
fully designate Mr. Laird. Magistrate Judge Parker overruled
Hudson’s opposition and granted Defendants/Counter-Claimants’
requested extension. In his ruling, Magistrate Judge Parker
wrote that Hudson “cites no authority which restricts a party

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from supplementing its expert designation before the expiration
of the designation deadline. The expert designation deadlines
set by the Court establish the dates on which final reports must
be produced by the parties. Order [Doc. 184] at p. 4. Hudson did
not object to this ruling within the 14 days required by Federal
Rule of Civil Procedure 72(a).
Hudson argues that it has not waived its right to seek
relief regarding these issues. It proffers that Judge Parker’s
Order “merely granted Counter-Plaintiffs time to produce a
report to supplement designated opinions — not to present a new,
previously undisclosed opinion.” In addition, Hudson did not
learn until Laird’s May deposition that Laird had provided his
opinion regarding roofing materials to Defendants/CounterClaimants in November, 2018, well before the initial designation
of experts on March 24, 2019. The court agrees with Hudson that
it did not waive its right to address the issue of the
Defendants/Counter-Claimants improperly disclosing the opinion
of Mr. Laird.
Parties must serve expert disclosures containing “a
complete statement of all opinions the witness will express and
the basis and reasons for them…” See FED. R. CIV. P. 26(a)(2).
Parties must supplement their disclosures if they learn that a
prior response was incomplete or incorrect and that information

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was not known to the other parties during the discovery process.
See Fed. R. Civ. P. 26(e)(1). However, Rule 26(e) only applies
to supplementation and not entirely new expert opinions. See
Bailey, 2015 WL 6828921 at *2 (emphasis added).
Rule 26(a)(2) is meant to provide notice to opposing
counsel before the deposition as to the testimony of experts.
See id. Issues that were not included in the initial report
cannot be considered supplementary. See id. A party who fails to
comply with Rule 26 “bears the burden to show that its actions
were substantially justified or harmless.” Id. at *3. Therefore,
as Defendants/Counter-Claimants failed to comply with Rule 26 by
failing to disclose a known opinion of their expert at the
initial designation, the burden shifts to them to show their
actions were justified or harmless.
Defendants/Counter-Claimants argue that any failure to
timely disclose Mr. Laird’s causations opinion was harmless. To
support this proposition they assert: (1) Hudson has neither
designated an expert, nor requested an extension to do so, (2) a
non-timely disclosure, therefore, would not impair the ability
of Hudson’s expert to offer counter-testimony, and (3) Hudson
fully examined Mr. Laird’s expert opinions at deposition
“subsequent to the service of his report, but prior to the
expiration of the discovery deadline.” (Doc. 217 at p. 14).

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Hudson counters that the abuse of expert discovery procedures
resulted in “avoidable waste of attorney and judicial resources
to compel an accurate disclosure of Mr. Laird’s opinions and a
report which should have been provided with his initial
designation.” This Court finds that the untimely disclosure was
harmless as Hudson was able to fully depose Mr. Laird and Hudson
had no expert witness of its own with whom it had to provide Mr.
Laird’s report.
To exclude evidence as a sanction under Rule 37(c)(1), the
court must consider four factors: (1) the explanation for the
failure to identify the witness, (2) the importance of the
testimony, (3) potential prejudice in allowing the testimony;
and (4) the availability of a continuance to cure such
prejudice. See Bailey, 2015 WL 6828921 at *3. The Plaintiffs
have not explained why they did not accurately describe Mr.
Laird’s expert opinion in the initial designation. The testimony
is important as it relates to the causation of the collapsed
building, an issue relevant to triggering the Subject Policies.
As previously stated, Hudson was not prejudiced by the untimely
disclosure of Defendants/Counter-claimants. Also, there is no
need for a continuance because the Plaintiffs supplemented their
disclosure prior to the expiration of the discovery deadline. As
a result, Plaintiff/Counter-Defendant’s Motion to Strike Expert
Testimony is denied.
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CONCLUSION
This Court, after considering the relevant Motions, has
determined that The Assignment between McComb, Talex, Alexander,
and Jubilee does not constitute a Judicial Admission. Therefore,
the Expert Opinions put forth by McComb must be evaluated under
the Daubert standard. As such, this Court finds that the expert
opinions satisfy the Daubert standard and are both relevant and
reliable.
In addition, the Court finds that, although the
Defendants/Counter-Claimants failed to properly disclose Mr.
Laird’s expert opinion in the initial designation, the error was
harmless. Therefore, the Plaintiff/Counter-Defendant’s Motion to
Strike Expert Causation Opinions is hereby DENIED.
IT IS THEREFORE ORDERED AND ADUDGED that the Motion to
Strike Expert Causation Opinions is DENIED.
SO ORDERED AND ADJUDGED this the 4th day of September 2019.

___/s/ David Bramlette___________
United States District Court Judge

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