Hannan v. Auto-Owners Insurance Company

Filing 59

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Plaintiff's Motions in Limine [ECF No. 45 ] are DENIED. IT IS FURTHER ORDERED that Defendant's Motion in Limine Regarding Actual Cash Value and Replacement Cost [ECF No. 42 ] is GRANTED i n part, and DENIED in part. Defendant's Motion in Limine will be granted to the extent Plaintiff will be permitted to state in opening statement and to adduce evidence of her property's actual cash or fair market value before the storm. She will not be permitted to state in opening statement or adduce evidence of her property's actual cash or fair market value after the storm that is inconsistent with her discovery responses. In all other respects, Defendant's motion wi ll be denied. IT IS FURTHER ORDERED that Defendant's Motion in Limine to Exclude Expert Testimony of Eric Baker [ECF No. 43 ] is GRANTED. IT IS FURTHER ORDERED that Defendant's Motions in Limine [ECF No. 44 ] is GRANTED in part, and DENIED in part, as discussed in the Court's above analysis. Signed by District Judge E. Richard Webber on July 25, 2014. (BRP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
PHYLLIS HANNAN,
Plaintiff,
v.
AUTO-OWNERS INSURANCE
COMPANY,
Defendant.

)
)
)
)
)
)
)
)
)
)

No. 2:13CV00053 ERW

MEMORANDUM AND ORDER
This matter comes before the Court on “Defendant’s Motion in Limine Regarding Actual
Cash Value and Replacement Cost” [ECF No. 42], “Defendant’s Motion in Limine to Exclude
Expert Testimony of Eric Baker” [ECF No. 43], “Defendant’s Motions in Limine” [ECF No. 44],
and “Plaintiff’s Motions in Limine” [ECF No. 45].
Plaintiff Phyllis Hannan (“Plaintiff”) filed a “Petition for Recovery Under a Property
Insurance Policy” in the Circuit Court of Montgomery County, Missouri, on May 14, 2013,
asserting claims for breach of contract and vexatious refusal to pay [ECF Nos. 1-1, 6]. On June
6, 2013, Defendant Auto-Owners Insurance Company (“Auto-Owners”) filed a Notice of
Removal, removing the cause to this Court on the basis of diversity jurisdiction, pursuant to 28
U.S.C. §§ 1332 and 1446 [ECF No. 1]. Auto-Owners filed its Answer to Plaintiff’s Complaint
on that same date, asserting the following affirmative defenses: 1) failure to state a claim upon
which relief may be granted; 2) no coverage and bar from recovery, per terms of policy, for
failure and refusal to allow Auto-Owners to inspect her roof; 3) no coverage and bar from
recovery, per terms of policy, because damage to property was due to wear and tear,

deterioration, or hidden or latent defects; 4) no coverage and bar from recovery, per terms of
policy, because the damage to property was due to faulty, inadequate or defective design,
workmanship, repair, construction, renovation, remodeling, maintenance, or was due to faulty,
inadequate or defective materials used in repair, construction, renovation or remodeling; and 5)
no coverage and bar from recovery, per terms of policy, because the damage claimed to the
interior of the building was not a result of a covered cause of loss (citing specifically to an
exclusion for interior damage resulting from, inter alia, rain, unless the building first sustained
damage by a Covered Cause through which rain entered) [ECF No. 5].
The parties’ good faith Alternative Dispute Resolution participation did not achieve a
settlement [ECF No. 14]. Subsequently, the Court granted Auto-Owners leave to amend its
Answer as to affirmative defenses, on the basis of information learned in Plaintiff’s expert
deposition [ECF Nos. 15-16].
Auto-Owners filed its Amended Answer on February 27, 2014, asserting the following
affirmative defenses: 1) failure to state a claim upon which relief may be granted; 2) no
coverage and bar from recovery, per terms of policy, for failure and refusal to allow AutoOwners to inspect her roof; 3) no coverage and bar from recovery, per terms of policy, because
damage to property was not caused by windstorm or hail, and as such, was not caused by a
covered cause of loss under the policy; 4) no coverage and bar from recovery under policy of
insurance because the damage claimed to the interior of the building was not a result of a
covered cause of loss (citing Covered Causes of Loss clause definition for Windstorm or Hail,
excluding coverage for interior damage caused by rain unless building first sustained wind or
hail damages to the roof through which rain entered); 5) no entitlement to coverage under policy
of insurance, because the cause of the alleged damage does not fall within the policy’s

-2-

specifically enumerated perils (fire; lightening; explosion; windstorm or hail; smoke; aircraft or
vehicles; riot or civil commotion; vandalism; sprinkler leakage; sinkhole collapse; volcanic
action; breakage of glass; falling objects; weight of snow, ice or sleet; and water damage,
meaning accidental discharge or leakage of water or steam as the direct result of the breaking or
cracking of any part of a system or appliance containing water or steam, other than an Automatic
Sprinkler System); 6) no coverage and bar from recovery, as loss specifically excluded per
policy terms, because the damage to property was due to surface water or water that backs up
from a sewer or drain; and 7) no coverage and bar from recovery as loss specifically excluded
per policy terms, because the damage to property was due to “fungi,” wet rot, dry rot and
bacteria [ECF No. 17].
Plaintiff and Auto-Owners have submitted a joint Stipulation of Uncontested Facts [ECF
No. 24]. As pertinent to the parties’ motions in limine, the parties agree the following facts are
uncontested. Auto-Owners issued a policy of insurance (bearing Policy No. 114605-7500685611; hereinafter referred to as “Policy”) to Plaintiff on property located at 680 S. Sturgeon Street,
Montgomery City, Missouri 63361, for the period of November 11, 2011, through November 11,
2012. Plaintiff made a claim under her Policy for damage arising out of a July 2, 2012 storm.
After investigation into the claim, Auto-Owners determined the storm damage was
Seventeen Thousand, Five Hundred, Sixty-Seven Dollars and Twenty-Five Cents ($17, 567.25).
Auto-Owners applied a Five Thousand Dollars and No Cents ($5,000.00) deductible to
Plaintiff’s claim, and then issued a check for Twelve Thousand, Five Hundred, Sixty-Seven
Dollars and Twenty-Five Cents ($12,567.25) on July 25, 2012 (with American Bank of Missouri
named as mortgagee), and on August 14, 2012 (with People’s Savings Bank named as
mortgagee).

-3-

After the payment of the claim, Plaintiff filed a second notice of loss with Auto-Owners
on September 11, 2011, claiming additional damage relating to the July 2, 2012 storm. AutoOwners investigated the claim presented by Plaintiff. Based on its investigation, Auto-Owners
has refused to pay any additional monies, as it is the company’s position that the damage alleged
by Plaintiff is not related to the July 2, 2012 storm.
Plaintiff claims there is additional damage to her roof due to the July 2, 2012 storm, and
contends she is entitled to recover additional insurance proceeds under the Policy. Plaintiff also
contends Auto-Owner’s refusal to pay her claim is without reasonable cause or excuse and she
asserts she is entitled to recover an additional statutory penalty as a result.
On July 23, 2014, the Court conducted a pretrial conference to hear arguments of the
parties’ pretrial motions [ECF No. 55]. At the conclusion of the proceedings, the Court took the
motions under submission. After review of the parties’ motions, supporting exhibits and
memoranda, and consideration of the parties’ arguments, the Court rules as follows.
I.

PLAINTIFF’S MOTIONS IN LIMINE [ECF NO. 45]
In her Motions in Limine, Plaintiff asks the Court to enter an Order instructing Auto-

Owners “to refrain from mentioning or interrogating directly or indirectly in any manner
whatsoever, including the offering of documentary evidence during voir dire, opening
statements, direct or cross-examination, closing arguments, or otherwise providing to the jury
regarding the following matters:” 1) affirmative defenses asserted in Auto-Owners’s Amended
Answer that were not included in Auto-Owner’s October 29, 2012 denial letter; and 2)
“Exclusions” contained within the Policy’s “Causes of Loss – Special Form (54082) [see ECF
No. 45-1 at 8-9]. Auto-Owners has filed its “Objection to Plaintiff’s Motion in Limine” [ECF
No. 49].

-4-

Plaintiff claims Auto-Owners amended its Answer to include a number of affirmative
defenses that were not present in any previous denial of benefits by Auto-Owners, and contends
Missouri case law clearly prohibits “such retrospective supplementation” by an insurer denying
benefits under a policy of insurance. As to Plaintiff’s Motion in Limine to exclude certain
affirmative defenses, Auto-Owners contends the motion is an improper, untimely motion to
strike
In Missouri, the general rule is that “an insurer, having denied liability on a specified
ground, may not thereafter deny liability on a different ground.” Brown v. State Farm Mut. Auto.
Ins. Co., 776 S.W.2d 384, 386 (Mo. 1989). In Brown, the Missouri Supreme Court granted
transfer “to consider whether an insured must show prejudice from asserting a subsequently
offered, more specific defense.” Id. Before reaching its conclusion, the Brown court examined
the doctrines of waiver and estoppel, noting confusion between cases employing the different
legal doctrines. Id. at 386-89. The court noted estoppel requires “(1) an admission, statement or
act inconsistent with the claim afterwards asserted and sued upon, (2) action by the other party
on the faith of such admission, statement or act, and (3) injury to such other party, resulting from
allowing the first party to contradict or repudiate the admission, statement or act.” Id. at 388.
Waiver is “the voluntary relinquishment of the right to rely on the contractual provision which
forms the basis of waiver[”;] accordingly, the Court found this defense did not require a showing
of prejudice to an insured. Id. at 388.
However, the court’s examination of case law led it to adopt a preference as to the
doctrine of estoppel: “[I]n the absence of either (1) an express waiver by the insurer or (2)
conduct which clearly and unequivocally shows a purpose by the insurer to relinquish a
contractual right, the insured must show prejudice before the rule may be invoked.”

-5-

In an October 29, 2012 letter denying Plaintiff’s claim for additional damages caused by
roof leaking, Auto-Owners stated that the damage to Plaintiff’s property was determined to be:
due to faulty or inadequate construction or maintenance. It appears the
installation of the EPDM roof membrane over the prior roofing system and the
possibility of improper installation of this roof, prevented proper attachment and
probably affected the slope of the roof. As the damage that occurred from the 72-2-12 claim was repaired and there was no other covered damage found to the
roof, we regretfully deny your claim for the replacement of the roof.
The determination that there is no coverage for the claim submitted is based on
our investigation, the policy(ies) identified and information provided.
[ECF No. 45-1 at 10].
When Auto-Owners filed its original Answer to Plaintiff’s Complaint, it asserted
affirmative defenses that were consistent with the reason stated for its loss determination in the
October 29, 2012 denial letter. An examination of Auto-Owners’s Amended Answer reveals that
several of Auto-Owners’s asserted defenses are likewise consistent with the denial letter.
However, the Court finds that Auto-Owners’s sixth and seventh affirmative defenses raise
entirely new grounds for its refusal to pay Plaintiff’s claim. The Court finds no waiver by AutoOwners; however, the Court concludes these defenses are inconsistent with the specific defense
announced in the denial letter. Nevertheless, Plaintiff has not shown the required prejudice
before estoppel may be invoked. Accordingly, the Court will deny Plaintiff’s request to exclude
affirmative defenses asserted in Auto-Owners’s Amended Answer that were not included in
Auto-Owners’s October 29, 2012 denial letter.
Plaintiff also contends the doctrines of estoppel and waiver preclude Auto-Owners from
enforcing the “Exclusions” clause contained in the Policy’s “Causes of Loss – Special Form
(54082), because Auto-Owners considered her roof to be in “good” and insurable shape during
the Policy’s effective dates, November 11, 2011 through November 11, 2012.

-6-

For its Objection, Auto-Owners also claims it had no duty to re-inspect the roof after it
issued the Policy, and it asserts any failure to inspect the roof would not waive any coverage or
defenses. Auto-Owners further states Plaintiff’s waiver argument has not been properly pleaded.
Auto-Owners claims Plaintiff’s first notice that she was going to assert waiver was in her Trial
Brief, submitted only twenty days prior to the scheduled trial date. Auto-Owners claims Plaintiff
has improperly raised this issue on the eve of trial, causing it severe prejudice. Auto-Owners
further argues any use of the waiver defense in this situation would be improper under Missouri
law, as Plaintiff is attempting to rewrite the policy of insurance, and to create coverage where
none previously existed. Auto-Owners contends that, even if such defenses were proper, these
defenses would not apply under the facts of this matter. In its Objection, Auto-Owners states
that it is not relying on wear and tear or faulty construction exclusion, and the only policy
provision at issue is the following:
When Broad is shown in the Declarations, Covered Causes of Loss means the
following:
* * *
4.
Windstorm or Hail, but not including:
c.
Loss or damage to the interior of any building or structure, or the
property inside the building or structure, caused by rain, snow, sand or dust,
whether driven by wind or not, unless the building or structure first sustains wind
or hail damages to its roof or walls through which rain, snow, sand or dust enters.
[ECF No. 49 at 3]. As indicated in the Court’s discussion of Plaintiff’s first point, this
affirmative defense is consistent with the reason Auto-Owners stated for denying Plaintiff’s
claim in its October 29, 2012 letter, i.e., there was no other covered damage found to the roof.
The Court will deny Plaintiff’s request to exclude “Exclusions” contained within the Policy’s
“Causes of Loss – Special Form (54082).

-7-

II.

DEFENDANT’S MOTION IN LIMINE REGARDING ACTUAL CASH
VALUE AND REPLACEMENT COST [ECF NO. 42]
During the pretrial conference, Auto-Owners asserted Plaintiff’s Policy is an Actual Cash

Value policy, thus contending Actual Cash Value is the proper measure of damages in this
action. In its Motion in Limine regarding Actual Cash Value and Replacement Cost, AutoOwners asks the Court to exclude evidence of fair market. or actual cash value of the Property
that was not disclosed in Plaintiff’s discovery answers or deposition testimony. Auto-Owners
claims it has made significant efforts to discover Plaintiff’s position on the difference in fair
market value before and after the loss, but Plaintiff failed to produce any evidence with regard to
the fair market value or actual cash value of the property after the storm. Auto-Owners claims
introduction of any “after” number would constitute unfair surprise and severely prejudice
Defendant.
Auto-Owners’s argument is persuasive. Plaintiff has produced no evidence of fair market
value or actual value of the property after the storm. Plaintiff has stated under oath in a
deposition that she does not know the after-storm value of the property. She confirmed in an
interrogatory answer that no appraisal was performed post storm.
Plaintiff filed a Memorandum in Opposition to Defendant’s Motion in Limine Regarding
Actual Cash Value and Replacement Cost [ECF No. 51]. Plaintiff claims the proper valuation of
her loss is Replacement Cost Value. She contends Auto-Owners has “waived” and should be
“estopped” from asserting the Policy is an Actual Cash Value policy, because both parties have
always treated it as a Replacement Cost Value policy. Plaintiff relies on the “Loss Report and
Repair Estimate” prepared by a claims adjuster who listed “RCV” and ACV” as the same figure,
$17, 567.25. Plaintiff asserts Auto-Owners paid the July 2, 2012 claimed loss for “covered wind
damage” in an amount equal to its valuation of Replacement Cost Value, with no reduction for

-8-

depreciation. Plaintiff claims, as a result of Auto-Owners’s treatment of the Policy as a
Replacement Cost Value policy, she continued paying premiums and maintained her insurance
on the property with Auto-Owners. Plaintiff also claims Auto-Owners’s corporate designee, Joe
Jackson, made an admission that the Policy was a Replacement Cost Policy, when he noted in his
deposition that Plaintiff’s policy was not renewed because “of the value,” stating ‘the building
was not insured to value,” and “. . . if you want replacement cost on your building and not have a
co-insurance penalty, we want you to have your building insured to within a certain limit in order
to hopefully not to have a co-insurance penalty at the time of the claim.”
Plaintiff’s Policy includes a “Loss Payment” clause, containing the following language:
In the event of loss or damage covered by this Coverage Form, at our option, we
will either:
(1)

Pay the value of loss or damaged property;

(2)

Pay the cost of repairing or replacing the lost or damaged property;

(3)

Take all or any part of the property at an agreed or appraised value; or

(4)
Repair, rebuild or replace the property with other property of like kind and
quality.
[ECF No. 1-1 at 18]. The Policy’s “Valuation” clause states:
We will determine the value of Covered Property in the event of loss or damage
as follows:
a.
At actual cash value as of the time of loss or damage, except as provided
in b., c., d., and f. below.
[ECF No. 1-1 at 19]. The circumstances of Plaintiff’s claim do not appear otherwise to fall
within the Policy’s listed exceptions for Actual Cash Value Valuation. The Policy does not
provide a definition for “Actual Cash Value,” or “Replacement Cost Value.”
Where a policy definition for “Actual Cash Value” is not provided, Missouri courts

-9-

substitute a common law definition. “Under Missouri law, actual cash value is defined as the
difference between the reasonable value of the property immediately before and after the loss.”
Harris v. Am. Modern Home Ins. Co., 571 F.Supp.2d 1066, 1079 (E.D. Mo. May 30,
2008)(citing Porter v. Shelter Mut. Ins. Co., 242 S.W.3d 385, 387 n. 2, 390 (Mo. Ct. App. 2007).
“The phrase ‘actual cash value’ has been treated by Missouri case law as meaning ‘fair market
value[,]’ . . . ‘the price the property would bring if sold by a willing seller to a willing buyer who
is under no compulsion to buy.’” Garvin v. Acuity, No. 11-05105, 2012 WL 5197223 at *4
(W.D. Mo. Oct. 19, 2012)(quoting Warren Davis Props. B. L.L.C. v. United Fire & Cas. Co., 4
S.W.3d 167, 173 (Mo. App. 1999). “Actual cash value is the replacement cost value minus
normal depreciation, or fair market value, while replacement cost value represents the cost of
replacing an item with a new one of like kind.” Santizo v. Allstate Prop. & Cas. Ins. Co., No.
09-151, 2010 WL 2735649 (E.D. Mo. July 9, 2010). It is incumbent on Plaintiff to introduce
evidence showing the market value of the property immediately before and immediately after the
storm damage claimed by Plaintiff. Plaintiff has supplied Auto-Owners with evidence of the
reasonable value of her property prior to the claim loss, but, she has only produced evidence as
to the actual cost of the repairs after the damage occurred. Such evidence is properly considered,
but not conclusive, of the property’s post-loss value. See Brown v. Pennsylvania Fire ins. Co.,
Phila.,, 263 S.W.2d 893, 899 (Mo. Ct. App. 1954). Considering that Plaintiff’s evidence of cost
of repair cannot be said to be comparatively insignificant as compared to Plaintiff’s evidence of
the value of the property as a whole, her sole reliance on evidence of repair costs carries a risk of
insufficient evidence on which to instruct on the measure of damages. Id. at 900.
Auto-Owners also contends any evidence of replacement cost should be excluded as not
relevant. During the pretrial conference, the Court received copies of a Loss Report and a repair

- 10 -

estimate prepared by Wickizer & Clutter, Inc., concerning Plaintiff’s July 2, 2012 claim. The
Loss Report indicates that inspection of Plaintiff’s roof revealed wind damage to the rubber
roofing in a 35’x115’ area, which could be “spot repaired.” The report also notes the fiberboard
insulation in this area needed to be replaced, because it had gotten wet. The Loss Report
indicates photographs and a repair estimate were submitted with the report. The repair estimate
concerned only the 35’x115’ area, and derived the cost of repair by multiplying the quantity of
materials and labor hours required by their unit cost. These values were listed in a column
labeled “RCV.” The repair estimate included columns labeled “Deprec.” and “ACV.” No
reduction for depreciation was indicated. The values listed in the “RCV” column were carried
over and listed under the “ACV” column. In its “Summary for Building” section, the report
indicated the “Line Item Total” was $17, 115.04, the “Material Sales Tax” was$ 452.21, and the
“Replacement Cost Value” was $17, 567.25. After allowing for a $5,000 “Deductible,” the” Net
Claim” was reported as $12,567.25.
Basically, Plaintiff’s argument appears to be that Auto-Owners, having decided her event
was compensable, elected to pay her loss claim for the July 2, 2012 storm damage at
Replacement Cost Value without reduction for depreciation, thus waiving any right to object to
the admission of Replacement Cost Value evidence. During the pretrial proceedings, AutoOwners contended the language contained in the repair estimate does not indicate such an
election was made by Auto-Owners. Auto-Owners argued that the repair estimate was prepared
by an underwriter and does not constitute an election by Auto-Owners to compensate Plaintiff’s
loss at Replacement Cost Value. The Court finds Auto-Owners elected, after determining
Plaintiff’s July 2, 2012 claim was a covered event of loss, to pay the cost of repairing Plaintiff’s
damaged property, in accordance with subsection a.(2) of the Policy’s Loss Payment clause.

- 11 -

Auto-Owner’s choice of this option makes such evidence relevant. The Court will deny AutoOwner’s request to exclude any evidence of replacement cost.
III.

DEFENDANT’S DAUBERT MOTION: DEFENDANT’S MOTION IN LIMINE
TO EXCLUDE EXPERT TESTIMONY OF ERIC BAKER [ECF NO. 43]
Plaintiff identified Eric Baker as an expert in her Rule 26(A)(2)(C) Expert Disclosure,

and indicated that the subject matter of his testimony would be causation of loss and estimates
for repair or replacement [ECF No. 43-1]. In the Preliminary Findings section of the Report
produced by Plaintiff to Auto-Owners, Mr. Baker reported: “Damage to the EPDM membrane
the underlying insulation and damage to the metal roof & metal siding was observed as the result
of wind/hail storm related events.” Mr. Baker set forth the following conclusions in his Report:
The force of the storm caused a large 30’x100’ area of membrane to bec[o]me
detached from its mechanical fasteners and actively billow EPDM allowing an
internal pressure build-up and water infiltration to the insulation board. The
active billowing and internal pressure with the lift force of the storm winds caused
the EPDM layer to stretch and rupture in multiple locations. Ruptures exhibit
bubbling of entrapped moisture.
Hail strikes crushed the moisture saturated roof insulation and the insulation is
distorting in multiple areas, and per manufacture specification insulation must be
replaced. Hail strikes also damage[d] some of the EPDM mechanical fasteners,
and hail damaged the metal roofing and siding.
Restoration is not a feasible alternative at this point as the damage to the
insulation board requires a complete removal of all roofing material and as the
EPDM has multiple ruptures it is not re-installable.
As this is a box recycling business the water penetration damages the inventory,
thus this threatens the lease income from this property.
[ECF No. 43-2 at 1].
In the Report’s Summary, Mr. Baker opined that a replacement cost policy allows for the
possibility that an insured would be placed in a better position than the insured was in before a
loss, because such policies are intended to allow the insured to replace a damaged building [ECF

- 12 -

No. 43-2 at 2]. Mr. Baker further stated: “To simply restore a roof to its pre-damaged condition
may render it unfit for similar use if the substrate or deck is deteriorated and insufficient to
support a layer of new roof materials or does not meet the manufacture[r’s] specifications.”1
Federal Rule of Evidence 702 sets forth the standards for determining if expert opinion
testimony is admissible:
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 on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods;
and
(d) the expert has reliably applied the principles and methods to the
facts of the case.

Thus, to be admissible, evidence must be useful to the fact finder in deciding the ultimate issue
of fact, the witness must be qualified to assist the fact finder, and the evidence must be reliable or
trustworthy in an evidentiary sense. Lauzon v. Senco Prods., Inc., 270 F.3d 681, 686 (8th Cir.
2001) (citing Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 591 (1993)). Proponents of
expert testimony must prove its admissibility by a preponderance of the evidence. Daubert, 509
U.S. at 592. Vigorous cross-examination, presentation of contrary evidence, and careful
instruction on the burden of proof are the traditional and appropriate means of attacking shaky

1

While the issue of Mr. Baker’s expertise in interpreting insurance policies was not argued, the
Court cautions Plaintiff’s counsel not to raise these issues in opening statement, nor adduce
evidence from Mr. Baker on these subjects without first stating to the Court, out of the hearing of
the jury, his intention to do so. It is the Court’s view this is a matter of law to be decided by the
court and there is no showing this witness is an expert in interpreting insurance policies.
- 13 -

but admissible expert evidence. Daubert, 509 U.S.. at 596. However, an expert=s opinion should
be excluded when it is Aso fundamentally unreliable that it can offer no assistance to the jury.@
Meterlogic, Inc. v. KLT, Inc., 368 F.3d 1017, 1019 (8th Cir. 2004).
In its Motion in Limine to Exclude Expert Testimony of Eric Baker, Auto-Owners
contends Mr. Baker’s opinion testimony, regarding 1) the issues of damages caused to Plaintiff’s
mechanically fastened EPDM roof, office, and metal roof, and 2) Auto-Owner’s claim handling
practices, is unreliable, and lacks sufficient foundation to be admissible as expert testimony
[ECF No. 43 at 2]. Auto-Owners claims:
[Mr. Baker’s] background and lack of knowledge, skill, experience, training, and
education with mechanically fastened EPDM roofs and related storm damage
prohibits him from knowing what caused damage to Plaintiff’s roof.
Additionally, Mr. Baker’s testimony regarding the damages caused to Plaintiff’s
mechanically fastened EPDM roof, office, and metal roof fails to consider
relevant facts and reliable methodologies, sources, and theories. Finally, Mr.
Baker’s opinion testimony on Auto-Owner]’s] claim handling practices should be
excluded because Plaintiff does not meet the disclosure requirements of Rule
26(a)(2) and Mr. Baker’s testimony is based on insufficient facts, knowledge,
skill, experience, training, and education.
[ECF No. 43 at 2}.
In “Plaintiff’s Memorandum in Opposition to Defendant’s Motion in Limine Regarding
Eric Baker Expert Testimony,” Plaintiff claims Mr. Baker’s construction experience, particularly
his work on commercial roofs and estimating work on EPDM roofs, properly qualifies him as an
expert to address causation and estimating the pricing of the work required to replace or repair
damage to Plaintiff’s commercial property resulting from the summer 2012 storm, or storms
[ECF No. 52]. The Court notes that, during the pretrial conference, Auto-Owners stated that its
Motion in Limine to Exclude Expert Testimony of Eric Baker was limited to that part of Mr.
Baker’s report pertaining to causation of damages. Auto-Owners indicated that it did not object
to Mr. Baker’s damage repair estimation and was not asking the Court to exclude that evidence.

- 14 -

Accordingly, the following analysis regarding the admissibility of Mr. Baker’s expert report
concerns only that part pertaining to causation, and does not apply to Mr. Baker’s repair
estimation.
In determining whether expert testimony should be presented to a jury, Courts consider
several factors, including: 1) whether the theory or technique can be, and has been, tested; 2)
whether the theory has been subjected to peer review and publication; 3) the known or potential
rate of error; and 4) whether the theory or technique is generally accepted in the relevant
community. Daubert, 509 U.S. at 593-94. Other factors useful for screening expert testimony
for relevance and reliability include whether: 1) the expertise was developed solely for litigation
or naturally flowed from the expert’s research; 2) the expert ruled out alternative explanations;
and 3) the expert sufficiently connected the proposed testimony with the facts of the plaintiff’s
case. Lauzon, 270 F.3d at 687.
The transcript of Mr. Baker’s deposition casts significant doubt on the reliability, in the
evidentiary sense, of his expert opinion testimony regarding the cause of damaged to Plaintiff’s
mechanically fastened EPDM roof. The Court notes that Mr. Baker had never seen a
mechanically-fastened EPDM roof prior to observing Plaintiff’s roof [ECF No. 43-3 at 30, 39].
Mr. Baker’s lack of experience with mechanically fastened EPDM roofs arguably makes his
qualification, to offer an expert opinion regarding Plaintiff’s damages in this matter, subject to
challenge on cross-examination. Nevertheless, this inexperience is not determinative on the
issue of the testimony’s admissibility. However, the insufficiency of the facts or data used as the
basis for his opinion, the methodology employed by Mr. Baker in analyzing the information he
obtained by visual inspection of the roof, and the scientific basis, if any, for his analysis, cause
his opinion testimony regarding causation to be unreliable.

- 15 -

During his deposition, Mr. Baker testified that he did not know the age of Plaintiff’s roof,
he did not observe how the EPDM’s plastic washer fasteners were attached to the roof, he did not
know the composition or placement of the fasteners, and he did not know how the roof system
was supposed to be installed [ECF Nos. 43-3 at 28-30, 32-33, 69]. He further testified that he
did not know why this particular roof system was no longer installed [ECF No. 43-3 at 31].
Although Mr. Baker stated that shrinkage and contraction of EPDM material with the change of
seasons makes the material more brittle over time, he conceded he did not know over what
length of time such deterioration occurred [ECF No. 43-3 at 32]. Mr. Baker testified that he
performed a visual inspection of the roof after it had been repaired, and had no way to observe
what had actually happened under the roof; he said he did not know what was below the EPDM,
and did not procure any core samples of the roof [ECF No. 43-3 at 36-37, 91]. When asked if he
relied on any document in forming his opinion, Mr. Baker responded he formulated his opinion
solely on the basis of his visual inspection of the roof [ECF No. 57].
Mr. Baker further testified that he had not visited Plaintiff’s building prior to the July 2,
2102 storm, and did not know its condition prior to that date [ECF No. 43-3 at 68]. He stated his
knowledge regarding its condition prior to July 2, 2012 was derived from statements his
company received from “anybody else” [ECF No. 43-3 at 68]. He testified he did not know if
any interior water damage occurred prior to July 2, 2012, did not know what storm or hail
damage may have occurred previously, and did not know what repairs had been made to the roof
prior to that date [ECF No. 43-3 at 68]. He conceded he did not know whether the hail marks on
the roof were from the July 2, 2012 storm, explaining, “Well, you can never tell how old a hail, a
hail hit is.”
When asked about the data that suggested a hail storm occurred on July 2, 2012, Mr.

- 16 -

Baker was unable to identify what storm reports he used [ECF No. 43-3 at 71]. He stated he
interviewed some of the individuals who were in the building during the storm, but he did not
record any of the conversations and could not remember the names of the people he questioned
[ECF No. 43-3 at 73]. Mr. Baker testified he had read articles about “billowing and EPDM
roofs,” but could not recall what articles he read, and could not recall the source upon which he
based his billowing theory [ECF No. 43-3 at 80-85]. When asked about his “bubbling of
entrapped moisture” theory, Mr. Baker could not recall the basis for the theory, stating,. “I would
say it probably came from Hague” [ECF No. 43-3 at 99].
Although the Court recognizes that an expert might form a conclusion based on a visual
or tactile inspection, and that such a method of analysis can be reliable, the record in this matter
does not support a finding that Mr. Baker has sufficient specialized knowledge to assist a juror in
deciding the particular issues in this matter. See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S.
137, 156 (1999). There is no indication in the record that other experts in the industry endorse
his billowing and bubbling of entrapped moisture theories, and no identified reference to articles
or papers that validate his conclusions. Id. Most troubling, however, is insufficiency of the
factual basis upon which Mr. Baker’s report is based. In light of the record as developed by the
parties, the Court finds that Mr. Baker’s opinion testimony on the cause of damage to the roof
must be excluded.
IV.

DEFENDANT’S MOTIONS IN LIMINE [ECF No. 44]
In its Motions in Limine, Auto-Owners requests that the Court enter Orders excluding

any reference to, or evidence of: 1) other claims and lawsuits involving Auto-Owner’s handling
or denial of unrelated first-party insurance claims presented to Auto-Owners by other individuals
(particularly, any testimony from Plaintiff’s insurance broker, Michael Granneman, regarding his

- 17 -

opinion on the handling of unrelated claims with Auto-Owners); 2) statements allegedly made by
Auto-Owners, its employees, or its agents that were not set forth in Plaintiff’s responses to
interrogatories and production requests; 3) Plaintiff’s character or character traits to support an
inference she has a reputation for truthfulness; 4) Plaintiff’s payment and amount of premium; 5)
argument suggesting jurors should consider what they would like or expect their insurance
company to do if they were in Plaintiff’s position; 6) argument directly or indirectly comparing
the size, power, and wealth of Plaintiff and Auto-Owners; 7) argument about the insurance
industry in general, and what insurance companies do; 8) other objectionable statements and
arguments regarding insurance company’s collection of premiums and refusal to pay claims or
defend insureds; 9) argument or inference, direct or indirect, suggesting an insurance company
can hire an expert to say anything; 10) Auto-Owners’s alleged vexatious refusal to pay not
disclosed in Plaintiff’s answers to interrogatories; 11) the propriety or depth of Auto-Owners’s
claim investigation, any alleged violation of company policies and procedures, any alleged
violations of state statutes or regulations, and any alleged delay in the handling of the claim that
have not been the facts pleaded in Plaintiff’s interrogatory answer; 12) the defense of waiver; 13)
Auto-Owners’s failure to inspect Plaintiff’s roof during the period between issuance of the
Policy and Plaintiff’s alleged loss; 14) settlement negotiations and Auto-Owners’s offer during
mediation; and 15) cancellation of Plaintiff’s Policy, or any claim there should be coverage for
any damage outside the policy period [ECF No. 44].
In her memorandum opposing Auto-Owners’s Motion in Limine, Plaintiff raised
objections only as to those involving Plaintiff’s asserted waiver defense, and Auto-Owners’s
failure to inspect Plaintiff’s roof during the period between issuance of the Policy and Plaintiff’s
alleged loss [ECF No. 53]. During the pretrial conference, the Court inquired to determine the

- 18 -

parties’ positions on each type of evidence Auto-Owners’s seeks to exclude, and the parties’
responses indicated their agreement on the use of many of those listed.
Accordingly, the Court will grant Auto-Owners’s motion to exclude evidence as to
following: 1) other claims and lawsuits involving Auto-Owners’s handling or denial of unrelated
first-party insurance claims presented to Auto-Owners by other individuals (particularly, any
testimony from Plaintiff’s insurance broker, Michael Granneman, regarding his opinion on the
handling of unrelated claims with Auto-Owners); 2) Plaintiff’s character or character traits to
support an inference she has a reputation for truthfulness; 3) argument suggesting jurors should
consider what they would like or expect their insurance company to do if they were in Plaintiff’s
position; 4) argument directly or indirectly comparing the size, power, and wealth of Plaintiff
and Auto-Owners; 5) argument about the insurance industry in general, and what insurance
companies do; 6) argument or inference, direct or indirect, suggesting an insurance company can
hire an expert to say anything; and 7) settlement negotiations and Auto-Owners’s offer during
mediation.
As to Auto-Owners’s request that other objectionable statements and arguments
regarding insurance company’s collection of premiums and refusal to pay claims or defend
insureds be excluded, Plaintiff indicated she might tender evidence regarding Auto-Owners’s
collection of premiums and refusal to pay claims in this matter, to support her vexatious refusalto-pay claim. Plaintiff stated she did not, however, intend to offer objectionable statements
about such conduct among insurance companies generally. Accordingly, the Court will deny
Auto-Owners’s motion to exclude this evidence, in accordance with Plaintiff’s representation.
The remaining requests presented in Auto-Owners’s Motion in Limine are also denied; however,
Auto-Owners may renew its objections at trial.

- 19 -

Accordingly,
IT IS HEREBY ORDERED that “Plaintiff’s Motions in Limine [ECF No. 45] are
DENIED.
IT IS FURTHER ORDERED that “Defendant’s Motion in Limine Regarding Actual
Cash Value and Replacement Cost” [ECF No. 42] is GRANTED in part, and DENIED in part.
Defendant’s Motion in Limine will be granted to the extent Plaintiff will be permitted to state in
opening statement and to adduce evidence of her property’s actual cash or fair market value
before the storm. She will not be permitted to state in opening statement or adduce evidence of
her property’s actual cash or fair market value after the storm that is inconsistent with her
discovery responses. In all other respects, Defendant’s motion will be denied.
IT IS FURTHER ORDERED that “Defendant’s Motion in Limine to Exclude Expert
Testimony of Eric Baker” [ECF No. 43] is GRANTED.
IT IS FURTHER ORDERED that “Defendant’s Motions in Limine” [ECF No. 44] is
GRANTED in part, and DENIED in part, as discussed in the Court’s above analysis.
So Ordered this 25th day of July, 2014.

E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE

- 20 -