Daniels et al v. Erie Insurance Group
MEMORANDUM OPINION OF THE COURT. Signed by District Judge Aleta A. Trauger on 12/4/2017. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(jw)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
DEBRA DANIELS and
ERIE INSURANCE GROUP,
Case No. 3:16-cv-01977
Judge Aleta A. Trauger
Before the court is the defendant’s Motion for Summary Judgment. (Doc. No. 16.) The
motion has been fully briefed and is ripe for review. For the reasons set forth herein, the motion
will be denied.
MATERIAL FACTS AND PROCEDURAL BACKGROUND
On or about July 28, 2015, plaintiffs Debra Daniels and Dennis Daniels submitted a claim
to defendant Erie Insurance Group (“Erie”), seeking coverage under their homeowner’s
insurance policy (“Policy”) for damage to their residence caused by an alleged sinkhole. In
response, Erie retained Rimkus Consulting Group (“Rimkus”) to perform an inspection of the
Daniels’ property to determine the cause of the damage to the residence and specifically to
determine if a sinkhole was present. The parties agree that, if a sinkhole caused the damage, then
the damage is covered by the Policy. (See Policy, Sinkhole Collapse Endorsement – Tennessee,
Doc. No. 16-2, at 33.)
Rimkus performed tests and inspections of the plaintiffs’ residence, under the direction
and supervision of a licensed Professional Engineer and a licensed Professional Geologist, and
issued a report dated December 22, 2015 (the “Rimkus Report”) summarizing their findings. The
Rimkus Report concluded, in a nutshell, that “sinkhole activity can be eliminated within a
reasonable professional probability as a cause of the distress noted in the building.” (Rimkus
Report, Doc. No. 16-1, at 4.) The Rimkus Report ascribes the damage to the Daniels’ residence
to (1) differential foundation settlement, (2) soil erosion, and (3) decomposition of organic
material. (Id.) Based on these conclusions, Erie notified the Daniels on February 1, 2016 that it
was denying their claim. (Denial Letter, Doc. No. 16-3.)
The plaintiffs filed this lawsuit on June 30, 2016, asserting claims for breach of the
Policy and bad faith in violation of Tenn. Code Ann. § 56-7-105, and seeking compensatory
damages, a statutory bad faith penalty, and punitive damages.
The court entered an Initial Case Management Order in October 2016, setting deadlines
for the identification and disclosure of expert witnesses and reports and rebuttal reports and
dispositive motions, among others. (Doc. No. 10.) Trial was set to begin January 9, 2018. (Doc.
No. 11.) On May 4, 2017, the parties filed a Joint Motion to Modify Initial Case Management
Order (Doc. No. 14), requesting that the plaintiffs’ expert disclosure and report deadline be
extended until August 1, 2017 and that the defendant’s rebuttal deadline be extended to August
15, 2017. Expert depositions would be completed by September 15, 2017. The parties noted that
it was “wholly unlikely” that any dispositive motions would be filed, but they agreed that the
deadline for such filing could be extended to September 27, 2017. They also agreed to an
abbreviated briefing schedule in order to ensure that any dispositive motion would be fully
briefed by or before October 11, 2017, thus “keep[ing] the trial date at least 90 days from the
close of dispositive motions.” (Doc. No. 14, at 2.) The court granted the motion. (Doc. No. 15.)
The plaintiffs’ expert, Sonny Gulati of Florida Testing & Environmental, Inc. (“FTE”),
completed his initial Report on June 2, 2016 and a Revised Report on May 9, 2017, well within
the plaintiffs’ disclosure deadline. FTE’s Reports state that FTE disagrees with the Rimkus
Reports and opine that the structural damage to the plaintiffs’ house was caused by a sinkhole.
Erie filed its Motion for Summary Judgment, supporting Memorandum, Statement of
Undisputed Facts, and numerous exhibits (Doc. Nos. 16–18 ) on September 13, 2017, arguing,
primarily, that FTE’s Reports should be excluded and that, without any expert’s testimony, the
plaintiffs lack admissible evidence to counter the Rimkus Report regarding the cause of the
damage to their residence.
On September 29, 2017, two days after the agreed-upon fourteen-day deadline for
responding, the plaintiffs filed a Motion to Extend Time to Respond to the Motion for Summary
Judgment. (Doc. No. 20.) There, they explained that they had been confused about the deadline
for responding and that the Florida office of lead counsel had been in chaos following the
September 11 landfall of Hurricane Irma. In addition, they disclosed that Erie, on September 15,
2017, had submitted to them a supplemental Report from Rimkus dated September 14, 2017, and
that the depositions of their experts had not taken place prior to September 15, 2017, as the
parties had agreed in the modified Case Management Order. Instead, they had been moved, by
agreement, to September 20, 2017 (Erie’s expert depositions) and September 28, 2017 (Gulati
deposition). In other words, the defendant voluntarily filed its Motion for Summary Judgment
prior to deposing the plaintiff’s expert.
Further, in light of this court’s July 2017 ruling regarding Gulati’s proffered expert
testimony in an unrelated case, Walsh v. State Farm Fire & Cas. Co., No. 3:15-cv-1036, 2017
WL 3025592, at *6 (M.D. Tenn. July 17, 2017), and the supplemental Rimkus Report produced
on September 14, the plaintiffs had FTE prepare a supplement to its Revised Report, dated
September 20, 2017. The plaintiffs expressed their hope that the Supplemental Report as well as
the plaintiffs’ cross-examination of Gulati during his deposition would alleviate the concerns
expressed by the court in Walsh about the methodology employed by Gulati in drawing his
conclusions about the cause of the damage to the plaintiffs’ residence. The plaintiffs therefore
requested that they be granted until ten days after Gulati’s deposition transcript was made
available to file their Response to the Motion for Summary Judgment. (Doc. No. 20, at 3.) The
plaintiffs attached to their motion both the Rimkus September 14, 2017 Supplemental Report and
FTE’s September 20, 2017 Supplemental Report. (Doc. Nos. 20-1, 20-2.)
Erie did not oppose the request to extend the filing deadline, but it did oppose the
Daniels’ use of FTE’s Supplemental Report in responding to the Motion for Summary Judgment,
on the basis that this Report was not provided to them before they filed their Motion for
Summary Judgment and, in fact, was not produced until 9:30 a.m. on the day they were to
depose Gulati. Erie also explained the delay in its filing of the Rimkus Supplemental Report:
plaintiffs’ counsel had granted Erie an extension of the time to submit a rebuttal report until after
the plaintiffs provided a complete copy of FTE’s job file, including photos, logs, notes and other
documents prepared by or relied upon by Gulati that were not contained in FTE’s initial and
revised reports. On August 15, 2017, Erie was provided the drilling logs from Richard Simmons
Drilling, upon which Gulati had relied. “Assuming all job file materials had been produced by
Gulati, on September 14, 2017, Erie submitted to counsel for Plaintiffs a rebuttal report from
Rimkus” (Doc. No. 21, at 2), the day after filing its Motion for Summary Judgment.
The court granted the plaintiffs’ request to extend the filing deadline, setting November
13, 2017 as the new deadline for filing their opposition to the Motion for Summary Judgment
and allowing the defendant until November 27, 2017 to file a reply. In addition, however, while
noting that the plaintiffs would be permitted to use Gulati’s deposition transcript in support of
their position on summary judgment, the court made it clear that it would exclude from
consideration any opinions offered by Gulati in the late-filed Supplemental Report in ruling on
the Motion for Summary Judgment. (Doc. No. 22.)
The plaintiffs’ Response, filed on November 13, 2017, was timely, and the defendant
promptly filed a Reply on November 22, 2017.
Motion for Summary Judgment
Rule 56 requires the court to grant a motion for summary judgment if “the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). To win summary judgment on a particular claim, the
moving defendant must show that, as a matter of undisputed material fact, the plaintiff cannot
establish at least one essential element of that claim. Once the moving defendant makes its initial
showing, the burden shifts to the plaintiff to provide evidence beyond the pleadings, “set[ting]
forth specific facts showing that there is a genuine issue for trial.” Moldowan v. City of Warren,
578 F.3d 351, 374 (6th Cir. 2009); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23
(1986). “In evaluating the evidence, the court must draw all inferences in the light most
favorable to the non-moving party.” Moldowan, 578 F.3d at 374 (citing Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
At this stage, “‘the judge’s function is not . . . to weigh the evidence and determine the
truth of the matter, but to determine whether there is a genuine issue for trial.’” Id. (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). But “[t]he mere existence of a
scintilla of evidence in support of the [non-moving party’s] position will be insufficient,” and the
party’s proof must be more than “merely colorable.” Anderson, 477 U.S. 242, at 252. An issue of
fact is “genuine” only if a reasonable jury could find for the non-moving party. Moldowan, 578
F.3d at 374 (citing Anderson, 477 U.S. at 252).
Daubert and the Federal Rules
Although styled as a motion for summary judgment, the defendant’s motion depends in
large part upon an argument that the plaintiffs’ proffered expert witness’s testimony violates
Rule 702 of the Federal Rules of Evidence and Rule 26(a) of the Federal Rules of Civil
Procedure, which together govern the admissibility of an expert witness’s testimony at trial.
Under Rule 702,
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
The district court acts as the “gatekeeper” on opinion evidence, Gen. Elec. Co. v. Joiner, 522
U.S. 136, 142 (1997), and must exercise its gatekeeping function “with heightened care.” United
States v. Cunningham, 679 F.3d 355, 380 (6th Cir. 2012) (citation omitted).
“As gatekeeper, the trial judge has discretion in determining whether a proposed expert’s
testimony is admissible based on whether the testimony is both relevant and reliable.” Palatka v.
Savage Arms, Inc., 535 F. App’x 448, 453 (6th Cir. 2013) (quotation marks and citation omitted).
The court’s task is to assess “whether the reasoning or methodology underlying the testimony is
scientifically valid and of whether that reasoning or methodology properly can be applied to the
facts in issue.” Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592–93 (1993).
However, the court will not exclude expert testimony “merely because the factual bases
for an expert’s opinion are weak.” Andler v. Clear Channel Broad., Inc., 670 F.3d 717, 729 (6th
Cir. 2012) (quotation marks and citations omitted). Indeed, rejection of expert testimony is the
exception rather than the rule—the gatekeeping function established by Daubert was never
“intended to serve as a replacement for the adversary system.” Rose v. Matrixx Initiatives, Inc.,
No. 07-2404-JPM/tmp, 2009 WL 902311, at *7 (W.D. Tenn. March 31, 2009) (quoting Fed. R.
Evid. 702 advisory committee’s note).
Rule 702 does not “require anything approaching absolute certainty.” Tamraz v. Lincoln
Elec. Co., 620 F.3d 665, 671–72 (6th Cir. 2010). Under Daubert, “experts are permitted wide
latitude in their opinions, including those not based on firsthand knowledge, so long as the
expert’s opinion has a reliable basis in the knowledge and experience of the discipline.” Dilts v.
United Grp. Servs., LLC, 500 F. App’x 440, 445 (6th Cir. 2012) (internal quotation marks and
citation omitted). “Daubert and Rule 702 require only that the expert testimony be derived from
inferences based on a scientific method and that those inferences be derived from the facts of the
case at hand, not that they know the answer to all the questions a case presents. . . .” Jahn v.
Equine Servs. PSC, 233 F.3d 382, 390 (6th Cir. 2000) (internal citation omitted). By the same
token, “the ‘knowledge’ requirement of Rule 702 requires ‘more than subjective belief or
unsupported speculation.’” Tamraz, 620 F.3d at 670 (quoting Daubert, 509 U.S. at 590). Lastly,
the “party proffering expert testimony must show by a ‘preponderance of proof’ that the expert
whose testimony is being offered is qualified and will testify to scientific knowledge that will
assist the trier of fact in understanding and disposing of issues relevant to the case.” Pride v. BIC
Corp., 218 F.3d 566, 578 (6th Cir. 2000) (quoting Daubert, 509 U.S. at 592 n.10).
In conjunction with Rule 702, Rule 26 requires disclosure of all expert witnesses, along
with a written report prepared and signed by the expert. Fed. R. Civ. P. 26(a)(2). The written
report must contain “a complete statement of all opinions the witness will express and the basis
and reasons for them” and “the facts or data considered by the witness in forming them.” Fed. R.
Civ. P. 26(a)(2)(B)(i)–(ii).
The defendant moves for summary judgment on the plaintiffs’ claims for breach of
contract, bad faith in violation of Tenn. Code Ann. § 56-7-105, and punitive damages. (Doc. No.
16, at 1.) In their Response, the plaintiffs expressly withdraw their claim for bad faith and the
associated statutory penalty as well as their claim for punitive damages. (Doc. No. 24, at 1 n.1.)
Thus, the only claim remaining is for breach of the Policy.
As to that issue, Erie argues that the Daniels’ proffered expert’s reports are inadmissible
and, therefore, that the plaintiffs have no evidence to support their assertion that the damage to
their house was caused by a sinkhole. The plaintiffs argue that the expert report, considered in
conjunction with the expert’s deposition, is admissible and creates a material factual dispute as to
whether sinkhole activity caused the damage. They also contend, in the alternative, that
“decomposition of organic material,” one of the causes to which Erie’s expert attributes the
damage to the plaintiffs’ residence, is not specifically excluded and therefore is also a covered
cause of damage.
Under Tennessee law, “courts should construe insurance contracts in the same manner as
any other contract.” Am. Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 814 (Tenn. 2000).
A claim for breach of contract under Tennessee law requires the plaintiff to prove the existence
of an enforceable contract, non-performance amounting to a breach of that contract by the
opposing party, and resulting damages. Ingram v. Cendant Mobility Fin. Corp., 215 S.W.3d 367,
374 (Tenn. Ct. App. 2006). Erie does not dispute the existence of a valid insurance contract. The
question presented by its Motion for Summary Judgment is whether Erie’s denial of the Daniels’
claim amounts to a breach of that contract. To survive summary judgment on this question, the
plaintiffs must show the existence of a material factual dispute as to whether a covered event
caused the damage to their residence.
Admissibility of FTE’s Reports
Gulati, according to his signature line on the FTE Reports, is a registered Professional
Engineer, registered Environmental Property Assessor, and Certified Florida Environmental
Auditor. He is licensed as a Professional Engineer in both Florida and Tennessee (see Doc. No.
16-6, at 2), and his specialization is geotechnical engineering. (Gulati Dep. 6, 8, Doc. No. 24-4,
at 2.) The defendant does not dispute his qualifications to offer an opinion in this case. It
contends, instead, that opinions proffered by Gulati do not satisfy Daubert because they fail to
disclose the reasoning or methodology behind those opinions.
As the Daubert Court stated:
Faced with a proffer of expert scientific testimony, then, the trial judge must
determine at the outset . . . whether the expert is proposing to testify to (1)
scientific knowledge that (2) will assist the trier of fact to understand or determine
a fact in issue. This entails a preliminary assessment of whether the reasoning or
methodology underlying the testimony is scientifically valid and of whether that
reasoning or methodology properly can be applied to the facts in issue.
Daubert, 509 U.S. at 592–93 (footnotes omitted).
The Initial Report
In FTE’s initial Report, Gulati specifically states that his firm was engaged to “conduct
a review of the ‘Report of Findings’ dated December 22, 2015 prepared by Rimkus Consulting
Group, Inc.” (Doc. No. 16-11, at 1.) In other words, Gulati’s opinions in the initial Report are
based entirely on the testing conducted by Rimkus. He describes the factual findings made in the
Rimkus Report, including a detailed description of the damage to the plaintiffs’ residence and the
investigation conducted by Rimkus. He summarizes the ultimate opinion reached in the Rimkus
Report: that “sinkhole activity can be eliminated within a reasonable probability as a cause of
distress noted in the building” and that the damage was caused, in part, by “differential
settlement which was exacerbated by the inadequate foundation embedment.” (Id.)
Gulati states that he does not concur with that conclusion and that it is his professional
opinion, “based on the data presented,” that “sinkhole activity is present at the subject residence”
and that “structural damage has occurred at the subject residence.” (Id.) With regard to the
Standard Penetration Test borings conducted by Rimkus, Gulati states: “[I]t is my professional
opinion that the data reported in of [sic] the borings indicate systematic weakening of soils.
Weight of rod condition was encountered in B-2 [test site].” (Doc. No. 16-11, at 3.) No other
analysis of the evidence or explanation of the methodology used to reach his conclusions is
included in the Report. Instead, Gulati goes on to discuss remediation: “We believe that
conclusive evidence of an ongoing sinkhole loss has been discovered, therefore we recommend
the subject structure should be stabilized by underpinning.” (Id.) He describes the underpinning
process and the costs associated with it. (Id. at 3–4.)
This Report, standing alone, clearly fails to satisfy Daubert and is insufficient to give rise
to a material factual dispute as to whether the damage to the plaintiffs’ residence was caused by a
sinkhole, principally because it contains no explanation of the methodology used, or the
application of the methodology to the facts, to justify the conclusion that sinkhole activity was
present at the plaintiffs’ property. The court further notes that the Initial Report never actually
states that sinkhole activity caused the damage to the residence. Rather, it states, in the
disjunctive, that sinkhole activity is present and that structural damage has occurred. Gulati
makes no attempt to link those two findings. Moreover, the FTE initial Report does not explain
the methodology by which Gulati determined that the Rimkus Report, or the investigation on
which it was based, is in some way inaccurate or unreliable. The court concludes that the initial
Gulati Report fails to satisfy the Daubert requirements or Rule 702. Accord Walsh v. State Farm
Fire & Cas. Co., No. 3:15-cv-1036, 2017 WL 3025592, at *6 (M.D. Tenn. July 17, 2017)
(likewise finding expert report prepared by FTE and Gulati to be inadmissible). More
importantly for purposes of the Motion for Summary Judgment, the Report does not constitute
evidence that a jury would be permitted to consider.
The Revised FTE Report
The Revised Report essentially supersedes the initial Report. Erie argues that the FTE
Revised Report too must be excluded for failure to comply with Rule 702 or Daubert. More
specifically, it contends that the Report “contains no explanation of the methodology used or the
application of any methodology to the facts justifying the conclusion that the damage to the
plaintiffs’ residence is caused by sinkhole.” (Doc. No. 17, at 9.) Instead, Erie argues, the Report
“describes the tests that were conducted and the results thereof” but “fails to explain how it used
these results to determine the conclusion that the damage to the plaintiffs’ residence is caused by
sinkhole activity.” (Id.) Finally, the Report fails to “explain the methodology by which it
determined that the Rimkus Report, or the investigation upon which it was based, is in some way
inaccurate or unreliable.” (Id.).
In response, the plaintiffs insist that evaluation of expert testimony should be left to the
jury and that the plaintiffs, and Gulati, have made every effort to address the concerns expressed
by the court in Walsh. The plaintiffs specifically request that the court “peruse Mr. Gulati’s
deposition transcript” from pages 75 through 130, “which supplements and elaborates in great
depth Mr. Gul[ati’s] methodology of applying generally accepted engineering practices and
sinkhole investigation techniques to the circumstances of this case.” (Doc. No. 24, at 12.) The
plaintiffs insist that this explanation does not constitute a “new opinion” not disclosed in the
expert report but, instead, is “simply an elaboration on the opinion in the two prior reports.”
In its Reply, Erie argues that the court should not consider Gulati’s deposition testimony
on cross-examination, in which plaintiffs’ counsel attempted to cure the deficiencies in the
Revised Report. The deposition was a discovery deposition requested by the defendant, at which
the plaintiffs took the opportunity to allow their expert to further explain his findings, at the
defendant’s expense. (Doc. No. 26.)
In the Revised Report, dated May 9, 2017, Gulati again catalogs the list of problems with
the plaintiffs’ residence that are noted in the Rimkus Report, consisting of cracks in the
foundation and walls of the house, door misalignments, cracked tiles and displaced grout, as well
as open surface depressions on the ground alongside one section of the foundation wall and near
a corner downspout, erosion channels, and so forth. (Doc. No. 16-6, at 3–4.) This time, however,
rather than relying solely upon the tests and observations conducted by Rimkus, FTE hired a
subcontractor, Richard Simmons Drilling Co., to perform four Structural Standard Penetration
Test (“SPT”) borings. (Id. at 4.) Based on the results of the SPT borings, the information
obtained from the homeowner, and his review of all of the data relayed by Rimkus, the Revised
The plaintiffs also refer to the deposition testimony of John Edwards, P.E., geotechnical
expert for defendant in the case of Alonso v. Florida Insurance Guaranty Association, No. 11003276 (Fla. 13th Judicial Dist. Ct). (See Doc. No. 24-9.) It is entirely unclear to the court how
that deposition or any other documents from that case could be deemed to bolster the
admissibility of the plaintiff’s expert report in this case.
[T]he damage to the subject Daniels residence is caused by sinkhole activity. In
my professional judgment, the totality of scientific data (collected by [Rimkus] &
FTE) evaluated to render an opinion is sufficient to conclude sinkhole activity as
the primary cause of distress/damage within a reasonable professional probability.
(Id. at 4.)
In support of this opinion, Gulati appends a Sinkhole Investigation Fact Sheet, which
identifies the “Scope of Investigation” as including the four SPT borings which, he claims,
demonstrated “zones of high porosity interconnected to voids and/or solution channels.” (Id. at
5.) He describes the condition of the bore samplings as confirming “[r]aveling of soil/sediment,
systematic weakening of soil-sediment, zones of high porosity and dissolution of limestone
coupled with intermixing of clay with limestone.” (Id.)
He then describes in greater detail the process of conducting the four SPT borings. The
drilling was performed by a truck-mounted drill rig operation by Richard Simmons Drilling Co.
Each boring extended to a depth of from 15.5 to 21 feet below the land surface, and each SPT
boring location is identified on a plan attached to the Report. The FTE Revised Report states:
Representative soil samples from the test borings were obtained by means of the
split barrel sampling procedure in general accordance with ASTM specification D
1586. A copy of this procedure is included in the Appendix. 2 The Structural
Standard Penetration test results are the results of recorded blow counts with a
140 pound hammer falling freely thirty inches, driving drill rods attached to a
standard 2” O.D. sampler.
In the standard manner, the sampler is seated six (6) inches into the bottom of the
test hole and then advanced an additional 18.0 inches. All advancement of the
sampler is accomplished by the dynamic effort of the hammer. Blows are applied
until eighteen (18) inches of penetration are reached or until an excessive blow
count is attained. The sampler is then removed from the test hole, opened, and the
soil sample sealed in a plastic bag.
A representative of our firm maintained a field log of the soil samples recovered
A copy of this procedure is not included in the court’s record.
in the field. All the soil samples were sealed, labeled and delivered to our
laboratory for further examination and classification. The soil samples were
visually inspected and classified on the basis of texture and plasticity in
accordance with the Unified Soil Classification System.
Finally, it is our opinion that the actual transition between soil stratas is often
gradual, thereby implying that the boundaries between soil types as indicated on
the attached boring logs are approximate.
(Id. at 6.)
Gulati then describes very generally the samples recovered from each boring location
(see, e.g., id. at 7 (“This test boring revealed top soil to clay in the upper 2.5 feet, followed by
firm, sandy clay to 5.0 feet and very soft clay to 20.0 feet. Very dense limestone was then
found . . . and continued to the boring termination depth of 21.0 feet.”).) Attached to his report is
a set of graphs showing the number of hammer blows required to reach a given depth at each
boring location. In particular, the graph for SPT-1, the first boring, shows a very low number of
hammer blows per 18 inches of drilling, presumably implying soft dirt and low resistance, down
to approximately 20 feet, where the drill struck limestone. (Doc. No. 16-6, at 11.) The SPT-4
bore showed a low number of hammer blows required to bore through the first five feet of dirt.
(Doc. No. 16-6, at 14.) The Report does not actually explain the import of these findings,
however, but it outlines the “basis of conclusions” as follows:
The subject structure is underlain by karst conditions. 3
The minor differential settlement is not the cause of distress at the subject
residence. The cause of the damage is deep rooted. The structure was built in
1999 and the distress was noticed recently and is still ongoing.
Although the FTE Report does not explain what is meant by “karst conditions,” Gulati
explained in his deposition that “‘karst’ means – first of all, karst comes from the – from the
limestone. When the limestone comes in contact with the groundwater, groundwater which has
an acid in it, that acid can go and dissolve the calcium carbonate from the limestone. And that
calcium carbonate weakens the rock, and the upper soil sediment can start moving into the
limestone. That is karst condition.” (Gulati Dep. 32, Doc. No. 24-4, at 8.)
Closed depressions which might indicate sinkhole activity were located within
one mile of the subject residence.
Systematic weakening of soil/sediment was encountered in SPT-1 and SPT-4.
The main house floor system has undergone significant differential settlement
of up [sic] 2.5 inches. This is excessive in light of geologic conditions and the
fact that sinkhole activity does not usually manifest itself on the ground
surface. As foundation system needs remediation, it is recommended that the
remediation must include underpinning.
The main house concrete floor system has undergone an abnormal amount of
differential settlement due to underlying karst conditions.
Note: My professional opinions, within a reasonable degree of professional
probability, are based on review of all the scientific data available
including, but not limited to data collected by [Rimkus] & FTE,
historical aerial maps, topographic quad map of the area, and
application of statutory definitions of sinkhole, sinkhole activity, and
(Doc. No. 16-6, at 8.)
In addition to this Revised Report, however, the record now also includes Gulati’s
deposition testimony. In this deposition, plaintiffs’ counsel examined Gulati regarding his
opinions and how he reached them, and Gulati expanded upon his conclusions. For example, he
explained the results from the SPT at the first bore site as follows:
Okay. Looking at Standard Penetration Boring B-1, do you see any
systematic weakening of the soils as described by the statute?
And where do you see that at?
I see the systematic weakening – first of all, I see the soil sediment where
the intermixing of the soil sediment in the shallow zone. That is starting at six feet
down to a depth of ten feet. And then the systematic weakening starts at ten feet,
where the blow count goes from 57 to 29 to 6. . . . And then if you look at the 20
foot sample, or right above it, you can see a yellow-ish or brown-ish yellow silty
clay with limestone fragments or rock fragments. That is a dissolution of
At 15 feet did it also have limestone fragments in the soil?
Okay . . . . And, in your opinion, the presence of the fragments from 15 to
20 feet could indicate that there has been a dissolution of limestone?
Okay. Do you have an opinion as to whether that dissolution of limestone
has caused – or has resulted in the raveling of soils or sediments or rock into
subterranean voids created by the effect of ground water erosion on limestone?
And what’s your opinion in that regard?
Well . . .[t]he limestone has gone through dissolution. Upper soil sediment
has been intermixing with the limestone. And I think that is also reflected in one
of the hand augur borings by Rimkus.
You can see that photograph Number 25, you can see how that organics is
intermixed with the clay material?
So basically what happens is because of the presence of sinkhole activity
where the rainwater hits that area, the organics which is supposed to be on the
surface, those organics slowly but surely have been moving into the upper
material. And the same phenomenon happens if you go deeper down, where the
upper soil has been moving into limestone. So that all reflects sinkhole activity.
(Gulati Dep. 94–96, Doc. No. 24-4, at 24.) 4 Gulati also testified repeatedly that it is “common
practice in his industry” to rely on the particular data and testing that he relied on to reach his
conclusions. (See, e.g., Gulati Dep. 104, Do. No. 24-4, at 26.) And he provided an explanation
for his rejection of many of the defendant’s expert’s opinions. (See, e.g., Gulati Dep. 83–84,
Doc. No. 24-4 at 21 (explaining rationale for rejecting Rimkus’s opinion that the damage to the
Plaintiffs’ counsel used a green highlighter on Gulati’s deposition transcript,
presumably to bring to the court’s attention those portions of the transcript counsel believed to be
most relevant. Unfortunately, the green marker had the effect of rendering many of the
highlighted lines difficult to decipher and some, completely illegible. (See, e.g., Gulati Dep. 83–
84, Doc. No. 24-4, at 21.)
residence was caused by decomposition of organic materials).)
There is some merit to the defendant’s contention that the Revised Report does not
contain sufficient information about Gulati’s methodology or basis for reaching his opinions.
“[A]n expert opinion must ‘set forth facts’ and, in doing so, outline a line of reasoning arising
from a logical foundation.” Brainard v. Am. Skandia Life Assur. Corp., 432 F.3d 655, 657 (6th
Cir. 2005). A “‘report must be complete such that opposing counsel is not forced to depose an
expert in order to avoid an ambush at trial; and moreover the report must be sufficiently
complete so as to shorten or decrease the need for expert depositions and thus to conserve
resources.’” Id. (citation omitted). Moreover, “if a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is not allowed to use that information or
witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was
substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1).
Here, however, the defendant does not actually move to bar Gulati from testifying as a
sanction pursuant to Rule 37. Instead, Erie contends that the information in his Reports is not
sufficient to satisfy Rules 702 and 26(a)(2) and should be excluded under Daubert, as a result of
which the plaintiffs would lack any admissible evidence to support their theory of the cause of
the damage to their residence.
Given the actual state of the record in this case, the court is compelled to disagree. First,
the Sixth Circuit has expressly observed that Rule 26 “does not limit an expert’s testimony
simply to reading his report. No language in the rule would suggest such a limitation. The rule
contemplates that the expert will supplement, elaborate upon, explain and subject himself to
cross-examination upon his report.” Thompson v. Doane Pet Care Co., 470 F.3d 1201, 1203 (6th
Cir. 2006). In this case, Gulati was actually deposed, and he was extensively questioned—albeit
by plaintiffs’ counsel—about the basis for his opinions. While Rule 26(a) seeks to prevent
“ambush at trial” and to “shorten or decrease the need for expert deposition,” R.C. Olmstead, Inc.
v. CU Interface, LLC, 606 F.3d 262, 271 (6th Cir. 2010), “those concerns can become moot
when a deposition is actually taken.” United States v. Roberts, 830 F. Supp. 2d 372, 387 (M.D.
Tenn. 2011) (citing E.E.O.C. v. Freemen, 626 F.Supp.2d 811, 821 (M.D. Tenn. 2009)).
“Moreover, because one purpose of Rule 26(a)(2) is to provide notice, a deposition disclosure
may be curative.” Id. (internal quotation marks and citation omitted).
In this case, Gulati’s deposition was actually taken more than three months prior to trial,
and Erie does not argue that it will be prejudiced at trial based on an inability to adequately
prepare for cross-examination. In his deposition, Gulati has offered sufficient explanation of the
methodology behind his opinions to create a material factual dispute as to the cause of the
structural damage to the plaintiffs’ residence and, consequently, as to whether the defendant is
contractually obligated to cover the claimed loss. He explained that it is common in the industry
to rely on the results of physical testing performed by others; he explained the basis for his
conclusion that sinkhole activity is present on the plaintiffs’ property; and he substantiated his
disagreement with the defendant’s expert. He identified the data upon which he relied and
generally what he took from the sources to arrive at his conclusions from the perspective of a
Although unorthodox and somewhat unfair to Erie, the testimony elicited by the plaintiffs
at Gulati’s deposition has effectively cured what otherwise might have been a fatal failure to
comply with Rule 26(a)(2). And the court notes, again, that Erie voluntarily submitted its Motion
for Summary Judgment prior to deposing Gulati. Certainly, Erie has pointed out inconsistencies
and weaknesses in Gulati’s opinions. The court nonetheless finds that the defendant’s attacks
challenge the credibility of Gulati’s testimony rather than its admissibility. As the Supreme Court
has noted, “[v]igorous cross-examination, presentation of contrary evidence, and careful
instruction on the burden of proof are the traditional and appropriate means of attacking shaky
but admissible evidence.” Daubert, 509 U.S. at 596. See also Roberts, 830 F. Supp. 2d at 387
(“Daubert sets out a flexible and more lenient rule that favors the admission of any scientifically
valid expert testimony, and [c]ourts should resolve doubts regarding the usefulness of an expert’s
testimony in favor of admissibility.” (internal quotation marks and citations omitted)). 5
In light of this ruling on the admissibility of Gulati’s deposition testimony and expert
report, the court finds that there is sufficient evidence in the record to give rise to a material
factual dispute as to whether the damage to the plaintiffs’ residence was caused by sinkhole
activity and, therefore, as to whether the damage is covered by the Policy. The defendant’s
Motion for Summary Judgment will, therefore, be denied.
In Travelers Property & Casualty Corp. v. General Electric Co., 150 F. Supp. 2d 360
(D. Conn. 2001), the district court denied the defendant’s motion to exclude the plaintiff’s expert
witness’s testimony, even though both the expert report and the expert witness’s twelve-day
deposition failed to fully disclose the expert’s methodology for reaching his opinions, because
the expert’s methodology and bases for his opinions were fully revealed during a Daubert
hearing conducted after the plaintiff moved to exclude the evidence. As the court stated:
Were the court to have considered only [the] expert report, his deposition testimony and
the parties’ briefs, it likely would have reached a different result. . . . The inadequacy of
[the expert’s] disclosure and the weaknesses evident in his deposition testimony,
however, are not dispositive of the motion in limine. The court must determine whether
the opinion that [the expert] more fully articulated during the July 16, 2001 Daubert
hearing is admissible at trial under Fed. R. Evid. 702 and the principles of Daubert and
Kumho Tire. Simply put, Rule 702 and Daubert set standards for the admissibility of trial
evidence, not requirements of pretrial procedure. If [the expert] has a relevant and
reliable opinion to offer that will assist the trier of fact to determine the cause of the dryer
fires at issue, that opinion should be admitted into evidence
Id. at 365–66. While finding the expert’s opinion admissible, however, the court also concluded
that the expert’s three-page expert report was in bad faith for which sanctions were warranted, in
the form of requiring the plaintiff to reimburse the defendant for one-third of its costs and
expenses in taking the first twelve days of the expert’s deposition. Id. at 368.
Decomposition of Organic Materials
The plaintiffs argue, in the alternative, that “decomposition of organic material,” one of
the causes to which Erie’s expert attributes the damage to the plaintiffs’ residence, is not
specifically excluded and therefore is a covered cause of damage under the Policy. Having
concluded that the defendant’s Motion for Summary Judgment must be denied on the basis that
Gulati’s report and testimony will be admissible, the court declines to reach this alternative
argument for denying the motion. The court also notes that the plaintiffs did not actually file
their own motion for summary judgment on this ground and finds that the issue has not been
adequately briefed to be considered as a separate basis for summary judgment in favor of either
For the reasons set forth herein, the defendant’s Motion for Summary Judgment will be
An appropriate order is filed herewith.
ENTER this 4th day of December 2017.
ALETA A. TRAUGER
United States District Judge
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