First American Title Insurance Co. v. Bowles Rice, L.L.P.

Filing 139

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTSMOTION TO EXCLUDE PLAINTIFFS REBUTTAL EXPERT [DKT. NO. 116 . Signed by Senior Judge Irene M. Keeley on 1/5/18. (mh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

FIRST AMERICAN TITLE INSURANCE CO.,
Plaintiff,
v.

CIVIL ACTION NO. 1:16cv219
(Judge Keeley)

BOWLES RICE, LLP,
Defendant.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
Pending is the Motion to Exclude Plaintiff’s Rebuttal Witness
filed by the defendant, Bowles Rice, LLP (“Bowles Rice”). For the
reasons stated on the record during the December 20, 2017, status
conference, as well as those that follow, the Court GRANTS the
motion (Dkt. No. 116).
I. BACKGROUND
This case arises out of a $775 million title insurance policy
issued by Bowles Rice as an agent of the plaintiff, First American
Title Insurance Co. (“First American”). The policy became effective
on March 9, 2007, and insured the priority of a credit line deed of
trust related to the construction of a coal-fired power plant by
Longview Power, LLC (“Longview”). In 2012, Longview’s contractors
filed mechanic’s lien claims in excess of $335 million, which
asserted priority over the credit line deed of trust. After
initially contesting the legitimacy of coverage claims under its
title insurance policy, First American ultimately settled its

FIRST AMERICAN V. BOWLES RICE

1:16CV219

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
alleged liability to the title insurance policyholder, Union Bank
of California, N.A. (“Union Bank”), for $41 million.1
First American seeks indemnification from Bowles Rice pursuant
to the parties’ agency relationship. It alleges, in part, that
Bowles Rice breached the relevant agency agreement by failing to
inform First American that Longview’s contractors had commenced
construction before the credit line deed of trust was recorded. In
both the underlying litigation and the instant lawsuit, however,
the validity, priority, and enforceability of the contractors’
mechanic’s liens has remained a contested issue.
During October and November 2017, the parties filed expert
disclosures pursuant to the deadlines in the Court’s Scheduling
Order (Dkt. No. 25 at 2). On October 2, 2017, First American
disclosed as its expert an attorney named Robert T. Edwards
(“Edwards”) (Dkt. No. 116-1). Edwards’ opinions focus primarily on
whether Bowles Rice breached the parties’ agency agreements when it
issued the title insurance policy for the Longview project. Among
others, Edwards opines that Bowles Rice breached the agreements by
1) failing to notify First American that construction had commenced
1

A more detailed summary of the factual background of this
case can be found in the Court’s Memorandum Opinion and Order
Overruling Defendant’s Objections, which was filed on December 11,
2017 (Dkt. No. 128).
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
on the project, 2) failing to exercise due diligence and reasonable
care by inspecting the subject property, 3) failing to obtain
approval to issue a policy in excess of $500,000, and 4) failing to
obtain approval to insure against the special risk of mechanic’s
liens. Id. at 6-7.
On October 21, 2017, Bowles Rice identified two experts. Its
first expert, attorney Robert B. Holman (“Holman”), covers a wide
variety of subject matter in his report (Dkt. No. 116-2). He
concludes that Bowles Rice was authorized to issue the West
Virginia policy. Id. at 26-27. He also opines that Bowles Rice
properly underwrote risks associated with mechanic’s liens by
obtaining an Owner’s Affidavit and lien waivers prior to closing.
Id. at 29-30. Moreover, he contends that, despite the allegation
that Bowles Rice failed to tender knowledge of construction, First
American itself failed to properly evaluate site work and take
precautions with regard to mechanic’s lien risks. Id. at 30-31.
Finally, he opines that First American should have denied Union
Bank’s claim, and, further, that it handled the claim in an
unreasonable manner by failing to investigate or challenge the
validity of the mechanic’s liens. Id. at 34-37.
Bowles Rice also disclosed the “preliminary report” of its
second expert, attorney Carl L. Fletcher (“Fletcher”). Id. at 42.
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
In that report, Fletcher opines that “[t]he challenges to the
priority and validity of the [mechanic’s] liens are . . . wellgrounded,” and “that had [First American] pursued those issues to
their conclusion it is likely to have prevailed on some or all of
them.” Id. at 44-45.2
On November 10, 2017, First American identified attorney
Johnson W. Gabhart (“Gabhart”) as a rebuttal expert to offer
opinions “concerning the enforceability and priority of certain
mechanic’s liens recorded by contractors working on the Longview
Power Plant Project,” including “whether the mechanic’s liens
appear to have been properly perfected and whether they created a
security interest that was prior to a credit line deed of trust
. . . insured by” First American (Dkt. No. 122-1).
In Gabhart’s opinion, activities such as clearing, grubbing,
road construction, fencing, berming, and installation of office
trailers, all of which took place prior to the recording of the
credit

line

deed

of

trust,

were

necessary

elements

of

the

contractors’ work. Id. at 4. Moreover, he opines that the partial
lien waivers obtained by Bowles Rice were conditional and did not

2

First American moved to disqualify Fletcher due to an
alleged conflict of interest (Dkt. No. 123), which motion the Court
granted on January 3, 2018 (Dkt. No. 138).
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
cover claims where no payment had been made. Consequently, Gabhart
concludes that mechanic’s liens for subsequent work could relate
back to construction prior to the recording of the deed of trust.
Id. He also concludes “that the subject mechanic’s liens were
properly executed and timely enforced,” and that “the mechanic’s
liens were entitled to priority over the credit line deed of trust
securing Union Bank’s interest.” Finally, he opines “that First
American’s actions in settling the mechanic’s liens and thereby
correcting title to the subject property were quite reasonable.”
Id. at 5.
On November 22, 2017, Bowles Rice moved to exclude Gabhart as
an expert, contending that, because First American bears the burden
to prove the reasonableness of its settlement, Gabhart’s opinion
constituted

inappropriate

rebuttal

(Dkt.

No.

116

at

1).

In

response, First American argued that its case “has nothing to do
with the actual validity, priority, and enforceability of the
mechanic’s liens,” and that it has offered Gabhart’s opinion only
in response to an affirmative defense raised by Bowles Rice. Since
that opinion is not being offered in support of its prima facie
case, First American contends it is an appropriate subject for
rebuttal testimony (Dkt. No. 122 at 1-2).

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
II. STANDARD OF REVIEW
Pursuant to Fed. R. Civ. P. 26(a)(2)(D), “[a] party must make
expert disclosures at the time and in the sequence that the court
orders.” The Court’s Scheduling Order permits rebuttal experts
“only if the evidence is intended solely to contradict or rebut
evidence on issues not previously identified by another party”
(Dkt. No. 25 at 4). As the Court has stated, the purpose of
rebuttal is to address new issues that would not have been properly
considered during a party’s initial expert disclosures (Dkt. No. 99
at 12). The Southern District previously explained:
A party may not offer testimony under the guise of
“rebuttal” only to provide additional support for his
case in chief. The plaintiff who knows that the defendant
means to contest an issue that is germane to the prima
facie case (as distinct from an affirmative defense) must
put in his evidence on the issue as part of his case in
chief. . . . Ordinarily, rebuttal evidence may be
introduced only to counter new facts presented in the
defendant’s case in chief. . . . Permissible rebuttal
evidence also includes evidence unavailable earlier
through no fault of the plaintiff.
Wise v. C.R. Bard, Inc., No. 2:12-cv-01378, 2015 WL 461484, at *2
(S.D.W.Va. Feb. 3, 2015) (internal citation and quotation omitted).
An example of appropriate rebuttal evidence is that which responds
to an affirmative defense. See id.

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
If a party fails to make timely disclosures as required above,
it may not “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 harmless.” Fed. R. Civ. P. 37(c)(1). To
determine within its discretion whether a failure is substantially
justified or harmless, the Court “should be guided by”:
(1) the surprise to the party against whom the witness
was to have testified; (2) the ability of the party to
cure that surprise; (3) the extent to which allowing the
testimony would disrupt the trial; (4) the explanation
for the party’s failure to name the witness before trial;
and (5) the importance of the testimony.
S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d
592, 596 (4th Cir. 2003) (internal quotation and citation omitted);
see also Wilkins v. Montomery, 751 F.3d 214, 222 (4th Cir. 2014).
III. LEGAL FRAMEWORK
The

propriety

of

Gabhart’s

testimony

thus

depends,

in

pertinent part, on First American’s burden of proof under West
Virginia’s law of indemnification. West Virginia recognizes both
express and implied indemnification. Express indemnity is based on
a written agreement and “can provide the person having the benefit
of the agreement, the indemnitee, indemnification even though the
indemnitee is at fault.” Syl. Pt. 1, Valloric v. Dravo Corp., 357

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
S.E.2d 207 (W. Va. 1987). Implied indemnity, on the other hand,
arises out of a relationship between the parties. Id.
In Valloric v. Dravo Corp., the Supreme Court of Appeals of
West Virginia held that the indemnitee’s burden of proof in an
indemnification action depends on whether the indemnitor “had
actual notice of the underlying claim, an opportunity to defend it,
and the right to participate in any settlement negotiations.” Id.
at 211; see also VanKirk v. Green Construction Co., 466 S.E.2d 782,
789 (W. Va. 1995) (“Our indemnity law is consistent with that of
other jurisdictions where courts hold that an indemnitor given
reasonable notice by the indemnitee is obligated to assume the
defense and, if the indemnitor does not, then it is bound by the
judgment.”). “Where an indemnitor has not been notified . . . and
given an opportunity to participate in the settlement negotiations,
then an indemnitee must prove that he was actually liable to the
plaintiff.” Valloric, 357 S.E.2d 207, Syl. Pt. 3.
On the other hand, “[w]here a party having a duty to indemnify
has

been

notified

proceedings

and

or

given

been
an

made

a

party

opportunity

to

to

the

underlying

participate

in

its

settlement negotiations . . . the defendant-indemnitee should not
be required to prove” that it was actually liable “to recover the
amount paid in the settlement.” Id., 357 S.E.2d 207, Syl. Pt. 2.
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
Rather, “[u]nder a potential liability standard, the indemnitee
must in his indemnity suit show that the original claim is covered
by the indemnity agreement. Then he must demonstrate that he was
exposed to liability which could reasonably be expected to lead to
an adverse judgment. Finally, he must prove that the amount of the
settlement was reasonable.” Id., 357 S.E.2d 207, Syl. Pt. 4. “The
focus must remain on what was a reasonable judgment in light of the
circumstances at the time the settlement was made.” Id. at 213.
Valloric cited with approval the following reasoning from Trim
v. Clark Equipment Co., 274 N.W.2d 33, 36-37 (Mich. App. 1979)
(internal quotation and citation omitted):
Potential liability actual means nothing more than that
the indemnitee acted reasonably in settling the
underlying suit. The reasonableness of the settlement
consists of two components which are interrelated. The
fact finder must look at the amount paid in settlement of
the claim in light of the risk of exposure. The risk of
exposure is the probable amount of a judgment if the
original plaintiff were to prevail at trial, balanced
against the possibility that the original defendant would
have prevailed. If the amount of the settlement is
reasonable in light of the fact finder’s analysis of
these factors, the indemnitee will have cleared this
hurdle. The fact that the claim may have been
successfully defended by a showing of contributory
negligence, lack of negligence or otherwise, is but a
part of the reasonableness analysis and, therefore,
subject to proof.

9

FIRST AMERICAN V. BOWLES RICE

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
Valloric, 357 S.E.2d at 214.3
IV. DISCUSSION
As noted, First American’s burden of proof with regard to
indemnification depends on whether it provided adequate notice to
Bowles Rice. Whether or not the notice was sufficient, under either
an actual liability or potential liability standard, Gabhart’s
testimony is “germane to [First American’s] prima facie case” and
thus constitutes inappropriate rebuttal evidence. Wise, No. 2:12cv-01378, 2015 WL 461484, at *2. Moreover, First American’s failure
to disclose Gabhart in a timely manner was neither substantially
justified nor harmless.
A.

Actual Liability
The parties dispute whether two particular letters from First

American to Bowles Rice constitute the notice contemplated by
Valloric. The first letter was mailed on May 6, 2014, from First
American’s Senior Claims Counsel, Brian Barlow (“Barlow”), to Chud
Dollison (“Dollison”), the title agent and partner at Bowles Rice

3

In another portion of the Trim opinion not quoted in
Valloric, the court stated that, “[i]f it is shown that this suit
would have been successfully defended, the indemnitee will not
recover. The burden of presenting evidence on this point is on the
indemnitor, but the ultimate burden of persuasion remains with the
indemnitee to show that the settlement was reasonable under all the
circumstances.” Trim, 274 N.W.2d at 37.
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
who signed the title insurance policy at issue (Dkt. No. 129-1).
The letter summarizes Union Bank’s claim, including the fact that
the contractors’ mechanic’s liens asserted priority over the credit
line deed of trust. Barlow also advised Dollison as follows:
The lien priority issues have proceeded to mediation in
the Bankruptcy Court. Based on the information available
to date, your firm should put its liability insurance
carrier on notice of this claim if it has not already
done so. Please confirm in writing that you have put your
liability insurance carrier on notice of this claim.
Id. On May 21, 2014, Dollison sent an email confirming that he had
placed Bowles Rice’s carrier on notice (Dkt. No. 129-3 at 1).
The second letter from Barlow to Dollison is dated July 14,
2014. In it Barlow noted that “[t]o date, I have not been contacted
by any representative of the insurance carrier regarding the
investigation of [the] claim. Nor, despite knowledge of the ongoing
litigation, has the insurance carrier involved itself in this
matter.” Id.

The letter also stated that First American was

proceeding with settlement negotiations, and possibly might settle
the case in the absence of “communication or objections” from
either Bowles Rice or its carrier. Id.
Whether these letters constitute sufficient notice under
Valloric is too fact-bound a question to warrant determination at
this stage of the litigation. The notice requirement contemplates
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
“an opportunity to defend,” Valloric, 357 S.E.2d at 211, which is
commensurate with an indemnitee’s duty to provide “reasonable
notice.” VanKirk, 466 S.E.2d at 789. Disputed questions regarding
notice, including its reasonableness under the circumstances, are
reserved for the trier of fact under West Virginia law. See, e.g.,
Syl. Pt. 1, Dairyland Ins. Co. v. Voshel, 428 S.E.2d 542 (W. Va.
1993) (holding that the reasonableness of notice provided to an
insurer “ordinarily becomes a question of fact for the fact finder
to decide”); Johnson v. Inter-Ocean Cas. Co., 164 S.E. 411, 412 (W.
Va. 1932) (referring to “proper notice” as a question of fact). Of
course, the evidence in this case may ultimately warrant only one
reasonable inference, see Ferguson v. Upper Chesapeake Med. Servs.,
Inc., 91 F.3d 130 (4th Cir. 1996) (Table), but such a decision
should be made on a fully developed record.
Should the trier of fact conclude that First American failed
to provide sufficient notice to Bowles Rice, First American then
would be required to prove that it was actually liable to pay Union
Bank’s claim. Valloric, 357 S.E.2d 207, Syl. Pt. 3. To establish
actual liability, First American would have to present evidence
that Union Bank’s claim was covered and had merit based on the
validity, enforceability, and priority of the mechanic’s liens.
Because

First

American

may

be
12

required

to

present

evidence

FIRST AMERICAN V. BOWLES RICE

1:16CV219

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
regarding the validity of the mechanic’s liens as part of its prima
facie case on actual liability, it would be improper for it to
offer Gabhart’s testimony in rebuttal. See Wise, No. 2:12-cv-01378,
2015 WL 461484, at *2.4
B.

Potential Liability
If the trier of fact concludes that Bowles Rice did receive

the notice contemplated by Valloric, First American then must only
prove that it was potentially liable. Valloric, 357 S.E.2d 207,
Syl. Pts. 2, 4. The parties hotly dispute whether the validity of
the mechanic’s liens is an element of First American’s prima facie
case on potential liability, or an affirmative defense raised by
Bowles Rice (Dkt. Nos. 116 at 8 n.1; 122 at 6-7).
Contesting an issue on which the plaintiff bears the burden of
proof

is

necessarily

distinct

from

asserting

an

affirmative

defense. See Wise, No. 2:12-cv-01378, 2015 WL 461484, at *2. “A
defense which demonstrates that plaintiff has not met its burden of

4

The notice requirements themselves cannot be characterized
as an affirmative defense, given that the Supreme Court of Appeals
has referred to them as “prerequisites for an indemnitee to have
the benefit of the potential liability standard along with the
further element that the settlement amount must be deemed to be
reasonable in view of the potential liability.” Valloric, 357
S.E.2d at 211 (emphasis added). Thus, First American may only
utilize the potential liability standard if it proves that notice
was sufficient. See id., 357 S.E.2d 207, Syl. Pt. 2.
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
proof is not an affirmative defense.” Zivkovic v. S. Cal. Edison
Co., 302 F.3d 1080, 1088 (9th Cir. 2002). “Affirmative defenses
plead matters extraneous to the plaintiff’s prima facie case, which
deny plaintiff’s right to recover, even if the allegations of the
complaint are true.” Hartford Underwriters Ins. Co. v. Kraus USA,
Inc., 313 F.R.D. 572, 575 (N.D. Cal. 2016) (quoting G&G Closed
Circuit Events, LLC v. Nguyen, No. 10-168, 2010 WL 3749284, at *5
(N.D. Cal. Sept. 23, 2010)).
In the context of this case, the alleged invalidity of the
mechanic’s liens is not an affirmative defense raised by Bowles
Rice. While Valloric suggests that an indemnitor should be given an
opportunity to prove that the indemnitee was not liable in the
underlying

case,5

it

never

shifts

the

burden

of

proving

reasonableness away from the plaintiff indemnitee. Rather, the
validity of a settlement under the potential liability standard

5

See, e.g., Valloric, 357 S.E.2d at 212 (“[E]quitable
considerations require that the third-party defendant have a
reasonable opportunity to show that the third-party plaintiff was
not liable to the original plaintiff but paid the claim as a
volunteer.”); id. at 214 (quoting Trim, 274 N.W.2d at 36-37) (“The
fact that the claim may have been successfully defended by a
showing of contributory negligence, lack of negligence or
otherwise, is but a part of the reasonableness analysis and,
therefore, subject to proof.”); see also Trim, 274 N.W.2d at 37
(“The burden of presenting evidence on this point is on the
indemnitor . . . .”).
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
turns on whether 1) First American “was exposed to liability which
could reasonably be expected to lead to an adverse judgment,” and
2) “the amount of the settlement was reasonable.” Valloric, 357
S.E.2d at 214. “The reasonableness of the settlement” depends on
“the amount paid in settlement of the claim in light of the risk of
exposure,” which is measured by “the probable amount of a judgment
if the original plaintiff were to prevail at trial, balanced
against the possibility that the original plaintiff would have
prevailed.” Id. (quoting Trim, 274 N.W.2d at 36-37) (emphasis
added). In order to prove reasonableness, First American has the
burden to establish the possibility that the mechanic’s liens were
valid, enforceable, and entitled to priority over Union Bank’s
credit line deed of trust.
Gabhart’s opinion addresses the validity of the mechanic’s
liens in order to establish the reasonableness of First American’s
settlement under the potential liability standard. This is a matter
on

which

First

American

bears

the

burden

of

proof.

And,

as

Gabhart’s opinions do not confront “new facts” or “previously
unavailable evidence” presented by Bowles Rice regarding First
American’s potential liability, they have been improperly offered
as rebuttal testimony. See Wise, No. 2:12-cv-01378, 2015 WL 461484,
at *2.
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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
C.

Substantially Justified or Harmless
Because First American improperly disclosed Gabhart’s report

in rebuttal rather than in its case in chief, Fed. R. Civ. P.
37(c)(1) directs the automatic exclusion of his testimony. The
Court

must

exclude

Gabhart’s

testimony

unless

the

untimely

disclosure was “substantially justified or harmless” under the
factors outlined in Southern States, 318 F.3d at 596-97. First
American failed entirely to address these factors in its opposition
brief. And because most of the factors weigh in favor of striking
Gabhart’s testimony, the Court finds that First American’s failure
to disclose him in its case in chief was neither substantially
justified nor harmless.
As to the first factor, Bowles Rice states that it was “quite
surprised” when First American disclosed Gabhart as a rebuttal
expert

on

the

validity,

priority,

and

enforceability

of

the

mechanic’s liens (Dkt. No. 116 at 10-11), given First American’s
burden of proving its potential liability, not only that it settled
the claim for a fraction of the alleged liability. Valloric, 357
S.E.2d at 214. The second factor, whether Bowles Rice can cure the
surprise, Southern States, 318 F.3d at 596-97, weighs against
striking Gabhart. Bowles Rice has already disclosed experts on the
mechanic’s lien issues and has ample time to take Gabhart’s

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
deposition.

The

third

factor,

however,

weighs

against

First

American. Allowing Gabhart’s testimony would disrupt the trial
because his opinions affect Bowles Rice’s presentation of evidence.
See id. Had Gabhart’s opinions been disclosed properly pursuant to
the Court’s Scheduling Order, Bowles Rice’s expert could have
considered them in forming his opinions concerning the mechanic’s
liens. Because Gabhart was disclosed as a rebuttal expert, Bowles
Rice had no opportunity to respond to his opinions in its expert
disclosures.
With regard to the fourth factor, the importance of the
evidence, First American’s position in this litigation supports the
conclusion that Gabhart’s testimony is not necessary to its case in
chief. See id. First American has consistently maintained that it
will establish the reasonableness of its settlement through the
“balance between settlement amount . . . and the potential judgment
amount” (Dkt. No. 58 at 13-14). It has also stated its intent to
rely on “employees who evaluated the claims and coverage defenses”
(Dkt. No. 109 at 7), and never suggested that it would rely on
expert testimony until it disclosed Gabhart in rebuttal.
Finally, as to the fifth factor, First American has not
provided any reason, much less a compelling one, for its late
disclosure. Southern States, 318 F.3d at 596-97. It argues only

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
MOTION TO EXCLUDE PLAINTIFF’S REBUTTAL EXPERT [DKT. NO. 116]
that Gabhart is an appropriate rebuttal expert. But “mere labeling
of [Gabhart] as a ‘rebuttal’ expert is not a sufficient explanation
for . . . untimely disclosure.” Wise, No. 2:12-cv-01378, 2015 WL
461484, at *4.
V. CONCLUSION
After considering the factors outlined by the Fourth Circuit
in Southern States, the Court concludes that First American’s
failure

to

timely

disclose

Gabhart

was

neither

substantially

justified nor harmless. It therefore GRANTS Bowles Rice’s Motion to
Exclude Plaintiff’s Rebuttal Expert (Dkt. No. 116) and excludes
that testimony pursuant to Fed. R. Civ. P. 37(c)(1).
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: January 5, 2018.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

18