Hurricane Katrina continues to provide cause for litigation, and this case involved a claim relating to the destruction caused by the storm that hinged on the testimony of a hurricane damages expert witness.
The Supreme Court of Mississippi ruled on the admissibility of the damages expert witness in an action brought by a homeowners’ association for problems with the development, design, and construction of condominiums rebuilt after they were destroyed by Hurricane Katrina.
Plaintiff hired its expert architect to investigate and identify defects in the design and construction of the property. The structural expert identified 23 design and construction defects which he estimated would cost $1,322,000 to repair. He later updated his report and revised his repair estimate to $2,689,000. His report described each defect and gave a ballpark cost estimate to repair each defect.
Plaintiff told the trial judge that it hadn’t been able to depose any of Defendants’ witnesses and asked for a new scheduling order to allow it to conduct depositions and to seasonably supplement its expert reports. Defendants objected, arguing that the deadline for expert designations had passed and that the structural engineer shouldn’t be allowed to offer any new opinions.
The court limited Plaintiff’s right to supplement its damages expert witness reports based only on information learned in the depositions and excluding new information learned from tests recommended by the structural engineer. The court reset trial, and established new deadlines for completion of discovery, with a new deadline for dispositive or Daubert motions.
Following a hearing, the court granted the motion to exclude the structural engineer from testifying as to monetary damages, finding that he was not qualified by his own admission and that he had declined to permit supplementation of his report to provide the basis for his cost estimates. However, the Court denied the motion to exclude the expert’s damages testimony, and at the request of the defense, continued trial and ordered the architect to supplement his report.
The architect attached an exhibit demonstrating a “step by step analysis” of how he used RS Means to estimate the cost as applies to the roof replacement item, which was the third of the 23 items identified as structural design defects in his report. He used a 2008 version of RS Means in calculating the repair estimate. Defendants moved to strike the architect’s supplementation and renewed their motion for summary judgment. The court granted Defendants’ motion to exclude the architect’s damages testimony as well as the defendant’s motion for summary judgment and final judgment.
Plaintiff filed his supplementation at 11 PM, on the last day of the two-week period. The supplementation included calculations on only one of the 24 cost items. As a result, the Court found that the Defendants were in no better position than they were before the extension. The substance and details supporting the damage estimates should have been disclosed. The disclosure order extended to all calculations and methodology used to reach estimates for all 24 cost items, but was only provided for one. Judge Chandler found that as to the one item—which calculations were derived from an obsolete 2008 edition of RS Means—was unreliable.
The trial court granted Defendants’ motion to exclude the testimony of the architect as to his damages calculations. The trial continued without a new trial date at the request of Defendants to require supplementation of the architect’s expert report, “to provide the architect’s summary of the grounds for each opinion relating to cost.” The structural engineer was excluded from testifying as to cost damages due to his statement in his initial report that he wasn’t a qualified cost estimator. He subsequently supplemented his report with an affidavit and exhibit with itemized calculations for roof repairs.
On appeal, Plaintiff argued that the trial court abused its discretion in excluding the architect’s expert testimony on cost damages, and Defendants challenged the reliability of his method and his failure to disclose the basis of the majority of his cost opinions.
Associate Justice David A. Chandler of the Mississippi Supreme Court wrote in his opinion for the court that seasonable supplementation of expert testimony is required under the guidelines of Rule of Civil Procedure 26(f). The function of this requirement is to “fairly inform the opposing party of the evidence against it with an opportunity to meet it and to avoid ‘trial by ambush,’” the judge explained, citing a 2011 Mississippi decision.
There were many reliable methods of calculating construction damages available to experts based on the nature of the cause of action and best evidence available of the underlying facts and data. What matters on a case-by-case basis, the judge reasoned, is adherence to Rule of Evidence 702 and Rule of Civil Procedure 26—and, in particular, adherence to the requirement that experts disclose the basis of their opinions with sufficient specificity to allow defendants to prepare a defense and avoid trial by ambush. Cost estimates don’t have to be presented with “mathematical certainty.” But there should be sufficient evidence presented so that the trier of fact can determine damages within a reasonable certainty.
The judge held that, generally speaking, the annually published RS Means Construction Cost manual is a reliable industry source of data and has been used with approval in cases involving damages expert witness testimony. However, merely disclosing that a five-year-old RS Means manual was the general basis for the conclusory estimates on 22 of the 23 items of alleged structural damages of several million dollars wouldn’t cut it. The testimony was unreliable as it failed to disclose the basis of the damages expert witness opinion.
“Pretrial obfuscation of the basis for expert opinions,” Judge Chandler wrote, “especially when the court has ordered further disclosure, is a game of chicken that parties should not play in light of how our evidentiary standards have evolved to preclude trial by ambush.”
As a result, there were no damages estimates left for Plaintiff to present as evidence in this trial.
The Supreme Court agreed with the trial court that production of the basis for only one itemized opinion out of 23 was not in compliance with the degree of specificity ordered. The Court held that the trial court did not abuse its discretion in granting Defendants’ Daubert motion to exclude the structural engineer as unqualified to provide expert opinions relating to cost.
The trial court’s grant of summary judgment was affirmed.
Inn By the Sea Homeowner’s Ass’n, Inc. v. Seainn, LLC, — So.3d —-, 2015 WL 4572928 (Miss. Miss. July 30, 2015).