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Fava v. Liberty Mutual Insurance Corp.

United States District Court, D. New Mexico

September 20, 2018



         THIS MATTER comes before the Court upon Defendant's Motion to Strike or Disallow Certain Opinions of Plaintiffs' Experts Robert Gordon McKeen and David Disko, filed June 1, 2018 (Doc. 67). Having reviewed the parties' pleadings and the applicable law, the Court finds that Defendant's motion is not well-taken and, therefore, is DENIED.


         This lawsuit against Liberty Mutual arises out of Plaintiffs' claims for damages under a Homeowners Policy (“Policy”) issued by Liberty Mutual (“Liberty”) to Mr. Fava. Mr. and Mrs. Fava (“Plaintiffs” or “Favas”) allege property damages to their home stemming from a water leak under their home. Plaintiffs filed the Complaint on July 29, 2016 in the Second Judicial District, County of Bernalillo, and Defendants removed the case to federal court under diversity jurisdiction on April 17, 2017. The Complaint asserts four claims for relief against Defendant:

Count I: Breach of Contract and the Covenant of Good Faith and Fair Dealing;
Count II: Violation of Unfair Practices Act;
Count III: Violation of New Mexico Insurance Code; and
Count IV: Negligence.

         According to the Complaint, on August 18, 2015, a pipe in the crawlspace underneath Plaintiffs' home burst, flooding the home's crawlspace with several inches of standing water. Plaintiffs took action to stop the leak and report the incident to Plaintiffs' insurer, Liberty. The water from the burst pipe caused the floor in Plaintiffs' kitchen and living room to begin sloping downward and large cracks to form in several load-bearing walls in the home. The Favas reported the damage to Liberty. Plaintiffs assert that Liberty repeatedly denied coverage of Plaintiffs' claim based on inadequate investigations of the cause of the damage to the home as well as its misrepresentations about those investigations. Since August 2015, Plaintiffs' home has had a 10' diameter hole in the living room, made when Liberty performed its inspection of the damage to Plaintiffs' home. As a result of Liberty's improper denial of coverage and mishandling of Plaintiffs' claim, Plaintiffs' home continues to deteriorate and Plaintiffs have been unable to use a significant portion of their home since that time.

         Defendant denies Plaintiffs' contentions. Following the reported water loss, Liberty retained independent adjusters to inspect the water loss and also retained an engineer to inspect the water loss and report the findings. Based on those findings and the damages associated with the water leak, Defendant paid what was owed under the policy.


         In this motion, Liberty contends that the Court should strike or disallow certain testimony from Gordon McKeen (“McKeen”) and David Disko (“Disko”) because they are based on the opinions of professional engineer John Giersch (“Giersch”). Plaintiffs hired Giersch, a Registered Professional Engineer for JPG Engineering, LLC (“JPG Engineering”) in November 2015, several months after the August 2015 leak event, to create a repair plan to remediate conditions at their residence. Plaintiffs have identified Giersch who is a professional engineer as a fact witness but not as an expert.

         McKeen is a licensed engineer in Albuquerque whose testimony is being offered by Plaintiffs to testify regarding: (1) the cause and origin of the damage to the Favas' home, and (2) the most appropriate engineering plan to repair that damage. Disko is a licensed contractor in Albuquerque who is offered by the Favas to testify about the cost of implementing the engineering repair plan. Plaintiffs have timely disclosed expert reports for McKeen and Disko.

         Liberty denied Plaintiffs' claims for property damage on three separate occasions. After the first denial in September 2015 and in response to Mr. Fava's protest that Liberty had not performed any investigation on the claim, the insurer hired Rimkus Consulting Group, Inc. to perform an inspection of the damage to the structure of the Fava residence. Two days after Rimkus issued a report, on October 3, 2015, Liberty again denied Plaintiffs' claim. The third letter of denial, which was dated March 21, 2016, gave different reasons (“settling” and “seepage exclusion”) for rejecting coverage. See Docs. 76-2; 76-3.

         Not surprisingly, McKeen's reports directly challenge the adequacy and integrity of the Rimkus reports. A big part of the dispute centers on whether damage to the house was caused by water coming into crawlspace from outside the house over a long period of time prior to the water leak or whether the damage was caused by the acute event of a burst water line which caused water to flood the crawlspace area. See Doc. 67-3 at 6. Defendant seeks to exclude those portions of McKeen's and Disko's testimony and opinions that rely on Giersch's plan because admission of such testimony contravenes Rules 701 through 704 of the Federal Rules of Civil Procedure.

         Defendant initially argues that Giersch's opinions constitute expert opinions under Rule 702, and as such should have been disclosed under Fed.R.Civ.P.26(a)(2); and further, that failure to disclose McKeen and Disko as experts warrants sanctions under Rule 37(c). Under Rule 37 of the Federal Rules of Civil Procedure, a federal district court has discretion to preclude the use of information at trial any witness or information that a party failed to timely disclose under Rule 26(a). Fed.R.Civ.P.37(c)(1); Farris v. Intel Corp., 493 F.Supp.2d 1174, 1178 (D.N.M. 2007) (“The determination of whether a Rule 26(a) violation is justified or harmless is entrusted to the broad discretion of the district court”) (citing Woodworkers Supply, Inc. v. Principal Mut. Life. Ins. Co., 170 F.3d 985, 993 (10th Cir.1999) (citation omitted). A court should consider the following factors in order to determine whether Rule 37 sanctions are warranted:

(1) any prejudice or surprise to the party against whom the testimony is offered;
(2) the ability of the party to cure any prejudice;
(3) the extent to which introducing the testimony would disrupt ...

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