United States District Court, D. Connecticut
RULING RE: MOTION TO EXCLUDE EXPERT TESTIMONY OF
TOMMY MICHAELS (DOC. NO. 117) AND MOTION TO EXCLUDE EXPERT
TESTIMONY OF JEFFREY STEMPEL (DOC. NO. 119)
Janet
C. Hall United States District Judge
I.
INTRODUCTION
This
case involves a breach of contract dispute between the
plaintiffs (collectively “Dominion Resources”)
and the defendant, Alstom Power, Inc. (“Alstom”).
On September 1, 2017, Dominion Resources filed a Motion to
Exclude the Testimony of Alstom's Proposed Expert, Tommy
Michaels. See Dominion Resources' Motion to
Exclude Expert Testimony of Tommy Michaels (“Dominion
Resources' Mot. to Exclude”) (Doc. No. 117). On
that same date, Alstom filed a Motion to Exclude the
Testimony of Dominion Resources' Proposed Expert, Jeffrey
Stempel. See Alstom's Motion to Exclude Expert
Testimony of Jeffrey STempel (“Alstom's Mot. to
Exclude”) (Doc. No. 119).
For the
reasons stated below, Alstom's Motion to Exclude the
Expert Testimony of Jeffrey Stempel is
DENIED. Dominion Resources' Motion to
Exclude the Expert Testimony of Tommy Michaels is
GRANTED IN PART AND DENIED IN PART.
II.
BACKGROUND
Dominion
Resources and Alstom entered into a contract (the
“Alliance Agreement”) on February 1, 2005.
See Dominion Resources' Local Rule 56(a)(1)
Statement
of Facts (“Dominion Resources' L.R.56(a)(1)”)
(Doc. No. 133) at ¶ 1; Alstom's Local Rule 56(a)(1)
Statement of Facts (“Alstom's L.R.56(a)(1)”)
(Doc. No. 135) at ¶ 1. The Alliance Agreement governed
services provided by Alstom at Dominion Resources' power
generation facilities, pursuant to purchase orders issued by
Dominion Resources and accepted by Alstom. See id.
Among other things, the Alliance Agreement provided that
Dominion Resources and Alstom would each “indemnify,
save harmless and . . . defend” the other for certain
claims specified in the Alliance Agreement. See
Alstom's L.R.56(a)(1) at ¶ 5; Dominion
Resources' Local Rule 56(a)(2) Statement of Facts
(“Dominion Resources' L.R.56(a)(2)”) (Doc.
No. 138) at ¶ 5; Dominion Resources' L.R.56(a)(1),
Ex. 1 (“Alliance Agreement”), Terms and
Conditions, at 15017-18. The Alliance Agreement also required
Alstom to obtain certain insurance policies, including
“commercial general liability insurance” with
coverage and limits specified in the Alliance Agreement.
See Alstom's L.R.56(a)(1) at ¶ 6; Dominion
Resources' L.R.56(a)(2) at ¶ 6; Alliance Agreement,
Terms and Conditions, at 14. It also required the parties to
each, “to the extent permitted by its insurers, require
each of their respective insurers to waive all rights of
recovery against each other.” Alliance Agreement, Terms
and Conditions, at 15020.
Alstom
obtained an insurance policy (the “Zurich
Policy”) from Zurich American Insurance Company for the
period of April 1, 2007, to April 1, 2008. See
Dominion Resources' L.R.56(a)(1) at ¶ 2;
Alstom's Local Rule 56(a)(2) Statement of Facts
(“Alstom's L.R.56(a)(2)”) (Doc. No. 140) at
¶ 2. The Zurich Policy had an aggregate limit of
liability of $5 million, and Dominion Resources was named as
an additional insured. See id. Alstom also obtained
a commercial umbrella insurance policy (the “Allianz
Policy”) from Allianz Global Risks U.S. Insurance
Company for the same time period with a policy limit of $18
million. See Alstom's LR.56(a)(1) at ¶ 25;
Dominion Resources' L.R.56(a)(2) at ¶ 25. Both the
Zurich Policy and the Allianz Policy were
“eroding” policies, such that the costs of
defense reduce the amount of insurance available under the
liability limit.[1] See Alstom's L.R.56(a)(1) at
¶ 13; Dominion Resources' L.R.56(a)(2) at ¶ 13.
Pursuant
to a purchase order under the Alliance Agreement, Alstom
performed an inspection of a boiler at a Dominion Resources
power generation facility in Massachusetts in April 2007.
See Dominion Resources' L.R.56(a)(1) at ¶
6; Alstom's L.R.56(a)91) at ¶ 33. On November 6,
2007, an accident occurred involving the boiler inspected by
Alstom, and five individuals were injured as a result, three
fatally so. See Dominion Resources' L.R.56(a)(1)
at ¶ 7; Alstom's L.R.56(a)(1) at ¶ 36. In May
2009, the decedents' estates and the injured workers
filed a lawsuit against Dominion Resources, Alstom, and other
defendants in Massachusetts Superior Court. See
Dominion Resources' L.R.56(a)(1) at ¶ 8;
Alstom's L.R.56(a)(1) at ¶¶ 37-39.
Ultimately,
the parties in the Massachusetts state court litigation
reached a settlement agreement in 2015. See Dominion
Resources' L.R.56(a)(1) at ¶ 13; Alstom's
L.R.56(a)(1) at ¶¶ 48. Under the settlement,
Dominion Resources paid in excess of $5 million to the
plaintiffs of the Massachusetts litigation. See
Alstom's L.R.56(a)(1) at ¶ 64; Dominion
Resources' L.R.56(a)(2) at ¶ 64. Dominion Resources
also claims that they paid in excess of $9.9 million to
defend themselves in the Massachusetts litigation.
See Alstom's L.R.56(a)(1) at ¶ 65; Dominion
Resources' L.R.56(a)(2) at ¶ 65.
Dominion
Resources received $5 million from the Zurich Policy and the
Allianz Policy obtained by Alstom. See Alstom's
L.R.56(a)(1) at ¶ 71; Dominion Resources'
L.R.56(a)(2) at ¶ 71. Dominion Resources had also
independently obtained an excess insurance policy (the
“AEGIS Policy”) from AEGIS. See Dominion
Resources' L.R.56(a)(1) at ¶ 14; Alstom's
L.R.56(a)(2) at ¶ 14. Dominion Resources received from
the AEGIS Policy all of the remaining amount that Dominion
Resources paid to defend and settle the Massachusetts
litigation that was not paid by the Zurich or Allianz
Policies. See Alstom's L.R.56(a)(1) at ¶
72; Dominion Resources' L.R.56(a)(2) at ¶ 72.
On
December 1, 2016, Dominion Resources filed the Amended
Complaint, alleging two counts of breach of contract against
Alstom. See Amended Complaint (“Am.
Compl.”) (Doc. No. 45). Count One alleges that Alstom
breached the Alliance Agreement by failing to pay the costs
of Dominion Resources' defense in the Massachusetts
litigation. See id. at ¶¶ 43-47. Count Two
alleges that Alstom breached the Alliance Agreement by
obtaining eroding insurance policies. See id. at
¶¶ 48-52. Dominion Resources argues that
“commercial general liability insurance, ” as
specified in the Alliance Agreement, required a non-eroding
policy such that coverage for a defense would not reduce the
amount of insurance available under the policy limit. See
id. at ¶ 31. Dominion Resources argues, therefore,
that it should have received from Alstom's insurance
policies both the $9.9 million for the cost of the defense
and the $5 million for the cost of the settlement. See
id. at ¶ 42. Instead, because the policy was
eroding, Dominion Resources received only a total of $5
million toward the defense. See id. at ¶ 41.
Alstom argues to the contrary that “commercial general
liability insurance” does not require a non-eroding
policy and that, therefore, it complied with the Alliance
Agreement. See Alstom's Motion for Summary
Judgment on Dominion Resources' Breach of Contract Claims
(“Alstom's MFSJ”) (Doc. No. 131) at 6-18.
On
December 15, 2016, Alstom filed its Answer, Defenses, and
Counterclaims. See Answer, Defenses, and
Counterclaims (“Answer”) (Doc. No. 48). In it,
Alstom advances three counterclaims. Counterclaims One and
Two assert claims for contractual indemnity and indemnity at
law, respectively. See id. at ¶¶ 100-105.
Counterclaim Three alleges that Dominion Resources breached
the Alliance Agreement by failing to require AEGIS to waive
all rights of recovery against Alstom and by pursuing claims
paid by AEGIS in this litigation. See id. at
¶¶ 106-09.
On
October 27, 2017, Alstom and Dominion Resources both
cross-moved for summary judgment. See Motion for
Summary Judgment by Dominion Resources (“Dominion
Resources' MFSJ”) (Doc. No. 129); Motion for
Summary Judgment Dismissing Plaintiffs' Breach of
Contract Claims (“Alstom's MFSJ”) (Doc. No.
131); Motion for Summary Judgment Dismissing Plaintiffs'
Claims as Barred by Statute of Limitations (Doc. No. 132);
Motion for Judgment on the Pleadings and Alternative Motion
for Summary Judgment (Doc. No. 134). Each seeks to preclude
the testimony of the other's expert witness. The court
lays out each expert's opinion in more detail below.
III.
LEGAL STANDARD
Federal
Rule of Evidence 702 provides:
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.
Fed. R. Evid. 702. “The party proferring the proposed
expert evidence bears the burden of establishing its
admissibility by a preponderance of the evidence.”
Karavitis v. Makita U.S.A., Inc., 722 Fed.Appx. 53,
55 (2d Cir. 2018).
Daubert
v. Merrell Dow Pharmaceuticals, Inc. established a
two-part inquiry: “whether the expert is proposing to
testify to (1) scientific knowledge that (2) will assist the
trier of fact to understand and determine a fact in
issue.” Daubert v. Merrell Dow Pharm., Inc.,
509 U.S. 579, 592 (1993). Thus, the court must first
determine whether the expert's testimony meets a
“standard of evidentiary reliability.”
Id. at 590. The Supreme Court has articulated four
factors courts may look to when assessing the reliability of
an expert: (1) “whether a theory or technique . . . can
be (and has been) tested”; (2) “whether a theory
or technique has been subjected to peer review and
publication”; (3) “the known or potential rate of
error of a technique”; and (4) the “general
acceptance” of a theory by the “relevant
scientific community.” Id. at 593-94.
However,
these factors “do not constitute a definitive
checklist or test.” Kumho Tire Co., Ltd. v.
Carmichael, 526 U.S. 137, 150 (1999) (emphasis in
original). Rather, the court's “gatekeeping inquiry
must be tied to the facts of a particular case, ” and
“the factors identified in Daubert may or may
not be pertinent in assessing reliability, depending on the
nature of the issue, the expert's particular expertise,
and the subject of the testimony.” Id.
(internal quotation marks and citation omitted). The Second
Circuit has held that this is particularly true where the
testimony does “not depend on engineering or scientific
expertise, ” but concerns “the customs and
practices of the insurance industry.” SR Int'l
Bus. Ins. Co. v. World Trade Ctr. Properties, LLC, 467
F.3d 107, 133 (2d Cir. 2006); see also Iacobelli
Construction, Inc. v. Cty. of Monroe, 32 F.3d 19, 25 (2d
Cir.1994).
Second,
the court must determine whether the expert's testimony
meets a relevance standard. See Daubert, 509 U.S. at
591. In order to assist the trier of fact, the expert
testimony must be “sufficiently tied to the facts of
the case that it will aid the jury in resolving a factual
dispute.” Id. (quoting United States v.
Downing, 753 F.2d 1224, 1242 (3d Cir. 1985)).
IV.
DISCUSSION
A.
Alstom's Motion to Exclude Expert Testimony of
Jeffrey Stempel
Dominion
Resources offers the expert opinion of Jeffrey Stempel,
Professor of Law at the William S. Boyd School of Law,
University of Nevada Los Angeles. See Expert Report
of Jeffrey W. Stempel (“Stempel Report”) (Doc.
No. ...