United States District Court, N.D. West Virginia
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S
MOTION TO EXCLUDE PLAINTIFF'S REBUTTAL EXPERT [DKT. NO.
M. KEELEY, UNITED STATES DISTRICT JUDGE
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.
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 alleged liability to the
title insurance policyholder, Union Bank of California, N.A.
(“Union Bank”), for $41 million.
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.
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 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.
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.
Rice also disclosed the “preliminary report” of
its second expert, attorney Carl L. Fletcher
(“Fletcher”). Id. at 42. In that report,
Fletcher opines that “[t]he challenges to the priority
and validity of the [mechanic's] liens are . . .
well-grounded, ” 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
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.
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 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.
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
STANDARD OF REVIEW
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
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
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.
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 ...