United States District Court, W.D. Pennsylvania
MICHAEL FISHER, Circuit Judge.
Pending before the court are twelve motions in limine filed by the parties in this insurance breach of contract action. The outstanding motions are styled as follows: (1) Third Party Defendant Continental Casualty Company's ("Continental") motion to exclude the expert testimony of Gary S. Barach (ECF No. 178); (2) Continental's motion to preclude Third Party Plaintiff Kelman Bottles ("Kelman") from asserting or suggesting that Continental violated Pennsylvania insurance law or regulations (ECF No. 214); (3) Continental's motion to preclude testimony from Randolph Goodman on alleged property damage (ECF No. 216); (4) Continental's motion to preclude testimony from Douglas Hilliard or other Kelman witnesses to prove proximate cause of direct physical damage to the furnace interior (ECF No. 218); (5) Continental's motion to limit recovery based upon the "other insurance" provision in its policy (ECF No. 221) (this motion is duplicative of Kelman's motion to preclude Continental from arguing that Kelman's recovery is limited by the other insurance provision (ECF No. 235)); (6) Kelman's motion to preclude expert testimony speculating that a loan to Kelman would have been called (ECF No. 223); (7) Kelman's motion to preclude expert testimony that it expected a leak in the furnace (ECF No. 225); (8) Kelman's motion to exclude the expert testimony of Jeffrey P. Belack as redundant and cumulative (ECF No. 227); (9) Kelman's motion to exclude expert testimony by Nicholas Bozovich (ECF No. 229); (10) Kelman's motion to preclude redundant and cumulative testimony from refractory experts (ECF No. 233); (11) Continental's motion to exclude testimony concerning alleged property damage (ECF No. 237); and (12) Continental's motion to preclude Kelman from introducing evidence of certain alleged damages (ECF No. 239). The motions have been fully briefed and are now ripe for disposition. The Court today decides all but the last two motions, as discussed below.
The parties are intimately familiar with the factual background of this case, so the Court need not discuss the facts at length herein. It bears noting, however, that this case stems from an incident that occurred on March 15, 2011 at Kelman's glass manufacturing facility in Glenshaw, Pennsylvania. At the time, Kelman was operating only one furnace at the facility ("Furnace #2"). Molten glass escaped from Furnace #2 on that day, resulting in physical damage to the furnace and other property. At issue in this case- which is scheduled to go to trial on August 18, 2014-is whether the March 15, 2011 incident was a "breakdown" as defined in Continental's policy.
1. Continental's motion to preclude expert testimony from Gregory S. Barach
Continental's first motion seeks to exclude testimony from certified public accountant Gregory S. Barach. The motion is wide-ranging and attacks several aspects of Barach's expert report. At the outset, we note that Barach will be permitted to testify within the scope of his expertise as a certified public accountant-a conclusion that Continental does not appear to challenge. That said, he will not be permitted to testify as to the glass bottle manufacturing industry or insurance underwriting practices. Although the Court will DENY Continental's motion, the scope of that conclusion as it applies to each of Continental's arguments will be addressed below.
a. Kelman would have sustained operations but for the loss
Continental argues that Barach should be precluded from testifying that Kelman would have been able to sustain its business operations but for the March 15, 2011 incident because his testimony is not based upon a valid methodology. See Fed.R.Evid. 702 (expert testimony must be based upon "reliable principles and methods"). Contrary to Continental's assertion, however, Barach's expert report describes his review of Kelman's books and records, including those related to accounts receivable, sales and cash flow, payroll liabilities, short-term debt liabilities, and future plans for expansion. Because Barach, as an accountant, relied upon Kelman's financial books and documents in reaching his conclusions, the Court concludes that his methodology was reliable under Rule 702. See ProtoComm Corp. v. Novell Advanced Servs., Inc., 171 F.Supp.2d 473, 480 (E.D. Pa. 2001) (finding an accountant's expert testimony to be reliable where his opinions were based upon a review of a "multitude of relevant business documents"). To the extent that Continental wishes to undermine Barach's conclusions, it is free to do so by way of cross-examination.
b. Business income losses
Continental likewise challenges the reliability of Barach's conclusion with respect to business income losses. Continental argues that the time period from which production figures were drawn and the basis for the number of expected production days are speculative and unsupported. Kelman responds by pointing to Barach's report, which states the basis for his conclusion insofar as "financial metrics indicate increased production yields during the recent months preceding the incident as well as significant increase in income for operations." (Barach Report at 27).
The Court concludes that Barach will be permitted to testify as to the business income losses on the ground that any dispute Continental has with the factual underpinning of Barach's testimony can be effectively tested on cross-examination. See Sterling v. Redevelopment Auth. of City of Phila., 836 F.Supp.2d 251, 272 (E.D. Pa. 2011) ("As a general rule, the factual basis of an expert opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing party to examine the factual basis for the opinion in cross-examination'" (quoting Children's Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 865 (8th Cir. 2004)). Barach has supported his conclusions with the rationale that Kelman had shown increased production in the months leading up to the incident, and was on track to continue to do so. Continental may challenge that conclusion at trial.
c. Enterprise value
Continental challenges Barach's calculation of Kelman's enterprise value on the ground that the "mechanical computation" undertaken by Barach in making that calculation was not done in accordance with the standards adopted by his profession. Kelman counters by pointing out that Barach's expert report acknowledges this shortcoming, and notes that Barach's deposition testimony established that a "comprehensive valuation" cannot be conducted when a plant like Kelman's is not operating.
Barach will be permitted to testify based upon the mechanical computation. Kelman maintains that Barach was unable to follow the "comprehensive valuation" methodology given the facts of this case, and Continental offers no basis for finding that assertion to be untrue. Moreover, the Court is not persuaded by Continental's citation to Elcock v. Kmart Corp., 233 F.3d 734, 748 (3d Cir. 2000), for the proposition that Barach's methodology was an improper synthesis of two accepted methodologies. Barach followed the "mechanical computation" methodology, which is an acceptable alternative to the requirements applicable to his profession under certain circumstances. The methodology at issue in Elcock involved a hybrid procedure that was, according to the court, a "novel method" that was based upon an "arbitrary admixture of two widely used methods." Id. No such ...