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Steven J. Inc. v. Landmark American Insurance Co.

United States District Court, M.D. Pennsylvania

June 22, 2015

STEVEN J. INC., for itself and for and to the use of David Fenton, Plaintiff
v.
LANDMARK AMERICAN INSURANCE COMPANY, Defendant

MEMORANDUM

CHRISTOPHER C. CONNER, CHIEF JUDGE

Plaintiff Steven J. Inc. (“Steven J.”) brings an action for breach of contract against defendant Landmark American Insurance Company (“Landmark”) on the ground that Landmark improperly denied a claim for certain losses sustained by property owned by Steven J. Presently before the court is Landmark’s motion (Doc. 37) for summary judgment. Also pending is Landmark’s motion (Doc. 44) to preclude the testimony of plaintiff’s expert witness, as well as three motions (Docs. 48, 50, 51) in limine. For the reasons that follow, the court will grant in part Landmark’s motion to preclude expert testimony and will grant its motion for summary judgment.

I. Factual Background and Procedural History[1]

This action concerns an insurance claim for damage to commercial property. The property at issue is a campground site located in Kunkletown, Pennsylvania (“the property”). (Doc. 37-5, Ex. D). The property consists of, inter alia, a campground, a main building with a restaurant and bedrooms (“the main building”), two additional detached buildings, a gazebo, and a pavilion. (Id.; Doc. 37-10, Ex. I (“Halliwell Report”) at 2). Plaintiff Steven J., a Pennsylvania corporation, purchased the property in 2006 with the intention of converting it into a bed and breakfast. (Doc. 37-7, Ex. F, Sept. 19, 2014 (“Miga Dep.”), at 4:24-5:17, 35:19-36:17). Steven J. owned the property at all times relevant to this action. (Doc. 37-1 ¶¶ 55-58). Steven Miga (“Miga”) is the president and sole officer of Steven J. (Id. ¶ 16).

On May 23, 2012, Steven J. leased the property to David Fenton (“Fenton”) for a term of two years and six months. (Doc. 37-6, Ex. E at 1). The lease offered Fenton an option to purchase the property during the initial lease term, but Fenton never exercised this option. (Id. ¶ 40; Doc. 37-1 ¶¶ 63-64). Fenton submitted an application for commercial insurance as to certain buildings on the property, including the main building. (Doc. 37-5, Ex. D). Defendant Landmark issued Fenton d/b/a Gods Country Acres Camp Ground, Inc. a commercial property and commercial general liability policy. (See Doc. 37-1 ¶ 45). The policy provided coverage from August 7, 2012 to August 7, 2013. (Id.) With respect to the main building, the policy apparently provided coverage for “Special” causes of loss, excluding theft, under which all risks of direct physical loss were covered unless the loss was subject to an exclusion or limitation in the policy. (See Id. ¶¶ 49, 52). Among other exclusions, the policy did not pay for loss or damage caused by wear and tear or by deterioration. (Id. ¶ 75). Through an endorsement, Steven J. was subsequently added to the policy as a “mortgagee.” (Id. ¶ 66).

On March 11, 2013, Fenton submitted a property loss notice. (Id. ¶ 71). The notice indicates that the loss occurred on February 11, 2013 and describes the damage as “eaves torn off building” and “roof leaks.” (Doc. 37-8, Ex. G). At some point thereafter, Fenton or Steven J. apparently clarified that the damage was allegedly due to Superstorm Sandy, which affected the area on October 29, 2012. (See Halliwell Report at 1). Landmark retained Engle Martin & Associates, Inc. (“Engle Martin”), an adjuster, to investigate Steven J.’s claim. (Doc. 37-1 ¶ 81). Landmark authorized Engle Martin to engage Halliwell Engineering Associates, Inc. (“Halliwell”), a third-party vendor, to analyze the claim. (Id. ¶ 76; Doc. 42-2, Ex. A, Sept. 22, 2014 (“Keephart Dep.”), at 12:21-13:9). Engle Martin property adjuster Jonathan Keephart (“Keephart”) and Halliwell engineer Mark Zajac, P.E. (“Zajac”) inspected the property in April 2013. (See Halliwell Report at 5). On April 30, 2013, Zajac authored an engineering report regarding the cause of the claimed loss. (See Doc. 37-1 ¶¶ 77, 80). He opined that the roof damage and water intrusion was due to wear and tear on the roof, rather than wind damage. (See Halliwell Report at 13-14). In May 2013, Engle Martin issued a reservation of rights letter outlining potentially applicable policy exclusions and conditions. (Doc. 37-1 ¶ 82; Doc. 37-17, Ex. P).

On June 18, 2013 and again several weeks later, David R. Drake, AIA, LEED AP (“Drake”) inspected the property for Steven J. (See Doc. 37-1 ¶ 31; Doc. 37-9, Ex. H, Sept. 19, 2014 (“Drake Dep.”), at 12:20-13:4). Drake prepared a report, dated August 14, 2013, in which he opined that the main building had experienced water infiltration damage and roof damage between 2012 and 2013. (Doc. 37-18, Ex. Q (“Drake Report”) at 1). He concluded that most of the water damage in the main building was due to Superstorm Sandy or subsequent winter storms. (Id. at 2). At some point prior to the initiation of this action, Landmark apparently denied Steven J.’s insurance claim.[2]

Steven J. commenced the instant action in the Pennsylvania Court of Common Pleas of Monroe County against both Landmark and Engle Martin. (Doc. 1-1, Ex. A). Defendants removed the action to this court on the basis of diversity jurisdiction. (Doc. 1). On May 8, 2014, Steven J. filed an amended complaint. (Doc. 18). The amended complaint states a cause of action against Landmark for breach of contract and against Engle Martin for tortious interference with the insurance contract. Engle Martin moved to dismiss the tortious interference claim for failure to state a claim upon which relief can be granted. (Doc. 24). In a report and recommendation, dated August 4, 2014, Chief Magistrate Judge Martin C. Carlson recommended that the court grant Engle Martin’s motion. The court adopted the report and dismissed the tortious interference claim against Engle Martin. (Doc. 35).

On October 30, 2014, after the completion of fact discovery, Landmark moved for summary judgment. (Doc. 37). Landmark argues, inter alia, that the policy is void due to a misrepresentation of ownership interest, that Steven J. failed to demonstrate a covered loss, that the alleged damage was attributable to causes excluded under the policy, and that Steven J. breached the insurance contract by failing to provide timely notice of the alleged loss. (Doc. 39 at 4). Steven J. opposed the motion. (Doc. 42-1). Following the close of expert discovery, Landmark moved to exclude Drake’s expert testimony as to causation on the grounds that Drake is not qualified to testify as an expert and that his methodology is unreliable. (Doc. 44). Landmark also filed motions in limine to preclude evidence of damages, to preclude the expert testimony of Drake as to both causation and damages, and to preclude the trial testimony of Fenton. (Docs. 48, 50, 51). All pending motions have been fully briefed and are ripe for disposition.

II. Legal Standards

A. Admissibility of Expert Testimony

“A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” Fed.R.Civ.P. 56(c)(2). When there is a proper challenge to the admissibility of evidence, such as a motion to exclude expert testimony, the party offering the expert bears the burden of establishing the admissibility of such expert’s testimony and report by a preponderance of the evidence. See Burke v. TransAm Trucking, Inc., 617 F.Supp.2d 327, 331 (M.D. Pa. 2009); see also In re Paoli R.R. Yard PCB Litig. (Paoli II), 35 F.3d 717, 744-46 (3d Cir. 1994).

Admissibility of expert testimony is a question of law governed by Federal Rule of Evidence 702. See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 588-89 (1993). Trial courts must act as gatekeepers to “ensure that any and all scientific testimony or evidence admitted is . . . reliable.” Id. at 589. Rule 702 provides as follows:

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 ...

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