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Hudson Henley Group v. Love Insurance Group L.L.C.

United States District Court, N.D. Texas, Dallas Division

March 31, 2018

HUDSON HENLEY GROUP, Plaintiff,
v.
LOVE INSURANCE GROUP L.L.C., Defendant.

          MEMORANDUM OPINION AND ORDER

          Sam A. Lindsay United States District Judge

         Before the court are Plaintiff Hudson Henley Group (“Henley”) Proposed Findings of Fact and Conclusions of Law (Doc. 82), filed November 8, 2017; and Defendant Love Insurance Group L.L.C. (“Love”) Proposed Findings of Fact and Conclusions of Law (Doc. 83), filed November 13, 2017. Also before the court are Plaintiff's Motion in Limine (Doc. 67), filed May 3, 2017; and Defendant Love Insurance Group, LLC's Motion in Limine (“Love's Motion in Limine”) (Doc. 70), filed May 3, 2017. After considering the motions, responses, replies, arguments of counsel made during the bench trial conducted on May 17, 2017, record, and applicable law, the court grants Plaintiff's Motion in Limine (Doc. 67), as herein set forth; and denies Defendant Love Insurance Group, LLC's Motion in Limine (Doc. 70), as herein set forth.

         The court's findings of fact and conclusions of law are made pursuant to Rule 52(a) of the Federal Rules of Civil Procedure (“Rule 52”). In making these findings and conclusions, the court considered testimony during a one-day bench trial held on May 17, 2017.[1] For the reasons that follow, the court finds and concludes that Henley is entitled to recover on its claim of breach of contract against Love in the amount of $837, 367.65. The court, therefore, will enter judgment in favor of Henley in accordance with this memorandum opinion and order during the week of April 2, 2018.

         I. Procedural Background

         Henley filed this action against Love and American Bankers Insurance Company of Florida (“ABI”) on August 18, 2015, in the 14th Judicial District of Dallas County, Texas, for breach of contract, negligent misrepresentation, promissory estoppel, and breach of fiduciary obligations in connection with his purchase of “FEMA[2] flood insurance” for the Sonoma Apartment complex (“Sonoma”). Pl.'s Orig. Pet. 3, 6. On September 22, 2015, ABI removed this action to federal court, contending that it arises under the National Flood Insurance Act (“NFIA”), 42 U.S.C. § 4001, et seq. Love consented to removal of the action to federal court. On July 6, 2016, ABI was dismissed from this action with prejudice. Henley's remaining claims against Love included breach of contract, negligent misrepresentation, promissory estoppel, and breach of fiduciary obligations.

         On December 1, 2015, after the parties filed their Joint Status Report, the court entered a scheduling order that included the following deadlines: amendment of pleadings and joinder of parties due by February 29, 2016; discovery due by September 2, 2016; dispositive motions due by September 16, 2016; Plaintiff's expert designations due by June 6, 2016; and Defendant's expert designations due by July 5, 2016.[3] On May 18, 2016, Henley filed his designation of experts and designated R. Lane Addison as a retained expert “on the attorney's fees incurred by plaintiff in this matter” and James Amos (“Amos”) as a nonretained “public adjuster that reviewed the damages to plaintiff's property and put together an exhaustive estimated cost to repair the same.” (Doc. 10). On July 5, 2016, Love requested an extension from July 5, 2016, to July 12, 2016, to file its expert designations, which was granted by the court. Love never filed any expert designations.[4] On September 16, 2016, Love filed a Daubert motion (“Defendant's Daubert Motion”) (Doc. 35) to exclude Amos and argued that he was unqualified as an expert on insurance coverage and causation.

         On July 6, 2016, Henley moved for summary judgment on his breach of contract claim (Doc. 12). On February 24, 2017, the court granted Plaintiff's Motion for Summary Judgment with respect to Henley's breach of contract claim; and denied it with respect to the amount of damages to which Henley was entitled (Doc. 54). The court concluded that there was no genuine dispute of material fact as to whether Love breached the implied contract between it and Henley, in which Love agreed to provide a total of $975, 000 of insurance coverage for the Sonoma buildings. The court, however, concluded that the amount of damages, if any, that the breach caused was in dispute.[5]

         On March 27, 2017, Henley filed Plaintiff Hudson Henley's Supplemental Rule 26 Expert Designations (Doc. 59), in which Amos drafted a supplemental report to address issues raised by the court's summary judgment ruling regarding damages. In response to Henley's supplemental expert designation, Love filed Defendant Love Insurance Group, LLC's Motion in Limine (Doc. 70) (“Defendant's Motion in Limine”), in which Love reiterated arguments made in its Daubert motion to disqualify Amos's testimony.

         II. Motions in Limine

         A. Defendant's Motion in Limine[6]

         In its motion, Love urged the court to issue a ruling on its Daubert motion and fully incorporated Defendant Love Insurance Group, LLC's Daubert Motion to Disqualify Testimony of John Amos (Doc. 35) (“Daubert Motion”) and Defendant Love Insurance Group, LLC's Reply to Plaintiff's Response to Love's Motion to Strike Expert Opinion (Doc. 40) as if stated in Love's Motion in Limine (Doc. 70).

         1. Amos's Qualifications

         In its Daubert Motion, Love contends that Amos failed to satisfy the Daubert standard for admissibility of expert evidence and that Amos's testimony and report are not reliable or helpful to the trier of fact in determining damages in this case because he did not look at the unprocured policy when making his initial estimates. See Def.'s Mot. in Limine 6-7. Specifically, Love contends that Amos should be disqualified from giving expert testimony at trial for the following reasons:

(1) Amos is unqualified as an expert on insurance coverage and causation. He lacks expertise regarding the extent of the insurance policy and whether the flood insurance covers each item he estimated. Therefore, his testimony is unreliable, irrelevant, and inadmissible;
(2) Amos' testimony and report are based on faulty assumptions. He assumed all of the itemized things needed to be replaced, including numerous items in his estimates that were far above the waterline and were not damaged by the flood- therefore, his testimony is inherently flawed;
(3) Amos failed to follow proper methodology, and even contradicted the methodology designated by Plaintiff-therefore, his testimony is unreliable;
(4) Amos failed to consider the actual costs of the repairs that have been made- therefore, his testimony is based upon insufficient facts or data; and
(5) Amos received a percentage of his estimated repair amount, thereby rendering him biased Def.'s Daubert Mot. 3.

         In Plaintiff's Response to Love's Motion to Strike Expert Opinion (Doc. 38), Henley contends that the standard for Daubert admissibility focuses on relevancy and reliability and not the factual bases of Amos's opinion. For that reason, Henley contends that Amos should not be excluded as an expert witness because Love's challenge to Amos's factual bases should have been addressed on cross-examination. Henley further contends that Amos is a qualified expert under Daubert because his “estimate is a reliable estimate of the damages caused by the flood, based on insurance industry standards for evaluating property damages.” Pl.'s Resp. 4-7.[7]

         In Love's Motion in Limine, it further argues that Amos is unqualified to provide testimony concerning how much the unprocured policy would have paid in damages because Amos is designated as a “damages” expert and not a “coverage” expert. In Plaintiff's Response to Love's Motion in Limine (Doc. 71), Henley argues that the motion contains “half-truths” and “material omissions” regarding Amos's experience and qualifications that should not disqualify him as an expert witness. Pl.'s Resp. to Love's Mot. in Limine. 2-3.

         The Federal Rules of Evidence provide that a court “must decide any preliminary question about whether a witness is qualified, a privilege exists, or evidence is admissible.” Fed.R.Evid. 104(a). The rules provide the following guidance on the admissibility of expert testimony:

         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 ...

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