United States District Court, N.D. Texas, Abilene Division
EAGLE RAILCAR SERVICES-ROSCOE, INC., Plaintiff/Counter-Defendant,
NGL CRUDE LOGISTICS, LLC, Defendant/Counter-Plaintiff.
MEMORANDUM OPINION AND ORDER
SCOTT FROSTUNITED STATES MAGISTRATE JUDGE.
Court has under consideration NGL Crude Logistics, LLC's
(“NGL”) Objection to and Motion to Exclude
Untimely Expert Designations and Opinions (doc. 43);
Plaintiff Eagle Railcar Services-Roscoe, Inc.'s
(“Eagle”) Motion for Leave to File Third Party
Complaint (doc. 47); and Eagle's Motion to Compel and
Motion for Sanctions (doc. 57). The motions are fully briefed
and ready for ruling. After reviewing the briefing and
applicable law, the Court DENIES the
commenced this action in state court in June 2016, seeking
$49, 541.08 in damages for cleaning, servicing, maintaining,
and/or repairing railcars for NGL. See Pl.'s
Orig. Pet. (doc. 1-2). An attachment to the complaint shows
the damage computation resulting from twenty-one unpaid
invoices between December 2015 and February 2016. See
Id. (attachment to Pl.'s Orig. Pet.).
removed this action to federal court in August 2016.
See Notice of Removal (doc. 1). That same day, it
filed its Original Answer and Counterclaim seeking more than
$1, 000, 000 in damages for three counterclaims: (1) breach
of contract, (2) promissory estoppel, and (3) negligent
misrepresentation based on an alleged oral agreement between
the parties for Eagle to clean railcars at its Roscoe, Texas
facility starting in October 2014. See Def.'s
Orig. Answer & Counterclaim (doc. 1-2). It alleges that
Eagle promised to complete the cleaning and return the
railcars to NGL within thirty to forty days of approval of
estimated cleaning charges - a process described as
“turning.” See Id. Contemporaneously
with the removal of this action, NGL filed (1) a Certificate
of Interested Parties (doc. 1-3) that merely lists the
parties and their attorneys and (2) a Corporate Disclosure
Statement (doc. 2) that identifies its parent company as NGL
Energy Operating, LLC.
next month, Eagle filed its Original Answer to
Defendant's Counterclaim (doc. 4). It asserted eight
affirmative defenses: (1) accord and satisfaction; (2)
waiver; (3) NGL consented to, approved, acquiesced in, and/or
ratified the alleged conduct; (4) estoppel; (5) failure to
mitigate damages; (6) excuse, justification, and/or
privilege; (7) statute of frauds; and (8) absence of
reasonable or justifiable reliance. Doc. 4 at 4.
this case proceeded fairly typically schedule-wise with the
entry of a Pretrial Scheduling Order (doc. 10) on October 11,
2016, including setting a November 9, 2016 deadline for
compliance with Fed.R.Civ.P. 26(a)(1); a March 1, 2017
deadline for seeking leave to amend pleadings and to add
parties; and expert designation deadlines in April and May
2017. On December 5, 2016, NGL made initial disclosures,
including (1) production of 697 pages of documents that it
may use to support its claims and (2) identification of an
Eagle representative, Adolf Deloera, and a NGL
representative, Mitch Wood, as individuals likely to have
discoverable information that NGL may use to support its
counterclaims. Doc. 50 at 1-3. These initial disclosures
identified no affiliate or parent company of NGL. See
Id. Nevertheless, NGL did produce a spreadsheet with the
following information: “HSCOM/NGL LEASE
IDENTIFICATION”; Car Number; date cleaning was
complete; total days at ERSR; days at ERSR after May 1, 2015;
lease rates per day for each railcar both before and after
May 1, 2015; and claimed total extra lease payments incurred.
See Doc. 54 at 18-20. Ten listed railcars include a
notation that they had been assigned to
“Centennial.” See Id. at 19.
April 11, 2017, the Court granted an agreed motion to extend
deadlines. See ECF No. 18. Two weeks later, Eagle
filed a notice of acceptance of an offer of judgment.
See Doc. 19. The next day, on April 26, 2017, NGL
produced documents in response to Eagle's First Request
for Production. See Doc. 50 at 6-13. Eagle contends
that the production consisted of approximately 6, 500 pages
and NGL is not identified within any produced document.
See Doc. 49 at 3; Doc. 57 at 2. The production,
nevertheless, included the following agreements: (1) Car
Leasing Agreement 9750-97 between General Electric Railcar
Services Corp. (“GE Rail”) and High Sierra Crude
Oil and Marketing LLC (“HSCOM”); (2) Assignment,
Assumption and Amendment Agreement among HSCOM, GE Rail, and
Centennial Energy LLC (“Centennial”); (3) Car
Leasing Agreement 5942-97-0 between GE Rail and Centennial;
(4) Crude Rail Transportation Agreement between Green Plains
Trade Group LLC (“GPTG”) and Trans Montaigne
Product Services, Inc.; (5) Rider No. 1 to Master Rail Car
Lease and Service Contract No. L-1 between Transportation
Equipment, Inc. and HSCOM; and (6) Rider No. 15 between First
Union Rail Corp. (“First Union”) and Gavilon, LLC
(“Gavilon”).See Doc. 50 at 14-19.
designated its experts on May 3, 2017. See Doc. 21.
On May 11, 2017, and pursuant to Fed.R.Civ.P. 54(b), the
Court entered judgment in favor of Eagle for the full amount
of its alleged damages, plus attorneys' fees and costs.
See Agreed J. Pursuant to Rule 54(b) (doc. 23). The
Court thus dismissed all claims asserted by Eagle with
prejudice and recognized that NGL's counterclaims remain
pending. See id.
6, 2017, the Court granted a second agreed motion to extend
deadlines and extended the deadline for rebuttal expert
witnesses to June 30, 2017. See ECF No. 18. Eagle
served its rebuttal expert disclosures on June 30, 2017.
See Doc. 29. It therein identified an employee
(Jaime Calfee) and officer (Marc Walraven) as experts under
Fed.R.Civ.P. 26(a)(2)(C) not requiring a written report and
an independent expert (Gary Hunter) under Fed.R.Civ.P.
26(a)(2)(B) who provided a written expert report. See
Id. It designated these experts to provide opinions
about industry standards, whether damages to NGL were
foreseeable, and the commercial reasonableness of “turn
times” at the relevant Eagle facility in Roscoe.
See Id. Before stating his expert opinions in his
written report, Hunter set out his background and experience,
history of his fees and expert testimony in other cases, the
documents he reviewed, and a factual history of this case.
Doc. 44 at 4-7. He then opined that (1) no industry standard
exists that governs turn times for railcar cleaning and
repair, (2) Eagle's turn times were commercially
reasonable under the facts of this case, and (3) NGL's
claimed damages in this action could not have been reasonably
foreseeable to Eagle. See Id. at 7-9.
20, 2017, the Court allowed Eagle to substitute counsel.
See Order Granting Agreed Mot. to Substitute Counsel
(doc. 31). Four days later, the Court granted an unopposed
motion to amend the pretrial scheduling order. See
ECF No. 33. It extended the discovery deadline to October 31,
2017, and the dispositive motion deadline to December 8,
2017. See id.
email to NGL dated September 15, 2017, Eagle indicated that
it wanted to file an amended answer and stated an anticipated
need to depose representatives from non-parties GPTG; GE
Rail; and Transportation Equipment, Inc. who are parties to
subject sublease agreements or owners of the subject
railcars. See Doc. 44 at 17. On September 20, 2017,
NGL deposed Deloera. See Doc. 54 at 1. He testified
about the seventy-one railcars at issue in this litigation
and that he understood that Centennial sent some of them to
the Roscoe facility. See Id. at 4. He further
testified about emails dated April 29, 2015, which reflect
that Centennial informed Eagle that Centennial had assumed
the lease on nine railcars “from the crude oil group of
NGL” and needed them to be cleaned and serviced.
See Id. at 5-6.
depositions held on September 20 and 21, 2017, Eagle obtained
information that non-party Centennial may have transferred
its legal rights to NGL. At the conclusion of the latter
deposition, NGL produced a June 30, 2016 written assignment
of legal claims between it and Centennial that (1) identifies
both entities as wholly owned subsidiaries of NGL Energy
Partners, LP (“NGL EP”); (2) assigns to NGL
“any and all legal and equitable claims [Centennial]
has or will have against Eagle”; and (3) is signed by
the same individual representing both entities, CFO Robert
Karlovich. See Doc. 44 at 115-16; Doc. 50 at 20-21.
September 26, 2017, Eagle moved for leave to file a first
amended answer based upon (1) an August 15, 2017 document
production regarding NGL's damages; (2) a September 19,
2017 confirmation from NGL counsel that a three-page
spreadsheet comprises their damages claim; and (3) the newly
discovered information from the depositions of September 20
and 21, 2017. See Doc. 34. Early the next month,
Eagle moved to modify the pretrial scheduling order, but did
not seek to extend any deadline regarding expert witnesses or
joining new parties. See Doc. 35.
reviewing the briefing and applicable law, the Court granted
the first motion and partially granted the second motion in
October 2017. See Order (doc. 41). In doing so, the
Court found good cause for granting leave to file an
out-of-time, amended answer based on significant new evidence
that came to light during discovery. It also found the delay
excusable and that Plaintiff acted promptly when it learned
of the new information. In addition, the Court found good
cause to extend the discovery and dispositive motion
deadlines, respectively to January 31, 2018, and March 5,
2018. In its First Amended Answer to Defendant's
Counterclaim (doc. 42), Eagle adds affirmative defenses nine
through sixteen to the original answer: (9) offsets and
credit; (10) repudiation of contract; (11) fraud; (12)
impossibility of performance; (13) novation; (14)
unconscionability; (15) contract modification; and (16)
discharge from performance.
that order, Eagle agreed to supplement its discovery
responses regarding its defenses of offset and credit.
See Doc. 44 at 21-22. On November 22, 2017, Eagle
noticed a deposition of an NGL representative pursuant to
Fed.R.Civ.P. 30(b)(6). See Doc. 58 at 18-24. It
requested a designated representative knowledgeable about
fourteen topics, including (3) “Any agreements,
contracts, or other understandings between NGL, Centennial,
” GE Rail, HSCOM, GPTG, First Union, TransMontaigne,
and Gavilon and (11) “NGL's efforts to locate and
produce documents responsive to Eagle's discovery
requests.” Id. at 23-24.
days later, NGL supplemented its prior document production
with two additional written assignments of legal claims dated
June 30, 2016. See Doc. 50 at 22-24. These
assignments are materially the same as the assignment between
NGL and Centennial other than respectively changing the
assignor to HSCOM and TransMontaigne. See Id. The
next day, NGL served objections and responses to the Rule
30(b)(6) deposition. See Doc. 58 at 27-33. NGL
objected that topic 3 “is vague, ambiguous, completely
unlimited in time and scope, and seeks information that is
irrelevant.” Id. at 29. Subject to those
objections, it designated
Mitch Walker to testify regarding the lease agreements for
the 71 railcars at issue in this lawsuit and any agreements,
contracts, or understandings beyond the lease agreements
between it and the named lessors . . . related to the leases
and any agreements, contracts, or understandings between it
and its affiliates or successors-in-interest . . . regarding
the lease agreements for the 71 railcars at issue.
Id. With respect to topic 11, NGL designated
“Walker to testify regarding its efforts to locate and
produce documents responsive to Eagle's non-objectionable
discovery requests in this matter.” Id. at 32.
deposed Walker the next day. See Doc. 48 at 19. He
identified NGL EP as the parent company of NGL, NGL Crude
Transportation, LLC (“NGL Transport”), and
Centennial and stated that an organizational chart exists for
NGL EP that lists all the related entities. Id. at
32, 36, 41. He also identified Mitch Wood as a person
employed by either NGL or NGL Transport and stated that, in
his opinion, the parties to this litigation formed one
agreement prior to the arrival of the first rail-car at
Eagle's facility and this agreement resulted from
communications between Eagle and Wood and/or Byron
Stewart. Id. at 31, 32, 34. He further
testified that there are written agreements between NGL and
NGL Transport related to which entity is responsible for
various things. Id. at 34- 36. He stated a belief
that either NGL or Centennial paid excess lease charges for
railcars at Eagle's facility. Id. at 32-33.
also testified about NGL's acquisitions of various
contracts and leases. See Id. at 38-42. He stated
that NGL or NGL EP bought and absorbed certain contracts of
TransMontaigne. Id. at 38-39. He further testified
that TransMontaigne and HSCOM were subsidiaries and that NGL
had assumed their obligations. See Id. at 40. The
HSCOM acquisition occurred prior to Gavilon and before any
railcars were sent to Eagle. Id. at 41. Likewise,
NGL EP acquired Centennial before NGL sent any cars to Eagle.
See Id. at 41-42.
testified about the legal assignment of claims, Walker stated
that he did not know the date they were executed but had just
recently become aware of the assignment from Centennial. Doc.
58 at 90. He testified that he did not believe the
assignments were executed prior to the lawsuit, but would
need to “look at the assignment to be certain.”
Id. at 91. He did not know who drafted them.
December 18, 2017, Eagle served supplemental interrogatory
answers that identified fact witnesses, including Walraven,
Calfee, and Deloera, who have “knowledge of the damages
incurred by Eagle” from actions of NGL and its
affiliates. See Doc. 44 at 38-40. In
addition, Eagle identified Matthew Hurt as an individual who
“has knowledge of the services rendered by Eagle and
the legal and technical requirements to conduct valve
inspection.” Id. at 40. At that time, Eagle
had “yet to finalize a total amount of damages.”
Id. at 41.
December 22, 2017, Eagle served its Second Request for
Production of Documents to NGL. See Doc. 58 at
34-40. Thirty-eight separate requests for production
(“RFP”) comprise this Second Request. See
Id. at 36-39.
next month, Eagle served purported supplemental expert
designations under Fed.R.Civ.P. 26(a)(2)(B) for Hunter,
including a report dated January 12, 2018, and under Rule
26(a)(2)(C) for Calfee, Walraven, and two newly identified
employee experts (Adolf Deloera and Matt Hurt). See Doc.
44 at 47-71. Hunter again set out his background and
experience, his expert witness case history, the documents he
reviewed, and a factual history of this case. Id. at
53-62. He then set out his expert opinions regarding damages
to Eagle caused by NGL. See Id. at 62-70.
January 22, 2018, NGL served its Objections and Responses to
Plaintiff's Second Request for Production. See
Doc. 58 at 41-68. NGL objected to each RFP, except RFP 38,
which it stated that no responsive documents exist. See
Id. at 43-68. NGL produced no additional documents in
response to the Second Request for Production. See
prior to the close of discovery, NGL filed its objection and
motion (doc. 43). The first week of February 2018, Eagle
moved for leave to file a third-party complaint (doc. 47).
Due to the pendency of these motions, the parties filed an
agreed motion to modify the pretrial schedule that the Court
granted on February 22, 2018, vacating the dispositive motion
deadline and stating that it will reset that deadline and any
other necessary pretrial deadline after considering the
pending motions. These motions became ripe for ruling with
the filing of reply briefs in mid-March 2018. The same day
that Eagle's motion became ripe, March 14, 2018, Eagle
filed its motion to compel and for sanctions (doc. 57). That
motion became ripe for ruling with the filing of Eagle's
reply brief on April 23, 2018.
MOTION TO EXCLUDE
objects to and seeks to exclude Eagle's January 2018
expert designations on grounds of untimeliness.
Alternatively, it asks the Court to order Eagle to pay its
reasonable and necessary attorneys' fees and expenses
caused by the untimely expert designations. Relying on
Fed.R.Civ.P. 37(c)(1), which governs sanctions for failing to
provide information or identify a witness as required by
Fed.R.Civ.P. 26(a), NGL moves to exclude the disclosures
entirely or obtain its fees and expenses. Eagle contends that
it timely supplemented its expert disclosures, but if the
Court disagrees or finds NGL prejudiced, it argues that the
requested exclusion or other sanction is unwarranted because
any violation of Rule 26(a) was substantially justified or
Expert Disclosure Requirements
relevant to this case, Fed.R.Civ.P. 26(a)(2)(A) provides
generally that “a party must disclose to the other
parties the identity of any witness it may use at trial to
present evidence under Federal Rule of Evidence 702, 703, or
705.” Absent a stipulation between the parties or
otherwise ordered by the court, subparagraph (B) requires the
disclosure to “be accompanied by a written report -
prepared and signed by the witness - if the witness is one
retained or specially employed to provide expert testimony in
the case or one whose duties as the party's employee
regularly involve giving expert testimony.” For expert
witnesses not required to provide a written report,
subparagraph (C) requires the disclosure to state “(i)
the subject matter on which the witness is expected to
present evidence under Federal Rule of Evidence 702, 703, or
705; and (ii) a summary of the facts and op in- ions to which
the witness is expected to testify.” Like subparagraph
(B), the requirements of subpar-agraph (C) are contingent on
the absence of a stipulation or order of the court. Not only
does Rule 26(a)(2) address who and what must be disclosed
with respect to expert witnesses, but subparagraph (D) also
sets a generally applicable deadline for disclosure of expert
testimony absent a stipulation or court order - at least
ninety days before trial unless “the evidence is
intended solely to contradict or rebut evidence” of
another party, in which case, the rebuttal expert disclosure
must be made within thirty days of the other party's
expert disclosure rules also require parties to supplement
their “disclosures when required under Rule
26(e).” Fed.R.Civ.P. 26(a)(2)(E). In general, Rule
26(e) requires parties to supplement their Rule 26(a)
(A) in a timely manner if the party learns that in some
material respect the disclosure or response is incomplete or
incorrect, and if the additional or corrective information
has not otherwise been made known to the other parties during
the discovery process or in writing; or
(B) as ordered by the court.
for Rule 26(a)(2)(B) disclosures, “the party's duty
to supplement extends both to information included in the
report and to information given during the expert's
deposition. Any additions or changes to this information must
be disclosed by the time the party's pretrial disclosures
under Rule 26(a)(3) are due.” Fed.R.Civ.P. 26(e)(2).
Rule 26(a)(3)(B) requires disclosures to “be made at
least 30 days before trial” absent a court order
setting a different deadline.
Timeliness of Expert Disclosures
case, the Court set deadlines for Rule 26(a)(2) disclosures.
In May and June 2017, both parties made timely expert
disclosures consistent with those deadlines as extended by
the Court on motion of the parties. At that time, Eagle
merely made rebuttal disclosures in response to NGL's
expert disclosure. No. one questions the timeliness or
adequacy of these initial expert disclosures.
the deadlines for expert disclosures passed, Eagle moved for
leave to file an amended answer with eight new affirmative
defenses to NGL's counterclaims. It also moved to modify
the governing pretrial scheduling order, but in so doing, it
did not seek any change to the expert disclosure deadlines.
The Court granted leave to file the amended answer and
extended the discovery and dispositive motions deadlines. It
did not reset or extend any expert designation deadline.
states that, “after the Court granted [it] leave to
file its affirmative defenses and extended the discovery
period on October 26, 2017, there was no limitation that a
party was restricted from discovery of or providing support
regarding these new affirmative defenses” and
“there were no restrictions regarding expert
designations or factual witnesses that limited [its] ability
to support these defenses.” Doc. 49 at 5. In other
words, Eagle contends that this action lacks a court order
setting an expert witness deadline regarding its new defenses
because the Court allowed the amended answer without imposing
a specific deadline for expert disclosures relative to the
the Court understands the basis for that line of reasoning,
it does not agree that the default deadlines set out in Rule
26(a)(2)(D) automatically spring back into play following
leave to file an amended pleading. Once a court issues an
order setting expert designation deadlines, those deadlines
apply, even if expired, until the court otherwise orders.
Through its Pretrial Scheduling Order, the Court set specific
deadlines for all expert designations under Rule 26(a)(2).
That those deadlines expired before the Court granted Eagle
leave to file an amended answer with new affirmative defenses
does not revert the case to the general deadline set out in
Rule 26(a)(2)(D), i.e., at least ninety days before trial,
which only applies absent stipulation or court order. As
stated in Rule 26(a)(2)(D), parties must make their expert
“disclosure at the times and in the sequence that the
court orders.” When a party wants to revive expired
deadlines, the proper procedure is to move to extend them.
Alternatively, a party may move for leave to take action past
an expired deadline. The latter alternative essentially has
the same effect as moving to extend the deadline. Eagle
pursued neither of these alternatives. Its 2018 expert
disclosures are untimely under the court-imposed deadlines
set out in the Pretrial Scheduling Order as amended by later
orders of the Court.
however, specifically argues that, because its 2018 expert
disclosures qualify as supplemental disclosures under Rule
26(a)(2)(E), the expired deadlines do not apply. Under this
scenario, the deadline for supplemental expert disclosures
would be governed by Rule 26(e) rather than the court-imposed
deadlines for initial expert disclosures. NGL contests the
characterization of the 2018 disclosures as supplemental.
Fifth Circuit has long recognized that supplementary
disclosures are merely intended “to supplement, ”
not “to provide an extension of the deadline by which a
party must deliver the lion's share of its expert
information.” Sierra Club, Lone Star Chapter v.
Cedar Point Oil Co. Inc., 73 F.3d 546, 571 (5th Cir.
1996). Supplementary “disclosures are not intended to
provide an extension of the expert designation and report
production deadline.” Metro Ford Truck Sales, Inc.
v. Ford Motor Co., 145 F.3d 320, 324 (5th Cir. 1998);
accord Harmon v. Ga. Gulf Lake Charles L.L.C., 476
Fed.Appx. 31, 36 (5th Cir. 2012) (per curiam). When a
“supplemental report is comprised of new, previously
undisclosed opinions, ” it is not truly a supplement
and must be filed within the deadline for expert opinions set
by the court. See Elliot v. Amadas Indus., Inc., 796
F.Supp.2d 796, 802 (S.D.Miss. 2011). Similarly, when a report
“contains entirely new opinions or addresses subject
matter outside the scope of [the initial] designation and
[the] initial report, it is not a supplement. Rather, it is
an untimely designation.” Ishee v. Fed. Nat'l
Mortg. Ass'n, No. 2:13-CV-234-KS-MTP, 2015 WL
224800, at *2 (S.D.Miss. Jan. 15, 2015).
Eagle characterizes the 2018 expert disclosures as
supplemental, it identifies two entirely new experts and
provides a new report from Hunter that expresses opinions
regarding damages to Eagle. Furthermore, Eagle's initial
expert designations were for rebuttal only. Eagle intends the
expert opinions designated in 2018 to support its affirmative
defenses. The 2018 disclosures are not supplemental. They are
thus untimely unless the Court extends the deadline or
otherwise allows Eagle to make the disclosures outside the
Sanctions for ...