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Generation Trade, Inc. v. Ohio Security Insurance Co.

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

May 21, 2019

GENERATION TRADE, INC., Plaintiff,
v.
OHIO SECURITY INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          ED KINKEADE UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant's Motion for Summary Judgment (the “Motion for Summary Judgment”) (Doc. No. 22), Plaintiff's Motion for Leave to File Surreply to Defendant's Motion for Summary Judgment (the “Motion for Leave”) (Doc. No. 41), Plaintiff's Motion to Limit and Exclude the Testimony of Timothy Marshall (Doc. No. 45), Plaintiff's Motion to Exclude the Expert Testimony of Marshall Lafon (Doc. No. 46), and Defendant's Motion to Limit and Exclude the Testimony of Kelly Parker, Dan Mizell, and Sean Harshaw (Doc. No. 47). After considering the briefs, responses, replies, and applicable law, the Court GRANTS the Motion for Summary Judgment because Plaintiff Generation Trade, Inc. failed to present evidence that would provide a jury a reasonable basis to allocate damages covered by the insurance policy from potential damages before the insurance policy's coverage period. As detailed further below, the Court DENIES Plaintiff's Motion to Limit and Exclude the Testimony of Timothy Marshall (Doc. No. 45) and Defendant's Motion to Limit and Exclude the Testimony of Kelly Paker (only) (Doc. No. 47), and because the remaining motions concerning witness testimony are not necessary for the Court's summary judgment determination, the Court DENIES these motions as moot (Doc. Nos. 46, 47). Lastly, the Court DENIES Plaintiff's Motion for Leave (Doc. No. 41) because (1) the Court grants summary judgment in favor of Defendant Ohio Security Insurance Company on a basis raised in its original motion and (2) any new evidence or case law cited by Defendant Ohio Security Insurance Company in its reply is irrelevant to the Court's analysis in this Order.

         I. Factual and Procedural History

         The case before this Court involves a dispute concerning insurance coverage related to hail damage to a warehouse facility (the “Property”) located in Irving, Texas. Plaintiff Generation Trade, Inc. (“Generation Trade”) bought the Property in 2014, and, from the time of purchase, Generation Trade has insured the Property through a policy with Defendant Ohio Security Insurance Company (“OSIC”). Although Generation Trade has insured the Property since Generation Trade acquired it, the Property was originally built in 1981. A 24-gauge metal roof covers the entire Property, except for a small portion of the roof installed in May 2016 that is 26-gauge metal. Both parties agree that the insurance policy at issue in this case covers hail damage to the roof. The parties also agree on the language and the applicable policy provisions.

         In July 2017, Andre Simon (“Simon”), the owner of Generation Trade, observed hail damage to the roof of the Property. Simon immediately reported the damage to OSIC. OSIC assigned Joseph Hinkson (“Hinkson”) to inspect the Property, and Hinkson determined that there was hail damage to the roof exceeding $1, 000, 000. OSIC then assigned Marshall Lafon (“Lafon”), a large loss adjuster, to further investigate the damage to the roof of the Property. Lafon acknowledged that there was hail damage to the roof of the Property, but after reviewing a weather report for hail events over a certain period of time, Lafon had questions about whether some of the hail damage predated the policy's period of coverage.

         OSIC then hired Henry Yang (“Yang”), a professional engineer with Rimkus Consulting Group, Inc., to further analyze the hail damage to the roof of the Property. Yang concluded from his investigation that the hail damage to the portion of the roof consisting of 26-gauge metal would have necessarily occurred after May 2016, as Generation Trade installed this portion of the roof in May 2016; however, Yang concluded that the damage to 24-gauge metal roof occurred over time since 1981, and Yang could not identify when and what hail events caused the damage to this portion of the roof. (Generation Trade cites Yang's reports as proof that Yang concluded that the damage to the 24-gauge metal roof occurred prior to policy coverage, but Yang's conclusions in both versions of the two reports he submitted only finds that the damage “occurred throughout the years, since 1981.”)

         Shortly after Yang submitted his second report, OSIC sent Generation Trade a letter in which it denied Generation Trade's insurance claim. In its letter, OSIC explained that the insurance policy covered the damage to the newer, 26-gauge metal roof, but the total expense for repair to that portion of the roof did not exceed the policy's deductible. OSIC thus denied Generation Trade's insurance claim, relying upon Yang's conclusion that the hail damage to the 24-gauge metal roof could have predated the period of policy coverage because it “occurred throughout the years, since 1981.” Generation Trade initiated this case in state court approximately a month after OSIC denied Generation Trade's claim. OSIC retained Timothy Marshall (“Marshall”) as its testifying engineer for this case. Marshall inspected the property once and submitted two reports concerning his findings. Marshall found that weather data indicated hail events of varying magnitude occurred both before and during the policy coverage period; however, Marshall stated that he cannot opine as to which specific hail event caused any of the damage. Prior to the initiation of this suit, Generation Trade hired Kelly Parker (“Parker”), who inspected the property and issued a report in October 2017. The Court will address the opinions and conclusions of Marshall and Parker in more depth throughout this Order.

         Generation Trade filed its original petition for this suit in state court on January 11, 2018. Generation Trade amended its petition on February 9, 2019 to name OSIC as defendant instead of Liberty Mutual Insurance Company. OSIC removed the case to this Court on February 21, 2018. OSIC moved for summary judgment on October 26, 2018, and shortly after moving for summary judgment, OSIC moved for leave to amend its answer to include the affirmative defense that Generation Trade failed to provide prompt notice of its claimed loss. Finding no undue delay or undue prejudice, this Court granted OSIC's motion for leave to amend its answer and allowed OSIC to include this affirmative defense. In its Motion for Summary Judgment, OSIC argues that because Generation Trade either (1) cannot segregate its covered damages from its uncovered damages or (2) failed to provide prompt notice of its loss, summary judgment in favor of OSIC is appropriate for Generation Trade's breach-of-contract claim. OSIC further argues that because Generation Trade did not suffer an injury independent from the insurance policy, and because there is no viable claim for negligent claim handling, summary judgment in favor of OSIC is appropriate on Generation Trade's Texas Insurance Code and negligence claims. Finally, OSIC argues that summary judgment on Generation Trade's request for attorneys' fees is appropriate because Generation Trade failed to provide the requisite pre-suit notice to OSIC before Generation Trade filed its action.

         II. Applicable Law

         Summary judgment is appropriate when the pleadings, affidavits, and other summary-judgment evidence show that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A “material fact” is a fact that under the applicable substantive law “might affect the outcome of the suit.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of “a material fact is ‘genuine' . . . if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. All evidence and reasonable inferences must be viewed in the light most favorable to the nonmovant, and all disputed facts resolved in favor of the nonmovant. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005).

         The moving party bears the burden of identifying those portions of the record it believes demonstrates the absence of a genuine issue of material fact. Celotex, 477 U.S. at 322-25. Once a movant makes a properly supported motion, the burden shifts to the nonmovant to show the existence of a genuine fact issue for trial; however, the nonmovant may not rest upon allegations in the pleadings to make such a showing. Anderson, 477 U.S. at 256-57. Conclusory allegations, unsubstantiated assertions, or a mere scintilla of evidence cannot defeat a motion for summary judgment. See Id. at 249-52; Boudreaux, 402 F.3d at 540. “Where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant, or where it is so overwhelming that it mandates judgment in favor of the movant, summary judgment is appropriate.” Alton v. Tex. A&M Univ., 168 F.3d 196, 199 (5th Cir. 1999). If the nonmovant fails to make a sufficient showing to prove the existence of an essential element to the case and on which the nonmovant will bear the burden of proving at trial, summary judgment must be granted. Celotex, 477 U.S. at 322. The nonmovant must cite specific facts in the record to survive a motion for summary judgment, as “Rule 56 does not impose upon the district court a duty to sift through the record in search of evidence to support a party's opposition to summary judgment.” Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006) (quoting Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998)); see Fed. R. Civ. P. 56(c)(3).

         III. Analysis

         Before the Court can address the substantive issues raised in the Motion for Summary Judgment, the Court must first address the motions from the parties seeking to limit and exclude testimony from various witnesses. Between the two parties, there are three motions addressing five witnesses; however, as the Court explains in its analysis below, only the motions seeking to limit and exclude the testimony of Timothy Marshall and Kelly Parker are relevant for purposes of this Order. After addressing these motions, the Court then turns to the substantive arguments of the Motion for Summary Judgment. The Court finally turns to the Motion for Leave.

         A. The Motions to Limit and Exclude Testimony

         Generation Trade and OSIC have both filed motions seeking to limit and exclude the testimony of five witnesses. Generation Trade seeks to limit and exclude the testimony of Timothy Marshall and Marshall Lafon. OSIC seeks to limit and exclude the testimony of Kelly Parker, Dan Mizell, and Sean Hershaw. The bulk of the arguments for both parties concern the witnesses' testimony about causation. As the Court's analysis on the Motion for Summary Judgment pertains solely to causation and Generation Trade's failure to segregate its damages, the Court analyzes these motions to limit and exclude testimony to the extent necessary to address the issue of Generation Trade's failure to segregate damages, which is the dispositive issue of this case. The Court need not address other issues in these motions to the extent such issues do not relate to the issue of segregating damages or to the extent a witness's testimony is unnecessary or irrelevant to the Court's analysis in this Order. Consequently, the most important motion related to witness testimony is Generation Trade's motion directed at limiting and excluding the testimony of Timothy Marshall.

         Generation Trade moves this Court to limit and exclude Marshall's testimony to the extent necessary to prevent Marshall from (1) testifying as to the date damage occurred to the Property and (2) “transform[ing] hearsay meteorological data into opinion, ” inter alia. Generation Trade argues that, as related to these points of testimony, (1) “Marshall is not qualified by education, training, or experience to opine on [these] issues” and (2) “his testimony lacks proper foundational evidence.” (Generation Trade's request to limit and exclude testimony concerning the reasonable and necessary costs to repair or replace the damaged roof, as well as testimony concerning the “FM 4471 testing, ” are irrelevant for purposes of this Order. Likewise, because Generation Trade's argument that ...


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