MICHAEL M. BAYLSON, District Judge.
Two motions are presently pending before the Court: Defendant's Daubert Motion to Preclude (1) Jay B. Rosen's Supplemental Report and (2) the April 17, 2015 Estimate and Testimony of Walter Clark (ECF 23), as well as Defendant's Motion for Summary Judgment (ECF 24). For the reasons that follow, the Court will grant the Motion to Preclude in part and deny the Motion for Summary Judgment.
The facts of this insurance coverage case are largely undisputed. On February 19, 2014, Plaintiffs Maria Stochel and Eugene Nowakowski suffered damage to their home following a water main break. ECF 24-2 ¶ 1. At the time of the break, Plaintiffs maintained a homeowners' insurance policy with Defendant Allstate that excludes coverage for flood or groundwater damage. Allstate accordingly denied Plaintiffs' February 21, 2014 insurance claim for water damage from the break. ECF 24-2 ¶¶ 2-8.
On August 20, 2014, Plaintiffs filed a second claim with Allstate alleging that the City of Philadelphia's efforts to repair the water main had caused vibration damage to the property. ECF 24-2 ¶¶ 9-11. The parties appear to agree that this vibration damage, if proven, would be covered under the insurance policy.
On September 23,2014, Allstate inspected Plaintiffs' residence. Present were Allstate's field adjuster Gerald Povacz, Allstate's structural engineer Sinan Jawad, and Plaintiffs' engineer Jay B. Rosen. ECF 24-2 ¶¶ 12-15, 32-33. On September 29, 2014, Jawad issued a report concluding that there was no damage to Plaintiffs' home caused by vibration. ECF 24-2 ¶¶ 19-21.
On September 30, 2014, Rosen issued a report. ECF 24-2 ¶ 35. Rosen concluded that "the house was damaged due to the forces that occurred during the water main breakage and subsequent flooding. The flooding resulted in saturation of the lower levels of the structure and damage to the existing foundation and exterior walls." ECF 24-2 ¶ 36.
On February 26, 2015, Rosen issued a supplemental report without re-inspecting the property. ECF 24-2 ¶¶ 34, 38-39. The supplement clarified that "[a]s per my original report, the damage that occurred due to the water main break is attributable to the initial flooding and [sic] well as vibration due to the equipment used to reconstruct the main." ECF 24-23 Def. Ex. R. The parties hotly dispute whether Rosen's February 2015 supplement altered the September 2014 report: Defendant contends that Rosen's initial report made no mention of damage to the property as a result of vibrations from heavy equipment and attributed all costs to flooding. ECF 24-2 ¶¶ 37, 40; ECF 27 Def. Resp. to PSOF ¶ 8. Plaintiffs counter that Rosen's initial report made factual assertions consistent with vibration damage such that his supplemental report merely clarified any ambiguity. ECF 26-2 Pl. Resp. to DSOF ¶¶ 37, 40; PSOF ¶ 8.
Rosen's supplemental report also posited for the first time that "[w]hile it is difficult to separate the causes to individual damage, it is my professional opinion that the flood line or high water line can be used as a division for a demarcation of cause. In other words, damage below the high water line is due to the water main break, and damage above the high water line is due to vibration. While overlap does exist, this provides a bright line break in causation." ECF 24-2 ¶ 36.
During his deposition, Rosen repeatedly emphasized that it is difficult to separate damage caused by water from damage caused by vibration. He could not provide a scientific basis for his conclusion about the water line as causal boundary. ECF 24-2 ¶¶ 42-43; ECF 24-22 Def. Ex. Q (Rosen Dep.) at:
On April 17, 2015, after this litigation had commenced as outlined below, Allstate conducted a second inspection of Plaintiffs' property. Present were Allstate's structural engineer Gary Popolizio and an estimator working for the Plaintiffs named Walter Clark. ECF 24-2 ¶¶ 26-27, 44, 46.
Clark prepared interior and exterior damage estimates. ECF 24-2 ¶¶ 44-55. Clark relied on Rosen's initial September 2014 report, conversations with the Plaintiffs, and a visual inspection in making his estimates.
On October 2, 2014, Allstate denied Plaintiffs' vibration claim on grounds that damage to the property resulted from earth movement, not vibration. ECF 24-2 ¶¶ 22-25. On December 16, 2014, Plaintiffs filed suit in the Philadelphia County Court of Common Pleas. ECF 1 ¶ 1. Allstate removed the action to this Court on January 20, 2015 on the basis of diversity jurisdiction as more than $75,000 is in controversy, Allstate is incorporated in and has its principle place of business in Illinois, and Plaintiffs are domiciled in Pennsylvania. ECF 1; 28 U.S.C. § 1332 (2015). Defendant filed both Motions on October 30, and they are now ripe for adjudication.
"Rule 702 has two major requirements. The first is that a witness proffered to testify to specialized knowledge must be an expert . . . . The second requirement of Rule 702 is that the expert must testify to scientific, technical or other specialized knowledge [that] will assist the trier of fact[, meaning] that an expert's testimony is admissible so long as the process or technique the expert used in formulating the opinion is reliable."
In this case, Defendant has not argued that Plaintiffs failed to produce qualified experts. Rosen has a Bachelor and Master of Science in Civil Engineering, two decades of experience in the field, and Professional Engineer licenses in nine states. ECF 25-4 Pl. Opp. Ex. D. Clark similarly has worked in the field as a claims estimator since 2008. ECF 25-9 Pl. Opp. Ex. I.
A far thornier issue, however, concerns whether Rosen's February 2015 supplemental report and Clark's damages estimate resulted from reliable processes. Determining whether an expert report is reliable is a "flexible" inquiry that can consider the following non-exhaustive list of factors: "(1) whether a method consists of a testable hypothesis; (2) whether the method has been subject to peer review; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique's operation; (5) whether the method is generally accepted; (6) the relationship of the technique to methods which have been established to be reliable; (7) the qualifications of the expert witness testifying based on the methodology; and (8) the non-judicial uses to which the method has been put."
One portion of Rosen's February 2015 report, in which Rosen claims that the water line provides a way to demarcate damage caused from flooding from damage caused by vibrations, fails to meet the reliability standards outlined above.
However, the remaining conclusion in Rosen's February 2015 report (that there is harm present in the Plaintiffs' home from both vibration and water damage, without apportioning relative degrees) is admissible. Defendant can cross-examine Rosen at trial on what Defendant characterizes as an inconsistency between Rosen's September 2014 and February 2015 reports on this issue.
Clark's damages estimate is also admissible. Defendant has not challenged the process by which Clark computed damages in this case. Defendant's main objection is that Clark's estimate cannot opine on what caused the damage to the exterior of the property. However, Clark's report merely assumes that all damage to the exterior of Plaintiffs' residence is from vibration damage; it does not purport to establish causation. Clark arrived at this assumption independent of Rosen's February 2015 report, and Defendant can cross-examine Clark about the bases for it at trial. To the extent Plaintiffs cannot first prove that exterior damage resulted from vibration, Clark's report may be of little use to them. But to the extent they can, his report may provide a sound scientific basis for approximating how much damage they incurred.
In light of the Court's ruling on the admissibility of expert testimony above, Plaintiffs have raised an issue of fact as to whether damage was caused by vibrations.
Defendant's argument that Plaintiffs have failed to prove damages with reasonable certainty similarly fails for purposes of this Motion for Summary Judgment. "Ordinarily in insurance coverage disputes an insured bears the initial burden to make a prima facie showing that a claim falls within the policy's grant of coverage, but if the insured meets that burden, the insurer then bears the burden of demonstrating that a policy exclusion excuses the insurer from providing coverage if the insurer contends that it does."
It may be that at trial, the fact finder disbelieves Plaintiffs' assertion that vibration damage is present. It may also be that Defendant can show that the predominant cause of any damage to the property was excluded under the policy. But the Court cannot decide those issues now, and consequently Defendant's Motion for Summary Judgment shall be denied.
Rosen's February 2015 opinion that the water line on Plaintiffs' property provides a bright line causal break between damage caused by flooding and damage caused by vibration is not the product of reliable methodology. It is therefore inadmissible. The portion of Rosen's report clarifying that both vibration and water damage are present, as well as Clark's estimate of damages, do not suffer from the same defect and are thus admissible. Because issues of fact exist as to the cause of damage to the property, Defendant's Motion for Summary Judgment shall be denied.
An appropriate Order follows.