Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_12-cv-01811/USCOURTS-cand-3_12-cv-01811-9/pdf.json

Nature of Suit Code: 385
Nature of Suit: Property Damage - Product Liability
Cause of Action: 28:1332 Diversity-Property Damage

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

PHILADELPHIA INDEMNITY INSURANCE 

COMPANY,

 Plaintiff,

 v.

BROAN-NUTONE, L.L.C.; et al.,

 Defendants.

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Case No. 12-cv-01811-SC

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANTS'

MOTION TO STRIKE

I. INTRODUCTION

Now before the Court is Defendants Broan-Nutone, L.L.C. and 

A.O. Smith Corporation's motion to strike several of Plaintiff 

Philadelphia Indemnity Insurance Company's rebuttal experts. ECF 

No. 49. The motion is fully briefed.1

 The Court initially vacated 

the hearing on this motion, but then ordered supplemental briefing2

and held a hearing on April 3, 2015. For the reasons set forth 

 

1 ECF Nos. 50 ("Mot."), 65 ("Opp'n"), 71 ("Reply").

2 See ECF Nos. 98 ("Supp. Br. Order"), 100 ("Pl.'s Supp. Br."), 103 

("Defs.' Supp. Br.").

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below, the motion is GRANTED IN PART and DENIED IN PART.

II. BACKGROUND

This case is about the cause of a fire. Plaintiff insured a 

building in San Francisco that was severely damaged by a fire in 

2011. Plaintiff alleges that Defendant Broan-Nutone manufactured a 

defective bathroom ceiling fan that overheated and started the 

fire. Defendants argue that the fan was not defective and that the 

fire started in the building's trash chute.

This motion concerns damages experts. Plaintiff's initial 

expert witness disclosure did not specify any retained damages 

expert. According to Plaintiff, it intended to pursue the cost of 

repairs as the measure of its damages and did not believe an expert 

was needed to establish the amount spent on repairs. Defendants' 

initial expert disclosure, which came one month after Plaintiff's, 

named Wayne F. Prescott as an expert who would testify regarding 

the fair market value the building prior to the fire. Defendants 

believe that the fair market value of building is the upper limit 

of the amount Plaintiff may recover. In its rebuttal expert 

disclosure, Plaintiff named four retained experts whose testimony 

relates to damages. Defendants responded with this motion, 

claiming that Plaintiff's rebuttal experts are not actually 

intended to rebut anything Mr. Prescott says, but instead will 

bolster Plaintiff's case in chief. Plaintiff opposes, arguing that 

its rebuttal experts do, in fact, rebut Mr. Prescott's testimony. 

III. LEGAL STANDARD

Federal Rule of Civil Procedure 26 requires that "a party must 

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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." Fed. R. Civ. P. 26(a)(2)(A). Witnesses that 

are "retained or specially employed to provide expert testimony" 

must prove a written report that contains:

(i) a complete statement of all opinions the witness will 

express and the basis and reasons for them; (ii) the 

facts or data considered by the witness in forming them; 

(iii) any exhibits that will be used to summarize or 

support them; (iv) the witness's qualifications, 

including a list of all publications authored in the 

previous 10 years; (v) a list of all other cases in 

which, during the previous 4 years, the witness testified 

as an expert at trial or by deposition; and (vi) a 

statement of the compensation to be paid for the study 

and testimony in the case.

Fed. R. Civ. P. 26(a)(2)(B).

Rebuttal expert testimony is limited to presenting evidence 

that "is intended solely to contradict or rebut evidence of the 

same subject matter identified by an initial expert witness." Amos 

v. Makita U.S.A., Inc., No. 2:09-CV-01304-GMN, 2011 WL 43092, at *2 

(D. Nev. Jan. 6, 2011). Parties are normally required to provide 

rebuttal expert disclosures within 30 days of the other party's 

disclosure. Fed. R. Civ. P. 26(a)(2)(D); see also Yeti by Molly, 

Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001) 

("Absent other direction from the court, a rebuttal report shall be 

filed 'within 30 days after the disclosure' of the evidence that 

the expert is assigned to rebut.").

Federal Rule of Civil Procedure 37(c)(1) provides that "[i]f a 

party fails to provide information or identify a witness as 

required by Rule 26(a) or (e), the party is not allowed to use that 

information or witness to supply evidence on a motion, at a 

hearing, or at a trial, unless the failure was substantially 

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justified or is harmless." Fed. R. Civ. P. 37(c)(1); see also Yeti 

by Molly, 259 F.3d at 1106 ("Rule 37(c)(1) gives teeth to these 

requirements by forbidding the use at trial of any information 

required to be disclosed by Rule 26(a) that is not properly 

disclosed."). When a party designates an expert as a rebuttal 

expert, some of whose testimony is not proper rebuttal evidence,

the Court may limit that expert's testimony, rather than strike it 

entirely. See Lindner v. Meadow Gold Dairies, Inc., 249 F.R.D. 

625, 636 (D. Haw. 2008).

IV. DISCUSSION

Defendants challenge four of Plaintiff's rebuttal experts: 

Nasir Aziz, Trevor Crossley, Peter Evans, and Stan Tish. The Court 

finds that Mr. Aziz and Mr. Crossley must be excluded entirely, 

while Mr. Evans and Mr. Tish may testify, so long as their 

testimony is truly contained solely to rebuttal issues.

A. Mr. Aziz and Mr. Crossley

Defendants argue that expert reports of Mr. Aziz and Mr. 

Crossley fail to meet the requirements set out in Rule 26. 

Defendants are correct. Mr. Aziz's "report" consists only of a 

hypothetical bid for the demolition of six-story structure and a 

printed copy of Mr. Aziz's LinkedIn profile. See ECF No. 51 

("Mijanovic Decl.") Ex. D. Mr. Crossley's "report" is a 

spreadsheet listing various costs (presumably those that Mr. 

Crossley believes would be incurred in demolishing and clearing the 

building involved in this case) and a resume. See id. Ex. E. 

Neither report specifies what the expert's opinion will be. Even 

assuming that the opinions offered will be limited to the costs set 

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out in the reports, neither report provides any basis for the 

numbers that appear in them.

Plaintiff responds only briefly to the claim that these 

reports are deficient, apparently conceding that the reports do not 

meet the Rule 26 requirements but arguing that the Court should 

nonetheless exercise its discretion not to strike the reports. See

Opp'n at 8-9. Indeed, the Ninth Circuit has recognized that Rule 

37(c)(1) permits the use of information, even if its disclosure 

violated the Federal Rules, "if the parties' failure to disclose 

the required information is substantially justified or harmless." 

Yeti by Molly, 259 F.3d at 1106. The burden of showing that the 

violation of the rule was justified or harmless lies with the 

violator. See Goodman v. Staples The Office Superstore, LLC, 644 

F.3d 817, 827 (9th Cir. 2011). Plaintiffs do not claim that their 

failure to follow the Rules was justified; instead they only state 

(without support) that their failure was harmless. The Court 

disagrees. By failing to provide any clear indication of the bases 

for Mr. Aziz's or Mr. Crossley's opinions, Plaintiff denied 

Defendants a fair opportunity to challenge those opinions. 

Defendants' motion is GRANTED with respect to Mr. Aziz and Mr. 

Crossley, and their reports are STRICKEN.

B. Mr. Evans and Mr. Tish

The dispute about Mr. Evans and Mr. Tish stems from the 

parties' disagreement about what evidence is relevant to the 

damages assessment under California tort law. Mr. Evans is an 

insurance adjuster. He opines that Mr. Prescott's appraisal 

improperly considers "the building a constructive total loss, when 

damage was clearly partial and was readily repairable." Mijanovic 

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Decl. Ex. F at 3. He says that the correct valuation of the 

building as a total loss should include the costs of demolition, 

debris removal, and other related work. Id. at 4. Mr. Tish is an 

appraiser whose assessment of the building's value is different 

from that of Mr. Prescott. Defendants do not dispute that most of 

Mr. Tish's report is proper rebuttal testimony, but they do 

challenge the section of his report that discusses the replacement 

cost of the building. See Mot. at 11-12.

Essentially this is a dispute about whether the demolition, 

clearing, and other related costs can fairly be said to rebut Mr. 

Prescott's opinion. Defendants argue that those costs cannot rebut 

Mr. Prescott's opinion, because his opinion dealt only with the 

fair market value of the property prior to the fire. Plaintiff 

argues that Mr. Prescott's opinion is incomplete because it fails 

to account for those costs and that its experts therefore rebut Mr. 

Prescott's incomplete estimate of Plaintiff's loss.

California law provides for a plaintiff who has suffered 

tortious damage to real property to recover the lesser of (1) the 

cost of repairing the property to its state prior to the tort or 

(2) the diminution in the fair market value of the property. This 

rule was established by the California Supreme Court in Green v. 

General Petroleum Corporation:

If the cost of repairing the injury by removing the 

debris . . . and otherwise restoring the premises to 

their original condition, amounts to less than the value 

of the property prior to the injury, such cost is the 

proper measure of damages; and if the cost of restoration 

will exceed such value, then the value of the property is 

the proper measure.

205 Cal. 328, 336 (Cal. 1928). The California Court of Appeal more 

recently reiterated this rule in more modern terms:

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For tortious injury to real property, the general rule is 

that the plaintiff may recover the lesser of (1) the 

diminution in the property's fair market value, as 

measured immediately before and immediately after the 

damage; or (2) the cost to repair the damage and restore 

the property to its pretrespass condition, plus the value 

of any lost use. The practical effect of this rule is to 

limit damages to property to the fair market value of the 

property prior to the damage.

Kelly v. CB & I Constructors, Inc., 179 Cal. App. 4th 442, 450 

(Cal. Ct. App. 2009).

Green and Kelly demonstrate that damages for tortious injury 

to real property are ordinarily capped at the fair market value of 

the property prior to the tort.3 As a result, Plaintiff is 

precluded from recovering demolition, clearing, and other costs in 

addition to the fair market value of the building prior to the 

fire. However, evidence of such costs may be relevant to rebut Mr. 

Tish's testimony to the extent that those costs affected the postfire fair market value of the property. That is, the contested 

evidence is rebuttal evidence only if Plaintiff intends to show 

that the diminution in the property's fair market value (the 

difference in its value before and after the fire) exceeds Mr. 

Tish's appraisal of the property's value before the fire. Once 

 

3 There are exceptions to this general rule. One is the "personal 

reasons" exception, which permits a plaintiff who has a special 

personal reason to repair property to recover repair costs in 

excess of the pretrespass fair market value. See Kelly, 179 Cal. App. 4th at 450-51. Plaintiff asserts the personal reasons 

exception in this case. See Pl.'s Supp. Br. at 5-8. However, the 

personal reasons exception permits a plaintiff to recover 

restoration and repair costs; it is not relevant to establishing 

the fair market value of the property. Because Mr. Tish's 

testimony deals only with the property's fair market value, 

Plaintiff's rebuttal experts may not testify regarding any costs 

that Plaintiff intends to recover under the personal reasons 

exception. This holding does not preclude Plaintiff from arguing 

that the exception applies; it is merely a ruling that Plaintiff's 

rebuttal experts may not be used to establish any repair costs that 

Plaintiff intends to recover via that exception.

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Plaintiff has established the post-fire fair market value of the 

property, by expert or other admissible testimony, Plaintiff may 

use the testimony of Mr. Evans and Mr. Tish to show that those 

anticipated costs reduced the post-fire value of the building.

Evidence of demolition and clearing costs, as well as any 

other costs Plaintiffs seek to recover, is admissible to rebut Mr. 

Prescott's appraisal only to the extent that those costs diminished 

the fair market value of the property after the fire. Thus, while 

the Court finds that such evidence may be admissible as rebuttal 

evidence, it is admissible only if Plaintiffs lay the proper 

foundation, by an expert appraisal or other admissible evidence. 

The requisite foundation includes (1) the fair market value of the 

property after the fire; (2) evidence that the costs Plaintiff 

seeks to recover would reduce that fair market value; and (3) the 

extent to which those costs would reduce the property's post-fire 

fair market value. Without that foundation, evidence of any 

demolition, clearing, or other related costs Plaintiff seeks to 

recover in addition to the property's fair market value is 

inadmissible to rebut Mr. Prescott's testimony.

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V. CONCLUSION

For the reasons set forth above, Defendants' motion to strike 

is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to 

Mr. Aziz and Mr. Crossley, as their reports fail to comply with the 

Federal Rules of Civil Procedure. The motion is DENIED as to Mr. 

Evans and Mr. Tish. They may testify as rebuttal experts, subject 

to the limitations -- including the foundational requirements the 

Court has laid out -- set forth above.

IT IS SO ORDERED.

Dated: April 13, 2015

UNITED STATES DISTRICT JUDGE

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