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Advanced Mechanical Services, Inc. v. Auto-Owners Insurance Co.

United States District Court, W.D. Kentucky, Louisville Division

August 4, 2017



          David J. Hale, Judge.

         Plaintiffs Advanced Mechanical Services, Inc.; Advanced Grinding & Machine, Inc.; Beechtree, Inc.; Robert R. Setree, II; and Beverly L. Setree claim that they are entitled to additional payment under an insurance policy purchased from Defendant Auto-Owners Insurance Company. (Docket No. 1-2) According to Plaintiffs, Auto-Owners breached the policy by failing to fully reimburse them for storm damage to their business property. (Id., PageID # 8) They further assert that this failure amounted to bad faith and violated the Kentucky Unfair Claims Settlement Practices Act. (Id., PageID # 9-11)

         Auto-Owners has moved to strike Plaintiffs' expert disclosures and for summary judgment, arguing that the disclosures are untimely and incomplete and that Plaintiffs' claims fail without expert testimony. (D.N. 99, 109) After the motion for summary judgment was fully briefed, Plaintiffs moved to amend and supplement their expert disclosures. (D.N. 111) But the amended disclosures, like the original, are deficient. Because Plaintiffs lack expert testimony to support their claim for replacement of machinery, and because they have not shown that they are entitled to replacement of undamaged siding to achieve “matching, ” Auto-Owners' motion for summary judgment will be granted.


         This action arises out of an insurance policy Plaintiffs purchased from Auto-Owners effective August 20, 2011. Pursuant to the policy, any lawsuit against Auto-Owners must be “brought within 2 years after the date on which the direct physical loss or damage occurred.” (D.N. 99-5) It is undisputed that the insured building-a machine shop located at 4644 Illinois Avenue in Louisville, Kentucky-suffered hail damage on April 28, 2012, which falls within the two-year timeframe. (See D.N. 1-2, PageID # 5) According to Plaintiffs, the property was also struck by lightning on that date, irreparably damaging several of the machines used in their business. Robert Setree testified at his deposition that he went to the shop the day after the storm and discovered that the electrical panel box had “blown up.” (D.N. 99-3, PageID # 468) Setree further testified that the transformers and utility pole were replaced after the storm. (Id., PageID # 474-77) However, a representative of Louisville Gas & Electric testified that LG&E's records show no power outage at 4644 Illinois Avenue on April 28, 2012, and the only replacement of the pole and transformers serving that address occurred on February 27, 2011-beyond the scope of the policy. (D.N. 99-3, PageID # 484-85, 490-91)

         Auto-Owners replaced the “blown up” panel box, as well as the roof and the siding on two sides of the building, which were damaged by hail. (See D.N. 107-2, PageID # 583 ¶ 7, 584 ¶ 12, 586 ¶ 17) However, Plaintiffs allege that Auto-Owners owes them further reimbursement. (D.N. 1-2, PageID # 8) They seek to recover the cost of replacing the machines that were allegedly destroyed and profits they claim to have lost as a result of the machines' destruction. (D.N. 107-1, PageID # 561-65) In addition, Plaintiffs contend that Auto-Owners must replace the two undamaged sides of the building “to conform with the two sides it [already] replaced.” (Id., PageID # 566) Auto-Owners has moved for summary judgment on all claims. (D.N. 99)


         Summary judgment is required when the moving party shows, using evidence in the record, “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see 56(c)(1). For purposes of summary judgment, the Court must view the evidence in the light most favorable to the nonmoving party. Loyd v. Saint Joseph Mercy Oakland, 766 F.3d 580, 588 (6th Cir. 2014) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). However, the Court “need consider only the cited materials.” Fed.R.Civ.P. 56(c)(3); see Shreve v. Franklin Cty., Ohio, 743 F.3d 126, 136 (6th Cir. 2014). If the nonmoving party “fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), ” the fact may be treated as undisputed. Fed.R.Civ.P. 56(e)(2)-(3). To survive a motion for summary judgment, the nonmoving party must establish a genuine issue of material fact with respect to each element of each of its claims. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) (noting that “a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial”).

         A. Lightning Damage

         The parties' primary dispute concerns the machines Plaintiffs claim were rendered inoperable by lightning on April 28, 2012. Auto-Owners, pointing to the LG&E records and Plaintiffs' discovery responses, maintain that Plaintiffs cannot prove the machines were damaged on that date, if they were damaged at all. Plaintiffs, meanwhile, contend that their proposed experts will provide the necessary proof and that even without expert testimony, they could prevail by relying on Robert Setree's affidavit and the report of one of Auto-Owners' experts. With or without the proposed experts, Plaintiffs' claims fail.

         1. Proposed Expert Testimony/Motion to Strike

         Auto-Owners asks the Court to strike Plaintiffs' first set of expert disclosures and deny their request to amend or supplement those disclosures. (D.N. 109, 115) The disclosures Plaintiffs made on February 17, 2017, were clearly deficient. Federal Rule of Civil Procedure 26 requires that expert disclosures “be accompanied by a written report-prepared and signed by the witness-” that includes the following information:

(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). Plaintiffs disclosed seven experts but attached only one report, by Kris Phillips of Bluegrass Lightning Consultants, Inc. (D.N. 99-2) The report makes no mention of Phillips's qualifications, compensation, or previous experience as an expert witness.[1] Phillips's opinions, which he states are based on a visual “inspection of the premises and the reports of the owner, ” comprise a single paragraph:

[W]e have determined that the damage reported and witnessed here is most likely the cause and a transient voltage caused by a lightning strike to a portion of the Electric Utility System. This is evidenced by the blown transformer adjacent to the subject property. Also, it is most likely that this surge event entered the subject property causing the reported damage as listed. Furthermore, based on our observations, there is a high likely hood [sic] that other parts of the buildings['] electrical and mechanical systems were affected. This is including but not limited to HVAC, Lightning [sic], and any installed Machining Equipment.

(Id., PageID # 457) The remainder of Phillips's report consists of photographs of the purported damage. (See id., PageID # 457-64)

         Rule 37 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 justified or is harmless.” Fed.R.Civ.P. 37(c)(1). “The exclusion of non-disclosed evidence is automatic and mandatory under Rule 37(c)(1) unless non-disclosure was justified or harmless.” Dickenson v. Cardiac & Thoracic Surgery of E. Tenn., P.C., 388 F.3d 976, 983 (6th Cir. 2004) (quoting Musser v. Gentiva Health Servs., 356 F.3d 751, 756 (7th Cir. 2004)). Although Plaintiffs do not expressly assert that their failure to provide disclosures in compliance with Rule 26(a)(2)(B) “was substantially justified or harmless, ” they protest that their newly retained counsel was overwhelmed at the time the disclosures were due and that Auto-Owners unreasonably refused to extend the disclosure deadline. (D.N. 107-1, PageID # 567; see id., PageID # 566) They further note that “[a]lthough ...

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