Novalk, LLC v. Evanston Insurance Company

Opinion

1 2 3 4 5 6 7 10 11 NOVALK, LLC, Case No.: 22cv1789-JO(LR)

12 Plaintiff, ORDER: 13 v. (1) GRANTING IN PART PLAINTIFF’S EX PARTE MOTION et al., 15 TO SUBSTITUTE EXPERT Defendants. WITNESSES AND MODIFY 16 SCHEDULING ORDER [ECF No. 35] 17 AND 18

19 (2) ISSUING AMENDED SCHEDULING ORDER 20 REGULATING DISCOVERY AND 21 OTHER PRE-TRIAL POCEEDINGS 22 23 24 Pending before the Court is Plaintiff’s Novalk LLC’s “Ex Parte Application to 25 Substitute Expert Witnesses and Modify Scheduling Order Regarding Expert Witness 26 Discovery Deadlines.” (ECF No. 35.) Defendant Evanston Insurance Company filed an 27 Opposition to Plaintiff’s motion. (ECF No. 36.) For the reasons stated below, the Court 28 GRANTS in part Plaintiff’s ex parte motion. 2 This action arises from a dispute between Plaintiff and Defendant Evanston 3 Insurance Company regarding insurance payment for damage and repair of Plaintiff’s 4 commercial property located at 310 Rockwood Avenue in Calexico, California, after it 5 suffered fire and water damage from the April 3, 2019 fire. (See ECF No. 1-20 at 2–30.) 6 In its Second Amended Complaint, the operative pleading in this case, Plaintiff asserts 7 causes of action for breach of contract, breach of the implied covenant of quiet 8 enjoyment, bad faith denial of insurance policy claim and benefits, unfair business 9 practices, and declaratory relief. (See id.; see also ECF No. 1-35.) 10 On March 30, 2023, the Court issued a “Scheduling Order Regulating Discovery 11 and Other Pre-trial Proceedings” (“Scheduling Order”) setting discovery and pretrial 12 deadlines in this case. (ECF No. 18 at 2–3.) On July 27, 2023, the Court granted in part 13 the parties’ joint motion to modify Scheduling Order and extended the deadline for expert 14 designation until October 6, 2023, rebuttal expert designation until October 20, 2023, 15 Rule 26(a)(2)(A) and (B) disclosures until November 20, 2023, Rule 26(a)(2)(D) and 16 Rule 26(e) supplemental disclosures until December 11, 2023, and expert discovery 17 deadline until January 12, 2024. (ECF No. 24 at 2.) 18 On October 6, 2023, Plaintiff designated Bethany Construction, Consulting and 19 Management, Inc. (“BCCM”) as its construction and repairs expert witness, and Mr. 20 Stanley L. Lipshultz as its insurance expert witness. (See ECF No. 35-3, Decl. of 21 Michelangelo Tatone (“Tatone Decl.”) at 3; ECF No. 35-3 at 22–24.) On October 20, 22 2023, Plaintiff designated BCCM as expert witness to offer rebuttal testimony to 23 Defendant’s designated expert Stephen Jirsa, and Mr. Lipshultz as expert witness to offer 24 rebuttal testimony to Defendant’s designated expert Kearson Strong. (See Tatone Decl. 25 at 3; ECF No. 35-3 at 30–32.) On November 17, 2023, Plaintiff filed the instant ex parte 26 motion seeking to: (1) substitute insurance expert witness Mr. Lipshultz, (2) substitute 27 construction and repair expert witness BCCM, and (3) continue all expert discovery 28 deadlines by approximately sixty days. (ECF No. 35 at 2, 12.) 2 A scheduling order “may be modified only for good cause and with the judge’s 3 consent.” Fed. R. Civ. P. 16(b)(4). The good cause standard “primarily considers the 4 diligence of the party seeking the amendment. The district court may modify the pretrial 5 schedule ‘if it cannot reasonably be met despite the diligence of the party seeking the 6 extension.’” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992); 7 see also Noyes v. Kelly Servs., 488 F.3d 1163, 1174 n.6 (9th Cir. 2007) (“[r]ule 16(b) 8 provides that a district court’s scheduling order may be modified upon a showing of 9 ‘good cause,’ an inquiry which focuses on the reasonable diligence of the moving 10 party.”). A court may also consider the “existence or degree of prejudice to the party 11 opposing the modification,” but “the focus of the inquiry is upon the moving party’s 12 reasons for seeking modification.” Johnson, 975 F.2d at 609. 13 After a scheduling order deadline has passed, in addition to establishing good 14 cause, a party moving to extend the expired deadline is required to demonstrate excusable 15 neglect. Cannon v. Austal USA LLC, Case No.: 15cv2582-CAB (BLM), 2017 WL 16 1479108, at *3 (S.D. Cal. Apr. 25, 2017) (citing Mireles v. Paragon Sys., Inc., Civil No. 17 13–CV–122–L (BGS), 2014 WL 575713, at *2 (S.D. Cal. Feb. 11, 2014); Fed. R. Civ. P. 18 6(b)(1)(B) (providing that “the court may, for good cause, extend the time on motion 19 made after the time has expired if the party failed to act because of excusable neglect.”)). 20 When analyzing whether a party’s neglect was excusable, district courts consider the 21 following factors: the danger of prejudice to the non-moving party; the length of the 22 delay and its potential impact on judicial proceedings; the reason for the delay, including 23 whether it was within the reasonable control of the movant; and whether the moving 24 party’s conduct was in good faith. See Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. 25 P’ship, 507 U.S. 380, 395 (1993); Cannon, 2017 WL 1479108, at *3; Mireles, 2014 WL 26 575713, at *2. “[T]he determination is at bottom an equitable one, taking account of all 27 relevant circumstances surrounding the party’s omission.” Pioneer Inv. Servs. Co., 507 28 U.S. at 395. 2 Plaintiff moves to substitute its insurance expert witness Mr. Lipshultz, as well as 3 its construction and repair expert witness BCCM, and to extend all expert discovery 4 deadlines by approximately sixty days. (See ECF No. 35 at 2, 5.) Plaintiff argues that it 5 has established good cause and excusable neglect to support its motion. (See ECF No. 6 35.) Plaintiff alleges that it was diligent in “retaining and monitoring expert witnesses to 7 comply with the scheduling order,” but “unexpected events justifying the substitution of 8 witnesses are beyond Plaintiff’s control.” (Id. at 2.) Plaintiff further asserts that it will be 9 significantly prejudiced if the requested extension is not granted because it will not be 10 able to obtain “crucial expert opinion” regarding the “two main contested issues” in this 11 case. (Id.) Additionally, Plaintiff contends that Defendant will not be prejudiced because 12 Plaintiff’s new experts will testify on the same topics, and Defendant has not yet 13 expended any resources on reviewing Plaintiff’s expert reports or preparing for any 14 depositions. (Id.) Plaintiff also maintains that the requested extension will not affect any 15 pretrial deadlines. (Id. at 2, 5–6.) 16 Defendant argues that Plaintiff’s motion is untimely and lacks good cause, and 17 asks the Court to deny the motion. (ECF No. 36 at 1, 5.) Defendant alleges that after 18 Plaintiff timely designated Mr. Lipshultz and BCCM as expert witnesses on October 6, 19 2023, the experts had at least forty-five days to prepare their reports by the Court’s 20 deadline. (Id. at 4.) Defendant further states that Plaintiff’s construction expert BCCM 21 does not explain when it began its analysis, the work that has been completed, which 22 work still needs to completed, or the steps BCCM took to comply with the current 23 deadline for expert reports. (Id. at 4–5.) Additionally, Defendant asserts that Plaintiff’s 24 claims expert, Mr. Lipshultz, neither provides the date of his wife’s “serious and 25 imminent surgery,” nor describes the work he had performed before he decided to 26 withdraw. (Id. at 5.) Finally, Defendant notes that on November 8, 2023, Plaintiff’s 27 counsel advised defense counsel that Plaintiff’s experts were requesting “a 20–30 day 28 extension on the Rule 26 Expert Disclosures due to the holidays.” (Id.) 1 The Court’s Scheduling Order set October 6, 2023, as the deadline to designate 2 expert witnesses. (ECF No. 18 at 3.) Plaintiff timely designated Mr. Lipshultz as its 3 insurance expert witness and BCCM as its construction and repair expert witness. (See 4 ECF No. 35-3; Tatone Decl. at 3.) On November 17, 2023, Plaintiff moved to substitute 5 expert witnesses Lipshultz and BCCM. (See ECF No. 35.) Because Plaintiff moved to 6 substitute expert witnesses Lipshultz and BCCM more than a month after the deadline for 7 expert designation, Plaintiff is required to establish good cause and excusable neglect. 8 See Cannon, 2017 WL 1479108, at *3; Mireles, 2014 WL 575713, at *2. Plaintiff alleges 9 in its motion that on November 13, 2023, its counsel learned that Mr. Lipshultz would not 10 be able to serve as an expert due to his wife’s “serious and imminent surgery.” (ECF No. 11 35 at 9.) Plaintiff further states that on November 14, 2023, BCCM advised Plaintiff’s 12 counsel that “the complexity of the case, coupled with an surge in deadlines and 13 insufficient staff,” BCCM required additional time to complete the Rule 26 report, and 14 BCCM’s “expert report would therefore not be ready until February 1, 2024.” (Id. (citing 15 Tatone Decl. at 2; Gallagher Decl. at 2).) 16 In support of its ex parte motion, Plaintiff provided a declaration from Mr. 17 Lipshultz. (ECF No. 35-1, Decl. of Stanley L. Lipshultz (“Lipshultz Decl.”) at 1–2.) Mr. 18 Lipshultz states that he is Plaintiff’s designated expert witness to offer testimony in the 19 following areas: (1) insurance claims handling, investigation, and cooperation by the 20 insured; (2) bad faith; (3) insurance policy coverage and policies; (4) insurance custom 21 and practice; (5) duties of the insured and insurer; (6) insurance standard of care; and 22 (7) any “other subjects or opinions referenced in its report or in subsequent deposition 23 testimony, including reasonable inferenced arising therein.” (Id. at 2.) He further states 24 that he is Plaintiff’s designated expert witness to offer rebuttal testimony to Defendant’s 25 designated expert witness Kearson Strong. (Id.) Mr. Lipshultz also declares that on 26 November 13, 2023, he advised Plaintiff’s counsel that Mr. Lipshultz’s wife had “serious 27 and imminent surgery” and, therefore, he “would not be able to fulfill [his] expert witness 28 role in the current action.” (Id.) 1 Further, Plaintiff has provided a declaration from Mr. Gallagher, the operations 2 manager of BCCM. (ECF No. 35-2, Decl. of Michael Gallagher (“Gallagher Decl.”) at 3 1.) Mr. Gallacher declares that BCCM is Plaintiff’s designated expert witness to offer 4 testimony regarding: (1) cost estimate; (2) scope of repair; (3) reconstruction; (4) damage 5 to the property, including but not limited to damage from the fire and any pre-existing or 6 subsequent damage; and (5) any “other subjects or opinions referenced in its report or in 7 subsequent deposition testimony, including reasonable inferenced arising therein,” as 8 well as “whether the scope of repair paid out in the 2017 claim was performed/completed 9 by the owner prior to the fire.” (Id. at 2.) Mr. Gallagher further states that BCCM is 10 Plaintiff’s designated expert witness to offer rebuttal testimony to Defendant’s designated 11 expert witness Stephen Jirsa. (Id.) Additionally, Mr. Gallagher declares that on 12 November 14, 2023, he informed Plaintiff’s counsel that BCCM would not be able to 13 complete its expert report by November 20, 2023, because of the “complexity of the case 14 requiring more time than initially anticipated, coupled with deadlines BCCM has 15 committed to before being retained as Plaintiff’s expert.” (Id.) 16 In his supporting declaration, Plaintiff’s counsel, Mr. Tatone, states that before 17 retaining expert witnesses, Plaintiff discussed the Court’s Scheduling Order to ensure that 18 the prospective experts would be able to comply with the deadlines. (Tatone Decl. at 4.) 19 Mr. Tatone further declares that after retaining the experts, he “diligently and repeatedly 20 reached out to the experts to remind them of the deadlines in this action, including the 21 deadline to file the Rule 26 report by email and phone call, including in both October and 22 November 2023.” (Id.) Mr. Tatone further states that on November 13, 2023, Mr. 23 Lipshultz informed him that due to his wife’s “serious and imminent surgery,” he would 24 not be able to serve as an expert witness in this case. (Id.) Mr. Tatone also declares that 25 on November 14, 2023, BCCM advised him that “the complexity of the case required 26 BCCM more time than initially anticipated to complete the Rule 26 report,” and that 27 BCCM would not be able to complete its expert report by the November 20, 2023 28 deadline. (Id.) Additionally, Mr. Tatone declares that when he contacted defense 1 counsel in early November 2023, to discuss an extension of the Rule 26 expert disclosure 2 deadline, he “was neither told nor did [he] have an understanding that BCCM would be 3 unable to timely prepare its expert report or that Mr. Lipshultz would no longer be able to 4 serve as an expert.” (Id.) 5 Because the Court has already issued a Scheduling Order and the deadline for 6 expert witness designation has passed when Plaintiff filed its ex parte motion, Plaintiff is 7 required to demonstrate good cause and excusable neglect to have the deadline amended. 8 A. Good Cause 9 The Court has carefully reviewed all exhibits provided by the parties, and 10 declarations from Mr. Lipshultz, Mr. Gallagher, and Plaintiff’s counsel, Mr. Tatone. The 11 documents establish that Plaintiff’s counsel learned about Mr. Lipshultz’s unavailability 12 to serve as an expert witness more than a month after his timely designation and four 13 days before Plaintiff moved to substitute Mr. Lipshultz. The documents also establish 14 that Mr. Lipshultz’s unavailability was caused by his wife’s health issues that were 15 unforeseen and outside of Plaintiff’s control. 16 Further, although Plaintiff timely designated its construction and repair expert 17 BCCM, and moved to substitute BCCM three days after Plaintiff’s counsel learned that 18 BCCM was not able to complete its expert report by November 20, 2023, the Court is 19 more troubled by the circumstances surrounding Plaintiff’s request to substitute BCCM. 20 Nevertheless, in light of Plaintiff’s contention in its motion that BCCM will not be able to 21 complete its expert report “until February 1, 2024,” (see ECF No. 35 at 9), and 22 representations in Mr. Gallagher’s and Mr. Tatone’s declarations, the Court finds that 23 BCCM’s inability to comply with the November 20, 2023 deadline was outside of 24 Plaintiff’s control. 25 The Court further finds that Plaintiff will be significantly prejudiced without an 26 insurance, and a construction and repair expert witnesses, because the proposed expert 27 opinions concern insurance company’s duty of care and the cost of repairs, which are key 28 contested issues in this case. Finally, the Court notes that Plaintiff attempted to obtain a 1 stipulation from Defendant regarding the proposed expert witness substitution and 2 continuance of expert discovery deadlines. (See Tatone Decl. at 4; see also ECF No. 36 3 at 3.) Accordingly, the Court finds that Plaintiff was reasonably diligent in seeking to 4 amend the Scheduling Order. 5 B. Excusable Neglect 6 The Court has considered the four factors identified by the U.S. Supreme Court to 7 determine whether there was excusable neglect justifying Plaintiff’s late request to 8 substitute two expert witnesses, and finds that Plaintiff has established excusable neglect. 9 See Pioneer Inv. Servs. Co., 507 U.S. at 395 (outlining the following factors: prejudice to 10 the non-moving party, the length of the delay and its potential impact on judicial 11 proceedings, the reason for the delay, and whether the moving party’s conduct was in 12 good faith). An order extending the deadline for expert witness designation and related 13 expert discovery will not cause any significant prejudice to Defendant. Plaintiff filed the 14 instant motion before expert witness reports were due, and Defendant has not yet 15 expended time or financial resources reviewing Plaintiff’s expert witness reports or 16 preparing and conducting expert depositions. Further, Plaintiff’s anticipated expert 17 redesignation relates to the same set of facts and issues concerning insurance coverage 18 and the cost of construction and repair at issue in this case. Additionally, expert 19 discovery is still open, pretrial motions have not been filed, and trial date has not been 20 set. Although Plaintiff’s request will have an impact on the timing of the judicial 21 proceedings, as discussed below, the Court approves a shorter continuance that will not 22 significantly delay the judicial proceedings. Additionally, Plaintiff’s motion was 23 necessitated by events outside of its control. Finally, after reviewing the declarations 24 included in Plaintiff’s ex parte motion, the Court cannot find that Plaintiff acted in bad 25 faith. Because most of the factors weigh in favor of finding excusable neglect, and in the 26 interests of justice, the Court finds that Plaintiff has established excusable neglect. See 27 id. (emphasis added) (providing that the determination regarding excusable neglect is “an 28 1 equitable one, taking account of all relevant circumstances surrounding the party’s 2 omission.”). 3 C. Conclusion 4 The Court finds that Plaintiff has established good cause and excusable neglect 5 justifying its request to extend the deadline to substitute Plaintiff’s two designated expert 6 witnesses, BCCM and Mr. Gallagher, and to continue expert discovery deadlines. 7 The Court, nevertheless, finds that the sixty-day extension of time Plaintiff seeks is 8 excessive. However, under the facts of this case, the Court finds good cause for a shorter 9 continuance and GRANTS in part Plaintiff’s ex parte motion to continue. 10 Although the Court continues the deadline to designate expert witnesses, this 11 extension is granted for the sole purpose of allowing Plaintiff an opportunity to 12 redesignate its insurance, and construction and repair expert witnesses to offer testimony 13 on the same topics as Mr. Lipshultz and BCCM. (See Lipshultz Decl. at 2; Gallagher 14 Decl. at 2; see also ECF No. 35-3 at 23–24, 31–32.) Plaintiff is further reminded that it is 15 required to proceed with expert discovery in an expeditious manner, and cautioned that 16 the Court is not inclined to entertain any further extensions of scheduling deadlines. 17 Having consulted with the chambers of Judge Ohta, the Court issues the following 18 “Amended Scheduling Order Regulating Discovery and Other Pre-trial Proceedings”: 19 1. The parties shall designate their respective experts in writing by 20 December 11, 2023. The parties must identify any person who may be used at trial to 21 present evidence pursuant to Rules 702, 703 or 705 of the Fed. R. Evid. This requirement 22 is not limited to retained experts. The date for exchange of rebuttal experts shall be by 23 December 11, 2023. The written designations shall include the name, address and 24 telephone number of the expert and a reasonable summary of the testimony the expert is 25 expected to provide. The list shall also include the normal rates the expert charges for 26 deposition and trial testimony. 27 2. By January 16, 2024, each party shall comply with the disclosure 28 provisions in Rule 26(a)(2)(A) and (B) of the Federal Rules of Civil Procedure. This 1 disclosure requirement applies to all persons retained or specially employed to provide 2 expert testimony, or whose duties as an employee of the party regularly involve the 3 giving of expert testimony. Except as provided in the paragraph below, any party 4 that fails to make these disclosures shall not, absent substantial justification, be 5 permitted to use evidence or testimony not disclosed at any hearing or at the time of 6 trial. In addition, the Court may impose sanctions as permitted by Fed. R. Civ. P. 7 37(c). 8 3. Any party shall supplement its disclosure regarding contradictory or rebuttal 9 evidence under Fed. R. Civ. P. 26(a)(2)(D) by January 29, 2024. 10 4. All expert discovery shall be completed by all parties by February 26, 11 2024. The parties shall comply with the same procedures set forth in the paragraph 12 governing fact discovery. 13 5. Failure to comply with this section or any other discovery order of the court 14 may result in the sanctions provided for in Fed. R. Civ. P. 37, including a prohibition on 15 the introduction of experts or other designated matters in evidence. 16 6. All other pretrial motions must be filed by March 8, 2024. Counsel for the 17 moving party must obtain a motion hearing date from the law clerk of the judge who will 18 hear the motion. The period of time between the date you request a motion date and the 19 hearing date may vary from one district judge to another. Please plan accordingly. 20 Failure to make a timely request for a motion date may result in the motion not being 21 heard. Motions in limine are to be filed as directed in the Local Rules, or as otherwise set 22 by the district judge. 23 7. If the trial will be a bench trial, Counsel shall file their Memoranda of 24 Contentions of Fact and Law and take any other action required by Local Rule 16.1(f)(2) 25 by June 12, 2024. Counsel do not need to file Memoranda of Contentions of Fact and 26 Law if the trial will be a jury trial. 27 8. Counsel shall comply with the pre-trial disclosure requirements of Fed. R. 28 Civ. P. 26(a)(3) by June 12, 2024. Failure to comply with these disclosure requirements 1 could result in evidence preclusion or other sanctions under Fed. R. Civ. P. 37. 2 9. Counsel shall meet and take the action required by Local Rule 16.1(f)(4) by 3 June 20, 2024. At this meeting, counsel shall discuss and attempt to enter into 4 stipulations and agreements resulting in simplification of the triable issues. Counsel shall 5 exchange copies and/or display all exhibits other than those to be used for impeachment. 6 The exhibits shall be prepared in accordance with Local Rule 16.1(f)(4)(c). Counsel shall 7 note any objections they have to any other parties’ Pretrial Disclosures under Fed. R. Civ. 8 P. 26(a)(3). Counsel shall cooperate in the preparation of the proposed pretrial 9 conference order. 10 10. Counsel for plaintiff will be responsible for preparing the pretrial order and 11 arranging the meetings of counsel pursuant to Civil Local Rule 16.1(f). By June 26, 12 2024, plaintiff’s counsel must provide opposing counsel with the proposed pretrial order 13 for review and approval. Opposing counsel must communicate promptly with plaintiff’s 14 attorney concerning any objections to form or content of the pretrial order, and both 15 parties shall attempt promptly to resolve their differences, if any, concerning the order. 16 11. The Proposed Final Pretrial Conference Order, including objections to any 17 other parties’ Fed. R. Civ. P. 26(a)(3) Pretrial Disclosures shall be prepared, served and 18 lodged with the assigned district judge by July 3, 2024, and shall be in the form 19 prescribed in and comply with Local Rule 16.1(f)(6). 20 12. The final Pretrial Conference is scheduled on the calendar of the Honorable 21 Jinsook Ohta on July 10, 2024, at 8:30 a.m. 22 13. The parties must review the chambers’ rules for the assigned magistrate 23 judge. 24 14. A post trial settlement conference before a magistrate judge may be held 25 within 30 days of verdict in the case. 26 15. The dates and times set forth herein will not be modified except for good 27 cause shown. 28 / / / 1 16. Briefs or memoranda in support of or in opposition to any pending motion 2 not exceed twenty-five (25) pages in length without leave of a district court judge. 3 || No reply memorandum shall exceed ten (10) pages without leave of a district court judge. 4 || Briefs and memoranda exceeding ten (10) pages in length shall have a table of contents 5 || and a table of authorities cited. 7 Dated: December 6, 2023 8 LY 10 Honorable Lupe Rodriguez, Jr. 11 United States Magistrate Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28