The Grand Reserve of Columbus, LLC v. Property-Owners Insurance Company

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 4, 2018
• Docket: 17-10264
• Status: Unpublished

Opinion

Case: 17-10264 Date Filed: 01/04/2018 Page: 1 of 9

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 17-10264 ________________________

D.C. Docket No. 4:15-cv-00053-CDL

THE GRAND RESERVE OF COLUMBUS, LLC,

Plaintiff-Appellee,

versus

PROPERTY-OWNERS INSURANCE COMPANY,

Defendant-Appellant.

________________________

Appeal from the United States District Court for the Middle District of Georgia ________________________

(January 4, 2018)

Before WILLIAM PRYOR, JILL PRYOR, and ANDERSON, Circuit Judges.

PER CURIAM:

Insurer Property-Owners Insurance Company (“Property-Owners”) appeals

from a jury verdict against it. The jury determined that a large number of roofs at Case: 17-10264 Date Filed: 01/04/2018 Page: 2 of 9

residential building complex The Grand Reserve of Columbus, LLC (“Grand

Reserve”) had been damaged by a hail storm, for which Property-Owners was

responsible under its policy with Grand Reserve. On appeal, Property-Owners

argues that the district court abused its discretion when it allowed insured Grand

Reserve’s expert to testify, allowed the expert to offer undisclosed opinions after

Grand Reserve rested, and allowed the jury to speculate about the amount of

damages. Property-Owners also argues that the district court erred when it

concluded that the timeliness of Grand Reserve’s notice of loss was properly

decided by the jury.

Property-Owners argues that the district court abdicated its gatekeeping role

by not deciding whether the testimony of Grand Reserve’s expert, Dansby,

satisfied Daubert before the trial. In Daubert v. Merrell Dow Pharmaceuticals,

Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993), the Supreme Court set the standard for

admission of expert testimony under Federal Rule of Evidence 702. Under

Daubert, the district court is to act as a “gatekeeper to insure that speculative and

unreliable opinions do not reach the jury.” McClain v. Metabolife International,

Inc., 401 F.3d 1233, 1237 (11th Cir. 2005)(citing Daubert, 590 U.S. at 589 n.7, 113

S. Ct. at 2795 n.7). The district court must perform “a preliminary assessment of

whether the reasoning or methodology underlying the testimony is scientifically

valid and of whether that reasoning or methodology properly can be applied to the

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facts in issue.” Daubert, 590 U.S. at 592-933, 113 S. Ct. at 2796. In McClain, we

held that the district court abdicated its gatekeeper role when it held a Daubert

hearing but stated that it was not qualified to determine if the experts’ testimony

was reliable and well-founded. 401 F.3d at 1238.

Here, the district court acknowledged its gatekeeping function and then

stated that it was going to have the plaintiff lay its foundation during direct

examination. Only then would the court decide if Dansby’s testimony was

admissible under Rule 702. The court performed its gatekeeping function in front

of the jury: Grand Reserve presented Dansby and his credentials and methodology

on direct and then Property-Owners cross-examined Dansby as to both. The court

then ruled that Dansby was qualified to provide an expert opinion as to the cause of

the roof damage at Grand Reserve. Property-Owners cites no authority indicating

that the Daubert inquiry must be conducted pre-trial.1 We hold that the district

court did not abuse its discretion, and did not abdicate its gatekeeper role.

Property-Owners also argues that the district court erred when it permitted

Dansby to testify about damages after only qualifying him to testify about

causation, but Property-Owners failed to preserve this objection at trial. When

1 We need not address the wisdom of conducting the inquiry in the presence of the jury. In this case, the inquiry was conducted and the district court’s decision with respect to Dansby’s qualifications to testify about causation was made before any substantive testimony in that regard was heard by the jury.

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Grand Reserve sought to introduce Dansby’s expert report, the trial court asked

Property-Owners if it had an objection to Dansby’s methodology as to the

damages, and Property-Owners stated that it did not. Property-Owners thus has

waived this argument. SEC v. Monterosso, 756 F.3d 1326, 1338 (11th Cir. 2014).

We also reject as wholly without merit Property-Owners’ argument that

Dansby was not qualified. Dansby has worked in this field for 26 years and

testified that he has examined over a thousand roofs. He even cited a specific hail

storm in Rome several years ago with respect to which he spent a significant

amount of time assessing the damages for other insurance companies. He

described in detail the damage throughout the Columbus area from the 2013 storm

(which was apparently the worst in years). There is no question that this type of

experience qualified Dansby as an expert witness.

We also reject Property-Owners’ argument that Dansby’s methodology was

unreliable. At trial, Dansby described in some detail his methodology, which was

the industry standard. One part of it involved creating a sample, usually 10 x 10

feet, for each exposure (i.e. northfacing, southfacing). He would then examine that

sample to determine if the damage was created by hail, a loosened nail, the roofer’s

shoe, or something else. Dansby testified that Property Owner’s manual specified

using the same test. Dansby testified that he looked at all of the two-story

buildings, neither of two three-story buildings, and half of the one-story buildings,

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focusing on the one-story buildings on the outside boundaries of the property. He

examined all but five or six of the fifty-five buildings. He described seeing hail

damage that was consistent from roof to roof across the property. Given his

testimony about how extensive and severe the 2013 storm was, and how consistent

the hail damage from roof to roof was, it was logical to take a sample of the roofs

located next to each other, in buildings facing the same direction and with the same

slope, to determine the overall damage. 2 Similarly, his testimony regarding the

Atlas Chalet shingle did not undermine his credentials: he testified that although he

was not familiar with the model before this case, he researched it, learned its

defect, and then excluded damage of the sort associated with it in his calculations. 3

Property Owners argues that the district court abused its discretion when it

allowed Dansby to offer new evidence of damages after Grand Reserve stated that

it rested its case, but a trial “judge has broad discretion to reopen a case to accept

additional evidence, and his decision will not be overturned absent an abuse of that

discretion,” Hibiscus Assocs. Ltd. v. Bd. of Trustees of Policemen & Firemen Ret.

Sys. of City of Detroit, 50 F.3d 908, 917 (11th Cir. 1995), and the district court did

not abuse its discretion here. Here, Dansby’s original damages calculations were

in the form of replacement value while the policy, as Property-Owners knew,

2 Moreover, he testified that such extrapolation was common in the industry. 3 Property-Owners’ other challenges to Dansby’s testimony are rejected without need for discussion. 5 Case: 17-10264 Date Filed: 01/04/2018 Page: 6 of 9

required actual cash value. Actual cash value is determined simply by subtracting

depreciation from the figure for replacement value. Calculation of the depreciation

figure was readily apparent because the actual age of each building was reflected

on the declarations page of the policy. That calculation and the subtraction thereof

from the replacement value to determine actual cash value was a common practice

for Property-Owners adjusters. And we have upheld the decision of district court to

allow a plaintiff to reopen its case and introduce new evidence to prove an element

of a claim in similar circumstances. See Lundgren v. McDaniel, 814 F.2d 600, 607

(11th Cir. 1987); United States v. One 1972 44’ Striker, Bonanza, 753 F.2d 867,

869 (11th Cir. 1985).

Property-Owners argues that it was entitled to judgment as a matter of law

because Grand Reserve failed to introduce sufficient evidence of damages, but we

disagree. Grand Reserve was required to prove “‘resultant damages’” as an

element of its claim of breach of contract under Georgia law. See Bates v.

JPMorgan Chase Bank, NA, 768 F.3d 1126, 1130 (11th Cir. 2014) (quoting Norton

v. Budget Rent A Car Sys., Inc., 307 Ga. App. 501, 705 S.E.2d 305, 306 (2010)).

And, under Federal Rule of Civil Procedure 50, a district court should grant a

motion for judgment as a matter of law if the evidence is not “‘legally sufficient’”

to support a contrary verdict. McGinnis v. Am. Home Mortg. Servicing, Inc., 817

F.3d 1241, 1254 (11th Cir. 2016) (quoting Fed. R. Civ. P. 50). Property-Owners

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argues that Dansby offered “at best” speculative evidence of damages, but its

attacks on Danby’s credibility and the accuracy of his estimate are misplaced

because “we have stressed” that “‘[i]t is the jury’s task—not [the court’s]—to

weigh conflicting evidence and inferences, and determine the credibility of

witnesses.’” McGinnis, 817 F.3d at 1254 (alterations in original) (quoting Shannon

v. Bellsouth Telecomms., Inc., 292 F.3d 712, 715 (11th Cir. 2002)).

Finally, Property-Owners argues that Grand Reserve did not provide prompt

notice of loss as required by the policy and thus should not recover. Here, a strong

wind and hail storm hit Columbus on March 18, 2013, and there was

uncontroverted evidence of the extensive damage it caused to metal roof parts,

patio screens, and heating and air conditioning units at every building in the

complex. In the months after the storm, Grand Reserve began receiving some

reports of leaking ceilings. Two work orders, one in May and one in June,

involved roof repairs, and the technician’s notes report repairs to wind- and hail-

damaged shingles. However, the two work orders showed hail damage only to a

few shingles each. There was testimony that such damage to a few shingles would

not give alert to broader damage. Moreover, given that Grand Reserve receives

approximately 2500 work orders per year, the isolated reports did not raise any

flags. Instead, in December 2013, the complex’s roofer replaced six to eight

bundles of shingles – a lot more than other repairs. He then notified the complex’s

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manager of the scope of the damage. The manager alerted owner Steven Corbett

that hail damage could be widespread. Shortly thereafter, Corbett notified

Property-Owners. And the jury heard evidence that Property-Owners did not

object to the delay after received it Grand Reserve’s notice of the claim and that

Property-Owners made a partial payment on the claim.

“An insured that cannot demonstrate justification for failure to comply with

a notice provision that is expressly made a condition precedent to coverage is not

entitled to either a defense or coverage, even if the insurer does not show actual

harm from a delay in notice.” Progressive Mountain Ins. Co. v. Bishop, 338

Ga.App. 115, 790 S.E.2d 91, 94 (2016) (citing Plantation Pipe Line Co. v.

Stonewall Ins. Co., 335 Ga.App. 302, 310-11, 780 S.E.2d 501, 509-510 (2015)).

Under Georgia law, the questions of whether the insured gave timely notice and

whether the delay was justified are for the factfinder. Id. at 95. In Bishop, the

court held that there is no bright line rule about the number of months. Id.

Looking at the facts, the court held that the eleventh-month delay was not

unreasonable as a matter of law, where the insured delayed telling his insurance

company about the accident because he did not realize the severity of his injuries.

Id. at 96.

Under these facts, the question of whether the ten-month delay was

reasonable was one for the jury to decide. The jury could reasonably have credited

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the testimony that the two work orders which revealed hail damage to a few

shingles would not have alerted Grand Reserve to broader hail damage, especially

in light of the great number and frequency of routine work orders. And that

Property-Owners failed to mention the delay long after it received notice of Grand

Reserve’s claim undermines its argument that “a reasonable jury would not have a

legally sufficient evidentiary basis to find” that the notice was not timely as a

matter of law. Fed. R. Civ. P. 50(a)(1). Thus, the district court did not err when it

denied Property-Owners’ motion for judgment as a matter of law on this issue.

For the foregoing reasons, the judgment of the district court is

AFFIRMED.