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Henlopen Hotel Inc. v. United National Insurance Co.

Superior Court of Delaware

January 10, 2020

HENLOPEN HOTEL, INC. Plaintiff,
v.
UNITED NATIONAL INSURANCE COMPANY, Defendant.

          Submitted: January 10, 2020

          Written Decision Issued: January 15, 2020

          ORDER ON PARTIES' MOTIONS TO EXCLUDE EXPERT WITNESSES AND FOR SUMMARY JUDGMENT

          Paul R. Wallace, Judge.

         Upon Henlopen Hotel's Motion to Exclude Expert Opinion Testimony, DENIED.

         Upon Henlopen Hotel's Motion for Partial Summary Judgment, DENIED.

         Upon United National Insurance's Motion to Exclude Expert Opinion Testimony, DENIED.

         Upon United National Insurance's Motion for Summary Judgment, GRANTED IN PART, DENIED IN PART.

         This 15th day of January, 2020, upon consideration of the Motion to Exclude the Expert Testimony of Mervin T. Thomas (D.I. 163) filed by United National Insurance Company ("United National") and the response thereto (D.I. 168) filed by Henlopen Hotel, Inc. ("Henlopen Hotel"); Henlopen Hotel's Motion in Limine to exclude testimony from J. Frank Peter (D.I. 171) and United National's response thereto (D.I. 174); Henlopen Hotel's Motion for Partial Summary Judgment (D.I. 122) accompanying brief (D.I. 132) and United National's answering brief thereto (D.I. 170); United National's Motion for Summary Judgment (D.I. 137) accompanying brief (D.I. 138) and Henlopen Hotel's answering brief thereto (D.I. 169); the oral arguments presented by the parties on the various motions, and the complete record in this matter, it appears to the Court that:

         (1) Henlopen Hotel filed this action against its insurer, United National Insurance Company for contract breach and insurance bad-faith[1] following a coverage denial for water damage caused by a ruptured pipe in January 2018. United National denied coverage based on its factual conclusion that the pipe burst due to freezing and its interpretation of Helopen Hotel's policy that, it says, disqualified coverage for such an incident.[2]

         (2) United National supports its conclusion that the pipe burst due to freezing with the expert analysis of J. Frank Peter ("Peter").[3] Henlopen Hotel seeks to admit the testimony of its own expert witness, Mervin T. Thomas ("Thomas"), to rebut this factual conclusion and give support to Henlopen Hotel's alternative hypothesis that the pipe failed due to accumulated wear and age.[4]

         (3) In dueling motions to exclude, each party seeks to bar the use of the other's expert alleging his testimony fails to satisfy the admissibility criteria for expert opinion evidence under Delaware's evidence rules.

         (4) In Henlopen Hotel's Motion for Partial Summary Judgment, it seeks the Court's determination that the water damage is covered under the policy based on either of two theories. Henlopen Hotel's first theory is that its undisputed efforts to keep the pipes heated satisfied the terms of the policy's Heat Requirement Endorsement[5] and therefore make the damage compensable irrespective of whether those efforts successfully prevented freezing.[6] Alternatively, the hotel argues that United National has failed to produce admissible evidence that freezing occurred and caused the damage.[7]

         (5) In United National's Motion for Summary Judgment, the insurer argues that the Heat Requirement Endorsement creates an ipso facto coverage exclusion for frozen pipes, [8] and that the record shows beyond all genuine dispute that the pipe ruptured due to a freeze.[9] Similarly, United National argues that because the policy unambiguously denies coverage, there was no breach of the covenant of good faith and fair dealing.

         (6) In the alternative, United National argues that even if a triable issue exists as to coverage, the exclusion and factual record demonstrate that United National's behavior shows neither bad faith nor maliciousness and so require entry of summary judgment as to the insurance bad faith count and prayer for punitive damages.[10]

         (7) Summary judgment is governed by Superior Court Civil Rule 56 and in a cross-motion with disputed facts, neither party's motion shall be granted unless the record shows that there is no genuine issue of material fact and one of the parties is entitled to judgment as a matter of law.[11]

         I. Each Experts' Testimony Is Admissible.

         (8) Delaware Rule of Evidence 702 permits a witness to provide an expert opinion if his or her testimony survives a five-step examination that looks at whether:

(a) the witness is qualified as an expert by knowledge, skill, experience, training, or education;
(b) the evidence is relevant;
(c) the expert's opinion is based upon information reasonably relied upon by experts in the particular field;
(d) the expert testimony will assist the trier of fact to understand the evidence or to determine a fact in issue; and
(e) the expert testimony will not create unfair prejudice or confuse or mislead the jury.[12]

         (9) Rule 702 substantially mirrors the corresponding federal rule of evidence[13] and Delaware courts find federal precedent of assistance when making expert admissibility determinations.[14] "The test of reliability is flexible," and it is within the discretion and responsibility of the Court both to devise how to measure reliability as well as to perform that measurement given the specifics and disciplines involved in the given case before it.[15]

         (10) When its admission is challenged, a trial judge must ensure that expert testimony is both reliable and relevant.[16] Expert testimony is relevant if it assists the fact finder in "understanding] the evidence or . . . determining] a fact in issue."[17]Reliable expert testimony is premised on technical or specialized knowledge, which requires the testimony to be grounded in reliable methods and procedures and "supported by appropriate validation-i.e., 'good grounds,' based on what is known."[18] So, at bottom, the Court's examination of an expert's opinion "must be solely focused on principles and methodology, not on the conclusions they generate."[19]

         (11) It is the burden of the party seeking to introduce the expert testimony to establish its admissibility by a preponderance of the evidence.[20] And "[a] strong preference exists" for admitting expert opinions "when they will assist the trier of fact in understanding the relevant facts or the evidence."[21]

         (12) The Court notes that a rigid application of the Daubert factors[22] simply cannot be engaged to determine testimonial reliability in every field of expertise.[23]For example, many scientific, technical, or specialized fields are not subject to peer review and publication. That is why the test of reliability is "flexible," and the trial court has "broad latitude when it decides how to determine reliability."[24]

         A. Both Experts Possess Education, Training, and Experience.

         (13) Thomas obtained an Associate's Degree from Temple University in architectural design and building construction technology in 1971.[25] He has spent the decades since working in various construction-related fields, including as a carpenter, a builder, a zoning officer and building inspector, and a construction supervisor, among other capacities.[26] The professional and practical knowledge and experience Thomas necessarily accrued over the course of that career constitutes the "knowledge, skill, experience, training, or education" necessary to give an expert opinion on matters in the field of construction.[27]

         (14) Peter obtained a Bachelor's Degree in Chemical Engineering from the University of Delaware in 1971, and a Master's in the same subject from the University of Pennsylvania in 1974.[28] He has likewise spent decades working in various construction-related fields, including design, safety, crisis management and response, and forensics.[29] Since 2003, he has worked solely in matters associated with building forensics, repair management, and associated legal support, with a focus on the effects of water on buildings.[30] As with Thomas, Peter has the qualifications necessary to form an expert opinion on matters related to construction engineering.

         (15) The experts' professional opinions are informed by a synthesis of knowledge and expertise accrued over their long careers. This expertise is fundamentally interdisciplinary, and includes a foundation in physics and chemistry-which certainly have ample peer-reviewed journals-as well as in observations and practical know-how in construction engineering-which generally evades such formal academic review and commentary. "Many scientific, technical, or specialized fields are not subject to peer review and publication," though they adhere to the characteristics of falsifiability, testability, and iterative refinement characteristic of the scientific method.[31] While mere ipse dixit from experience is insufficiently reliable to satisfy Rule 702, [32] that concern is not present where the professional's opinions are founded on data, assumptions, or inferences themselves published in scientific literature or otherwise amenable to examination. When an adverse party can adequately interrogate the bases of an expert's opinion, highlight contrary data, and expose the expert's consideration or lack of consideration of alternative scenarios, falsifiability is satisfied and the circumstances call for rigorous cross-examination rather than gatekeeping exclusion.[33]

         B. The Experts' Opinions Are Relevant.

         (16) Evidence is relevant when it has a "tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence."[34] Whether the broken pipe in this case ruptured due to a freeze during the cold snap in late 2017 and early 2018 is a central disputed issue of this case.[35] The experts' opinions directly relate to whether or not such a freeze caused the rupture, and if credited would make that conclusion respectively more or less probable in the mind of the fact finder.

         C. The Experts Use Professionally Reasonable Methods.

         (17) Thomas's first step was to consult with an outside metallurgical lab.[36]When that lab informed him that no metallurgic test could determine with certainty whether a pipe fracture was caused by freezing, he conducted his own investigation based on temperature patterns.[37] To track those temperatures, Thomas used Weather Underground, [38] a credible and recognized source of weather data.[39] He considered convection in the laundry chute, [40] and the physical appearance and markings on the broken fixture which, based on his experience, resembled accumulated long-term damage rather than a single recent freeze-driven burst event.[41]

         (18) Peter is also not a metallurgist and also consulted with an outside metallurgy lab, though unlike Thomas he obtained a full report.[42] Peter also reviewed Weather Underground data, though instead of conducting a thorough sweep through four decades of records, Peter limited himself to a "cursory review" of weather data from the 2017-18 winter cold snap in question.[43] Peter also took into consideration convection effects in the laundry chute.[44]

         (19) The similarity of the experts' methods speaks to their general acceptance in the field. The experts both consulted with an outside metallurgical lab. Both experts reviewed temperature data from the same source. Both considered thermal convection in the laundry chute. Both more generally seek to diagnose the cause of the pipe failure by eliminating alternative explanations based on circumstantial reasoning. The different depth with which they pursued particular lines of investigation and the different assumptions they made are readily subject to cross-examination and to evaluation by the fact finder for credibility and weight.

         D. The Experts Will Assist the Trier of Fact.

         (20) The ultimate fact finder, the jury, is presumably familiar with some of the basic ideas underlying the conclusions of both Thomas and Peter. The unusual property of water that it expands when frozen, and hence that ice floats, is universally known.[45] That this expansion exerts pressure on the surrounding container is also common knowledge.[46] The magnitude of forces involved, and other thermodynamic issues present in this case go well beyond this common knowledge, however.[47] So too are each expert's knowledge and application of construction principles related to the location of the water pipe and how that might make freeze a more or less likely cause of its failure. The expert opinions are therefore vital to the fact finder's ability to understand and evaluate the plausibility of the parties' competing theories for why the pipe fractured.

         E. Neither Expert Appeals to any Improper Bias.

         (21) Evidence appeals to an unfair prejudice when it tends to suggest decision on an improper basis, commonly but not necessarily emotion rather than reason.[48] The fact finder may credit each expert's opinion and analysis, or may not, but there is nothing in the record to suggest either will appeal to or persuade the fact finder on any improper basis. Whatever persuasive power might lie in each expert's opinion does so due to the coherence and power of its content to explain events.

         II. Disputed Facts Preclude Summary ...


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