Expert Witness: To Exclude, Or Not To Exclude, That Is The Question

Robert Quinn | Drew Eckl & Farnham

A significant factor to consider when evaluating a case, in particular for purposes of settlement, is whether the opposing party intends to utilize expert witnesses.  The inclusion or exclusion of opposing party’s expert witness in some instances may make or break a case.  The lack of an expert witness such as an economist may prohibit a plaintiff from proving future lost income which would significantly diminish the value of the case.  Or failing to disclose a orthopedist as a testifying expert may preclude an injured plaintiff from establishing causation.  Alternatively, the use of such expert witnesses by the plaintiff may significantly strengthen their case and convince you or your client that settlement is more advantageous than proceeding to trial.  The use of an expert witness becomes even more important when the other side intends to use one.  There are countless instances where juries put undue weight on the testimony of an expert merely because the other side failed to present similar testimony to rebut the expert’s opinion.  This makes the disclosure of an expert witness critical for evaluating a case for settlement. 

For many years in Georgia, an expert witness may be excluded under certain circumstances including the failure to disclose the expert witness by deadlines established in the court’s case management order.  The failure to disclose an expert witness pursuant to a court’s case management order in some instances have led to sanctions against the offending party including excluding that expert from testifying at trial.  The exclusion of the expert could certainly be devastating to your case and severely affect the settlement value.  However, a recent decision from the Georgia Supreme Court has changed the hardline rule regarding the exclusion of experts that were not timely disclosed pursuant to a court scheduling order.  Instead, the Georgia Supreme Court has now identified a list of factors that the court should consider when determining whether to exclude the late identified expert witness. 

 In Lee v. Smith, S18G1549, the Supreme Court was asked two questions, (1) whether it is proper for a trial court to exclude an expert witness solely because the witness was identified after the deadline established in the case management order, and (2) if it is improper to exclude such a witness, what factor should a trial court consider when exercising its discretion in determining whether to exclude said witness.  The case in question involved a collegiate athlete who was injured in a car accident.  Liability was not at issue and the only thing to be determined at trial were the damages sustained by the plaintiff.  Plaintiff did not disclose an expert witness in response to discovery requests.  The court had entered a case management order requiring all parties to identify all witnesses by May 12, 2017.  Plaintiff subsequently supplemented his responses to interrogatories identifying his sports agent as a damages witness.  However, he did not disclose his sports agent as an expert witness.  In June of the same year, defense counsel identified an expert witness to be called as a rebuttal witness regarding plaintiff’s newly submitted claim for future lost income. 

During the July pretrial hearing, plaintiff argued that the defendant’s rebuttal expert should be excluded because they were not timely identified pursuant to the case management order.  Defendant argued that the need for the expert witness did not become apparent until after the disclosure of plaintiff’s sports agent as a damages witness.  The court excluded the expert witness and explained that while he was sympathetic to the position of the defendant, the parties agreed to a scheduling order that required the disclosure of all expert witnesses by May and the most recent disclosure was untimely.

As a result of exclusion of defendant’s expert witness, plaintiff was able to submit unrebutted testimony regarding his claim for lost wages.  The jury eventually returned a verdict for $2 million dollars.

Defendant appealed this case to the Georgia Court of Appeals which initially affirmed the decision of the trial court.  Defendant then appealed this case to the Georgia Supreme Court.  The Georgia Supreme Court initially agreed that the trial court has broad discretion in setting scheduling deadlines and also imposing sanctions upon parties for failing to comply with those deadlines.  This had been the rule in Georgia for many years and similar sanctions excluding expert witnesses have been upheld.  However, the Georgia Supreme Court noted that the trial court’s discretion in fashioning a sanction for the party’s failure to comply with the scheduling order is not unlimited.  The court reasoned that “no harsher sanctions should be imposed than are necessary to vindicate the court’s authority.”  The Georgia Supreme Court further stated that a trial court must exercise some discretion by evaluating the specific circumstances surrounding the party’s non-compliance with an order to property determine what, if any, sanction is necessary to provide fairness to the parties and to vindicate the court’s authority.  The Georgia Supreme Court determined that because the sole reason the trial court decided to exclude the expert was he was untimely disclosed, the trial court had abused its discretion in sanctioning the defendant.     

However this did not end the court’s analysis of the matter.  The Georgia Supreme Court provided further guidance as to what a trial court should consider when determining whether or not the untimely disclosure of an expert witness warrants the sanction of excluding the witness.  The court ultimately decided that four factors should be considered when determining whether to exclude a late identified expert witness.  First, the explanation for the failure to disclose the witness, two, the importance of the testimony, three, the prejudice to the opposing party if the witness is allowed to testify and, four, whether a less harsh remedy than the exclusion of the witness will be sufficient to ameliorate the prejudice and vindicate the court’s authority.  Because these factors were not considered by the trial court when imposing the sanction of excluding the witness, the Supreme Court remanded the case for further consideration by the trial court.

What is important to understand from this new framework for determining a proper sanction for untimely disclosed expert witnesses is that the failure of a party now to meet the deadline in disclosing an expert witness does not immediately close the door for that witness’ inclusion at trial.  The parties need to be weary of the fact that the mere failure of a party to disclose an expert witness before the deadline will not immediately preclude them from using an expert witness at trial.  The parties must be cognizant of these factors going forward and understand the potential for disclosure of a previously unidentified expert witness when evaluating their case either for trial or for settlement.  Despite the fact that this new four factor test will allow some parties to include an expert witness that was previously not identified by the court’s scheduling order, we recommend taking all necessary steps to properly disclose any expert witnesses as soon as possible to ensure your ability to utilize those witnesses at trial.

Contractor Can’t Blame Inspector Who Failed to Note Non-Compliant Work

Stanley A. Martin | Commonsense Construction Law

An electrical contractor was supposed to run power cables through conduit, but elected on its own to run about 40% of the power cable with flexible metal-clad (MC) cable, without conduit. For a large portion of the project, Army Corps of Engineers inspectors made no comment about use of the MC cable. But then an electrical inspector for the Corps visited the site, and directed removal and replacement of the MC cable.

The contractor made a claim for $415,120 in additional costs of this work, which was denied by the contracting officer.

The contractor’s first argument on appeal, that the contract was ambiguous, failed. The Armed Services Board of Contract Appeals held that the specifications clearly required use of conduit for power cable.

The second argument is that the Corps should have noticed the use of MC cable. Thus, its failure to stop the contractor was either a signal that the Corps agreed with the contractor’s interpretation of the specs, or else that the Corps had waived the contract requirements.

The Corps’ failure to note the improper installation until the project was nearing completion, per the ASBCA, was “troubling, to say the least.” But it was the contractor’s obligation to meet the specs in the first instance. And “absent affirmative misconduct,” the Corps’ failure to note the improper installation did not bar the Corps from later demanding removal and replacement of the improper material.

This outcome is consistent with standard contract language. Common contract templates provide that the owner’s or architect/engineer’s failure to identify non-compliant work is no excuse for a contractor who has failed to properly perform the work. See, e.g., AIA A201-2017 § 9.6.6 (payment does not constitute approval of non-conforming work), and § 13.3.2 (no act or failure to act of owner or architect shall mean approval of improper work).

This confirms what contractors should expect: failure of an inspector to identify improper work does not let the contractor off the hook. The case is Appeal of Watts Constructors, LLC, ASBCA No. 61493 (Mar. 19, 2020).

Underestimating Work Doesn’t Make Contract Ambiguous

Lyndon F. Bittle | Carrington Coleman

The Dallas Court of Appeals affirmed summary judgment for a general contractor, holding its subcontractor was bound by the contract price, even if the subcontractor underestimated the amount of work required to complete the project. Lancaster ISD hired Pogue Construction to build two elementary schools. Pogue subcontracted the excavation work on one of the sites to Bright Excavation for $945,000. The subcontract required Bright to “excavate to the top of the tan limestone as verified by the geotechnical representative.” The bid package had instructed bidders to “assume six feet of remove and replace would be necessary.” After reviewing the initial geotechnical report of subsurface conditions, Bright estimated only between two and four feet of excavation would be required, and priced its bid accordingly. Unfortunately, this estimate proved to be inadequate, and Bright claimed it incurred over $325,000 in expenses beyond what it had projected. Pogue rejected Bright’s request for a change order increasing the contract amount, and Bright sought unsuccessfully to recover over $760,000 from Pogue’s payment bond surety, Hartford Insurance.

Bright sued Pogue and Hartford for breach of contract, payment on the bond, and assorted torts. Pogue counterclaimed to recover its attorney’s fees under the terms of the subcontract. The trial court entered summary judgment for Pogue and awarded its fees.

On appeal, Bright argued summary judgment was improper because the subcontract was ambiguous regarding the depth to which Bright was required to excavate within the $945,000 subcontract price. The Court of Appeals summarized Texas law governing the determination of contractual ambiguity, and reviewed the terms of the subcontract and related documents on which Bright relied. The Court concluded the subcontract was not ambiguous: “Bright, not Pogue or the school district, assumed the risk of the conclusions and interpretations Bright made based on the subsurface information contained in the geotechnical report.” Absent a breach of contract, Bright’s claim on the payment bond and tort claims against Pogue also failed.

Time to Reconsider Permitting Use of Drones for Development and Construction in Dense Urban Areas?

Virginia Trunkes | Construction Law Zone

COVID-19’s severe impact on some major metropolitan areas has been attributed to their density, infrastructure and inherent difficulty with “social distancing.” This same challenge with social distancing has led to either mandatory or pressured shutdowns of construction projects throughout many states and metropolitan areas. Meanwhile, and particularly during the shutdowns, building-safety mandates require that some people still physically be at the projects to ensure ongoing compliance – especially important where a half-complete project can result in its own safety problems. Simultaneously, to complete new real estate transactions, investigations of sites must still be performed for due diligence data.

Could commercial dronesi.e., small unmanned aircraft systems (“sUAS”), assist in these aspects to continue development and construction while mitigating health risks?

There are a myriad of benefits to sUAS use in real estate and construction. sUAS can capture images and videos that are typically difficult to obtain, share information in real-time and collect data frequently. This can lead to more knowledgeable decision-making on a more regular basis.

For instance, at the beginning of a transaction during due diligence, sUAS footage can prove the existence of assets, and can survey areas with added details about the landscape and topography. sUAS can get much closer to their intended objects than a helicopter, and deliver better, higher-quality pictures. Plus, their aerial images can be converted into maps and 3-D models.

At ongoing job sites, with their ability to reach “hard-to-get” to locations, sUAS can perform crucial safety inspections by, e.g., gauging the solidity of the structures and fixtures, and observing trespassing and theft. New technology such as thermal, infrared and LiDAR (light detection and ranging) sensors can help contractors spot problems in advance. And sUAS’ ability to view high-up facades with more breadth and frequency than human manual inspections could ensure greater safety to street pedestrians. (Just think of how these features could also result in lowered insurance premiums.)

In parts of the country and world where there do not exist highly stringent regulations for sUAS, sUAS use in real estate and construction has risen exponentially. Yet, commercial use of sUAS is prohibited in most portions of major metropolitan areas because, essentially, of their density. All sUAS must comply with FAA regulations. In comparison to unmanned air systems weighing 55 pounds or more (think Department of Defense), sUAS fall under “Part 107” rules (14. C.F.R. Part 107). Part 107 rules are straightforward, but plentiful.

The FAA offers operators of sUAS the opportunity to apply for a waiver from some of Part 107’s restrictions, which are granted on a case by case basis. But without a waiver from the FAA, the potential of sUAS for development and construction in dense urban areas cannot be realized.

For instance, the FAA prohibits operation of a sUAS over any persons not “directly participating” in the operation. That inherently presents a challenge in a highly-populated area. Additionally, the FAA permits operation of a sUAS only during daylight. Yet, there may be a circumstances outside of daytime hours prompting the need for an aerial investigation.

Assuming one could obtain a waiver for flying over people and at night, or otherwise block off a city street area (which requires a city permit) for a building analysis/safety check, the type of airspace above may present an obstacle. The FAA prohibits sUAS use within many types of categorized airspace (airspace ranges from Class A through G) without the required permission. Class B airspace contains at least one primary airport around which the airspace is designated. Operating an aircraft within a Class B airspace area requires Air Traffic Control clearance. Exemptions may be granted, through the Low Altitude Authorization and Notification Capability) (LAANC) application process. But they are discretionary, and in any event the necessary “low altitude ceiling” means for flights less than 400 feet high, which on average is a 40-story building. Today’s super skyscrapers, which would benefit the most from sUAS inspections, would not benefit from the LAANC.

In many cases outside of restricted airspace, use of a sUAS to view a skyscraper would actually comply with the FAA’s height restrictions: the altitude of the sUAS cannot be higher than 400 feet above ground level, unless it (1) is flown within a 400-foot radius of a structure; and (2) does not fly higher than 400 feet above the structure’s immediate uppermost limit. One operating a sUAS to evaluate a tall building would not need or want to go beyond those distances. That said, this exception would not apply in fog or where there exists low clouds, as the minimum distance of the small unmanned aircraft from clouds must be no less than 500 feet below the cloud. Add to that the requirement that sUAS be operated within a visual line of sight and the benefits for which the sUAS could otherwise be used would be defeated. Practically speaking, these restrictions would prevent the use of commercial sUAS for quite a few buildings typically in cities’ downtown areas; think Boston’s Financial District, Miami’s Brickell, and Philadelphia’s Center City neighborhoods, for instance.

New York City has its own, additional set of prohibitions. Neither LaGuardia nor JFK are participating airports in the LAANC program. Further, while city agencies like the NYPD and FDNY perform sUAS use for their operations, New York City Administrative Code § 10-126(c) makes it “unlawful for any person navigating an aircraft to take off or land, except in an emergency, at any place within the limits of the city other than places of landing designated  by the department of transportation or the port of New York authority.” This law is 60 years old. There have been attempts to amend this section by making “technical and conforming changes” such as restricting the times, locations and altitudes at which sUAS may be operated, but thus far to no avail.

Ironically, perhaps the same basis for prohibiting local commercial use of sUAS will be the basis for embracing them. If a (well-sanitized) sUAS can perform many functions of a person – and often more than one person – without creating a risk of contagion to itself or others, then exposure to infectious diseases can be minimized even more so.

Currently, more people than ever are working and “meeting” remotely through the use of sophisticated technology. Simultaneously, administrative agencies are temporarily relaxing certain regulatory standards to better address the health crisis. The confluence of sophisticated technology and a need to make exceptions to otherwise appropriate limitations could create the right temperature to introduce sUAS to city construction sites. Just as “Tommy the Robot” has been assisting doctors and nurses at a northern Italy hospital, this  may be commercial sUAS “time to shine” in our urban areas.

What Will the Future Hold for the Construction Industry?

Garret Murai | California Construction Law Blog

As we enter into the last week of April, many are wondering if the shelter in place orders issued by Bay Area counties (Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Santa Cruz and Sonoma) and the City of Berkeley, many of which went into effect six weeks ago on March 16, 2020, will be extended past their stated end date of next Monday, May 3, 2020.

When Will California Reopen?

On Friday, San Francisco Mayor London Breed said that San Francisco’s shelter in place order will “likely” be extended but did not indicate when that decision would be made or how long the extension would likely be. Other California counties already have shelter in placed orders extending past May 3rd  including Colusa (May 8, 2020), Los Angeles (May 15, 2020), Mendocino (May 10, 2020), San Luis Obispo (May 16, 2020), Solano (May 17, 2020) and Ventura (May 15, 2020), and several counties have shelter in place orders which remain in effect “until further notice.”

But it’s a decision that’s not just up to California counties, since the State of California also has jurisdiction over public health issues, and Governor Newsom’s statewide shelter in place order currently has no end date. While many states with shelter in place orders began loosen restrictions this past week, during a press conference this past Wednesday, Governor Newsom said that while he understood that people were anxious to know when the state will reopen, “[w]e are not prepared to do that today.” Instead, he said that California would be looking at “six parameters” including: (1) adequate testing; (2) protecting the most vulnerable; (3) the ability of hospitals to handle surges; (4) the development of therapeutic drugs; (5) the ability of businesses, schools and child care facilities to allow for physical distancing; and (6) and the ability to determine when to reinstitute more restrictive measures.

In the meantime, researchers at the University of Washington’s Institute of Health Metrics and Evaluation have projected that California may be able to begin easing restrictions after May 18, 2020. However, it’s only a projection, and the decision when to reopen California will also need to be coordinated with its neighboring states of Washington and Oregon with whom California has entered into a Western States Pact to share information and coordinate the reopening of each state.

Impact on Construction

Under the shelter in place orders, most construction projects in California have been shut down with the exception of construction of healthcare facilities related to responding to the coronavirus, public and private construction projects deemed to be “essential,” work necessary to secure and protect existing construction sites, and affordable housing.

Nationally, a survey conducted by the Associated General Contractors of America, indicates that 53% of construction firms reported having projects stopped, 23% reported having shortages of construction materials, equipment, or parts, and 40% reported having furloughed or laid off workers both in the field and in home offices.

On Friday, President Trump signed the Paycheck Protection Program and Health Care Enhancement Act which injects an additional $310 billion into the Paycheck Protection Program (“PPP”) and an additional $60 billion into the Economic Injury Disaster Loan Program (“EIDL”). The first round of funding under the Coronavirus Aid, Relief and Economic Security (CARES) Act enacted this past month, which had allocated $349 billion to PPP and $10 billion to EIDL, ran out of funds within 14 days. The U.S. Small Business Administration reports that, of the industries receiving funds under the PPP, the construction industry fared the best, receiving roughly 13% of PPP funds, or just under $45 billion.

What the Construction Industry Can Expect

According to major trade associations, contractors are expecting a significant slow down in the construction industry. In a report issued this past week by the American Institute of Architects, March saw the biggest monthly decline in billings by architecture firms in 25 years, which portends future impacts on construction projects. Regionally, the Northeast was saw the biggest declines, followed by the Midwest and South, and finally the West. Within sectors, institutional projects saw the biggest decline, followed by residential, and finally commercial/industrial.

According to a report issued on Thursday by the Associated Builders and Contractors, fewer than 30% of contractors expect their sales to increase over the next six months, less than 20% of contractors expect their profit margins to increase, one in five contractors expect a significant decrease in profit margins, and one in four contractors expect a significant decline in sales volumes. ABC Chief Economist Anirban Basu explained that the anticipated impacts on the construction industry of the coronavirus are different than what was seen in previous downturns:

Normally, construction activity is partially shielded from the initial stages of down turn due to the presence of backlog . . . . But this time is at least somewhat different, with certain construction activities halted in California, Pennsylvania, Massachusetts and elsewhere. While construction will hold up better in the near-term than retail, restaurants, airlines, auto manufacturing, lodging and a number of other key industries, its recovery is also likely to be less profound than in these other segments absent a federal infrastructure-oriented stimulus package.

On that front, President Trump and Democrats have restarted discussions on a multi-trillion dollar infrastructure plan, with the President tweeting this past week that “With interest rates for the United States being at ZERO, this is the time do our decades long awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding that once great infrastructure of our Country! Phase 4.” “Phase 4” refers to the next phase of Congressional funding. However, House Speaker Nancy Pelosi has stated that she wants to focus first on further stimulus funding for small businesses. Senate Majority Mitch McConnell, on the other hand, who had not been supportive of earlier efforts to craft an infrastructure bill, has said that he wants any further stimulus packages to be directly related to addressing the coronavirus.

In the meantime, construction companies are looking at various technologies to employ in the new “normal” that is expected after states reopen, including technologies to ensure that social-distancing requirements are complied with.