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United States v. Travelers Casualty and Surety Company of America

United States District Court, D. Nebraska

June 30, 2017

UNITED STATES OF AMERICA FOR THE USE OF DONALD B. MURPHY CONTRACTORS, a Washington corporation; Plaintiff,
v.
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut corporation Bond No. 041-SB-105826131; TRAVELERS INDEMNITY COMPANY, a Connecticut corporation Bond No. 041-SB-105826131; Defendants, KIEWITPHELPS, a joint venture; Defendant/Third-party Plaintiff,
v.
TREVIICOS SOUTH, INC., Third-party defendant.

          MEMORANDUM AND ORDER

          Joseph F. Bataillon Senior United States District Judge.

         This matter is before the court on the following motions: Treviicos South, Inc.'s, (“Trevi”) motion in limine under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) (“Daubert”) to exclude the opinions of Steve Stylos and John Elmer concerning the plaintiff's measured-mile analysis, Filing No. 117; KiewitPhelps' and Travelers Casualty and Surety Company of America's (“Travelers”)[1] motions in limine under Daubert to exclude the expert testimony of Robert Middour, Filing No. 119 and Filing No. 123; KiewitPhelps' and Travelers' motions to exclude the non-retained expert testimony of Bryce Niekamp, Paul Groneck, Craig Henke, and Steve Stylos, Filing No. 122 and Filing No. 125; KiewitPhelps' and Travelers' motions in limine under Daubert to exclude the expert testimony of John Elmer, Filing No. 127 and Filing No. 130; and KiewitPhelps' motion in limine to exclude the expert testimony of Paul Pederson, Filing No. 200.

         I. BACKGROUND

         This case involves a large excavation in connection with construction of the federal government's Stratcom Facility Replacement Project at Offutt Air Force Base near Omaha, Nebraska (the "Project"). The United States Army Corps of Engineers (“USACE”) entered into a construction contract for the Project with KiewitPhelps as the prime contractor. In compliance with the Miller Act, 40 U.S.C. § 3131(b)(2), KiewitPhelps furnished a payment bond, which names Travelers as surety, “for the protection of all persons supplying labor and material in carrying out the work provided for in the contract for use of each person.” Trevi was the “earth retention and drilled shaft” subcontractor to KiewitPhelps and was responsible for constructing the Permanent Earth Retention Systems (“PERS”) walls around the perimeter of what would then become the excavation. Trevi, subcontracted with Donald B. Murphy Contractors (“DBM”) to install tiebacks to anchor Trevi's PERS walls in place.

         This case involves competing construction-related claims for costs associated with delay and impact. DBM seeks recovery of its contract balance of approximately $2.1 million and the extra costs it incurred allegedly due to the conduct of KiewitPhelps and Trevi. KiewitPhelps has asserted claims against DBM relating to an alleged 53-day delay. KiewitPhelps is not only seeking direct costs, but also extended general conditions and costs that it alleges were incurred by several subcontractors that worked on the project.

         DBM has quantified those costs using the “measured mile” method, which it contends is the preferred method for quantifying recoverable impact costs in the construction industry. DBM has identified Steve Stylos and John Elmer to testify as experts about the measured mile quantification method.

         DBM contends KiewitPhelps had the duty to prevent surface water and groundwater from flowing into the excavation site. It contends the most common method of controlling water during construction is “dewatering.” DBM retained Robert Middour to provide expert testimony on dewatering designs and to analyze KiewitPhelps alleged dewatering failures.

         DBM has also disclosed that it intends to call Bryce Niekamp, Paul Groneck, Craig Henke, and Steve Stylos to testify as experts regarding construction scheduling, sources of water intrusion, and industry standards on maintaining a construction site in a suitable dewatered and unwatered condition. Those individuals are present or former DBM employees and are also fact witnesses.

         Further, DBM has disclosed Paul Pederson as an accounting expert to testify with regard to pricing methodology and to analyze KiewitPhelps' alleged damages. Trevi and KiewitPhelps present Daubert challenges to the proposed expert testimony.

         II. LAW

         Federal Rule of Evidence 702 governs the admissibility of expert testimony and requires that: “(1) the evidence must be based on scientific, technical or other specialized knowledge that is useful to the finder of fact in deciding the ultimate issue of fact; (2) the witness must have sufficient expertise to assist the trier of fact; and (3) the evidence must be reliable or trustworthy.” Kudabeck v. Kroger Co., 338 F.3d 856, 859 (8th Cir. 2003). Expert testimony assists the trier of fact when it provides information beyond the common knowledge of the trier of fact. Id. at 860. An expert's testimony should only be excluded where it is “so fundamentally unsupported that it can offer no assistance to the jury.” Synergetics, Inc. v. Hurst, 477 F.3d 949, 956 (8th Cir. 2007) (internal quotation marks omitted).

         The proponent of expert testimony bears the burden of providing admissibility by a preponderance of the evidence. Lauzon v. Senco Prods., 270 F.3d 681, 686 (8th Cir. 2001). Rule 702 reflects an attempt to liberalize the rules governing the admission of expert testimony, and the rule remains one of admissibility rather than exclusion. Shuck v. CNH Am., LLC, 498 F.3d 868, 874 (8th Cir. 2007). If there is doubt “whether an expert's testimony will be useful should generally be resolved in favor of admissibility.” Clark v. Heidrick, 150 F.3d 912, 915 (8th Cir. 1998).

         When faced with a proffer of expert testimony, trial judges are charged with the “gatekeeping” responsibility of ensuring that all expert evidence admitted is both relevant and reliable. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999); Daubert v. Merrell Dow Pharms., 509 U.S. 579, 589 (1993); United States v. Merrell, 842 F.3d 577, 582 (8th Cir. 2016). A trial court must be given wide latitude in determining whether an expert's testimony is reliable. See Kumho Tire, 526 U.S. at 152. This analysis requires that the court make a “preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology . . . can be [properly] applied to the facts in issue.” Daubert, 509 U.S. at 592-93. “Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Id. at 596. Finally, as with all evidence, an expert's testimony's probative value must not be substantially outweighed by a danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence. Fed.R.Evid. 403.

         Rule 701, however, is limited to situations where a witness is “not testifying as an expert.” Fed.R.Evid. 701 It provides that a lay witness can give an opinion if it is “(a) rationally based on the witness's perception; (b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” Id.Rule 701 permits lay witnesses to “offer an opinion on the basis of relevant historical or narrative facts that the witness has perceived.” MCI Telecomms. Corp. v. Wanzer, 897 F.2d 703, 706 (4th Cir.1990) (quoting Teen-Ed, Inc. v. Kimball Int'l, Inc., 620 F.2d 399, 403 (3d Cir.1980)). “This rule, however, generally does ‘not permit a lay witness to express an opinion as to matters which are beyond the realm of common experience and which require the special skill and knowledge of an expert witness.'” Certain Underwriters at Lloyd's, London v. Sinkovich, 232 F.3d 200, 203 (4th Cir. 2000) (quoting Randolph v. Collectramatic, Inc., 590 F.2d 844, 846 (10th Cir. 1979)).

         “The distinction between lay and expert witness testimony is that lay testimony ‘results from a process of reasoning familiar in everyday life, ' while expert testimony ‘results from a process of reasoning which can be mastered only by specialists in the field.'” Fed.R.Evid. 701 advisory committee's note to 2000 amendment (quoting State v. Brown, 836 S.W.2d 530, 549 (Tenn. 1992)); see also Range Road Music, Inc. v. E. Coast Foods, Inc., 668 F.3d 1148, 1153 (9th Cir. 2012) (quoting the same language). “Unlike a lay witness under [Federal] Rule [of Evidence] 701, an expert can answer hypothetical questions and offer opinions not based on first-hand knowledge because his opinions presumably ‘will have a reliable basis in the knowledge and experience of his discipline.'” Sinkovich, 232 F.3d 200, 203 (4th Cir. 2000) (quoting Daubert, 509 U.S. 579, 592 (1993)).

         The measured mile method of quantification, “like virtually every method of measuring lost productivity, appears to require the opinion of an expert.” Flatiron-Lane v. Case Atl. Co., 121 F.Supp.3d 515, 543-44 (M.D. N.C. 2015) (noting that “[t]he point of the method is to compare what actually happened to a hypothetical universe where the defendant did not disrupt productivity”). The construction of hypothetical situations is the hallmark of expert opinion testimony under Rule 702. See Sinkovich, 232 F.3d at 203.

         III. DISCUSSION

         A. Motions to exclude the testimony of Steven Stylos and John Elmer on measured mile quantification

         Trevi and KiewitPhelps move to exclude the testimony of Steven Stylos and John Elmer regarding the measured mile quantification (“MMQ”) of lost-productivity costs. They argue that Stylos's and Elmer's opinions are unreliable because Stylos and Elmer relied on incorrect and unreliable assumptions in arriving at their opinions, including that DBM's work on Level 1 was comparable to work DBM performed on Levels 2, 3, and 4. They also assert that Stylos and Elmer used incorrect assumptions that the lengths of the tiebacks installed on Level 1 were longer than those on the other levels. They also contend Stylos and Elmer failed to account for the difficulty of performing second shift work at night on Level 2, and used an incorrect number of weeks in concluding that DBM would have finished its work on time. In addition, they contend that the opinion of Mr. Elmer should be excluded because he did not conduct an independent analysis, but ...


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