Court Excludes Structural Engineering Expert Testimony That Discusses Depreciation

Court: United States District Court for the Southern District of Georgia, Statesboro DivisionJurisdiction: FederalCase Name: AMCO Ins. Co. v. TAF, Inc.Citation: 2018 U.S. Dist. LEXIS 165353

Facts

The plaintiff, AMCO Insurance Company (AMCO), insured a commercial property of McCorkle Wholesale, Inc. (McCorkle). The defendant, TAF, was a tenant in the said property. TAF buys and sells hunting supplies, including firearms. On November 12, 2015, Fordham, the president and CEO of TAF’s store, made preparations to reblue a Browning A-5 Sweet Sixteen shotgun that TAF had recently purchased. As part of the process, Fordham used a torch to heat the shotgun which was resting on a gun cleaning mat. This caused a fire to ignite resulting in damage to the property. The CEO admitted that his action was the sole cause of the fire.

As subrogee for McCorkle, AMCO reimbursed McCorkle in the amount of $1,047,815.11 and filed suit against TAF seeking full amount it paid McCorkle. In response, TAF argued, among other things, that McCorkle was negligent for its alleged failure to install the proper number of fire extinguishers in accordance with regulations and that this negligence contributed to the damages that the fire ultimately caused. TAF further argued that AMCO was not entitled to any reimbursement.

Both the plaintiff and defendant filed various motions to exclude the other’s expert witnesses. In one such motion, AMCO challenged the qualifications of TAF’s structural engineering expert to render an opinion regarding depreciation and the methodology used by him for the same.

The Structural Engineer Expert

The defendant’s expert witness was designated as an “engineering expert specializing in construction management and engineering services.” The expert used his expertise to evaluate the scope of the required repairs to the structural aspects of buildings and determined which portion of the building was usable and which were not. The expert provided information to a colleague familiar with the software used to estimate the damages the insurer owed.

The structural engineering expert witness offered testimony challenging the amounts that AMCO paid to McCorkle. The expert opined that AMCO should not have allowed approximately $7,094.00 for soda blasting the concrete floors of the property, and that AMCO improperly failed to apply depreciation to certain components of the property resulting in an overpayment of $17,984.00.

Court Discussions

The court noted that estimating depreciation and determining the damages suffered by the structural components of a building are two different areas and require different expertise. Determining structural damages requires knowledge concerning the physical properties of building components and the effect of various physical stressors on those components. Determining depreciation involves using accounting concepts and depends on the terms of the insurance contract. The court noted that the expert was qualified to determine the structural damages in question but not to determine depreciation.

Held

The court held that the structural engineering expertise differs from the expertise required to formulate a depreciation estimate. Furthermore, TAF had not demonstrated that its structural engineering expert witness was qualified to offer expert testimony on the issue of depreciation. Hence, the portion of the structural engineering expert’s testimony involving AMCO’s depreciation calculations were excluded.