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J. Kent Holland, J.D.
ConstructionRisk, LLC

A condominium homeowner association suit was dismissed on summary judgment, which was subsequently affirmed on appeal, because the experts failed to present detailed evidence and explanation of the various elements of the damages claimed, and one expert failed to demonstrate his qualifications to testify. Broad estimates of damages, even though loosely based on R.S. Means, were not sufficient to take the matter to jury, where the expert failed to do a detailed analysis of each of the 23 elements of a claim. In affirming the judgment, the court explained that the HOA failed to present admissible expert opinions because one report’s opinions lacked sufficient disclosure of the method and calculations that formed the basis of the report, and the other expert was, by his own admission, not qualified to provide cost estimates relating to this other opinions concerning structural defects. This decision demonstrates the importance of presenting qualified damage experts who will present detailed analysis of the actual costs for each element of a claim. Inn by the Sea Homeowners Association, Inc. v. Seainn, LLC, 170 So.3d 496 (Mississippi 2015).

Suit was brought by the HOA against the developer, structural engineer, architect, contractors, and others that were involved in the design and reconstruction of the condominiums when they were rebuilt following their destruction by Hurricane Katrina.   The suit alleged that significant problems began to manifest within a year of reconstruction — including structural defects.

Report only provided estimate of damages.  The HOA’s structural engineering expert provided an expert report on the structural issues, and his report included an estimate of $1,830,000 to correct engineering defects. The HOA also retained an architect as an expert, and his report identified twenty-three design and construction defects, which he estimated would cost $1.3 million to repair. He subsequently revised and updated his report a few months later and changed the repair estimate to $2.7 million. His report contained a description of each defect and a rounded, ballpark cost estimate to repair each defect.

Unfortunately for the HOA, its structural engineering expert vanished shortly before the trial date and they had to replace him. They granted a time extension to obtain a new expert. The new engineering expert provided a new expert report in which he agreed with the substance of the previous engineering report but also added that he believed that foundation pilings were designed with an overload of as much as 2.82 times their safe capacity. He was unwilling to provide exact itemized cost estimates for the items of engineering defects that he identified. He estimated a total repair budget for all the items between $1.6 million and $4 million.

According to the court, this new expert “openly stated that the ‘costs provided here are my best estimates’ but that he was ‘not a qualified estimator or contractor and therefore cannot be liable for the accuracy of these numbers. If more accurate numbers are needed then a licensed contractor or cost estimator should be engaged to provide them.’”

Supplemented report only provided details for one of twenty three items.  The trial court ordered the HOA to supplement its expert reports. The HOA did so by having the architect expert add a ten-paragraph affidavit with exhibits to his report, identifying RS Means as the basis for his cost estimates. He attached an exhibit demonstrating a “step by step analysis” of how he used RS Means to estimate the cost as applies to the roof replacement item. But that was only one of the twenty-three items identified as structural defects in his report. He did not do a similar detailed explanation for the other twenty-two items. Instead, he asserted that each “of the enumerated items in my report [is] contained with [M]eans and [was] researched for Inn By the Sea.”

The trial court concluded that the expert reports and affidavits failed to provide sufficient proof of actual damages and, therefore, granted summary judgment against the HOA. In determining whether the trial court acted correctly in granting the motion, the appellate court reviewed a number of previous appellate court case precedents. It cited a Court of Appeals decision that found the appropriate measure of damages was the actual repair costs that already had been incurred by the plaintiff in fixing the deficiencies of a contractor. It also cited a state Supreme Court decision that affirmed a defendant’s right now to be ambushed at trial with previously undisclosed calculations forming the basis for the plaintiff’s expert opinions, “even when the new disclosure did not alter the original expert conclusions.”

Conclusory estimates not sufficient for jury consideration.  With regard to the use of RS Means, the court stated that the manual “is a reliable industry source of data that has been used with approval in cases involving expert testimony on damages.” “But merely disclosing that a five year old RS Means manual is the general basis for the conclusory estimates on twenty-two of twenty-three items of alleged structural damages amounting to several million dollars does not provide a sufficient disclosure of data for a trier of fact to determine that the estimates have been calculated with reasonable accuracy or for a defendant to meet the evidence. As it is, the testimony is unreliable because it fails to disclose the basis of the expert opinion.”

The court further stated that, “Production of the basis for only one itemized opinion out of twenty-three was not in compliance with the degree of specificity reasonably ordered by the trial court.”

Expert not qualified to testify.  The appellate court also sustained the trial court’s conclusion that the replacement structural engineering expert was not qualified to provide expert testimony relating to damages. This is because the expert, “explicitly stated in his expert report that the range of between $1,660,000 and 4, 020,000 was merely his general estimate and that establishing sufficiently specific estimates would require bringing in someone more qualified.”

In summing up its conclusions, the appellate court stated that the engineer’s cost damages opinions lack sufficient disclosure of the method and calculations that formed the basis of his report. The court stated that the architect, by his own admission, was not qualified to provide cost estimates relating to his other opinions on structural defects.

Comment: This decision shows the great importance of obtaining experts qualified to provide a detailed expert opinion on damages and how those damages were calculated using the system that is recognized in the expert community. It demonstrates that parties should not go into litigation with the assumption that they can merely present cost estimates and rather loose explanations of damages because as the appellate court stated in this case, the defendant is entitled to know prior to trial the actual damages being claimed and the expert basis on which they are calculated.

 

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 18, No. 2 (February 2016).

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