My colleague Matt Donovan recently wrote about the requirements of Commercial Division Rule 13(c) and highlighted certain decisions in which expert reports were precluded for non-compliance. This week’s post looks at a decision by newly-appointed Manhattan Commercial Division Justice Nancy M. Bannon, who denied a motion to preclude expert reports despite non-compliance with the rule. In the decision, Justice Bannon sheds light on the boundary between admissible and impermissible expert opinions, particularly when reports encroach on the court’s authority to opine on legal conclusions, while also imposing specific limitations on the expert’s testimony.
Background
In 2497 Realty Corp. v. Fuertes, the plaintiff sold a contaminated property to the defendant, which had been impacted by an oil spill from a nearby gas station owned by non-party, ExxonMobil. Plaintiff and defendant entered into an agreement under which the defendant agreed to take on property remediation and settlement negotiations with ExxonMobil, and the parties agreed on a distribution plan for any proceeds resulting from any settlement reached with ExxonMobil (the “Distribution Plan”).
ExxonMobil settled with the defendant in 2011, but three years later the plaintiff filed suit alleging that the defendant breached the contract by violating the Distribution Plan. The court (Justice Charles E. Ramos [Ret.]) stayed the action until the remediation process was completed. In 2022, when the plaintiff successfully established that remediation was finished, the case was restored to resolve the issue of whether, under the contract, the property was remediated to “its highest and best use under applicable zoning laws, as the [defendant] shall determine in its sole and absolute discretion.” The parties submitted expert reports regarding the remediation, including the plaintiff who submitted two reports.
Motion to Exclude Expert Reports and Testimony
The defendant moved to exclude the plaintiff’s environmental expert testimonies and reports, arguing that:
- the reports contain impermissible legal conclusions that reach the ultimate issue;
- the plaintiff’s experts lack qualifications to opine on the “highest and best use” of the property; and
- the reports do not meet the disclosure requirements of Commercial Division Rule 13(c).
Justice Bannon denied the motion.
Scope of Expert Testimony
The court concluded that the experts’ opinions were well within their environmental remediation specialty, stating specifically:
“[the experts] do not opine on the issue of what is or is not the theoretical highest and best use of the Property. Rather, they opine on the environmental remediation of the Property—an appropriate issue for expert testimony that is within their area of expertise—taking as their starting point the First Department’s aforementioned analysis of the Contract’s terms, the Property’s current zoning for commercial use, and the defendants’ current use of the land for commercial purposes.”
Despite this conclusion, the court nonetheless observed that the defendant correctly pointed out that the plaintiff’s experts’ reports contained opinions that improperly delved into contract interpretation and legal conclusions, such as whether the remediation of the property was completed in accordance with the settlement agreement and the contract. The court ruled that the defendants may object to specific inquiries when justified, particularly concerning sections of the reports related to contract interpretation or legal conclusions. Ultimately, the court determined that experts are prohibited from testifying on matters of contract interpretation or purely legal issues and should exclusively focus on the environmental condition of the property.
Rule 13(c) Disclosure Obligations
The defendants also argued that the plaintiff’s experts’ reports failed to include their recent publications and experience as expert witnesses. The defendants also took issue with the joint authorship of the second report.
Under Commercial Division Rule 13(c), “expert disclosure must be accompanied by a written report, prepared and signed by the witness,” which must include:
A) a complete statement of all opinions the witness will express and the basis and the reasons for them;
(B) the data or other information considered by the witness in forming the opinion(s);
(C) any exhibits that will be used to summarize or support the opinion(s);
(D) the witness’s qualifications, including a list of all publications authored in the previous 10 years;
(E) a list of all other cases at which the witness testified as an expert at trial or by deposition during the previous four years; and
(F) a statement of the compensation to be paid to the witness for the study and testimony in the case.
The court rejected the defendants’ arguments regarding the experts’ qualifications and alleged non-compliance with Commercial Division Rule 13(c). First, the court clarified that there is no prohibition against jointly-authored reports. Second, the court emphasized that preclusion of expert testimony for non-compliance with Rule 13(c) is at the court’s discretion and noted that the defendants had not shown any prejudice resulting from the disclosure issues, particularly since the experts had already been deposed and questioned about their qualifications (see Taxi Tours Inc. v Go N.Y. Tours Inc., 227 AD3d 530, 531 [1st Dept. 2024]).
Upshot
While courts may not outright preclude expert reports, they can impose restrictions on testimony, particularly barring experts from addressing matters of contract interpretation or purely legal issues.
In addition, while experts must adhere to Commercial Division Rule 13(c) when submitting their reports, non-compliance does not always result in the exclusion of the expert’s testimony, as the court may exercise discretion to evaluate whether any potential prejudice has occurred.
[View source.]
