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Atlantic Coast Pipeline, LLC v. 0.07 Acre,

United States District Court, W.D. Virginia, Charlottesville Division

June 19, 2019

Atlantic Coast Pipeline, LLC, Plaintiff,
0.07 Acre, More or Less, In Nelson County, Virginia, et al., Defendants.



         Senior Judge Norman K. Moon This is a condemnation action brought by Atlantic Coast Pipeline, LLC (“ACP”) against property in Nelson County, Virginia, and record owner Fenton Family Holdings, LLC (“Fenton”). The condemnation arises in connection with the construction of an approximately 600-mile underground pipeline to transport natural gas from West Virginia to Virginia and North Carolina. A trial is scheduled to determine “just compensation” regarding permanent easements related to the construction and maintenance of the pipeline across a portion of property owned by Fenton. (Dkt. 1 (Complaint) ¶¶ 1-6).

         ACP moves to exclude the opinions and testimony of four of Fenton's designated experts: (1) Paykon H. Sarmadi, an architect, regarding improvements located on the property (dkt. 76); (2) Thomas L. Stokes, Jr., regarding the construction of the project, including safety implications and impacts of construction (dkt.82); (3) Richard Paradis, regarding noise and vibration impacts on the property (dkt. 78); and (4) Matthew P. Ray, an appraiser, regarding just compensation for the taking (dkt. 80).[1] For the reasons set out below, the Court will (1) deny ACP's motion to exclude the opinions and testimony of Sarmadi, (2) grant in part and deny in part ACP's motion to exclude the opinions and testimony of Ray, and (3) will grant ACP's motions to exclude the opinions and testimony of Paradis and Stokes.


         This is an eminent domain case in which ACP seeks to acquire permanent and (prior to ACP's June 11, 2019 Amended Complaint)[2] temporary easements across Fenton's property to construct and maintain a natural gas pipeline. The property contains improvements, including a bed and breakfast (described by Fenton as “a high-end, boutique bed and breakfast”). The easements are on a small portion of a tract of land comprised of approximately 2.922 acres in Nelson County, Virginia. One issue is whether two adjacent tracts owned by Fenton should be included in determining just compensation.

         ACP, the holder of a certificate of public convenience and necessity issued by the Federal Energy Regulatory Commission, has the substantive right to exercise eminent domain over and condemn the easements set out in the Complaint. Fenton granted access to ACP to exercise its right to immediate entry, access, and possession of the easements, with the determination of just compensation for the easements deferred. (Dkt. 22 (Stipulation) ¶¶ 2-5). The permanent easement is approximately 0.04 acre and triangular in shape, consisting of a 50-foot easement from a corner of Fenton's property and running along the adjacent sides. A temporary easement of approximately 0.03 acre has been deleted from the Amended Complaint. (Dkt. 1-4, Plat (Complaint Ex. 4); Dkt. 127 (Amended Complaint)).

         Fenton seeks just compensation, which its appraiser Matthew P. Ray places at $3, 156, 847. (Dkt. 81-2 (Ray Report) at 80). ACP's proffered expert William C. Harvey places just compensation at $130, 300. (Dkt. 97-1 (Harvey Supplemental Report) at 57[3]).


         The Takings Clause of the Fifth Amendment prohibits the taking of private property without just compensation. Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 536 (2005). Just compensation is to be awarded for the value of the taking plus any “severance damages” (i.e., the difference between the market value of the residue before and after the taking). Columbia Gas Transmission, LLC v. 76 Acres, More or Less, in Baltimore & Harford Cntys., Md., 701 Fed.Appx. 221, 228 (4th Cir. 2017) (unpublished). The instant motions challenge Fenton's designated experts pursuant to Fed.R.Civ.P. 26(a)(2) and Fed.R.Evid. 402, 403, and 702.

         Fed. R. Civ. P. 26(a)(2) requires the disclosure of expert testimony during discovery and provides, in part, that each party must disclose to the other party the identity of any witness it may use at trial to present evidence under Rules 702, 703, or 705 of the Federal Rules of Evidence. With respect to an expert witness, the disclosure must “be accompanied by a written report prepared and signed by the witness.” The report must include: (1) a complete statement of all opinions to be expressed and the basis and reasons therefor; (2) the facts or data considered by the witness in forming opinions; (3) any exhibits to be used as a summary of or support for the opinions; (4) the qualifications of the witness and list of publications in the previous 10 years; (5) a list of other cases in which the witness has testified as an expert within the preceding four years; and (6) the compensation to be paid the witness for study and testimony. Fed.R.Civ.P. 26(a)(2)(B). Fed.R.Civ.P. 37(c)(1) provides that if a party fails to disclose information required by Rule 26(a), the party is not allowed to use that information to supply evidence on a motion, at a hearing, or at a trial, unless such a failure is substantially justified or harmless. To avoid exclusion, the non-disclosing party bears the burden of establishing the failure was substantially justified or harmless. Gomez v. Haystax Tech., Inc., 761 Fed.Appx. 220, 229 (4th Cir. 2019) (unpublished) (per curiam).

         Fed. R. Evid. 702 provides that a witness who is qualified as an expert “by knowledge, skill, experience, training, or education, may testify” as to scientific, technical, or other specialized knowledge if it will assist the trier of fact. Such testimony, however, is only admissible if (1) “the testimony is based upon sufficient facts or data, ” (2) “the testimony is the product of reliable principles and methods, ” and (3) “the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702. “[A] court may consider whether the expert witness theory or technique: (1) can be or has been tested; (2) has been subjected to peer review and publication; (3) has a high known or potential rate of error; and (4) is generally accepted within a relevant scientific community.” Bresler v. Wilmington Tr. Co., 855 F.3d 178, 195 (4th Cir. 2017) (citation and internal quotation marks omitted); see Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 593-94 (1993). This list of factors is not exhaustive. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999). “[C]ourts may not evaluate the expert witness' conclusion itself, but only the opinion's underlying methodology.” Bresler, 855 F.3d at 195.

         The Supreme Court in Daubert concluded that implicit in Rule 702 is a district court's gatekeeping responsibility “to ‘ensure that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand.'” Nease v. Ford Motor Co., 848 F.3d 219, 229 (4th Cir. 2017) (quoting Daubert, 509 U.S. at 597). If the expert meets this threshold, criticisms of his or her testimony will go to its weight, not its admissibility. See Bresler, 855 F.3d at 195-96. The approach is not limited to the testimony of scientists but applies “to testimony based on ‘technical' and ‘other specialized' knowledge.” Kumho Tire, 526 U.S. at 141 (applying Daubert to the testimony of a mechanical engineer); see Fed. R. Evid. 702.

         Fed. R. Evid. 402 provides that, with certain exceptions, relevant evidence is admissible. Fed.R.Evid. 403 provides that a court “may exclude relevant evidence if its probative value is substantially outweighed by a danger of . . . unfair prejudice.”

         III. ANALYSIS


         ACP moves to exclude the opinions and testimony of Paykon H. Sarmadi (“Sarmadi”). (Dkt. 76). Fenton's Rule 26(a)(2) Disclosure states that Sarmadi, an architect with Balzer & Associates, Inc., is expected to testify regarding improvements located on the property as well as the cost to reconstruct improvements and site work. The Rule 26(a)(2)(B) Report submitted by Sarmadi consists primarily of an itemized list of materials and related prices as well as labor and specified contingencies, which are used to obtain a cost estimate to reconstruct the Inn. (Dkt. 77-1). The Report does not directly opine on just compensation but is used by Fenton's appraisal expert Matthew P. Ray in his opinion on just compensation.

         ACP asserts two reasons for excluding Sarmadi's opinions and testimony: (1) Sarmadi's alleged failure to comply with the disclosure requirements of Fed.R.Civ.P. 26(a)(2)(B); and (2) Sarmadi's opinions are inadmissible under Fed.R.Civ.P. 702. The Court will deny ACP's motion to exclude the opinions and testimony of Sarmadi.

         1. Fed.R.Civ.P. 26(a)(2)(B)

         ACP asserts three grounds for its argument that Sarmadi failed to comply with the requirements of Rule 26(a)(2)(B): (1) he did not “prepare” the Expert Report; (2) he did not include the basis and reasons for his opinions; and (3) he did not include sufficient facts or data to support his opinions.

         a. Rule 26(a)(2)(B): Written Report Prepared by Expert Witness

         Rule 26(a)(2)(B) provides that a party's disclosure must be accompanied by a written report “prepared and signed” by the proffered expert witness. ACP asserts that Sarmadi did not “prepare” the Report, contending the Report was in fact prepared by Sarmadi's estimator Mark D. Pitts, who has not been designated as a testifying expert and who stated in his deposition that after the first three pages of the Report, what followed “all appears from my report.” (Dkt. 84 at 4-6; Dkt. 77-4 (Pitts Depo.) at 22:8-11). Fenton counters that Sarmadi prepared his Report and that ACP's argument ignores the extensive work done by Sarmadi in reviewing, editing, and correcting Pitts' initial work. (Dkt. 88 at 2).

         “Ghost writing a testifying expert's report is the preparation of the substance writing of the report by someone other than the expert purporting to have written it.” Trigon Ins. Co. v. United States, 204 F.R.D. 277, 291 (E.D. Va. 2001). “Unquestionably, Rule 26 requires an expert witness to prepare his own Rule 26 report.” Id. Although an expert witness must “prepare” the report, the expert is permitted to use assistants. The framework the Court uses is summarized in an opinion cited by ACP:

An expert witness is permitted to use assistants in formulating his expert opinion, and normally they need not themselves testify. The opposing party can depose them in order to make sure they performed their tasks competently; and the expert witness can be asked at his deposition whether he supervised them carefully and whether his relying on their assistance was the standard practice in his field. If the requisite assurances are forthcoming, the assistants' work need not be introduced into evidence. . . .
Analysis become more complicated if the assistants aren't merely gofers and data gatherers but exercise professional judgment that is beyond the expert's ken. (They needn't, of course, be assistants. . . . it would make no difference if they were independent experts.).

Dura Auto. Sys. of Ind., Inc. v. CTS Corp., 285 F.3d 609, 612-13 (7th Cir. 2002) (citations omitted).

         ACP argues that the evidence shows that Pitts prepared the Report, pointing to Pitts' deposition testimony noted above as well as to Sarmadi's deposition testimony in which he could not remember what several acronyms in the Report stood for, did not know the name of the software program used to prepare the Report, and stated that previous projects Pitts reviewed would be “based on his [Pitts'] data and experience.” (See Dkt. 77-3 at 169:21-170:1, 170:18-171:1).

         ACP relies on Weitz Co., LLC v. Lloyd's of London, No. 4:04-CV-90353TJS, 2007 WL 7131908 (S.D. Iowa Sept. 28, 2007), where testimony of a weather expert was excluded when the expert delegated the collection of weather data and the writing of the report to an assistant. ACP argues that this is the same scenario which occurs here. The court in Weitz, however, observed that “[i]f the [expert] had been involved, even to some limited extent, in the underlying research, analysis or drafting of the report, the court would view his apparent lack of knowledge as to certain aspects of the report as a matter of weight.” Weitz, 2007 WL 7131908, at *3 (citing Archer Daniels Midland Co. v. Aon Risk Servs., Inc., 356 F.3d 850, 858 (8th Cir. 2004) (“Generally, the factual basis of an expert's opinion goes to credibility of the testimony, not admissibility.”)).

         In this case, Sarmadi did not completely delegate the task and simply sign the Report but was involved in various aspects of the underlying research and production of the Report. Sarmadi and Pitts spent 4-5 hours at the property site documenting existing conditions, verifying drawings, determining the quality of finishes and construction techniques, and talking with Fenton Inn personnel. (See Dkts. 77-2 at 1-2; 77-3 at 31:3-33:16, 54:9-19). After Pitts inputted the measurements and observations into a program to organize the data, Sarmadi and his team reviewed the information, verified its reasonableness, made edits, and confirmed its accuracy based on measurements and notes Sarmadi (and Pitts) took during the site inspection. (Id. at 79:14-80:1, 103:18-104:17).

         Sarmadi also testified that he checked “most” of the unit costs using his own data, mainly in an effort to make sure the big ticket items, “the things that would really impact the cost of the project[, ] were correct.” (Dkt. 77-3 at 174:15-175:19). Although ACP claims that Sarmadi's revisions to Pitts' cost estimate were limited to “a mere ten of more than 200 line items, ” (dkt. 94 at 2), Sarmadi's review appears to relate to major line items: custom work, exterior calculations, flooring, roofing, concrete walls, door costs, door and window quantities, pavers, and fireplaces. (See Dkt. 88-2 at 112-122).

         To be sure, Sarmadi used Pitts as a data gatherer but also for his expertise in pricing. (Dkt. 77-3 at 174:15-18 (“The reason Mark [Pitts] is part of the team is because of his expertise and because he's involved in the pricing side of things much more frequently.”)). This was disclosed in the Report. (See Dkt. 77-2 at 1 (referencing collaboration with a local construction estimator), 5 (profile of Pitts)). But Pitts' work would not appear to be beyond Sarmadi's “ken” (i.e., his expertise). And, as discussed above, Sarmadi was clearly involved to varying degrees in the underlying research, analysis, and drafting of the Report.

         The Court concludes, therefore, that Sarmadi's involvement was sufficient to meet Rule 26(a)(2)(B)'s requirement that the expert “prepare” the Report.[4]

         b. Rule 26(a)(2)(B)(i): Disclosure of Basis and Reasons for Opinions

         ACP asserts that even if Sarmadi prepared the Report, he failed to disclose the basis and reasons for his opinions as required by Rule 26(a)(2)(B)(i). “Expert reports must not be sketchy, vague or preliminary in nature. Expert reports must include the ‘how' and ‘why' the expert reached a particular result, not merely the expert's conclusory opinions.” Brosville Cmty. Fire Dep't, Inc. v. Navistar, Inc., No. 4:14-cv-00009, 2014 WL 7180791, at *3 (W.D. Va. Dec. 16, 2014) (quoting Salgado v. Gen. Motors Corp., 150 F.3d 735, 741 n.6 (7th Cir. 1998)).

         ACP argues that the Report itself contains no explanation of how the line item amounts were calculated and that Sarmadi and Pitts admitted the methodologies used to reach various line item amounts were not disclosed in the Report. ACP points to Sarmadi's testimony that he verified several of the line item amounts by comparing them to a project on which he previously worked but that methodology was not in the Report because “[w]e consider most of that just an internal process” and that his use of an aerial survey using Google Earth imagery software was not part of the Report. ACP also faults the Report for not disclosing that Pitts called supply houses and checked his proprietary database to obtain unit prices and for not disclosing Sarmadi's purported comparative analysis based on another project.

         “Every litigant in federal court is plainly entitled under Rule 26(a)(2)(B) to be given information spelled out therein, and none shoulder the burden to independently investigate and ferret out that information as best they can and at the expense of their client.” Carr v. Dees, 453 F.3d 593, 605 (4th Cir. 2006). Thus, an expert report should be written in a manner that reflects the testimony the expert is expected to give at trial. Sharpe v. United States, 230 F.R.D. 452, 458 (E.D. Va. 2005). ACP contends that it had to depose Sarmadi and Pitts without knowing the basis for their opinions, and had no prior knowledge that Sarmadi employed an aerial analysis, obtained vertical dimensions, or performed a comparative analysis using a prior project.

         Fenton characterizes ACP's argument as being extreme as it suggests Sarmadi should have disclosed every document he reviewed and every step he took in completing his Report. Fenton overstates ACP's position. Rather, as stated in one of the opinions cited by Fenton, the expert report must be “sufficiently detailed and complete enough to enable adequate preparation by” the other party. Sharpe, 230 F.R.D. at 458. Even so, Sarmadi's Report described the methods he employed in some detail:

Following our site visit, observations of existing conditions, conversations with Fenton Inn personnel and collaboration with a local construction estimator, we have prepared an estimated cost analysis broken into the various constructions Divisions, in accordance with current industry standards. The cost analysis is based on existing drawings provided by the Fenton Inn ownership, field observations documenting quality of work and deviations from the drawings provided, and quantities of materials taken from the field-verified existing drawings and site observations.

(Dkt. 88-1 at 1). The Report also discussed the considerations which went in to preparing cost estimates of the contingencies (contractor, design, and owner). (Dkt. 77-2 at 10).

         The Court is troubled by Sarmadi's failure to disclose in his Report specifically how the line item amounts were calculated. The Court finds, however, that under the circumstances of this case, including Sarmadi's limited focus on the replacement cost of the Fenton Inn, the disclosure of steps undertaken in identifying the quantity of materials required, and the itemization of unit costs, is sufficient to avoid exclusion on this ground.

         c. Rule 26(a)(2)(B)(ii): Disclosure of Facts or Data

         Rule 26(a)(2)(B)(ii) requires disclosure of “the facts or data considered by the witness” in forming his or her opinions. The phrase “facts or data” is meant to be interpreted broadly to require disclosure of any material considered by the expert, from whatever sources, that contains factual ingredients. Fed.R.Civ.P. 26, advisory committee's notes to 2010 amendments.

         ACP argues that Sarmadi failed to disclose the facts or data on which he relied, in violation of Fed.R.Civ.P. 26(a)(2)(B)(ii). ACP asserts that Sarmadi failed to disclose measurements taken during the site visit, sketches allegedly prepared by Sarmadi showing discrepancies between the Fenton Inn as designed and as-built, aerial photographs and other photographs relied on by Sarmadi, and cost data allegedly obtained by Pitts from suppliers and his database. In short, ACP concludes that ...

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