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NN&R, Inc. v. One Beacon Insurance Group

September 29, 2006


The opinion of the court was delivered by: Simandle, District Judge



This action arises from the structural collapse of a building at 326 Market Street, Camden, New Jersey. Plaintiff NN&R, Inc. ("NN&R"), a New Jersey corporation and the owner of a restaurant and apartment units located at that address, alleges that the building was severely damaged in February 2000 when the contiguous property collapsed and was then legally demolished. Prior to that event, CGU Insurance, the predecessor to OneBeacon Insurance Group ("OneBeacon"), issued insurance policies to NN&R through Triester, Rossman & Associates, Inc. ("Triester" or "TRA") that provided property and liability coverage. The factual and procedural history of this matter is set forth more fully in the Court's opinion of June 26. NN&R, Inc. v. One Beacon Ins. Group, No. 03-5011, 2006 U.S. Dist. LEXIS 43109 (D.N.J. June 26, 2006).

Currently pending before the Court are motions in limine of Defendants OneBeacon [Docket Item 83] and Triester [Docket Item 97] to exclude or limit the testimony and report of Plaintiff's proposed expert, James Klagholz, and a motion by OneBeacon for summary judgment against Triester [Docket Item 85] upon Triester's cross-claims for indemnification and contribution as well as OneBeacon's claim for indemnification. The Court heard oral argument on these and other motions on Wednesday, May 18, 2006*fn1 , and in its June 26, 2006 opinion, the Court reserved decision on the motions currently pending. Because the Court finds that Klagholz's opinion is, in large part, sufficiently reliable to be admitted at trial under Fed. R. Evid. 702 but that certain aspects of his testimony would be speculative or irrelevant, the Court will deny the motions in limine in part and grant them in part, as explained below. Because the Court finds that there is a genuine issue of material fact as to whether Triester failed to notify Plaintiff of the insurance coverage change and as to whether Triester and OneBeacon have rights of indemnification, the Court will deny, in part, OneBeacon's motion for summary judgment against Triester, as explained below. However, because the Court finds that there is no genuine issue of material fact as to Triester's right of contribution, the Court will grant OneBeacon's motion for summary judgment in part and dismiss that claim.


A. Motion to Exclude Testimony of Klagholz

Plaintiff seeks to admit the expert testimony of James Klagholz, a licensed insurance producer in New Jersey, to establish that Defendants, OneBeacon and Triester, deviated from the established customs of the insurance industry in their dealings with Plaintiff. Defendants claim that the Court should exclude Klagholz's testimony because his opinions do not meet the standards for reliability set forth in Fed. R. Evid. 702, Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) and Kumho Tire v. Carmichael, 526 U.S. 137 (1996). Defendants argue that Klagholz's opinions are not reliable because they are not supported by facts and Klagholz did not use a reliable methodology to reach them. Plaintiff opposes the motion in limine, arguing that its expert's opinions are reliable because they are based on sufficient facts to which he applied a proper methodology. Plaintiff argues that the facts on which its expert relied are not in dispute and, thus, it was not improper for him to learn of them through communications with Plaintiff's counsel rather than through firsthand examination of the insurance claim files. Further, Plaintiff argues, after Klagholz issued his report, counsel supplied the expert with all the relevant insurance claim documents. As to methodology, Plaintiff argues that because Plaintiff's expertise is based on his experience and training, it was appropriate under Kumho Tire for him to render his opinions based on that experience.

Federal Rule of Evidence 702, which governs the admission of expert testimony in federal court, provides as follows:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, 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 witness has applied the principles and methods reliably to the facts of the case.

In other words, when the Court evaluates proffered expert testimony, it must consider three requirements:

(1) qualifications - whether the expert is qualified to speak with authority on a particular subject or issue; (2) reliability -- whether the expert's methodology is sound and whether his or her opinion is supported by "good grounds;" and (3) fit -- whether there is a relevant "connection between the scientific research or test result to be presented and particular disputed factual issues in the case."

Yarchak v. Trek Bicycle Corp., 208 F. Supp. 2d 470, 494 (D.N.J. 2002) (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741-43 (3d Cir. 1994)). The burden is on the proponent of the testimony to prove its admissibility by a preponderance of proof. Id. at 744 (citing Bourjaily v. United States, 483 U.S. 171, 175 (1987)). However,

[t]his standard is not intended to be a high one, nor is it to be applied in a manner that requires the plaintiffs "to prove their case twice -- they do not have to demonstrate to the judge by a preponderance of the evidence that the assessments of their experts are correct, they only have to ...

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