Motion To Preclude Reports And Testimony of Experts Denied; Limitations On Trial Testimony Recognized

On August 21, 2024, Justice Nancy M. Bannon denied defendants’ motion to preclude the reports and trial testimony of plaintiff’s experts, while imposing certain limitations on the expert’s trial testimony, in a contractual dispute concerning environmental remediation. The case is 2497 Realty Corp. v. Fuertes, Index No. 151947/2014.

In 2010, plaintiff 2497 Realty Corp. sold a parcel of real property in Manhattan (the “Property”) to defendant 2497 Partner LLC. The Property was undergoing environmental remediation that gave rise to claims against non-party ExxonMobil.

The parties’ contract (the “Contract”) said that remediation would not be complete until the Property was eligible for its “highest and best use under applicable zoning laws, and all stages of that remediation are approved by all relevant federal, state and local authorities”. Slip Op., p. 2 (quoting Contract). The Contract gave defendants sole control over the remediation and over settlement negotiations with ExxonMobil, and created a distribution plan between the parties for any proceeds received from ExxonMobil.

After a settlement was reached with ExxonMobil, plaintiff brought suit, alleging that defendants had failed to abide by the distribution plan. In 2014, then-presiding Justice Charles E. Ramos stayed the action pending completion of remediation. In 2022, the Appellate Division found that plaintiff had made a prima facie showing that remediation was complete and restored the case to the active calendar.

Plaintiff submitted two expert reports in the restored action concerning the environmental condition of the Property. The first, from one Andrew Lockwood, was “directed to defendants’ counsel” regarding a narrow technical point, and did not disclose the expert’s qualifications or certain other matters required by Commercial Division Rule 13(c). The second, jointly authored by Lockwood and by one Derek Ersbak, was submitted in reply to defendant’s expert report, and detailed both Lockwood’s and Ersbak’s professional qualifications. Plaintiff’s second report opined that the remediation of the Property was complete, and the report of defendants’ expert opined that it was not.

Defendants moved to preclude the reports or testimony of Lockwood and Ersbak, arguing that 1) the reports contained impermissible legal conclusions that reach the ultimate issue in the case, 2) Lockwood and Ersbak were not qualified to opine on the “highest and best use” of the Property, and 3) plaintiff failed to satisfy Rule 13(c) because it failed to make required disclosures, and the second report was jointly authored. Justice Bannon denied the motion.

As to the first two points, she found that plaintiffs’ reports “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.” Id., pp. 4-5. However, to the extent that plaintiff’s reports “also include opinions that veer into contract interpretation and other legal conclusions, . . . defendants may inquire at trial as to the expert witnesses’ qualifications and may object to particular questions asked of the witnesses, if there are proper grounds therefor . . . [and] questions put to Lockwood and Ersbak at trial should be limited to the environmental condition of the Property without requesting opinions on particular legal obligations of the parties under the Contract.” Id., p. 5.

As to the third point, defendants failed to show prejudice from any failures of disclosure, which had been cured, and “defendants’ argument that the Commercial Division Rules prohibit joint authorship of expert reports because the Rules only refer to a singular ‘witness,’ rather than plural ‘witnesses,’ is unsupported by any decisional or statutory authority and can be summarily rejected as illogical.” Id., p. 6.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning expert witnesses, reports or testimony.