Opinion
IP 01-C-1592-C-M/S.
May 20, 2003.
ORDER ON PLAINTIFF'S OBJECTION TO AND MOTION TO EXCLUDE THE EXPERT TESTIMONY OF EUGENE BRESE
This matter comes before the Court on plaintiff's, Landmark Builders, Inc. ("Landmark"), Objection to and Motion to Exclude Portions of the Expert Testimony of Eugene Brese ("Brese"), under Rule 702 of the Federal Rules of Evidence. Defendants, Cottages of Anderson, LP, and Multi-Housing Construction Acquisition, LLC, n/k/a SHS Construction, LLC ("Defendants"), named Brese as a testifying expert in this case, and Landmark seeks to exclude his proposed testimony in its entirety. The parties have fully briefed their arguments, and the motion is now ripe for ruling.
I. BACKGROUND
In order to fully appreciate the issue before the Court, it is necessary to have some familiarity with the substance of the case. Landmark, a general contractor, entered into a contract (the "Contract") with Defendants to build Cottages of Anderson, a low-income housing complex in Anderson, Indiana. Comp. ¶ 1; Ex. 1. The Contract provided that Landmark was to be paid $5,764,337.00 for the work. Ex. 1. According to Landmark, that price was adjusted downward to $5,752,741.98 at the direction of Cottages of Anderson and as provided for in the Contract. Comp. ¶ 2. Landmark alleges that it substantially completed performance of the work in December 1998, but Defendants have only paid $5,483,535.62. Comp. ¶ 3. Subtracting the amount paid from the adjusted figure above, Landmark seeks the $269,206.36 balance in this breach of contract action. Id. A second count in the complaint seeks validation and foreclosure of a Mechanic's Lien (for $275,649.49) for material and labor Landmark furnished for completion of the construction project. Comp. ¶¶ 10-15.
Landmark actually entered into the Contract with KBMH Construction, Inc. (referred to as "Owner" in the Contract). KBMH Construction, Inc. subsequently merged into Multi-Housing Construction Acquisition, LLC. Multi-Housing Construction Acquisition, LLC subsequently changed its name to SHS Construction, LLC. Comp. ¶ 1.
Landmark initially filed suit in state court, but Defendants removed the suit to this Court on the basis of diversity jurisdiction.
Defendants plan to call three expert witnesses at trial to assist the fact-finder in fully understanding the issues that arise in this case. Brese is one of the three named experts. Landmark requests that the Court exclude the expert testimony of Brese in its entirety because his testimony is beyond the scope of his expertise.
II. EXPERT TESTIMONY STANDARDS
Rule 702 of the Federal Rules of Evidence governs the admission of expert testimony:
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.
FED. R. EVID. 702. In Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S.Ct. 2786 (1993), the Supreme Court "charged trial judges with the responsibility of acting as gatekeepers to exclude unreliable expert testimony, and the Court in Kumho clarified that this gatekeeper function applies to all expert testimony, not just testimony based in science." Ad. Comm. Notes to FED. R. EVID. 702. See also Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167 (1999). "The basic approach to opinions, lay and expert, in these rules is to admit them when helpful to the trier of fact." Ad. Comm. Notes to FED. R. EVID. 704.
III. DISCUSSION
Brese is an architect with thirty-eight years of experience in the field. He has served as an expert witness five times since 1990. In the instant case, Defendants proffer Brese as a testifying expert on the issue of whether or not Landmark achieved "substantial completion" of the Cottages of Anderson project prior to December 20, 1999. Brese opines that Landmark did not "substantially complete" the project because it failed to meet two of the Contract's requirements for a finding of "substantial completion": (1) the Defendants did not receive a "signed-off" notice of final inspection from the City of Anderson with respect to the work in December 1999; and (2) more than $57,643.00 of work remained to be completed in December 1999.
Landmark requests that the Court bar Brese as a testifying expert for two reasons: (1) although Brese has sufficient credentials to testify about architectural matters, he may not engage in contract interpretation, a legal endeavor; and (2) absent any need to clarify an esoteric term or principle from the relevant trade (architecture in this instance), an expert witness may not interpret the meaning of a contract. In response, Defendants contend that the unique role that an architect plays with regard to American Institute of Architects ("AIA") contracts justifies allowing Brese to testify.
Defendants rely on two state law cases in support of their position, but neither case stands for the proposition that architects qualify as experts witnesses whenever an AIA contract is involved. See Ingrassia Constr. Co. v. Vernon Twp. Bd. of Education, 384 N.J. Super. 130, 784 A.2d 73 (2001); Fontaine Bros., Inc. v. City of Springfield, 35 Mass. App. Ct. 155, 617 N.E.2d 1002 (1993). In Fontaine, from which Defendants quote, the AIA contract at issue gave the architect explicit authority to interpret the meaning and construction of all drawings and specifications, and the state court enforced the plain language of the statute by deferring to the architect's previous finding about the specifications at issue. See Fontaine, 617 N.E.2d at 1004. Ingrassia addressed the effect of an architect's certification of cause for terminating the AIA contract at issue. See Ingrassia, 784 A.2d at 80-81. Neither of the cases involved an architect testifying as an expert witness about how to interpret the terms of a contract, nor has the Court's own research of Seventh Circuit case law revealed support for this position. Moreover, the fact that a named architect is given the role of a "referee" in standard AIA contracts does not mean that any experienced architect can give expert testimony about how to interpret the terms of the contract in subsequent litigation. Defendants' reliance on Fontaine and Ingrassia is misplaced.
Courts have historically refused to admit expert testimony explaining matters of domestic law, including the interpretation of contracts. See, e.g., Marx Co. v. Diners' Club, Inc., 550 F.2d 505 (2d Cir. 1977) (trial court erred in permitting an expert witness to give his opinions as to the legal obligations of the parties under the contract). But see WH Smith Hotel Services, Inc. v. Wendy's Intern., Inc., 25 F.3d 422 (7th Cir. 1994) (admitting expert testimony on industry custom and usage to assist in interpretation of ambiguous terms); Phillips Oil Co. v. OKC Corp., 812 F.2d 265 (5th Cir. 1987) (where lay meaning of term in contract conflicts with industry meaning of term, expert witness may testify about the difference). Permitting expert witness testimony on how to interpret a contract could potentially invade the province of both the jury and the court. The Seventh Circuit has stated as much: "The question of interpretation of the contract is for the jury and the question of legal effect is for the judge. In neither case do we permit expert testimony." Loeb v. Hammond, 407 F.2d 779, 781 (7th Cir. 1969) (citation omitted). See also Delta Mining Corp. v. Big Rivers Elec. Corp., 18 F.3d 1398,1402 ("Absent any need to clarify or define terms of art, science, or trade, expert opinion testimony to interpret contract language is inadmissible.").
The proposed testimony of Brese runs afoul of that rule by giving a legal analysis of how to interpret "substantial completion" as defined in the Contract. Although there are some limited exceptions to the rule barring expert testimony on how to interpret a contract, the Court sees no reason to depart from the general rule in this case. "Substantial completion" is defined in the Contract Supplement and, accordingly, does not require further explanation from an expert in the field about custom and usage. Whether or not the terms of the Contract are ambiguous is a matter of law for the Court to decide. Even if the Court concludes that certain of the "substantial completion" criteria are ambiguous and that extrinsic evidence is necessary to clarify the terms, expert testimony on the issue would not be necessary. The Court bars Brese as an expert witness
The Contract required that certain criteria be met before Landmark could achieve "substantial completion" of the project. One criterion for "substantial completion" was that the City of Anderson must first "sign-off" on the construction. Defendants maintain that what constitutes "signing-off" on the construction is ambiguous, and contend that Brese could aid the fact finder in this regard. First, it is for the Court to determine whether or not the criteria for "substantial completion" are ambiguous as matter of law. See, e.g., Ancich v. Mobil Oil Corp., 422 N.E.2d 1320 (Ind.App. 1981). If the terms are indeed ambiguous, and their interpretation requires extrinsic evidence, then the fact finder must determine the facts upon which the contract rests. See Eli Lilly Co. v. Home Insurance Co. 482 N.E.2d 467, 471 (Ind. 1985), cert. denied 479 U.S. 1060, 107 S.Ct. 940, 93 L.Ed.2d 990 (1987). In the absence of any relevant extrinsic evidence, then the ambiguity is the be determined by the Court as a matter of law. See id. Even if it becomes necessary to use extrinsic evidence (ie, witnesses) to explain ambiguous terms in the Contract, that testimony would be limited to an explanation of the terms at issue.
IV. CONCLUSION
For the reasons discussed herein, the Court excludes the proposed expert testimony of Brese. Thus, the Court GRANTS Landmark's Objection to and Motion to Exclude the Expert Testimony of Brese.
IT IS SO ORDERED.