Expert’s Supplemental Report Doomed By New Opinions

A second expert witness report submitted by the defendants was not, a timely, supplemental report as claimed, but a new report, as the plaintiff argued, because the second report contained new opinions that contradicted the original opinions, the US District Court (W.D. Va.) found, excluding the report even though the court recognized that it was critical to the defendants.

In Mountain Valley Pipeline, LLC vs. 8.37 Acres of Land, owned by Frank H. Terry, Jr., et al. (7:20-cv-134, W.D. Va., Aug. 18, 2020), a real estate appraisal expert witness for the defendants, Dennis W. Gruelle, assumed in his original expert report that a deal to lease a 560-acre farm property to develop a wind farm fell through because of announcements by the plaintiff, Mountain Valley Pipeline (MVP), to build a natural gas pipeline which would require easments on the property owned by the defendants, Frank Terry, John Coles Terry, and Elizabeth Terry.

After submitting his report, Gruelle spoke with the wind farm developer and learned that the company had abandoned the lease for unrelated reasons. Three weeks after learning of his error, Gruelle submitted another report, on the last day of discovery, more than forty days after the deadline for initial expert disclosures.

In the “supplemental” report, Gruelle reversed his original opinion that MVP's project would prevent any development of the property as a wind farm, instead finding that the northern three-fifths of the property could be best used as a wind farm, the rest best used as a family subdivision, due to the lack of frontage caused by the easement. He also added that the wind farm could be accessed by a fire road on an adjacent parcel of land owned by Elizabeth Terry, another new opinion.

Gruelle found in his supplemental/second report, for the first time, that a High Consequence Area (an area where pipeline releases could have greater consequences) would damage the property by 35%. At the hearing on motions to exclude Gruelle's opinions, the defendants admitted there was no such area on the property.

The U.S. District Court for the Western District of Virginia recognized the importance of Gruelle's testimony, as did MVP. Without the second report, the landowner defendants were left with only Gruelle's initial, critically flawed report and the expected testimony of one of the landowners.

The district court also found that Gruelle, approved by the Virginia Department of Transportation to perform appraisals, failed in his initial report to link, more than anecdotally, the fear of pipelines he alleged to a diminution in market value which he claimed. Further, Gruelle attempted to introduce HUD lending requirements (for improvements within 660 feet of the pipeline) but, the court found, failed to link them to any diminution in the property value.

Even though the initial expert report was fatally flawed, the district court found MVP to be clearly prejudiced by Gruelle's late disclosures in his second report. The defendant landowners' offer to make Gruelle available for a deposition would not, in the court's words, “cure the prejudice” because MVP would not have the opportunity to file rebuttal opinions and would incur further expense.

A supplemental report that contains entirely new and different opinions from an initial report, the failure to timely disclose the new opinions and the 11th-hour production prejudiced the plaintiff and were not substantially justified, the district court found, excluding Gruelle's second report as a justified sanction.

The case was scheduled to go to trial September 8th, 2020.