Texas Federal Court Sorts Through Expert Challenges In Insurance Coverage Dispute For Well Blowout
Following an oil well blowout in Reeves County, Texas in September 2011, the operator sought insurance coverage under a policy providing protection against well blowouts and reimbursement for costs and expenses reasonably incurred in bringing the well under control. When the operator filed its insurance claim for the expenses related to the clean-up and the re-drilling of a replacement well, the insurer denied the claim based on the operator’s alleged engineering decision to exceed the maximum safe fracturing pressure for a string of casing that broke apart and caused the blowout. The policy required the operator to exercise due care and diligence in the conduct of all operations, which the insurer claimed did not occur.
The U.S. District Court for the Northern District of Texas ruled on the parties’ competing challenges to proffered expert testimony on the eve of a jury trial set to begin today. The court will allow the jury to hear most of the proffered expert testimony with some notable exceptions.
The court excluded the opinion of one of the insurer’s two proffered experts for a failure to provide a written expert report required by Federal Rule of Civil Procedure 26(a)(2)(B). Under the 2010 amendments to the Federal Rules, some expert witnesses do not have to file written reports, but this applies to those who are not specially employed or retained and who do not regularly give expert testimony (they only have to provide the subject matter of their testimony and a summary of the facts and opinions on which they will testify). See Fed. R. Civ. P. 26(a)(2)(C). In this case, the insurer retained the challenged expert five months after the well blowout and the court explained that the insurer did not establish that the expert had first-hand knowledge, or was a percipient witness, to the blowout so as to escape the requirement that he submit a full expert report. The court concluded that the insurer failed to prove that the failure to submit a written report was harmless or substantially justified, and thus will not permit him to testify at trial. The court found that the testimony would also be cumulative of the insurer’s other expert, and also found the testimony excludable under Federal Rule of Evidence 403.
The court also excluded part of another expert’s proffered testimony regarding Texas Railroad Commission regulations that did not go into effect until January 1, 2014, given that the blowout occurred in 2011.
