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Nevins v. Toll Brothers, Inc.

A-0946-10T1 (N.J. Super. App. Div. 2011) (Unpublished)

CONTRACTORS; REPAIRS — An expert’s testimony as to the costs for a contractor to repair a building for its buyer can be based on a gut feeling if the expert testifies as to the experiential basis for his or her conclusions, explains his or her methodology, and demonstrates that the both the factual bases and the methodology employed are scientifically reliable.

A buyer contracted with a custom home builder to have a home built. Following the closing, the buyers were unhappy with the quality of the construction and submitted a list to the builder of items that needed to be repaired. The buyer was not happy with the builder’s response and sued. Three of the claims were dismissed and the rest of the motion was denied. Prior to trial, the parties entered into a settlement agreement that called for a neutral expert to oversee the repair of the home. After a series of motions were filed, the case came under the management of a new judge and the buyers were ordered to provide an expert report and to allow the builder to inspect the home. The builder moved for partial summary judgment and all claims were dismissed except a claim for the breach of the builder’s limited warranty.

Eventually the buyers submitted a report from an expert with forty-five years of experience in commercial construction. The expert believed that the “house was of such poor quality… [that his] recommendation was to demolish it and rebuild it.” Additionally, he estimated that the cost of repairs would be “far more that the original cost of the house, and not significantly less” than the cost to rebuilt the entire home.

When the buyer’s expert was examined by the builder, he stated that he used the report of an engineering firm as a basis for his report but asserted that he “checked the report by making his own observations.” The expert characterized his role as to “review [the engineering] report, examine it, concur with it or disagree with it,” rather than to “analyze the structure, conduct calculations, [or] do any engineering work.” When further questioned by the buyers, the expert explained that the basis of ninety-percent of his calculations was rooted in his “gut feelings.” He explained that he “know[s] what things cost.” Additionally, the expert conceded that he had “very little” experience in “cost estimates” for a single family home, such as the buyers’ home.

Following the expert’s deposition, the builder moved to bar his testimony. After hearing oral arguments, the lower court granted the motion and dismissed the complaint. It recognized that the buyers’ expert possessed the “basic credentials to qualify as an expert,” but held that his report constituted a “net opinion” because such a report must be based on “more than gut feelings.” The buyers then appealed.

The Appellate Division considered the issue of whether an expert report amounts to a “net opinion” when the expert relied on his “gut feeling” concerning costs. The Court, convinced that this was a question for a jury, reversed and remanded the issue to the lower court, holding that the lower court erred when it excluded the expert’s opinion without having first heard either his direct testimony or held a Rule 104 hearing.

The Court reasoned that under N.J.R.E. 703, an expert opinion must be based upon “facts or data … perceived by or made known to the expert at or before the hearing” and that the “net opinion rule is a prohibition against speculative testimony.” Under the “net opinion rule,” expert testimony is excluded if it is based merely on unfounded speculation and unquantified possibilities.” This rule requires that an expert give the “why and wherefore” of his opinion rather than a mere conclusion. Additionally, experts must identify the “factual bases for their conclusions, explain their methodology, and demonstrate that both the factual bases and the methodology are scientifically reliable.” An expert’s net opinion is inadmissible as a net opinion when it is a “bare conclusion unsupported by factual evidence.”

Here, the Court was troubled because the lower court ruled based on information that came out of a cross examination style of interrogation. The expert was not given the opportunity to present his direct testimony at trial or in the context of a 104 hearing. While the expert based his testimony on his “gut feeling,” he subsequently sought to substitute “knowledge of cost” and “feel for costs” for “gut feeling.” Additionally, while the builder criticized the expert’s use of the reports of one or more prior experts as a framework for his report, New Jersey courts have previously held that statements relied on by an expert are ordinarily admissible for the limited purpose of “apprising the jury of the basis of the expert’s opinion, provided that they are reasonably relied on by experts in the field.” While this expert used prior reports of an engineering firm as the baseline for his report, he independently examined each item.

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