Construction Expert’s Opinions on Typical Overhead and Profit Margins Admitted
Posted on December 19, 2025 by Expert Witness Profiler
This litigation arises from hail damage to a hotel owned by Defendants, Merryton Bossier, LLC, Grace Chiao, and Hui Ping Lee (collectively, “Merryton”) in Bossier City, Louisiana, in 2020.
Merryton engaged Stonewater Roofing LTD. Co., LLC to perform roof repairs, contingent upon insurance approval by Scottsdale Insurance Company (“Scottsdale”).
After appraisers assessed the damage, Scottsdale refused to approve the work based on the estimates provided. The parties proceeded to mediation, and an amount of $1,500,000 was agreed upon. However, the parties never signed the mediation agreement, and Merryton later informed Stonewater that they would not proceed with the work. It is disputed exactly what work Stonewater performed. Following this, Stonewater filed suit, and Scottsdale filed a motion to enforce the settlement agreement, leading to the deposit of the $1,500,000 amount into the court registry. Stonewater now claims a right to those funds, while Merryton disputes it. Stonewater and Merryton both filed motions for summary judgment, and the Court ruled that a contract with a suspensive condition existed, but the question of whether that condition was fulfilled will be determined at trial.
Merryton retained William J. Cowley (“Cowley”) as a rebuttal expert to critique the methodology, assumptions, and pricing analysis of Stonewater’s expert.
Stonewater argued that Cowley’s testimony should be excluded, asserting that his testimony did not meet the requirements of Rules 401–403 and 702.
Construction Expert Witness
William Jeffrey Cowley has 44 years of experience in the construction industry, including expertise in claims adjusting and roofing.
Discussion by the Court
Stonewater argued that Cowley’s opinion regarding the typical overhead and profit being 10% each is unsupported by anything except Cowley’s subjective opinion. Stonewater also contended that Cowley’s reliance on national, generalized data failed to consider the specific circumstances of this case. Additionally, Stonewater argued that Merryton failed to timely provide a signed expert report in compliance with the Court’s Scheduling Order and Federal Rule of Civil Procedure 26, asserting that the signed version of Cowley’s report was produced only after the applicable deadline had passed.
In a separate motion in limine, Stonewater again challenged Cowley’s testimony. The motion made several arguments identical to the Daubert motion, including arguments on Cowley offering legal conclusion.
Analysis
Cowley’s Qualifications
Cowley’s qualifications are sufficient to offer opinions on the reasonableness of cost estimates and the methodology employed by Norrell. Stonewater does not contest these credentials, so the Court need not consider his qualifications in detail.
Posture of the Issue: Limited Rebuttal Expert
Because Cowley is not offering new opinions about the cost of repairs or liability but instead critiques the assumptions and conclusions of Stonewater’s expert, he is not required to generate an entirely new calculation for repair costs. Merryton contests liability, so it would be illogical for its expert to assume liability for purposes of preparing a competing cost estimate. Thus, the Court held that Cowley is not obligated to offer an independent repair costs estimate.
Untimely Signed Report
Plaintiff raised the procedural issue that Cowley’s report was not signed on time as required by Rule 26 and the Court’s Scheduling Order. Rule 26(a)(2)(B) requires that an expert submit a signed, written report.
The Court must use the following factors to determine whether the failure to disclose was justified or harmless: “(1) the explanation for the failure to disclose; (2) the importance of the evidence; (3) the potential prejudice to the opposing party of admitting the evidence; and (4) the possibility of curing such prejudice by granting a continuance.”
Here, Stonewater argues that Cowley’s expert report should be excluded because it was not signed by the deadline set forth in the Court’s Scheduling Order. The record reflected that although Cowley’s report was initially served without a signature, Cowley later executed the report, and a signed copy was provided to Stonewater. The contents of the report did not change, and Stonewater was fully apprised of Cowley’s opinions prior to delivery of the signed copy.
The Court found that any failure to timely provide a signed report was harmless. First, the omission of the signature appears to have been a mere oversight, rather than an attempt to evade disclosure obligations. Second, Cowley’s testimony is important to Merryton’s rebuttal of the opposing expert’s cost analysis, so exclusion would be a disproportionate sanction given the nature of the deficiency. Third, Stonewater has not demonstrated prejudice arising from the lack of a timely signature, as it received the report itself on time, was aware of the substance of Cowley’s opinions, and had the opportunity to depose Cowley. Accordingly, the Court found that the initial failure to provide a signed expert report did not warrant exclusion under Rule 37(c).
Cowley’s Critique of the $1,500,000 Figure
Stonewater argued that Cowley offered an impermissible legal conclusion by stating that there is no contractual or other basis for using the $1,500,000 mediation amount as the price for the roofing work.
The Court found that Cowley’s discussion of the $1,500,000 mediation amount fell within the proper scope of rebuttal expert testimony and did not constitute an impermissible legal conclusion.
Cowley did not attempt to resolve whether the mediation agreement is legally enforceable or whether Stonewater is ultimately entitled to the insurance proceeds. Rather, he critiqued the opposing expert’s assumption that the mediation amount may be treated as a fixed contract price for purposes of calculating damages.
The Discrepancy Between the Date of Loss and Pricing (2020 vs. 2025)
Cowley’s use of the U.S. Department of Labor Statistics Producer Price Index to highlight price increases in non-residential roofing from 2020 to 2025 is a valid methodology for adjusting for inflation. Under Rule 703, experts may base their opinions on sources that other experts in their particular field would reasonably rely on. Stonewater argued that Cowley’s reliance on government statistics is improper because it is “broad, national data—without a bridge to the specific job or loss date ….”
According to the Court, Cowley is not required to produce an independent cost estimate, and he did not use the Producer Price Index to calculate damages or to offer a substitute cost estimate.
As for whether the Producer Price Index is the best source for this data, it can be explored on cross examination. Any lack of project-specificity goes to the weight of Cowley’s testimony, not its admissibility.
Scope of Rebuttal
The opposing expert’s damages analysis depends on the pricing data he selected, and Cowley’s testimony directly challenges the accuracy of those inputs. Stonewater’s attempt to draw a distinction between critiquing the opposing expert’s “formula” and critiquing the pricing inputs used within that formula is an artificial one. Pricing assumptions are an integral component of the methodology itself, and challenging those assumptions is a proper means of rebutting the resulting conclusions.
Overhead and Profit
Stonewater contended that Cowley’s statement that 10% overhead and 10% profit is the industry standard should be excluded because Cowley did not produce independent research supporting this statement. However, the Court found that Cowley was not required to produce research to support this statement.
With 44 years of experience, Cowley is qualified to testify about standard industry practices in roofing, including typical overhead and profit margins.
Cowley’s Opinion Will Assist the Trier of Fact
Stonewater argued that Cowley’s opinions will not assist the trier of fact and amount to nothing more than subjective commentary supported only by his credentials.
The Court disagreed. Cowley’s testimony assisted the trier of fact by explaining industry practices and by identifying potential deficiencies in the assumptions and inputs underlying Norrell’s damages analysis. These are matters that are not within the common knowledge of a lay juror. Moreover, evaluating the reasonableness of pricing assumptions, inflation adjustments, and customary overhead and profit margins in the commercial roofing industry requires specialized knowledge. Cowley’s opinions provided context and explanation that will help the jury in evaluating Norrell’s conclusions. Any weaknesses in Cowley’s opinions may be explored through cross examination.
Motion in Limine
The Court has already determined that Cowley’s testimony is admissible under Rule 702. The majority of the arguments raised in Stonewater’s motion in limine merely repackaged those same Daubert challenges under the guise of Rules 401, 402, and 403.
However, Stonewater did raise an additional relevance argument. Stonewater contended that Cowley’s opinions are irrelevant under Rules 401 and 402 because Cowley’s assertion that 2020 pricing inputs should have been used would, if applied within Norrell’s model, produce a profit margin higher than the 49% margin Cowley already characterizes as excessive. See Record Document 153 at 5. According to Stonewater, this alleged inconsistency rendered Cowley’s testimony irrelevant and therefore inadmissible.
The Court found that this argument is unpersuasive. Stonewater’s reasoning rests on the assumption that the $1,500,000 mediation amount constitutes a fixed and binding contract price. This is a premise that Cowley did not accept and that remains disputed in this litigation. Framing Cowley’s rebuttal opinions as internally inconsistent requires acceptance of the assumptions Cowley challenges. Because that premise is disputed, this argument did not undermine the relevance of Cowley’s testimony.
Held
The Court denied Stonewater’s Daubert motion to exclude the testimony of William J. Cowley and motion in limine to exclude or limit the opinions and testimony of William J. Cowley.
Key Takeaway
In this context, the standards applicable to rebuttal experts are different from those governing affirmative expert testimony. A rebuttal expert’s function is to identify flaws in the opposing expert’s analysis, not necessarily to construct a competing model. Although courts have recognized that rebuttal experts may, in appropriate circumstances, offer independent opinions or utilize alternative methodologies, nothing in Rule 26 requires them to do so.
Case Details:
| Case Caption: | Stonewater Roofting Ltd. Co., LLC V. Merryton Bossier, LLC |
| Docket Number: | 5:22cv1048 |
| Court Name: | United States District Court, Louisiana Western |
| Order Date: | December 17, 2025 |
