Opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OKLAHOMA

SCHWOB ENERGY SERVICES, LLC,

Plaintiff,

v. Case No. 22-00084-JWB

MATRIX PDM ENGINEERING, INC.,

Defendant.

MEMORANDUM AND ORDER

This matter is before the court on cross-motions for partial summary judgment (Docs. 81,

87), three motions to strike expert testimony (Docs. 83, 84, 85), and a motion to strike a portion of

a reply brief. (Doc. 104.) The motions have been fully briefed and are ripe for decision. (Docs.

81, 83, 84, 85, 87, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105.) Plaintiff’s motion for partial

summary judgment (Doc. 81) is GRANTED IN PART and DENIED IN PART. Defendant’s

motion for partial summary judgment (Doc. 87) is GRANTED IN PART and DENIED IN PART.

Plaintiff’s motions to strike (Docs. 83, 84) are DENIED. Defendant’s motion to strike (Doc. 85)

is DENIED. Defendant’s motion to strike a portion of Plaintiff’s reply brief (Doc. 104) is

DENIED.

I. Facts and Procedural History

On February 22, 2022, Schwob Energy Services, LLC (“Plaintiff” or “Schwob”), initiated

this breach of contract lawsuit against Matrix PDM Engineering, Inc. (“Defendant” or “Matrix”)

for an alleged breach of a subcontractor agreement arising out of Matrix’s construction of a gas

compressor station for a pipeline project in Rangely, Colorado. (Doc. 2 at 3.) Defendant filed a

counterclaim for breach of contract on May 18, 2022. (Doc. 31.) After years of back-and-forth

briefing, settlement negotiations, and discovery, the parties have filed cross motions for partial

summary judgment, with each party recognizing that certain fact issues remain for trial. (Docs.

81, 87.) The parties have engaged experts to determine the reasonableness of possible damages.

Plaintiff has filed motions to strike the testimony of two of Defendant’s expert witnesses. (Docs.

83, 84.) Defendant has filed a motion to strike the testimony of one of Plaintiff’s witnesses. (Doc.

85.) In addition, Defendant has filed a motion to strike a portion of Plaintiff’s reply brief

concerning its motion to strike. (Doc. 104.)

Schwob and Matrix entered into their subcontract agreement on October 1, 2020. (Doc.

81-2 at 2.) Under the subcontract, Matrix would place purchase orders with Schwob to complete

work. (Id. at 3.) The purchase order placed under the subcontract is the subject of this lawsuit.

(Doc. 87 at 15-16; Doc. 97 at 1-2.) The purchase order indicated that Matrix was to pay Schwob

a fixed price sum of $6,670,624 (Doc. 96-5 at 2), plus the cost of any construction change orders.

The subcontract price was to be paid out over a series of milestones as the project was completed.

(Id.) This milestone system was referred to as the “Rules of Credit.” (Id.) At each milestone,

Schwob executed a waiver of claims for payment regarding the work performed on the project up

to the date of the waiver. See, e.g., (Doc. 87-8 at 5-6.)

On January 19, 2022, Matrix invoked its rights under Article 16.1 of the subcontract and

terminated Schwob for convenience. (Doc. 81-3 at 2-3.) At the time of termination, Schwob

believes it was 51% complete on the project, while Matrix believes the completion stood at 43%.

(Doc. 87 at 11; Doc. 96 at 6.) Before terminating Schwob for convenience, Matrix considered

terminating Schwob for default, under Article 15.1, due to alleged defects in Schwob’s

performance. (Doc. 81-5 at 5-7.) On February 11, 2022, Schwob, pursuant to the termination-for-

convenience clause, sent Matrix a final invoice for “reasonable costs” Schwob had allegedly

incurred and was owed under the subcontract’s termination-for-convenience clause. (Doc. 81-4 at

2.) The amount due on the invoice totaled $5,833,910.65. (Id.) Matrix refused to pay Schwob

any portion of its invoice. (Doc. 81 at 4; Doc. 96 at 8.) Schwob then filed this lawsuit alleging

breach of contract. (Doc. 2.) The court will evaluate the parties’ summary judgment motions first

and then move to the motions to strike.

II. Standard

A. Summary Judgment

Summary judgment is appropriate if the moving party demonstrates that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R.

Civ. P. 56(a). A fact is “material” when it is essential to the claim, and the issues of fact are

“genuine” if the proffered evidence permits a reasonable jury to decide the issue in either party's

favor. Haynes v. Level 3 Commc'ns, 456 F.3d 1215, 1219 (10th Cir. 2006). The court views all

evidence and reasonable inferences in the light most favorable to the nonmoving party. LifeWise

Master Funding v. Telebank, 374 F.3d 917, 927 (10th Cir. 2004).

B. Motions to Strike

Federal Rule of Evidence 702, which controls the admission of expert witness testimony,

provides:

A witness who is qualified as an expert by knowledge, skill, experience, training,

or education may testify in the form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized knowledge will help the

trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the

case.

Fed. R. Evid. 702. Under this rule, the district court must satisfy itself that the testimony is both

reliable and relevant, in that it will assist the trier of fact, before permitting a jury to assess such

testimony. Schulenberg v. BNSF Ry. Co., 911 F.3d 1276, 1282 (10th Cir. 2018) (citing United

States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009) (en banc)). The district court must first

determine whether the witness is qualified by knowledge, skill, training, experience, or education

to render an opinion. Id. If so, the district court must then determine whether the witness’s opinion

is reliable by assessing the underlying reasoning and methodology. Id. at 1283. The court is not

required to admit opinion evidence that is “connected to existing data only by the ipse dixit of the

expert,” and may exclude the opinion if “there is simply too great an analytical gap between the

data and the opinion offered.” Id. (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)).

But the rejection of expert testimony is the exception rather than the rule, and “[v]igorous cross-

examination, presentation of contrary evidence, and careful instruction on the burden of proof are

the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert v.

Merrell Dow Pharm., Inc., 509 U.S. 579, 596 (1993).

“The court has discretion to determine how to perform its gatekeeping function under

Daubert.” In re EpiPen (Epinephrine Injection, USP) Mktg., Sales Practices & Antitrust Litig.,

No. 17-MD-2785-DDC-TJJ, 2020 WL 1164869, at *3 (D. Kan. Mar. 10, 2020) (citing Bill Barrett

Corp. v. YMC Royalty Co., LP, 918 F.3d 760, 770 (10th Cir. 2019)).

III. Analysis

Schwob moves for summary judgment on its claim of breach of contract and moves for

summary judgment on Matrix’s breach of contract claim because it alleges Matrix has waived its

claim. (Doc. 81 at 7, 14.) In its cross-motions for summary judgment, Matrix asks the court to

find that it is not in breach and that Schwob has waived its claim to damages. (Doc. 87 at 13, 22.)

The court will address these arguments in turn before evaluating the parties’ respective motions to

strike.

A. Summary Judgment

i. The Termination Provision

With respect to Schwob’s breach of contract claim and its ability to recover unpaid costs

after a termination for convenience, the parties vehemently disagree as to how this provision is to

be interpreted. The court will first address Schwob’s breach of contract claim. A breach of

contract claim requires a party to prove the: “(1) formation of a contract; (2) breach of the contract;

and (3) damages as a result of that breach.” Morgan v. State Farm Mutual Auto. Insur. Co., 488

P.3d 743, 748 (Okla. 2021). To determine whether a party has breached a contract as a matter of

law, the court must ascertain the contract’s meaning. Both parties submit that the meaning of the

contract is a question of law that the court may properly answer on summary judgment unless it

determines that the language is ambiguous. (Doc. 81 at 6.) Indeed, “under Oklahoma law, the

interpretation of an unambiguous contract is a question of law for the courts.”1 Pub. Serv. Co. of

Oklahoma v. Burlington Northern R. Co., 53 F.3d 1090, 1097 (10th Cir. 1995) (citing Ferrell

Construction Co. v. Russell Creek Coal Co., 645 P.2d 1005, 1007 (Okla. 1982)) (“Whether a

contract is ambiguous so as to require extrinsic evidence to clarify the ambiguity is purely one of

law for the court, and the construction of an unambiguous contract is a matter of law for the

court.”).

It is well established that a court’s “primary goal is to ascertain ‘the parties’ mutual

intentions from the four corners of the contract.’” Tufaro v. Oklahoma ex rel. Board of Regents of

Univ. of Oklahoma., 107 F.4th 1121, 1132 (10th Cir. 2024) (quoting Walker v. Builddirect.com

1 Under the general terms and conditions of the subcontract, the parties have agreed that Oklahoma law governs the

interpretation and construction of the contract. (Doc. 81-2 at 18.)

Techs. Inc., 349 P.3d 549, 554 (Okla. 2015)). The parties’ intent is to be gleaned “from the entire

agreement.” Id. “If a contract is complete in itself and viewed in its entirety is unambiguous, its

language is the only legitimate evidence of what the parties intended.” Whitehorse v. Johnson,

156 P.3d 41, 47 (Okla. 2007). A reviewing court should not “create an ambiguity by using a forced

or strained construction, by taking a provision out of context, or by narrowly focusing on the

provision,” id., nor “make a new contract to benefit a party []or rewrite the existing one.” Bonner

v. Oklahoma Rock Corp., 863 P.2d 1176, 1183 (Okla. 1993).

Provisions in Oklahoma contracts are “to be understood in their ordinary and popular sense,

rather than according to their strict legal meaning, unless used by the parties in a technical sense,

or unless a special meaning is given to them by usage, in which case the latter must be followed.”

Okla. Stat. tit. 15 § 160. When possible “[t]he whole of a contract is to be taken together, so as to

give effect to every part, if reasonably practicable, each clause helping to interpret the others.” Id.

at § 157. Core to a court’s reasoning must be the presupposition that the parties’ intent is most

reliably expressed by the language they use. Id. at § 154 (“The language of a contract is to govern

its interpretation, if the language is clear and explicit, and does not involve an absurdity.”). Under

the doctrine of contra proferentem, a contractual uncertainty “should be interpreted most strongly

against the party who caused the uncertainty to exist.” Id. at § 170.

At the core of the parties’ motions for summary judgment is the meaning of the

subcontract’s termination-for-convenience clause. (Doc. 81 at 6-13, Doc. 87 at 9-18.) The clause

reads:

Contractor may at its sole discretion, by written notice to Subcontractor, terminate this

Subcontract, in whole or in part, for any reason whatsoever, or for no reason. Upon receipt

of written notice from Contractor, Subcontractor shall cease all work immediately, and take

all reasonable measures after consultation with Contractor, to terminate or assign to

Contractor all subcontracts, purchase orders, or other commitments related to the Work or

the Project on terms and conditions acceptable to Contractor. Subcontractor will be paid

all reasonable costs of all Work performed and materials furnished under the Subcontract

prior to receipt of such notice, plus reasonable demobilization costs, including reasonable

overhead and profit in accordance with this Subcontract. In no event will Subcontractor

be entitled to any payment or compensation whatsoever for interruption of business or any

other items of consequential damage, for overhead or loss of profits on the unperformed

work and/or services and unfurnished materials.

(Doc. 81-2 at 17.) (emphasis added). Schwob contends that the emphasized provision entitles it

to recover all its costs and demobilization expenses subject only to a reasonableness inquiry, and

reasonable overhead and profit in accordance with the terms of the subcontract. (Doc. 81 at 8.)

Based on the pretrial order, Schwob has reduced its damages by the prior amounts paid by Matrix.

(Doc. 90 at 22.) As Matrix did not pay these invoiced costs that were billed after termination, it

allegedly breached the subcontract. (Doc. 81 at 8.) Matrix by contrast alleges: “Schwob’s

compensation following termination is determined by: (1) the value of the completed milestones

under the ‘Rules of Credit’; (2) the portion of the value of incomplete milestones under the ‘Rules

of Credit’ that corresponds to Schwob’s percentage of completion; (3) valid change orders; and

(4) demobilization costs, which would include a reasonable profit and overhead amount for these

costs.” (Doc. 87 at 10.) Because it alleges that portions of Schwob’s work was defective and it

was permitted to back charge, Matrix argues that it need not pay Schwob as the amount of the back

charges exceeds what it owes Schwob. (Doc. 87 at 13.)

Schwob’s argument as to the provision’s interpretation is mostly based on grammar. (Doc.

81 at 10.) Its position hinges on the application of the sentence’s concluding phrase: “in

accordance with this Subcontract.” (Id.) Schwob contends that this restrictive clause only applies

to “reasonable overhead and profit” but does not reach back to “reasonable costs of all Work

performed and material furnished” or “reasonable demobilization costs.” (Id. at 12.)

Consequently, Schwob contends that it is entitled to recover all of its costs irrespective of the fixed

contract price, the ‘Rules of Credit,’ or allocation of the fixed amounts in the contract allocated

towards the milestones. (Id.) According to Schwob, the only category of damages that is limited

by the contractual payment plan is reasonable overhead and profit. As to those categories,

reference to the fixed contract price and the corresponding milestones is required.

In support of its interpretation of the provision, Schwob relies upon the grammatical

principle called the last antecedent doctrine, and Oklahoma courts have relied on it to decide cases.

In Tidal Oil Co. v. Roelfs, 187 P. 486, 487 (Okla. 1920), the Oklahoma Supreme Court explained:

A restrictive clause, however, must be set off by a comma, when it refers to several

antecedents which are themselves separated by that point. It will be observed that in the

provision under consideration the two antecedent clauses are separated by a comma. Under

this rule, if the parties intended the restrictive clause to apply to both antecedents, they

undoubtedly would have set it off by a comma.

See also St. Louis-San Francisco Ry Co. v. Bengal Lumber Co., 292 P. 52, 53 (Okla. 1930); James

v. Beckwith, 805 P.2d 117, 119 (Okla. Civ. App. 1990). Still, the Tenth Circuit cautions that

overreliance on formalistic grammar rules in the contract context can be poor evidence of the

parties’ intent, as “contracting parties often break grammar rules.” Fuel Automation Station,

L.L.C. v. Energera Inc., 119 F.4th 1214, 1229, n.15 (10th Cir. 2024) (“We consider grammar rules

here in that vein: as a flexible tool that can give insight into the parties’ intent and enlighten the

‘plain, popular, and generally accepted meaning of the words employed—unless context shows

otherwise.”). Matrix further counters that the application of the last antecedent doctrine in this

case would lead to an allegedly absurd result: Schwob collecting more than the full price of the

contract because of its termination. (Doc. 96 at 19.) Schwob’s compensation, however, is limited

by reasonableness, which is a fact question for the jury. Schwob is correct as a matter of

grammatical construction, but that is not the main reason the court in part grants its motion for

summary judgment.

Schwob’s position that it is to recover its reasonable costs is supported by the plain

language of the subcontract. (Doc. 81 at 10-13.) Matrix argues that the provision should be

interpreted as allowing Schwob to recover costs by determining the value of the complete and

incomplete milestones in accordance with the “Rules of Credit.” (Doc. 87 at 9-15.) This position

is not supported by the language in the provision. Contra Matrix, the termination for convenience

provision makes no mention of the “Rules of Credit” payment system. (Doc. 81-2 at 17.) Further,

that provision is outlined in the purchase order. (Id.) Matrix contends that this “Rules of Credit”

payment system is brought into Article 16.1 by the phrase “in accordance with the subcontract.”

(Doc. 87 at 11.) This argument fails because if “in accordance with the subcontract” brought the

“Rules of Credit” payment system into the clause, it would render the phrase “will be paid all

reasonable costs of all Work performed and materials furnished under the Subcontract prior to

receipt of such notice” devoid of meaning. The termination provision at Article 16.1 does not

mention milestone payments or rules of credit. It mentions costs. That, subject to reasonableness,

is what Schwob is to be paid. The court notes however, that the reasonableness inquiry by its very

nature will include consideration of the contract terms and surrounding context. Reasonableness

is not merely a question in the abstract about what might be commercially reasonable but rather

takes into account the circumstances of the parties’ dispute. For example, if a contract provided

the contractor would only be paid a certain amount for an expense, a party could not claim that the

expense is reasonable merely because it reflected the market price. A proper reasonableness

inquiry will consider the totality of the circumstances of the parties’ dispute.

Schwob argues that its interpretation of the termination-for-convenience clause in essence

“converts” the subcontract from a fixed price to a cost-plus model. (Doc. 81 at 13.) While this

likely overstates the consequences of the language, the plain meaning of the contract terms does

suggest that what Schwob is owed changes when a termination for convenience occurs. Compare

(Doc. 81-2 at 17 and Doc. 87-3 at 2.) This makes sense because, as Schwob points out, contractors

may frequently incur large upfront investment costs prior to completing much work on a project.

(Doc. 81 at 13.) If the clause merely allowed contractors to recover “milestone” completion

payments as suggested by the “Rules of Credit” system, contractors would never be able to recoup

those upfront investment costs if terminated for convenience early in the project.2

Finally, Matrix contends that other provisions of the subcontract limit Schwob’s recovery.

Specifically, it contends that incorporation by reference of the pipeline’s prime contract changes

the meaning of Article 16.1. (Doc. 96 at 21.) Essentially, Matrix argues that the termination

provision in the prime contract controls because that provision conflicts with Article 16.1. The

court is unconvinced. Matrix points to language in the Subcontract Special Terms and Conditions

which says: “With respect to Subcontractor’s Scope of Work to be performed as furnished

hereunder . . . In the event of inconsistencies, ambiguities, or conflicts between the terms of the

EPC Contract and the Subcontract General Terms and Conditions, then the terms of the EPC

Contract shall apply. However, the terms of the EPC Contract and the Subcontract General Terms

and Conditions shall be read and construed in harmony with each other to the fullest extent

practicable.” (Doc. 96-4 at 21). In the event of a conflict, the prime contract controls. (Id.)

Included in the terms of the prime contract is a provision that explains the prime contractor, upon

termination for convenience, is entitled to payment on the following basis: “to the extent Work is

2 Relatedly, Matrix argues that “it cannot have been the parties’ intention” for Schwob to be owed more under a

termination for convenience than the value of 50% of the work they have completed. (Doc. 96 at 20.) Courts inquire

into the intent of the parties to resolve what the language of the contract means, not necessarily what the eventual

consequences of that language are. See Hicks v. Mid-Kansas Oil & Gas Co., 76 P.2d 269, 271 (Okla. 1938) (“[A]

contract must be interpreted as to give effect to the mutual intention of the parties at the time of contracting, and in so

doing the language of the contract governs if it is clear and does not involve an absurdity, and the intention of the

parties to a written contract is to be ascertained from the writing alone, if possible, and the whole of the contract is to

be considered for this purpose.”).

terminated before Contractor fully completes a Milestone, Contractor shall be entitled to payment

on a prorated basis commensurate with the percentage of the Milestone that Contractor completed

at the time of termination.” (Doc. 96-3 at 9.) Matrix contends these terms conflict with the

subcontract terms and therefore, the prime contract terms must control. (Doc. 96 at 21.)

This argument is unpersuasive because the reach of the clause incorporating the terms of

the prime contract is limited to the project’s “Scope of Work.” (Doc. 96-4 at 21.) The termination-

for-convenience clause is included in the Subcontract General Terms and Conditions, not the

Scope of Work and as a result, the termination for convenience clause stands unmodified by the

terms of the prime contract. (Doc. 96-4 at 6.) A contrary result would hollow out the parties’

bargaining over the subcontract’s general terms.

The consequence of this interpretation is that Schwob is entitled to recover its costs, subject

to reasonableness, as provided by Article 16.1. Whether an outcome where Schwob recovers more

than the total cost of the contract would be absurd as a matter of law is not a question this court

needs to answer. Reasonableness is a fact issue for trial, subject to some limits. 88 C.J.S. Trial §

343. Moreover, the parties currently dispute what the total value of the contract is; accordingly,

that issue must also be left for trial. (Doc. 95 at 7.) Therefore, the court will not decide at summary

judgment whether Schwob’s claimed costs are reasonable, absurd, or exceed the value of the

subcontract. Schwob is entitled to receive its costs, subject to reasonableness, under Article 16.1

of the subcontract’s general terms and conditions. Schwob’s recovery of costs will be limited,

however, due to the release of claims executed by Schwob as discussed below.

ii. Releases

Matrix alternatively argues that Schwob released any claim for costs related to prior work

for which Schwob was paid and executed a release. (Doc. 87 at 22-27.) At each milestone payment

mark, Schwob executed a release that states:

[T]his document becomes effective to release any mechanic’s lien right, any right arising

from a payment bond right, any claim for payment, and any rights under any similar

ordinance, rule, or statute related to claim or payment rights for persons in the signer’s

position that the signer has on the PROJECT and/or property of the OWNER at the above

described LOCATION to the following extent: labor, services, equipment, or material

included in progress payments requests and furnished to the PROJECT through

11/14/2021 [end of payment period].”

(Doc. 87-8 at 5.) (emphasis added). Matrix argues that this language means that Schwob has

released any claim for payment on the project through the date of the last release: November 14,

2021. (Doc. 87 at 22-27.) The project continued its work until December 2021, its “winter break,”

due to the weather in northern Colorado. (Doc. 87 at 11; Doc. 95 at 6.) Before the project resumed,

Schwob was terminated. (Doc. 81-3 at 2-3.)

Schwob’s arguments to preclude application of the signed release are unpersuasive. First,

Schwob argues that because of its internal accounting practices, there is no way to “trace the effect

of the releases on specific items in the final invoice.” (Doc. 96 at 18.) But Schwob’s internal

accounting practices do not affect the language in the releases. Furthermore, if Schwob was

concerned that “much of the work it had completed towards the Rules of Credit milestones” would

not be paid, “because almost every milestone required 100% completion” to be billable, it should

have insisted on changes to the release language. (Doc. 95 at 19.)3 Schwob makes no further

arguments on the enforceability of the releases. It is clear that the release precludes any claim for

payment for labor, materials, or work performed that were billed under the progress payments.

(Doc. 87-8 at 5.) As a result, because it signed releases, Schwob may not seek costs on the project

3 Schwob also argues that its termination for convenience “abrogated” the language in its releases. For this proposition

it cites no authority and no language from the contract supporting this interpretation. As a result, the argument fails.

that were billed up to its last release on November 14, 2021. This means there is a small window

of time for which outstanding, unreleased claims for costs may be recoverable under the

termination-for-convenience provision. That said, there may be costs that were not included in the

progress payments and therefore are not covered by the releases, including change orders. (Doc.

95 at 18-19.)

B. Matrix’s Counterclaim

Matrix also filed a counterclaim against Schwob. (Doc. 31.) It alleges that Schwob

breached the subcontract by supplying defective work, failing to turn over quality control

documents, failing to pay its subcontractors, and failing to assign its subcontractors to Matrix after

termination. (Id. at 3-7.) Schwob filed a motion for summary judgment on Matrix’s counterclaim,

asserting that Matrix had waived its right to sue by terminating Schwob for convenience rather

than default. (Doc. 81 at 14-15.) Matrix disagrees and argues that it is not estopped from pursuing,

and has not waived, claims against Schwob for breaches of the subcontract. (Doc. 96 at 23-24.)

At heart, Schwob argues that Matrix has waived its claims to damages for Schwob’s alleged

breach because Matrix terminated Schwob for convenience. (Doc. 81 at 14.) “A waiver is defined

as the voluntary or intentional relinquishment of a known right.” Chandler v. State ex rel. Dep’t

of Pub. Safety, 419 P.3d 298, 310 (Okla. Civ. App. 2017) (citing Faulkenberry v. Kansas City

Southern Ry. Co., 602 P.2d 203, 207 (Okla. 1979). Unlike a termination for default, a termination

for convenience does not afford the terminated party the opportunity to cure any defective work.

Compare Doc. 96-4 at 14-15 to Doc. 96-4 at 17.

While the court must give effect to all provisions of a contract, Okla. Stat. tit. 15 § 157,

Plaintiff points to no provision of the subcontract that shows Matrix waived its rights to a claim

for damages for defective performance or any other breach set forth in Matrix’s claims. In fact,

the termination-for-convenience clause explicitly provides that: “Contractor may at its sole

discretion, by written notice to Subcontractor, terminate this Subcontract, in whole or in part, for

any reason whatsoever, or for no reason.” (Doc. 81-2 at 17.) (emphasis added). This language

belies Schwob’s implication that Matrix must use the termination-for-default clause when

terminating and seeking recovery for defective performance. (Doc. 97 at 9.) Accordingly, Matrix

has not waived its counterclaim. On this issue, Schwob’s motion for summary judgment is denied.

C. Motions to Strike

i. Richard DuCarme

Matrix has proffered Richard DuCarme as an expert witness to testify about costs incurred

by Matrix as a result of Schwob’s allegedly defective work. (Doc. 83-1 at 2.) Schwob has moved

to strike Mr. DuCarme’s testimony in its entirety due to alleged gaps in Mr. DuCarme’s expert

report. (Doc. 83 at 2-3.) Specifically, Schwob argues that Mr. DuCarme did not disclose “work

papers” that he refers to in his deposition and allegedly relied upon in his report. (Id.) As Matrix

explains, these “work papers” are excel spreadsheets that Mr. DuCarme created to organize the

underlying factual record for his review. (Doc. 100 at 2.) Failure to disclose these documents,

according to Schwob, violates Federal Rule of Civil Procedure 26. (Doc. 83 at 2-3.) Schwob

further contends that the violation has prejudiced it in such an irreparable way that Mr. DuCarme’s

testimony must be excluded in its entirety. (Doc. 83 at 14-17.)

The court will deny Schwob’s motion because Mr. DuCarme’s disclosures likely fall within

the limits imposed by Rule 26. An expert report must be complete enough to allow the opposing

party an opportunity to contest the analysis of the expert; this requires disclosure of the materials

the expert relied upon in reaching his opinion. Fed. R. Civ. P. 26 (a)(2)(B)(ii). “It is not sufficient

that an expert report merely set forth the opinions the expert will offer; ‘it must also describe the

reasons and basis for those opinions.’” Perry v. Safeco Ins. Co. of Am., No. 18-CV-539, 2020 WL

1166087 at *4 (N.D. Okla. 2020) (citing Rule 26 Committee Note). As explained below, Mr.

DuCarme disclosed the documents he relied upon to Schwob, the undisclosed excel spreadsheets

are merely summaries of the documents he relied upon.

Mr. DuCarme’s report contains various citations to underlying bates-numbered documents

(Doc. 83-3.) and an exhibit list that includes “documents contained in Vory’s Relativity database

which houses all documents produced in this action.” (Id. at 113.) Mr. DuCarme has declared in

a signed affidavit that the “work papers” he referenced are comprised of the exhibits in his report,

the underlying data and documents produced in the litigation, one unproduced email and most

importantly “two excel documents which copies, inserts, and aligns vendor and labor data with the

cost entries in Matrix’s costs report for ease of viewing and reconciliation.” (Doc. 100-2 at 2-3.)

As a result, Mr. DuCarme did not breach Rule 26 by failing to disclose the “work papers.”

Even if the disclosures did fall below the Rule 26 standard, Schwob must have suffered

sufficient prejudice to warrant the expert’s exclusion. Jacobsen v. Deseret Book Co., 287 F.3d

936, 952 (10th Cir. 2002) (“Rule 37(c) permits a district court to refuse to strike expert reports and

allow expert testimony even when the expert report violates Rule 26(a) if the violation is justified

or harmless.”). The Tenth Circuit instructs district courts that they “need not make explicit findings

concerning the existence of a substantial justification or the harmlessness” but should consider

certain factors. Id. at 953 (quoting Woodworker’s Supply, Inc. v. Principal Mut. Life Ins. Co., 170

F.3d 985, 993 (10th Cir. 1999)). Those factors are: “(1) the prejudice or surprise to the party against

whom the testimony is offered; (2) the ability of the party to cure the prejudice; (3) the extent to

which introducing such testimony would disrupt the trial; and (4) the moving party's bad faith or

willfulness.” Id.

As to the first factor, despite its protestations, Schwob was not surprised by the testimony

offered because as Matrix points out, the underlying documents and data used to support Mr.

DuCarme’s report were already disclosed. (Doc. 100 6-7.) The previously undisclosed excel

spreadsheets that Schwob contends “are the analysis,” (Doc. 103 at 4), are more like summary

exhibits which as Matrix explains “identify [] the bates numbers and reformat[] the information,”

(Doc. 100 at 2), from the discovery record. Second, whatever minimal prejudice Schwob did

suffer was cured as Matrix produced the summaries shortly after Mr. DuCarme’s deposition. (Doc.

100 at 3.) At this stage, Schwob has been in possession of these documents for nearly a year; this

is ample time to prepare challenges for trial. Third, neither party claims that the introduction of

Mr. DuCarme’s testimony would disrupt the trial and the court also sees no reason that would be

the case. Schwob’s contention that the court would need to reopen discovery and shift the trial

timeline is unfounded. Finally, Schwob does not argue bad faith or willfulness on the part of

Matrix and the court sees no evidence of such bad faith. Accordingly, because Mr. DuCarme’s

report likely complied with Rule 26 and the non-disclosure was relatively harmless, Schwob’s

motion to strike the testimony of Mr. DuCarme is denied.

Additionally, because Matrix has succeeded in its defense of Mr. DuCarme’s testimony,

its motion to strike a portion of Schwob’s reply brief (Doc. 103) regarding the underlying motion

to strike is denied as moot.

ii. Michael Patena

Matrix has proffered Michael Patena as an expert witness to testify in this case. (Doc. 83-

1 at 4.) Mr. Patena was an employee of Matrix when this litigation began and left the company

but continued to support the litigation. (Doc. 84 at 1.) During Mr. Patena’s deposition, counsel

for Schwob allegedly first learned that Mr. Patena was no longer an employee of Matrix. (Id. at

3.) In Schwob’s eyes, this changes Mr. Patena’s status as an expert witness and subjects him to

more stringent disclosure requirements associated with retained experts. (Id. at 33.) Because

Matrix failed to designate Mr. Patena as a retained expert and make the required disclosures,

Schwob argues that Mr. Patena’s testimony should be stricken. (Id. at 4-5.) The court disagrees.

Under FRCP 26, expert witnesses fall into two categories: retained and non-retained. Fed.

R. Civ. P. 26 (a)(2)(B). Retained experts are those that are brought into a case for the purpose of

supporting litigation. Id. Non-retained experts are witnesses that have a factual connection to the

case but also happen to be an expert. Id.; see also Downey v. Bob’s Discount Furniture Holdings,

Inc., 633 F.3d 1, 7 (1st Cir. 2011) (“[W]here, as here, the expert is part of the ongoing sequence

of events and arrives at his causation opinion during treatment, his opinion testimony is not that of

a retained or specially employed expert. If, however, the expert comes to the case as a stranger and

draws the opinion from facts supplied by others, in preparation for trial, he reasonably can be

viewed as retained or specially employed for that purpose, within the purview of Rule

26(a)(2)(B).”) (internal citations omitted). A retained expert is required to produce a written report

containing certain information. Id. at 26 (a)(2)(B)(i) – (vi). A non-retained expert is not required

to produce such a report. Id. at 26 (a)(2)(C)(i) – (iii).

Because Mr. Patena’s relevance to the events of the contractual dispute renders him a non-

retained expert, Matrix need not produce a report pertaining to his testimony. Contrary to

Schwob’s contentions, Mr. Patena’s status as a non-retained expert turns not on his employment,

but rather on his ties to the underlying facts of the dispute. See Downey, 633 F.3d at 7. Therefore,

Mr. Patena’s change in employment is irrelevant and Matrix was not under a requirement to

produce a report when Mr. Patena left his job. Therefore, Schwob’s motion to strike Mr. Patena’s

testimony is denied.

iii. Harlan Smith

Schwob has proffered its CEO, Harlan Smith, to testify about the costs Schwob incurred

on the project. (Doc. 85-1.) Matrix contends that his testimony should be excluded because it is

improper expert testimony. (Doc. 85 at 1.) Schwob disagrees and claims that Mr. Smith’s

testimony is merely lay testimony arising out of Mr. Smith’s direct experience with the business.

(Doc. 101 at 3-4.) A lay witness’s testimony is cabined to matters that do not “express an opinion

as to matters which are beyond the realm of common experience and which require the special

skill and knowledge of an expert witness.” Randolph v. Collectramatic, Inc., 590 F.2d 844, 846

(10th Cir. 1979). A lay witness may only testify if “his opinions or inferences do not require any

specialized knowledge and could be reached by any ordinary person.” LifeWise Master Funding

v. Telebank, 374 F.3d 917, 929 (10th Cir. 2004) (quoting Doddy v. Oxy USA, Inc., 101 F.3d 448,

460 (5th Cir. 1996)). More technical and complicated subjects like “sophisticated economic

models . . . ‘concern[ing] moving averages, compounded growth rates, and S-curves’” are outside

the purview of a lay witness. James River Ins. Co. v. Rapid Funding L.L.C., 658 F.3d 1207, 1214

(10th Cir. 2011) (quoting Telebank, 374 F.3d at 929).

But Mr. Smith plans to testify about something much milder: the costs that Schwob

incurred during its conduct under the subcontract. (Doc. 101 at 6.) This is a fact question, and

one that Mr. Smith surely has direct exposure to as the CEO of the company. Courts have

permitted this kind of testimony by lay witnesses. Ryan Dev. Co., L.C. v. Indiana Lumbermens

Mut. Ins. Co., 711 F.3d 1165, 1170 (10th Cir. 2013) (“The advisory committee notes to Rule 701

explain that ‘most courts have permitted the owner or officer of a business to testify to the value

or projected profits of the business, without the necessity of qualifying the witness as an

accountant, appraiser, or similar expert.’”) Mr. Smith will be permitted to testify on this subject

as a lay witness because his testimony will likely be limited to “basic arithmetic, personal

experience, and no outside expert reports.” Id. Accordingly, Matrix’s motion to strike the

testimony of Harlan Smith is denied. However, at trial Matrix may object to testimony that it

perceives wanders outside the confines of lay testimony and into the morass of expert opinion.

The court will take up those objections at that time.

IV. Conclusion

For the foregoing reasons, Schwob’s motion for partial summary judgment (Doc. 81) is

GRANTED IN PART and DENIED IN PART, Matrix’s motion for partial summary judgment

(Doc. 87) is GRANTED IN PART and DENIED IN PART, Schwob’s motions to strike (Doc. 83,

84) are DENIED, Matrix’s motion to strike (Doc. 85) is DENIED, and Matrix’s motion to strike a

portion of Schwob’s reply brief (Doc. 104) is DENIED as moot.

A telephone pretrial conference is set for January 21, 2026, at 11:15 a.m. Parties shall dial

Conference Number: 316-402-0044 Conference ID: 126 186 250.

IT IS SO ORDERED. Dated this 12th day of January, 2026

s// John W. Broomes

JOHN W. BROOMES

UNITED STATES DISTRICT JUDGE