MidAmerica C2L Incorporated v. Siemens Energy Incorporated ( 2023 )

USCA11 Case: 20-11266 Document: 74-1 Date Filed: 03/31/2023 Page: 1 of 46
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 20-11266
____________________
MIDAMERICA C2L INCORPORATED,
a Nevada corporation,
Plaintiff-
Counter Defendant-
Appellant,
SECURE ENERGY, INC.,
a Nevada Corporation,
Plaintiff-Appellant,
versus
SIEMENS ENERGY INC.,
a Delaware corporation,
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2 Opinion of the Court 20-11266
Defendant-
Counter Claimant-
Appellee.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 6:17-cv-00171-PGB-LRH
____________________
Before NEWSOM, BRANCH, and LAGOA, Circuit Judges.
LAGOA, Circuit Judge:
We GRANT IN PART Secure Energy, Inc.’s petition for
panel rehearing, vacate our prior opinion in this appeal, and substi-
tute in its place the following opinion.
This case is about a business relationship gone bad. In 2006,
Secure Energy, Inc.—with the intention of opening a coal gasifica-
tion plant in Illinois—approached Siemens Energy, Inc., about pur-
chasing some gasifiers and other related equipment. By 2007, the
parties had entered into a formal contract, under which Secure
would buy the equipment on a payment plan and Siemens would
continue to provide updates and repairs to the gasification reactors.
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20-11266 Opinion of the Court 3
Two problems quickly arose. First, the price of natural gas
fell in 2009. As a result, Secure had to change its business plan mul-
tiple times and could not keep up with its payments to Siemens.
Second, Siemens’s gasification equipment began having problems,
as discovered by one of Siemens’s other clients in 2010. By 2012,
Siemens began implementing several substantial modifications to
its gasifiers in order to get them working properly, but, because
Secure had never gotten its plant up and running, Siemens left Se-
cure out of the loop. In 2015, Siemens decided to exit the gasifica-
tion market entirely, but promised to continue supporting its exist-
ing projects, including Secure’s.
These problems created the perfect storm for litigation. Se-
cure—never having opened, let alone used, its gasification equip-
ment—was commercially failing. Secure still owed Siemens mil-
lions of dollars for the equipment and had just become aware that
the equipment it purchased years earlier had issues. In 2016, after
Siemens decided to leave the gasification market, Secure and its
subsidiary MidAmerica C2L Incorporated 1 sued Siemens, bringing
various fraud- and contract-based claims. Siemens—which was still
owed some thirteen million dollars under the contract and which
had given Secure multiple payment extensions on that amount—
filed a counterclaim against Secure for breach of contract.
1 Forpurposes of this opinion, we refer to MidAmerica as Secure unless oth-
erwise expressly noted.
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4 Opinion of the Court 20-11266
Years into the litigation, Secure sought leave to amend its
complaint, which the district court denied due to its untimeliness.
Later, the district court excluded Secure’s expert witness, Dr. Her-
bert Kosstrin, for relying on an unreliable methodology, and
granted summary judgment in Siemens’s favor on each of Secure’s
affirmative claims. The case thus proceeded to trial only on Sie-
mens’s counterclaim. Prior to trial, the district court excluded evi-
dence Secure sought to introduce in support of its breach-of-con-
tract affirmative defense. The jury returned a full verdict in Sie-
mens’s favor on its counterclaim, and Secure timely appealed.
On appeal, we are asked to determine four discrete issues:
(1) whether the district court abused its discretion in excluding Se-
cure’s expert witness; (2) whether the district court erred in enter-
ing summary judgment in Siemens’s favor; (3) whether the district
court abused its discretion in denying Secure leave to amend its
complaint; and (4) whether the district court abused its discretion
in excluding certain evidence at trial and afterwards denying Se-
cure’s motion for a new trial.
I. FACTUAL AND PROCEDURAL BACKGROUND
Secure was formed in 2006 2 for the purpose of developing
and constructing a facility in Decatur, Illinois, to convert coal into
2 Secure’s subsidiary, Secure Energy Decatur, LLC, was formed shortly after
this time and was the original entity contracting with Siemens.
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20-11266 Opinion of the Court 5
synthetic natural gas using a process called coal gasification. 3 To
that end, Secure began shopping around for a Basic Engineering
Design Package (“BEDP”) and Product Design Package (“PDP”)
from a coal gasification technology provider, eventually contacting
Siemens. Lars Scott and Jack Kenny, the two founders of Secure,
met with Rolf Rüsseler and Harry Morehead of Siemens. During
these meetings, Siemens represented to Secure that Secure was
purchasing a proven technology from Siemens, as it started the
equipment’s design in the mid-1970s and it had over twenty years
of experience in coal gasification. Additionally, Siemens repre-
sented that its current 500-megawatt gasifiers—which Secure was
interested in—employed a technologically advanced cooling-
screen system that accepted a wide range of feedstock and could
achieve “up to >99%” carbon conversion rates. And Siemens had
already sold the 500-megawatt gasifiers to one customer in China.
Impressed with these representations, Secure decided to use
Siemens for its equipment and technology needs. On July 24, 2007,
Secure and Siemens entered into a “Memorandum of Understand-
ing” memorializing the parties’ intention for Secure to purchase
3 Gasification converts carbonaceous, fossil-fuel based material (e.g., coal) into
gas (e.g., synthetic natural gas) by feeding pulverized coal (called feedstock)
into large pieces of equipment called gasifiers. See Ronald W. Breault, Gasifi-
cation Processes Old and New: A Basic Review of the Major Technologies; 3
Energies 216, 218 (2010), https://www.mdpi.com/1996-1073/3/2/216.
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6 Opinion of the Court 20-11266
from Siemens two 500-megawatt gasifiers, associated equipment,
engineering services, and a process license.
On December 21, 2007, Secure and Siemens entered into a
formal contract (the “2007 Contract”) whereby Secure would pur-
chase Siemens’s products and services for €27,715,000 plus
$1,717,000—in total, approximately $40 million. The 2007 Con-
tract and every subsequent contract at issue here included a merger
clause, which stated that neither “party will be bound by any prior
obligations, conditions, warranties or representations.” Secure
promptly paid to Siemens the $40 million called for in the 2007
Contract.
Secure and Siemens also entered into a licensing agreement
(the “2007 LSA”) whereby Secure licensed Siemens’s technology
for approximately €11.7 million. Secure was to pay the €11.7 mil-
lion licensing fee pursuant to an agreed upon fee schedule within
the 2007 LSA.
The burners—a core component of Siemens’s gasifiers—
were delivered to Secure in Decatur, Illinois, in March 2009. Se-
cure alleges that the pins in the cooling screen of the burners were
too short and out of specification, although Siemens disputes this
characterization. However, Secure only became aware of this al-
leged defect during the litigation—it never actually opened or put
into operation the Siemens gasifiers after it took possession of
them.
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The price of natural gas dropped precipitously in 2009; as a
result, Secure abandoned its original plan of converting coal to nat-
ural gas and began planning to build a coal-to-gasoline gasification
plant instead. But because the plot of land Secure had acquired in
Decatur could not accommodate this change, Secure decided to
move its plant to West Paducah, Kentucky.
Secure’s new plans in Kentucky required no changes to the
Siemens gasification equipment, and the parties continued their
business relationship. On March 31, 2010, Secure and Siemens en-
tered into a Completion Agreement (the “2010 Completion Agree-
ment”), which terminated the parties’ previous agreements in the
2007 Contract and 2007 LSA, as well as a new License Agreement
(the “2010 LSA”). The 2010 Completion Agreement also stipulated
that Siemens had met its performance goals under the 2007 Con-
tract and 2007 LSA and released both parties from any claim related
to those contracts. In addition, the 2010 LSA included a warranty
extension on the gasifiers (which would have otherwise expired in
2011) upon Secure’s payment of a €1 million fee, but Secure never
paid the fee. The 2010 LSA also set forth terms for paying the li-
censing fee under the agreement, requiring: (1) Secure to pay Sie-
mens €300,000 at the “Contract Date”; (2) €700,000 within five
business days of the date of “Closing of New Equity” or July 31,
2010, whichever was later; (3) €10.2 million upon “Financial
Close,” but no later than August 30, 2011 (unless otherwise agreed
to by the parties); and (4) €1.2 million when “Acceptance” oc-
curred, but no later than December 31, 2014.
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At around the same time Siemens was working with Secure,
Siemens sold five 500-megawatt burners to a client which installed
the burners at its coal to polypropylene plant in China (“NCPP”).
These burners were first used in October 2010. Immediately, there
were problems. The burners that Siemens had used were having
trouble converting the Chinese coal into synthetic gas. The pilot
burner was also “unreliable” and had to be removed twenty-five
times on two of the gasifiers at NCPP in the first two months. The
cooling screens also had issues, with the flame from the burner hit-
ting them at an awkward angle.
Siemens explains away these problems by referring to the
fact that the Chinese client used below-grade coal in the gasifiers at
NCPP and loaded the incorrect fuel source into the burners. And
Siemens admits that some of the parts of the gasifiers required re-
pair but maintains that none of the gasifiers were defective. In any
event, it is beyond dispute that, from 2010 to 2012, NCPP experi-
enced numerous problems and the Chinese client went forward
and made “optimizations and modifications” at NCPP. At one
point, the Chinese client sought payment from Siemens for the is-
sues it corrected related to NCPP, and by 2014, the Chinese client
had replaced its Siemens burners with burners from a Chinese en-
gineering firm.
Internal Siemens documents from this time period identified
the problems. In October 2012, Rüsseler sent an internal Siemens
email in which he explained that the “message” to Secure should
be to “scrap the equipment, we’ll start over again.” On November
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13, 2012, Siemens circulated an internal memo discussing the
needed improvements to the burners, which estimated that the im-
provements would take 8,520 engineering hours. At this point, Se-
cure had changed its business plan again, this time planning a coal-
to-methanol plant at its Kentucky location.
On July 18, 2012, Secure and Siemens entered into a new
Completion Agreement (“2012 Contract”) and License Agreement
(“2012 LSA”) (collectively, “2012 Contracts”). The 2012 LSA in-
cluded a merger clause that terminated all prior agreements. Pur-
suant to the 2012 LSA, Secure was required to pay Siemens a €12.48
million licensing fee. The 2012 LSA recognized that Secure had
already paid €300,000 in 2010, meaning that Secure still owed Sie-
mens €12.18 million under the 2012 LSA. Secure was required to
pay the remaining €12.18 million as follows: (1) €10.932 million
upon “Financial Close”—defined as the moment “construction fi-
nancing for the [p]roject ha[d] been arranged,” i.e., once Secure had
secured financing—but no later than February 28, 2013; and (2)
€1.248 million when “Acceptance” occurred—defined by the par-
ties as once specified reliability and performance tests were success-
fully completed and demonstrated— but no later than December
31, 2015. The 2012 LSA also provided that, in the event Secure fails
to make payment when due, and after the 15-business-day cure pe-
riod, Siemens would have the right to terminate the agreement and
Secure would owe Siemens ninety-two percent of the licensing fee
if Financial Close had not yet occurred. The 2012 Contracts
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substituted MidAmerica, Secure’s subsidiary, for Secure as the con-
tracting party.
Not long thereafter, Secure sought to obtain a construction
and financing contract for its plant from a company called SK En-
gineering & Construction. Siemens agreed to meet with SK and
Secure to help Secure acquire that agreement. During the meeting,
Siemens communicated with SK that Siemens would be imple-
menting the improvements it learned at NCPP so long as Secure
agreed to pay for them. Siemens estimated that it would take
around 8,500 engineering hours to complete. In December 2012,
however, Siemens suggested internally that incorporating these
changes would “tie up resources at a time when [Siemens] need[ed]
them more urgently elsewhere” and that, when offering these
changes to Secure, Siemens should make “the price and schedule
for this change order . . . so unattractive that [Secure] cannot draw
th[e] option.”
In early 2013, Siemens was in the process of pitching to a
new client—the Texas Clean Energy Project (“TCEP”). Because it
used a Chinese contractor, TCEP was aware of the problems the
Siemens’s burners had at NCPP and asked for reassurance that
there were solutions to the problems that occurred with the equip-
ment there. Siemens responded that there were, detailing twenty-
eight changes to the design—the design that Secure still had—that
would be implemented before the TCEP project got underway.
Secure did not make the license fee payment that came due
on February 28, 2013. At the time, the Siemens gasifiers Secure
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purchased had not been opened. And by now, Secure’s business
was crumbling, with internal documents indicating “substantial
doubt about [Secure’s] ability to continue as a going concern.” In-
deed, as of December 2012, Secure admitted that, “[i]n order to
continue the coal gasification project, [it must] obtain grants, debt
financing or additional equity investment.”
In May 2014, Secure emailed Siemens asking when Secure
could expect an updated BEDP and asking about the viability of its
equipment. Internally, Siemens stated that “very little to nothing
can be re-used [sic] and we would have to start from scratch.”
By March 2015, Secure stopped making payroll payments to
its employees. In July 2015, Secure advised Siemens that there
might be “new life for [its] project,” as SK had introduced Secure
to a group in Houston that were interested in partnering with it on
the Kentucky plant. But Secure was never able to obtain the nec-
essary financing for a coal-to-fertilizer plant at the Kentucky site
that it hoped would give it that new life. Secure then missed the
December 2015 licensing fee payment due to Siemens under the
2012 LSA. By the end of 2015, Secure had not paid any of the li-
censing fees under the 2012 Contracts, except for the down pay-
ment, and it had suspended its business operations.
At the same time, the market constraints that were squeez-
ing Secure had the same effect on Siemens. By mid-2015, Siemens
decided to exit the gasification market. On a February 2, 2016, call
between Secure and Siemens, Siemens told them of its decision.
Secure interpreted the call as an anticipatory repudiation of the
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contract—i.e., Secure believed that Siemens was communicating it
would not honor the contract.
On February 11, 2016, Secure demanded recission of the
2007 Contract and the return of all monies paid by Secure to Sie-
mens pursuant to that contract. On February 17, 2016, Siemens
informed Secure that Siemens would not violate any contractual
obligation even though Siemens was closing its coal gasification
business.
In March 2016, Siemens proposed extending the license fee
payment deadline and the deadline for completing “performance
tests.” Secure rejected the offer, so Siemens revoked it and de-
manded payment of the approximately €11.5 million termination
fee owed pursuant to the 2012 LSA.
Secure filed suit against Siemens in July 2016, in Illinois state
court. Siemens removed the case to federal court, and the case was
transferred to the Middle District of Florida. Secure amended its
complaint on April 21, 2017. Secure brought six counts: (1) breach
of contract; (2) breach of warranty of fitness; (3) fraudulent misrep-
resentation by Siemens as to support of the project; (4) fraudulent
misrepresentation for failure to disclose defects 4; (5) recission for
fraud, and (6) recission for lack of consideration. All in all, Secure
sought approximately $86 million in damages—$40 million for the
4 The fraudulent misrepresentation claim for Siemens’s alleged failure to dis-
close design defects was voluntarily dismissed.
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loss of value of the equipment and technology it purchased and $46
million for its expenses designing and engineering its plants—and
claimed that Siemens anticipatorily repudiated by exiting the gasi-
fication market. Siemens answered and asserted a counterclaim for
breach of contract, seeking payment of the termination fee owed
under the 2012 LSA plus interest. Secure filed a reply to Siemens’s
counterclaim which asserted various affirmative defenses, includ-
ing that Siemens “materially breached the terms and conditions” of
the 2012 LSA.
Secure voluntarily dismissed its fraudulent misrepresenta-
tion claim for support of project. In an order on Siemens’s motion
for partial dismissal, the district court determined that Secure’s re-
scission for lack of consideration claim was limited to misrepresen-
tations and omissions following March 31, 2010 (the date the par-
ties entered into the 2010 Contract) because the 2010 Contract
waived and released all previous claims.
The litigation moved into discovery. Over a year and a half
after the deadline to amend pleadings had passed—and just two
weeks before the close of fact discovery—Secure asked the district
court for leave to amend its complaint so that it could plead new
facts and alternative legal theories of recovery. Secure based its
motion exclusively on Federal Rule of Civil Procedure 15, concern-
ing leave to amend, but did not address Federal Rule of Civil Pro-
cedure 16, which concerns modifications to scheduling orders. The
magistrate judge denied the motion. The magistrate judge ex-
plained that the motion was brought under the wrong rule, noting
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14 Opinion of the Court 20-11266
that Secure failed to address the requirements of Rule 16(b)(4), and
concluded that Secure had not demonstrated good cause to sup-
port belated amendment of the complaint. On February 5, 2019,
Secure moved to continue the trial date in order to file an amended
complaint. That motion was also denied for failure to provide
good cause. After summary judgment was entered in Siemens’s
favor on Secure’s affirmative claims, Secure renewed its motion to
continue the trial and amend its complaint. And again, its motion
was denied.
Because Secure’s claims were premised in large part on de-
fects in the BEDP and the gasification burners, it retained an expert,
Dr. Herbert Kosstrin, to testify as to their defective nature. Dr.
Kosstrin was prepared to testify that (1) Siemens’s BEDP and gasi-
fication equipment were defective; and (2) their defective nature
prevented Secure from obtaining financing to complete their
plants; and (3) the gasification equipment was worthless except for
scrap value. Siemens moved to exclude Dr. Kosstrin under Daub-
ert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), ar-
guing that he did not inspect the equipment purchased by Secure,
that he utilized an unreliable methodology, and that his testimony
would be unhelpful to the jury. The district court granted the mo-
tion and excluded Dr. Kosstrin’s expert opinion and testimony. In
its order, the district court explained that Dr. Kosstrin’s opinion
was not based on any reliable methodology, e.g., by testing or con-
ducting computer modeling on the equipment; was gleaned exclu-
sively from internal Siemens documents that the jury could view
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itself; did not adequately compare the Secure project to the NCPP
project, including because his comparison lacked sufficient analysis
and he failed to consider the data regarding the coal used at NCPP;
and that his conclusions consisted entirely of his own ipse dixit.
The district court also excluded Dr. Kosstrin’s opinion re-
garding the value of the equipment because it found he lacked the
requisite qualification to testify as an expert on the value of the
equipment and he never conducted an appraisal analysis. Follow-
ing the exclusion of Dr. Kosstrin, the district court took up the par-
ties’ cross motions for summary judgment. The district court de-
nied Secure’s motion for summary judgment. The district court
granted Siemens’s motion for summary judgment in part and dis-
missed all of Secure’s affirmative claims against Siemens. The dis-
trict court held that four of the claims—breach of implied war-
ranty, fraudulent misrepresentation, recission-fraud, and recission-
lack of consideration—were premised on the “same ‘material de-
sign defects’ allegations” and that, because Secure had no expert to
testify that the gasification equipment was in fact defective, Secure
had no evidence to support these claims.
With respect to Secure’s breach of contract claim, the dis-
trict court held that Secure’s breach of contract claim was limited
to the repudiation theory it alleged in its Complaint and that Secure
failed to prove that its damages were the direct and proximate re-
sult of Siemens’s alleged conduct to support that theory of liability.
The district court denied Siemens’s motion for summary judgment
on Siemens’s counterclaim.
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16 Opinion of the Court 20-11266
Following the summary judgment orders, the case pro-
ceeded to trial only on Siemens’s counterclaim for breach of con-
tract, premised on the 2012 LSA. Prior to trial, Siemens filed a mo-
tion in limine seeking to exclude: (1) nonpleaded, dismissed, re-
leased, or rejected claims including alleged defects, misrepresenta-
tions, fraudulent concealments, and any theory that Secure is ex-
cused from nonperformance of the 2012 LSA except for the antici-
patory repudiation theory; (2) evidence concerning alleged prob-
lems at the NCPP plant; and (3) evidence related to the alleged fail-
ure to inform or provide improvements under the 2012 LSA; as
well as other evidence that Siemens argued was irrelevant to its
counterclaim and Secure’s defenses. The district court granted Sie-
mens’s motion, thereby limiting Secure’s affirmative defense that
Siemens breached the 2012 LSA to Secure’s anticipatory repudia-
tion theory.
At the conclusion of trial, Secure made a motion for judg-
ment as a matter of law—arguing that the evidence demonstrated
that Siemens repudiated the 2012 LSA and that Secure did not
breach the agreement. The district court denied the motion.
The jury returned its verdict on March 4, 2020, in which it
rejected Secure’s anticipatory repudiation defense and awarded
Siemens $13,200,395.50 in damages. After the jury verdict, Secure
renewed its motion for judgment as a matter of law and, in the al-
ternative moved for a new trial because, among other reasons, the
district court excluded evidence that Siemens failed to perform un-
der the 2012 LSA. The district court denied both motions and held,
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with respect to the exclusion of evidence related to Siemens’ al-
leged breach, that Secure’s new defense of an alleged breach unre-
lated to anticipatory repudiation was untimely and failed to articu-
late a material breach. Secure filed this timely appeal.
II. STANDARDS OF REVIEW
We review for abuse of discretion a district court’s decisions
regarding the admissibility of expert testimony. Gen. Elec. Co. v.
Joiner, 522 U.S. 136, 142–43 (1997); accord United States v. Frazier,
387 F.3d 1244, 1259 (11th Cir. 2004) (en banc) (“This Court has uni-
formly applied the deferential abuse-of-discretion review that
Joiner mandates.”). We will find an abuse of discretion only if the
district court’s ruling was “manifestly erroneous.” Joiner, 522 U.S.
at 142 (quoting Spring Co. v. Edgar, 99 U.S. 645, 658 (1878)); Fra-
zier, 387 F.3d at 1258. A district court of course abuses its discretion
when it applies the wrong legal standard. Frazier, 387 F.3d at 1259.
We review an order granting summary judgment de novo,
applying the same legal standards as the district court. Amy v. Car-
nival Corp., 961 F.3d 1303, 1308 (11th Cir. 2020). We view the ev-
idence in the light most favorable to the non-movant and draw all
reasonable inferences in his favor. Haves v. City of Miami, 52 F.3d
918, 921 (11th Cir. 1995). “Summary judgment is appropriate if ‘the
evidence before the court shows that there is no genuine issue as
to any material fact and that the moving party is entitled to a judg-
ment as a matter of law.’” McCullough v. Antolini, 559 F.3d 1201,
1204 (11th Cir. 2009) (quoting Haves, 52 F.3d at 921); Fed. R. Civ.
P. 56(a)).
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We review a district court’s denial of a motion for a new trial
for abuse of discretion. McGinnis v. Am. Home Mortg. Servicing,
Inc., 817 F.3d 1241, 1255 (11th Cir. 2016). “[N]ew trials should not
be granted on evidentiary grounds unless, at a minimum, the ver-
dict is against the great—not merely the greater—weight of the ev-
idence.” Lamonica v. Safe Hurricane Shutters, Inc., 711 F.3d 1299,
1312–13 (11th Cir. 2013) (quoting St. Luke’s Cataract & Laser Inst.,
P.A. v. Sanderson, 573 F.3d 1186, 1200 n. 16 (11th Cir.2009)). Re-
latedly, we review the district court’s grant of a motion in limine
for abuse of discretion. Cabello v. Fernandez-Larios, 402 F.3d
1148, 1161 (11th Cir. 2005) (per curiam). Under the abuse-of-dis-
cretion standard, we may reverse a decision of the dis-
trict court only if the court applies an incorrect legal standard, fol-
lows improper procedures in making its determination, or makes
findings of fact that are clearly erroneous. Luxottica Grp., S.p.A. v.
Airport Mini Mall, LLC, 932 F.3d 1303, 1311 (11th Cir. 2019). And,
a “district court has wide discretion in determining the relevance
of evidence produced at trial.” Cabello, 402 F.3d at 1161. Even
relevant evidence may be excluded “if its probative value is sub-
stantially outweighed by a danger of . . . unfair prejudice, . . . un-
due delay, wasting time, or needlessly presenting cumulative evi-
dence.” Fed. R. Evid. 403.
III. ANALYSIS
On appeal, Secure contends that the district court erred in:
(1) excluding Dr. Kosstrin’s testimony; (2) granting summary judg-
ment; (3) denying its requests to file an amended complaint; and
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(4) denying Secure’s motion for a new trial on the grounds that Se-
cure was barred from presenting evidence that Siemens breached
the 2012 LSA. We address each argument in turn.
A. Did the district court err in excluding Dr. Kosstrin?
Our analysis regarding the admissibility of expert testimony
begins with Federal Rule of Evidence 702, which 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 special-
ized knowledge will help the trier of fact to under-
stand 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.
As explained by the Supreme Court, the purpose of the ex-
pert admissibility rules is to enlist the federal courts as “gatekeep-
ers” tasked with screening out “speculative” and “unreliable expert
testimony.” Kilpatrick v. Breg, Inc., 613 F.3d 1329, 1335 (11th Cir.
2010) (quoting Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579,
597 (1993)). In this Circuit, we have distilled the expert admissibil-
ity inquiry into the following three factors:
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20 Opinion of the Court 20-11266
(1) the expert is qualified to testify competently re-
garding the matters he intends to address;
(2) the methodology by which the expert reaches his
conclusions is sufficiently reliable as determined by
the sort of inquiry mandated in Daubert; and
(3) the testimony assists the trier of fact, through the
application of scientific, technical, or specialized ex-
pertise, to understand the evidence or to determine a
fact in issue.
City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 562 (11th
Cir. 1998) (footnote omitted). We have also noted that “[w]hile
there is inevitably some overlap among the basic requirements—
qualification, reliability, and helpfulness—they remain distinct con-
cepts and the courts must take care not to conflate them.” Frazier,
387 F.3d at 1260 (citing Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK
Ltd., 326 F.3d 1333, 1341 (11th Cir. 2003)).
Here, the district court rested its exclusion of Dr. Kosstrin’s
opinions on the qualifications and reliability prongs. Regarding an
expert’s qualifications, we have explained that:
we observe that experts may be qualified in various
ways. While scientific training or education may pro-
vide possible means to qualify, experience in a
field may offer another path to expert status. In fact,
the plain language of Rule 702 makes this clear: expert
status may be based on “knowledge, skill, experi-
ence, training, or education.” (emphasis added). The
Committee Note to the 2000 Amendments of Rule
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20-11266 Opinion of the Court 21
702 also explains that “[n]othing in this amendment is
intended to suggest that experience alone . . . may not
provide a sufficient foundation for expert testimony.”
Fed. R. Evid. 702 advisory committee’s note (2000
amends.).
Of course, the unremarkable observation that an ex-
pert may be qualified by experience does not mean
that experience, standing alone, is a sufficient founda-
tion rendering reliable any conceivable opinion the
expert may express. As we observed in Quiet Tech-
nology, “while an expert’s overwhelming qualifica-
tions may bear on the reliability of his proffered testi-
mony, they are by no means a guarantor of reliabil-
ity. . . . [O]ur caselaw plainly establishes that one may
be considered an expert but still offer unreliable testi-
mony.” 326 F.3d at 1341–42. Quite simply, under
Rule 702, the reliability criterion remains a discrete,
independent, and important requirement for admissi-
bility.
Id. at 1260–61 (alterations in original).
As to the reliability prong, we have noted that “[r]ulings on
admissibility under Daubert inherently require the trial court to
conduct an exacting analysis of the proffered expert’s methodol-
ogy.” McCorvey v. Baxter Healthcare Corp., 298 F.3d 1253, 1257
(11th Cir. 2002). The Supreme Court has identified a number of
factors for courts to consider in conducting that analysis, including:
(1) whether the theory or technique can be, and has been, tested;
(2) whether the theory or technique has been subjected to peer
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22 Opinion of the Court 20-11266
review and publication; (3) the known or potential rate of error;
and (4) whether the theory has attained general acceptance in the
relevant scientific community. See Daubert, 509 U.S. at 593–94.
Importantly, “nothing in either Daubert or the Federal Rules of Ev-
idence requires a district court to admit opinion evidence that is
connected to existing data only by the ipse dixit of the expert,” and
the “court may conclude that there is simply too great an analytical
gap between the data and the opinion proffered.” Joiner, 522 U.S.
at 146.
In this case, Secure retained Dr. Kosstrin to testify as to three
issues: (1) “the defects in the Siemens Equipment and Technol-
ogy—as evidenced by Siemens’s first test of its designs at NCPP—
prevented Appellants’ gasifiers from meeting their contractually-
guaranteed performance”; (2) “the defects prevented [Secure] from
obtaining financing for their project”; and (3) “in light of the de-
fects, the Equipment and Technology have only scrap value.”
Dr. Kosstrin, who holds a Ph.D. in Mechanical and Aero-
space Engineering from Cornell University, has forty years of ex-
perience in the alternative energy field, including alternative fuels.
In preparing his testimony and reaching his conclusions, he re-
viewed a number of documents that Siemens produced in discov-
ery, including documents related to the design of the gasifiers. In
his report, Dr. Kosstrin makes clear that this is all he reviewed, stat-
ing “the basis for this opinion is a review of exhibits and infor-
mation concerning the NCPP plant’s operations up to the signing
of the 2012 [LSA].”
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20-11266 Opinion of the Court 23
Dr. Kosstrin’s methodology was as follows. Because Sie-
mens had shipped nearly identical burners to their Chinese client
at NCPP, Dr. Kosstrin hypothesized that, if those burners were ex-
periencing problems, then the Secure burners would as well. His
report thus detailed the design of the NCPP burners, explained the
problems experienced at NCPP, and stated that Secure would have
experienced the same problems with its Siemens burners, if Secure
had ever opened and used them.
The district court excluded Dr. Kosstrin’s expert testimony,
and in its order, identified a number of problems with Dr.
Kosstrin’s testimony: (1) “Dr. Kosstrin did not perform any testing
on the Secure equipment, because it was never installed”; (2) “Dr.
Kosstrin did not conduct any computer modeling or simulations of
the Secure equipment’s performance . . . , and he did not com-
municate with anyone involved in the NCPP plant to determine
why they made changes to the equipment”; (3) Dr. Kosstrin’s ex-
pert report contained “no opinions on how the coal at the NCPP
plant compared to the design coal for the Secure project”—i.e.,
while acknowledging that the NCPP plant used a grade of coal that
was outside the range specified by Siemens in the contract with
NCPP, Dr. Kosstrin did not account for how this might affect the
performance of the burners; (4) Dr. Kosstrin did not conduct an
individual cost analysis for the hypothetical corrective measures
and could not say whether the modifications were inexpensive; (5)
Dr. Kosstrin knew that the Chinese operators ran the gasifier at be-
low minimum load but “did not perform an analysis to determine
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24 Opinion of the Court 20-11266
whether NCPP was complying with the minimum load case, or the
impact on operations”; (6) Dr. Kosstrin “did not consider alterna-
tive designs that Siemens should have employed”; and (7) he failed
“to compare the Secure BEDP to any other BEDP for coal gasifica-
tion.” (emphasis added). In short, the district court excluded Dr.
Kosstrin’s testimony as to design defects because he did not run any
analysis on the equipment at issue and compared the equipment to
the NCPP equipment in a manner that failed to account for two
variables that Siemens listed in the contract as causing problems
with the burners.
As to the third issue on which Dr. Kosstrin sought to tes-
tify—that the equipment had only “scrap value”—the district court
found that Dr. Kosstrin lacked the requisite qualifications to testify
on the subject, noting that Kosstrin is “not a certified appraiser” and
“has never performed an appraisal analysis.”
Under our deferential standard of review, we cannot con-
clude that the district court abused its discretion in excluding Dr.
Kosstrin’s testimony. Our caselaw makes clear that, in order for a
methodology to be reliable, the expert must be able to adequately
explain how the data he relied on led him to his conclusions. In a
case such as this one—where the expert notes that many factors
could have contributed to the defect at issue—this means the ex-
pert must be able to explain his consideration of the other alterna-
tive causes. See, e.g., Guinn v. AstraZeneca Pharms. LP, 602 F.3d
1245, 1253 (11th Cir. 2010) (per curiam) (noting that an expert
“need not rule out all possible alternative causes,” but “must at
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20-11266 Opinion of the Court 25
least consider other factors that could have been the sole cause of
the plaintiff’s injury”). Caselaw on this point is legion.
Frazier is one such case. There, the expert was prepared to
testify as to the transfer of hairs and bodily fluids during a sexual
assault. 387 F.3d at 1252. But the expert “offered precious little in
the way of a reliable foundation or basis for his opinion.” Id. at
1265. While the expert was eminently qualified to testify and
formed his opinion based on his experience in the field, we affirmed
the exclusion of his testimony because he never explained how he
was able to reach his opinion. Id. Because he did not so explain,
we said that “it would be very difficult indeed for the district court
(or for that matter the jury) to make even an informed assessment,
let alone to verify” that the opinion was reliable. Id. We reempha-
sized that “it remained the burden of the proponent of this testi-
mony to explain how that experience led to the conclusion he
reached.” Id.Hughes v. Kia Motors Corp., 766 F.3d 1317 (11th Cir. 2014),
is another such example. In Hughes, the expert sought to testify
that the plaintiff would not have sustained a fatal injury had her
automobile been equipped with a “shut-off switch,” claiming to
have reached this conclusion “based on the scientific method” but
“without further explaining how he tested his hypothesis to sup-
port his conclusions.” Id. at 1329–30. Relying on Frazier, we con-
cluded that the district court did not abuse its discretion in exclud-
ing the expert’s testimony. Id. at 1329. And we noted that the ex-
pert was unable to account for other factors that contributed to the
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26 Opinion of the Court 20-11266
death, such as the impact of the semi-truck, admitting that he
lacked sufficient information to rule out any other causes. Id. at
1330.
Both cases hold obvious relevance to the issue presented. In
both Frazier and Hughes, we affirmed the exclusion of expert evi-
dence because the proponent of that testimony was unable to link
the expert’s methodology—or lack thereof—to his conclusions.
The same is true here. The district court concluded that Dr.
Kosstrin was unable to adequately explain how he reached his con-
clusions other than by pointing to the NCPP plant—which, as al-
ready mentioned, had a slew of additional variables not present in
the Secure situation. As we have previously stated, “[s]omething
[does not] become ‘scientific knowledge’ just because [it is] uttered
by a scientist; nor can an expert’s self-serving assertion that his con-
clusions were derived by the scientific method be deemed conclu-
sive.” McDowell v. Brown, 392 F.3d 1283, 1299 (11th Cir. 2004)
(quoting Daubert, 43 F.3d at 1315–16). Indeed, the “trial court’s
gatekeeping function requires more than simply ‘taking the ex-
pert’s word for it.’” Fed. R. Evid. 702 advisory committee’s note to
2000 amendment (citing Daubert, 43 F.3d at 1319). Here, Dr.
Kosstrin provided nothing but his word and own ipse dixit. He
pointed to the NCPP plant and said, without any verifiable meth-
odology or consideration of the factors unique to that plant, that
Secure would have experienced the same problems. The district
court thus did not abuse its discretion by excluding his testimony.
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20-11266 Opinion of the Court 27
The same is also true of the district court’s decision to ex-
clude Dr. Kosstrin’s testimony related to the value of the burners.
Even setting aside the district court’s ruling as to qualifications on
this issue, Dr. Kosstrin’s valuation of the gasifiers was based exclu-
sively on his conclusion that the gasifiers were defective. Because
that opinion was unreliable, his opinion as to value is also neces-
sarily so.
B. Did the district court err in granting summary judgment?
As noted above, the district court entered summary judg-
ment in Siemens’s favor on each of Secure’s claims against it. Be-
fore analyzing the claims on a count-by-count basis, however, two
preliminary issues bear mentioning.
First, the parties have both waived any arguments regarding
which state’s law should apply. In the district court, the parties dis-
puted whether the law of Kentucky, Missouri, or Florida should
apply to the non-contract claims. 5 In the district court’s order
granting summary judgment, the court applied Florida law to each
of the non-contract claims. And on appeal, neither party argues
that the district court erred in doing so.
Choice of law is not jurisdictional. See Keeton v. Hustler
Mag., Inc., 465 U.S. 770, 778 (1984) (“The question of the applica-
bility of New Hampshire’s statute of limitations to claims for out-
of-state damages presents itself in the course of litigation only after
5 There is no dispute that New York law applies to the contract claims.
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28 Opinion of the Court 20-11266
jurisdiction over respondent is established, and we do not think
that such choice of law concerns should complicate or distort the
jurisdictional inquiry.”). And, as such, it is waivable if the parties
abandon the issue on appeal. See Mesa Air Grp., Inc. v. Delta Air
Lines, Inc., 573 F.3d 1124, 1128 (11th Cir. 2009) (finding that where
a party had failed to present a choice-of-law issue to the trial court,
the issue was waived on appeal). Accordingly, we apply Florida
law to all of the non-contract claims.
Second, the district court granted summary judgment
against Secure on four of its claims—breach of implied warranty of
fitness, fraudulent misrepresentation, recission-fraud, and recis-
sion-lack of consideration—based solely on the theory that, be-
cause these claims were premised on a design defect, Secure
needed an expert witness to testify as to the defect. And because
Dr. Kosstrin had been excluded—properly, as we have already con-
cluded—Secure had no such expert testimony. The district court,
however, did not identify a single case holding that a plaintiff is re-
quired to present expert testimony to bring a claim for fraud or
breach of implied warranty. Instead, the district court borrowed
language from cases discussing the causation element in negligence
and strict liability actions and applied it here. For example, the dis-
trict court cited Small v. Amgen, Inc., 723 F. App’x 722, 726 (11th
Cir. 2018), an unpublished products liability case from this Court,
for the proposition that “in complex cases where a jury is asked to
assess complex medical or scientific issues outside the scope of a
layperson’s knowledge, an expert’s testimony is required.” In
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20-11266 Opinion of the Court 29
doing so, the district court ignored the first clause of the sentence
stating “[r]egarding discovery and proof of causation.” Indeed, each
of the cases cited by the district court (and Siemens) were focused
only on the element of causation in tort suits.
In Lucas v. Firestone Tire & Rubber Co., 458 F. 2d 495, 497
(5th Cir. 1972), 6 we were confronted head-on with the task of
“mak[ing] the initial determination as to the state of Florida law
governing breach of implied warranty cases as that law applies to
the question presented, i.e., whether plaintiff must introduce the
testimony of an expert that the [product] was defective.” We an-
swered that question in the negative: “There is no burden on plain-
tiff to prove a specific defect by an expert witness as distinguished
from other proof. The fact of a malfunction and also of a defect
may be proven by direct or circumstantial evidence.” Id. We are
aware of no case post-dating Lucas that stands for the contrary po-
sition, and neither party has directed our attention to one. As such,
we apply the rule of Lucas and hold that Florida law does not re-
quire plaintiffs in contract cases to prove the defective nature of the
product at issue with expert testimony.
Although the district court’s reason for granting summary
judgment was incorrect, we can, as a general principle, affirm on
any basis supported by the record. See Lucas v. W.W. Grainger,
6 See Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc)
(adopting as binding precedent all of the decisions of the former Fifth Circuit
prior to October 1, 1981).
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30 Opinion of the Court 20-11266
Inc., 257 F.3d 1249, 1256 (11th Cir. 2001). But, following the issu-
ance of our prior opinion in this case, this Court issued its en banc
decision in United States v. Campbell, 26 F.4th 860 (11th Cir. 2022)
(en banc). In Campbell, this Court held that “the mere failure to
raise an issue in an initial brief on direct appeal should be treated as
a forfeiture of the issue, and therefore the issue may be raised by
the court sua sponte in extraordinary circumstances after finding
that one of our [Access Now, Inc. v. Southwest Airlines Co., 385
F.3d 1324 (11th Cir. 2004),] forfeiture exceptions applies.” Id. at
873. The Access Now exceptions are:
(1) the issue involves a pure question of law and re-
fusal to consider it would result in a miscarriage of
justice; (2) the party lacked an opportunity to raise the
issue at the district court level; (3) the interest of sub-
stantial justice is at stake; (4) the proper resolution is
beyond any doubt; or (5) the issue presents significant
questions of general impact or of great public con-
cern.
Id. (citing Access Now, 385 F.3d at 1332).
Under Campbell, however, our analysis does not stop at
whether one of the Access Now exceptions applies. If we find that
one of the forfeiture exceptions applies, we still must decide
“whether the issue is extraordinary enough for us to exercise our
discretion and excuse the forfeiture.”7 Id. at 875. And, “[i]n most
7Siemens contends that Campbell did not “rob” us of the principle that we
may affirm on any ground presented by the record, even those not considered
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20-11266 Opinion of the Court 31
cases, “an issue abandoned on appeal should still be dismissed with-
out reaching the merits.” Id.
As Secure notes, Siemens failed to brief the alternative argu-
ments on appeal it raised below in support of its motion for sum-
mary judgment on Counts 2, 4, 5, and 6. Therefore, we must first
consider whether any of the forfeiture exceptions apply. Turning
to the forfeiture exceptions, only the fourth exception—whether
the proper resolution of the issue is beyond any doubt—arguably
applies here. But, even assuming the fourth exception applies, we
consider whether Siemens has not demonstrated “an extraordinary
circumstance such that we should exercise our discretion to excuse
[its] forfeiture.” See id. at 877. In Campbell, we found that there
were extraordinary circumstances present where: (1) this Court
had “an extraordinary interest in protecting the public and encour-
aging good police work by ensuring that evidence obtained in good
faith reliance on binding appellate precedent is not excluded”; (2)
the district court had correctly denied the motion to suppress, and
this Court was “loathe” to reverse where the issue was inadequate
defense of the district court’s correct judgment; (3) the case was “a
good-faith exception case in which there are no material factual dis-
putes,” i.e., a “pure question of law”; and (4) the appellant’s
or relied upon by the district court, as elucidated by cases such as Lucas, 257
F.3d at 1256. While we generally agree, in cases where one of the parties has
not raised issues on appeal that they made below in support of affirmance or
reversal, we must apply Campbell’s two-step analysis in considering whether
to exercise our discretion to hear forfeited issues.
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32 Opinion of the Court 20-11266
arguments to the panel placed the issue before the Court. See id.
at 877–79.
By contrast, this case presents a commercial dispute be-
tween two parties, with the forfeited arguments concerning a mo-
tion for summary judgment. None of the public policy considera-
tions present in Campbell exist here. Further, the district court did
not consider Siemens’s alternative arguments in its order granting
summary judgment, and Siemens will be able to raise those argu-
ments again to the district court, should it choose to do so. While
Siemens contends that not considering its unbriefed, alternative ar-
guments would be a waste of judicial (and the parties’) resources
“and would ‘reward[]’” Secure for “creating word constraints by
advancing meritless arguments,” it does not cite to any authority
suggesting that this constitutes extraordinary circumstances. And
we decline to do so under the circumstances of this particular case.
Accordingly, we conclude that, for purposes of this appeal,
Siemens has forfeited its alternative grounds for affirming the dis-
trict court’s grant of summary judgment as to Secure’s claims in
Counts 2, 4, 5, and 6. On remand, Siemens can re-assert the alter-
native arguments it raised below to the district court as a basis for
summary judgment on those claims, should it choose to do so.
Having resolved the Campbell issue as to Counts 2, 4, 5, and
6, we now turn to whether the district court correctly granted sum-
mary judgment on Secure’s claim for anticipatory repudiation in
Count 1. The parties agree that New York law governs the contract
claims in this case, including Secure’s anticipatory repudiation
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20-11266 Opinion of the Court 33
claim. Under New York law, “[a]nticipatory repudiation occurs
when, before the time for performance has arisen, a party to a con-
tract declares his intention not to fulfill a contractual duty.” Lu-
cente v. Int’l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002).
An anticipatory breach of contract—also known as an
anticipatory repudiation—“can be either a statement
by the obligor to the obligee indicating that the obli-
gor will commit a breach that would of itself give the
obligee a claim for damages for total breach or a vol-
untary affirmative act which renders the obligor una-
ble or apparently unable to perform without such a
breach.”
Princes Point LLC v. Muss Dev. L.L.C., 87 N.E.3d 121, 133 (N.Y.
2017) (quoting Norcon Power Partners v. Niagara Mohawk Power
Corp., 705 N.E.2d 656, 659 (N.Y. 1998)). For an anticipatory repu-
diation to occur, “the expression of intent not to perform by the
repudiator must be ‘positive and unequivocal.’” Id. (quoting Te-
navision, Inc. v. Neuman, 379 N.E.2d 1166, 1168 (N.Y. 1978)); see
also Rachmani Corp. v. 9 E. 96th St. Apartment Corp., 211 A.D. 2d
262, 267 (N.Y. App. Div. 1995) (requiring a “definite and final com-
munication of the intention to forego performance before the an-
ticipated breach may be the subject of legal action”). “Mere expres-
sion of difficulty in tendering the required performance, for exam-
ple, is not tantamount to a renunciation of the contract.” Rach-
mani, 211 A.D. at 267.
While an anticipatory breach obviates the need for the non-
breaching party to tender performance, the nonbreaching party
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34 Opinion of the Court 20-11266
must nonetheless demonstrate that it was “ready, willing[,] and
able to perform its obligations under the contract” at the time its
performance would have been due in order to recover damages.
Inter-Power of N.Y. Inc. v. Niagara Mohawk Power Corp., 686
N.Y.S.2d 911, 913 (N.Y. App. Div. 1999); accord Towers Charter &
Marine Corp. v. Cadillac Ins. Co., 894 F.2d 516, 523 (2d. Cir. 1990).
This principle is merely an application of the general rule that the
complaining party must demonstrate that the breach caused him
injury; “[t]o do this he must prove that he intended to and was able
to perform when his performance was due.” Scholle v. Cuban-
Venezuelan Oil Voting Tr., 285 F.2d 318, 320 (2d Cir. 1960).
In addition, causation is an essential element of the claim.
See Bausch & Lomb Inc. v. Bressler, 977 F.2d 720, 728, 731 (2d Cir.
1992). The plaintiff “must demonstrate that the damages were
caused by and are ‘directly traceable to the [defendant’s] breach.’”
Id. at 731 (alteration in original) (quoting Kenford Co. v. County of
Erie, 493 N.E.2d 234, 235 (N.Y. 1986)). Where the ultimate trans-
action would have failed, and where the plaintiff’s claimed dam-
ages would have resulted even if no breach occurred, the plaintiff
cannot prove that his damages resulted from the defendant’s con-
duct. See id. (affirming the district court judgment because the
plaintiff sought “to recover for a loss on a transaction separate from
the transaction that gave rise to the breach”).
Secure claims that Siemens anticipatorily breached by leav-
ing the coal gasification market because, in doing so, Siemens
demonstrated that it would not honor its obligations under the
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20-11266 Opinion of the Court 35
2012 LSA. The district court identified two problems with the an-
ticipatory repudiation claim: (1) that Secure could not prove causa-
tion, and (2) that Secure could not prove it was ready, willing, and
able to perform. We agree with the district court.
First, Secure is unable to prove causation. The district court
determined that there was no evidence of a causal relationship be-
tween Siemens’s anticipatory repudiation and the damages Secure
sought because Secure, at the time of the alleged repudiation, had
not obtained the necessary financing for its project. Furthermore,
the district court noted that Secure’s claimed damages from the
“useless equipment and technology” would have resulted regard-
less of whether Siemens exited the gasification market. Secure re-
sponds by pointing to the fact that their proposed EPC financiers
were troubled by the performance of the Siemens gasifiers. But
there is an obvious problem with Secure’s theory: the discussion
with the financiers occurred in 2012 while the alleged repudiation
occurred more than three years later, in February 2016. Secure has
not presented any record evidence tying an inability to secure fi-
nancing after Siemens’s alleged breach and, as such, has no evi-
dence of causation. We can affirm on this basis alone.
Second, the “ready, willing, and able” requirement also bars
recovery. New York law requires the “plaintiff alleging an antici-
patory breach of contract [to] show (1) that the defendant insisted
upon terms not contained in the contract; and (2) that the plaintiff
was ‘ready, willing, and able to perform its own obligations under
the contract when performance was due.’” United States v. Hon,
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36 Opinion of the Court 20-11266
17 F.3d 21, 26 (2d Cir. 1994) (quoting Towers Charter, 894 F.2d at
523). The district court concluded that Secure was not ready, will-
ing, and able to perform because Secure was in financial ruin and
had missed multiple payments on the contract before the alleged
repudiation. We agree. For Secure to succeed on its anticipatory
repudiation claim under New York law, Secure had to show that,
at the time Siemens exited the gasification market (and thus, in Se-
cure’s telling, anticipatorily repudiated the contract), Secure was
able to perform its own obligations. But because Secure had al-
ready missed multiple payments under the contract at that time,
Secure itself was already in breach, and thus unready and unable to
perform. And finally, we note that when Siemens decided to exit
the gasification market in 2015, it promised to continue supporting
its existing projects, including Secure’s.
Therefore, the district court did not err in granting summary
judgment as to Count 1. Accordingly, we affirm the district court’s
grant of summary judgment as to Count 1 and reverse its grant of
summary judgment as to Counts 2, 4, 5, and 6.
C. Did the district court err in denying leave to amend?
Next, we address the district court’s denials of Secure’s mo-
tions for leave to amend. As noted above, we “will only reverse a
district court’s denial of a motion to amend in instances in which
the district court has clearly abused its discretion.” Henson v. Co-
lumbus Bank & Tr. Co., 770 F.2d 1566, 1574 (11th Cir. 1985). Nor-
mally, to acquire permission to amend one’s pleading, a litigant
need only establish the relatively lenient standard of Rule 15(a),
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20-11266 Opinion of the Court 37
which states that leave shall be granted “when justice so requires.”
However, when a party moves to amend their complaint after the
deadline for doing so set by the district court in its scheduling or-
der, a litigant must also “show good cause why leave to amend the
complaint should be granted.” Smith v. Sch. Bd. of Orange
Cnty., 487 F.3d 1361, 1366 (11th Cir. 2007) (per curiam); see
also Fed. R. Civ. P. 16(b); Sosa v. Airprint Sys., Inc., 133 F.3d 1417,
1419 (11th Cir.1998) (per curiam) (“If we considered only Rule
15(a) without regard to Rule 16(b), we would render scheduling
orders meaningless and effectively would read Rule 16(b) and its
good cause requirement out of the Federal Rules of Civil Proce-
dure.”). We have recognized that Rule 16’s “good cause standard
precludes modification [of the scheduling order] unless the sched-
ule cannot be met despite the diligence of the party seeking the ex-
tension.” See Sosa, 133 F.3d at 1418 (quoting Fed. R. Civ. P. 16 ad-
visory committee’s note); see also Johnson v. Mammoth Recrea-
tions, Inc., 975 F.2d 604, 609 (9th Cir. 1992) (“If [a] party was not
diligent, the [good cause] inquiry should end.”).
In this case, Secure filed its first amended complaint on April
21, 2017. Following a scheduling conference, the district court en-
tered a scheduling order on May 18, 2017, which set a deadline to
amend pleadings for June 1, 2017. Due to joint motions by the par-
ties, the scheduling order was twice amended, but neither amend-
ment changed the deadlines for amending pleadings.
Secure first moved for leave to amend its complaint on De-
cember 28, 2018—already more than a year after the deadline to
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38 Opinion of the Court 20-11266
amend pleadings had passed. Secure sought leave to amend its
complaint to add new factual allegations and legal theories of re-
covery, based largely on having finally completed its review of the
large amount of documents produced to it by Siemens, as well as
the depositions of current and former Siemens employees. The
magistrate judge denied that motion, noting that “the breadth of
document production was directly related to the breadth of [Se-
cure’s] discovery requests, and Secure could not cry foul over get-
ting what it asked for. Nor did Secure identify any testimony from
the depositions that related to the proposed amendments. In addi-
tion, the magistrate judge noted that discovery had already been
ongoing for two years, and Secure provided no explanation as to
why it was unable to uncover the information sooner. Finally, the
magistrate judge noted that Secure had relied on the incorrect legal
standard—Rule 15 instead of Rule 16.
Just a few days later, Secure moved to extend the trial date,
in what it now admits was nothing but a ruse to amend its com-
plaint. Because this was nothing more than an attempt to circum-
vent the court’s previous order, it was summarily denied for essen-
tially the same reasons.
Eventually, the district court granted Siemens’s motion for
summary judgment and denied Secure’s motion for summary
judgment. After those rulings—and more than two years after the
deadline to amend pleadings had passed, and just a few weeks be-
fore trial was scheduled to commence—Secure moved for leave to
amend its complaint a third time. The district court denied that
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20-11266 Opinion of the Court 39
request. In its denial, the district court forcefully reminded Secure
that its litigation tactics “in this regard run dangerously close to
sanctionable actions under [Federal Rule of Civil Procedure] 11.”
We had occasion to apply Rule 16 to similar circumstances
to these in Smith v. School Board of Orange County. There, the
plaintiff sought leave to amend his complaint (after the deadline for
doing so set by the scheduling order) because, in his view, discov-
ery had “produced new violations of the [l]aw that must be ad-
dressed within the counts of the complaint.” 487 F.3d at 1367 (al-
teration in original). The district court denied leave to amend be-
cause the defendant’s motion for summary judgment had already
been pending for a month and because the plaintiff failed to explain
why the facts underlying the amendment were undiscoverable pre-
viously. See id. We affirmed, noting the “extreme untimeliness of
[the plaintiff’s] motion and his lack of a complete showing of good
cause.” Id.The district court’s rulings here were not an abuse of discre-
tion for the same reasons articulated in Smith. To satisfy Rule 16,
a litigant must show that it could not meet the scheduling order
“despite the diligence of the” litigant. Sosa, 133 F.3d at 1418. Here,
Secure was seeking leave to replead already-dismissed claims and
add new facts and theories of recovery, including a fraudulent in-
ducement claim that Secure says it was able to plead “with greater
particularity,” more than a year after the deadline to amend plead-
ings had passed. But, as Secure admitted, the facts that formed the
basis of its amendment were available “at the earliest just prior to
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40 Opinion of the Court 20-11266
the amendment deadline.” (emphasis added). What Secure actu-
ally complains of, then, is not that the facts were not ascertainable,
but that it took Secure too long to conduct discovery. That is not
due diligence. And it is thus not good cause. We affirm the district
court’s denials of leave to amend.
D. Did the district court err in denying Siemens’s ability to
present its affirmative defense?
The final issue for our consideration concerns the district
court’s order denying Secure’s motion for a new trial and the dis-
trict court’s related ruling on Siemens’s motion in limine. At issue
is the scope of evidence Secure was permitted to present at trial.
As noted previously, the only affirmative breach-of-contract claim
that Secure advanced throughout the trial was an anticipatory re-
pudiation claim. However, defensively (i.e., in response to Sie-
mens’s breach of contract counterclaim regarding the 2012 LSA),
Secure asserted a broader breach-of-contract based affirmative de-
fense. As its eighth affirmative defense, Secure asserted that “[t]o
the extent Siemens seeks recovery in contract, Siemens materially
breached the terms and conditions of said contract and is entitled
to no relief thereon.”
In its motion in limine, Siemens sought clarification as to
whether Secure would present evidence only of anticipatory repu-
diation or whether Secure would be permitted to present evidence
of other alleged breaches of contract, which Secure had not yet
raised in the litigation. Specifically, the other theories that Secure
sought to introduce evidence of were: (1) Siemens breached the
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20-11266 Opinion of the Court 41
contracts by delivering defective gasification equipment; and (2)
Siemens breached the contracts by failing to inform Secure of avail-
able improvements to the gasification equipment and technology.
The district court granted Siemens’s motion in limine and
excluded any evidence Secure sought to present regarding the
above-listed theories of breach of contract. Thereafter, Secure re-
raised this issue in its motion for a new trial. In granting Siemens’s
motion in limine and denying Secure’s motion for a new trial, the
district court gave a number of justifications for its decision to ex-
clude this evidence. First, the district court noted that Secure was
attempting to advance a trial-by-surprise strategy. This affirmative
defense, and the facts related to that defense, were not pled. And
Secure’s own affirmative claim for breach of contract was premised
exclusively on Siemens’s alleged anticipatory repudiation. There-
fore, to allow Secure to present both a defense based on both an-
ticipatory repudiation and other alleged breaches of contract was,
in the eyes of the district court, fundamentally unfair to Siemens.
Second, the district court noted that the failure to provide notice of
improvements was not a material breach of the contract at issue.
Third, and perhaps most importantly, the district court found that
the evidence was not relevant, noting that Secure’s new theories of
breach of contract (very much unlike the anticipatory-repudiation
theory) could not have excused its performance under Siemens’s
counterclaim because that counterclaim was only for the termina-
tion fee under the 2012 LSA.
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42 Opinion of the Court 20-11266
On appeal, Secure asks for reversal based only on the second
theory it sought to add as part of its affirmative defense, arguing
that the district court erred when it excluded evidence related to
Siemens’s alleged breach in failing to notify Secure of improve-
ments.
We find no abuse of discretion in the district court’s ruling
based on the relevant facts at issue here. On July 3, 2012, the parties
entered into the 2012 LSA. That contract terminated and released
all claims under the previous agreements between the parties and
required Secure to make an approximately €12 million license fee
payment. Two provisions of that contract are at issue here. First,
under § 5.1, the 2012 LSA required Siemens to inform Secure “of
any Improvements to the Technology which are developed or ac-
quired and released for commercial application by Siemens,” and
Secure had an option to contract for those improvements for an
additional fee. Second, under § 11.3.1, the 2012 LSA allowed Sie-
mens to terminate the contract if Secure “fails to make any pay-
ment when due” provided Siemens provided Secure a fifteen-day
cure period. If Siemens exercised that option, the 2012 LSA pro-
vided that Secure would owe to Siemens ninety-two percent of the
licensing fee (more than €11 million). After Secure missed the
deadline on its license fee payment, Siemens, in February 2016, of-
fered Secure an extension on the deadline to pay. After Secure re-
fused that extension, Siemens exercised its option to terminate the
contract and, after providing Secure a cure period, invoiced Secure
for ninety-two percent of the licensing fee.
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20-11266 Opinion of the Court 43
The issue is whether Siemens’s alleged breach of § 5.1 might
somehow excuse Secure’s performance under § 11.3.1. As an initial
matter, we agree with the district court that Secure should not be
permitted to raise this theory because Secure had not put Siemens
on notice of it. See Proctor v. Fluor Enters., Inc., 494 F.3d 1337,
1350 (11th Cir. 2007) (“In deciding waiver issues under [Fed. R. Civ.
P.] Rule 8(c), this Court [examines] whether a plaintiff had notice
of the unpled defense or was prejudiced by the lack of notice.”).
The Federal Rules of Civil Procedure make clear that a defendant
raising an affirmative defense must “affirmatively state” it. Fed. R.
Civ. P. 8(c). And this requires, at the minimum, putting the plain-
tiff on notice of the nature of the defense. See Blonder-Tongue
Lab’ys, Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350 (1971) (“The
purpose of [Fed. R. Civ. P. 8(c)] is to give the opposing party no-
tice.”).
In this case, Secure asserted a boilerplate affirmative defense,
alleging only that Siemens’s breached the contract without any
identification of either the legal theory of breach or the contractual
provision at issue. And when Siemens moved for summary judg-
ment on its breach of contract counterclaim regarding the 2012
LSA, Secure responded to that motion without referencing § 5.1 of
the contract. Given that Secure’s theory of breach of contract, as
shown by its affirmative claim and its response to Siemens’s mo-
tions, was premised only on anticipatory repudiation, we cannot
say that the district court abused its considerable discretion on
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44 Opinion of the Court 20-11266
evidentiary matters by excluding Secure’s evidence relating to dif-
ferent breach-of-contract theories at trial.
Moreover, the district court was also correct that the defense
was legally inadequate, and therefore irrelevant. “In diversity ac-
tions, we look to state law to inform the determination of whether
a certain defense is ‘any other matter constituting an avoidance or
affirmative defense’ under the federal rule.” Proctor, 494 F.3d at
1350 (quoting Troxler v. Owens-Illinois, Inc., 717 F.2d 530, 532
(11th Cir. 1983)). Here, New York law, which governs the contract
claims, allows breach of contract to be raised as an affirmative de-
fense. See L & L Excavating Corp. v. Abcon Assocs., Inc., 594
N.Y.S.2d 818, 820 (N.Y. App. Div. 1993). However, a “party’s obli-
gation to perform under a contract is only excused where the other
party’s breach of the contract is so substantial that it defeats the
object of the parties in making the contract.” Frank Felix Assocs.,
Ltd. v. Austin Drugs, Inc., 111 F.3d 284, 289 (2d Cir. 1997) (applying
New York Law). In other words, “a non-breaching party’s obliga-
tion to perform is excused only when there is a material breach by
the other party.” AKTIV Assets LLC v. Centerbridge Partners,
L.P., No. 653259/2019, 2019 WL 7165927, at *7 (N.Y. Sup. Ct. Dec.
24, 2019) (citing Smoley v. Carole Hochman Design Grp., Inc., 79
A.D.3d 540, 541 (1st Dep’t 2010)). And whether a breach is material
can be decided as a matter of law. See id.; Cont’l Ins. Co. v. RLI
Ins. Co., 555 N.Y.S.2d 325, 328 (N.Y. App. Div. 1990); see also Frank
Felix Assocs., 111 F.3d at 289. “[I]n determining whether [a] mate-
rial breach relieves non-breaching party’s obligation to perform,
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20-11266 Opinion of the Court 45
‘the extent to which the agreement provides for performance with-
out delay’ should be considered.” Frank Felix Assocs., 111 F.3d at
289 (quoting Restatement (Second) of Contracts § 242(c)).
The district court ruled that, as a matter of law, the breach
asserted by Secure was not material, in part because the 2012 LSA
did not impose any deadline on Siemens to provide notice of the
improvement and Secure had to pay for any improvements. Id.
(“In determining if [Siemens’s] breach defeated the object of the
[2012 LSA], we must consider the special purpose of the contract”
and look to “the extent to which the injured party will be deprived
of the benefits [it] reasonably expected”(citing Restatement (Sec-
ond) of Contracts § 241)). Moreover, the record evidence estab-
lishes that Siemens did provide Secure notice of design improve-
ments on October 31, 2012, during a call between SK, Siemens, and
Secure, in which Siemens indicated that it would include the design
improvements if Secure paid for the re-engineering. At the time of
Secure’s breach, then, Secure was already aware of the improve-
ments. Secure, however, missed its licensing fee payments due in
February 2013 and December 2015 after Siemens provided notice
of the improvements. Indeed, Secure stipulated that it was unable
to perform under the terms of the 2012 LSA and therefore could
not have paid for the improvements, as the district court held, even
if Secure had chosen to obtain them. As such, the notice for those
improvements could not have been the reason Secure itself
breached the contract.
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46 Opinion of the Court 20-11266
The district court was thus right to conclude that Siemens’s
alleged breach—not providing notice of the improvements
sooner—was not material to the contract. Because the contract did
not impose any time limitation on when notice of improvements
should be given, and because the record evidence established that
Secure had notice of the improvements before Secure failed to ten-
der payment, Siemens’s breach was irrelevant to the claim pre-
sented.
IV. CONCLUSION
For the foregoing reasons, we reverse the district court’s
grant of summary judgment as to Secure’s claims in Counts 2, 4, 5,
and 6, and remand for the district court for further proceedings.
On remand, Siemens can re-assert the alternative arguments it
made below to the district court as a basis for summary judgment
on those claims, should it choose to do so. We affirm the district
court’s grant of summary judgment as to Count 1 and affirm as to
all other issues.
AFFIRMED IN PART, REVERSED IN PART.