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SE Property Holdings LLC v. Center

United States District Court, S.D. Alabama, Southern Division

January 19, 2017

TAMMY T. CENTER, et al., Defendants.



         This matter comes before the Court on Defendants' Motion in Limine to Exclude Plaintiff's Expert Witness, Stacy T. Cummings (doc. 119). The Motion in Limine has been briefed and is now ripe for disposition.[1]

         I. Background.

         Plaintiff, SE Property Holdings, LLC (“SEPH”), brought this action seeking to set aside certain transfers of property made by Charles and Belinda Trammell to their children and to family-controlled limited liability companies. SEPH's position is that the Trammells are indebted to it as guarantors on certain defaulted loans, and that when SEPH initiated legal action against them to enforce those guaranty obligations, the Trammells fraudulently transferred significant assets, including a house on Lake Martin, a beach condominium unit, shares of UPS stock, and ownership interests in LLCs. SEPH now brings multiple causes of action under the Alabama Uniform Fraudulent Transfer Act, Ala. Code §§ 8-9a-1 et seq. (the “AUFTA”), against the Trammells and others. A critical issue in this case is whether “the debtor was insolvent at the time or the debtor became insolvent as a result of the transfer.” Ala. Code § 8-9A-5(a).[2] Indeed, in an Order entered on December 30, 2016, the Court concluded that “[t]he evidence and argument at trial on Count Three will be limited to the questions of whether Charles and Belinda Trammell were insolvent within the meaning of Alabama Code § 8-9A-2 at the time of, or became insolvent as a result of, the challenged transfers.” (Doc. 122, at 28.)

         A key component of SEPH's contemplated evidence at trial as to the insolvency issue will be the testimony of Stacy T. Cummings. In the Joint Pretrial Document, SEPH explained that “Ms. Cummings will offer an opinion as to the value of the assets and liabilities of Mr. and Mrs. Trammell at the time of the transfers and the value of the assets transferred.” (Doc. 129, at 7.) Cummings is a certified public accountant who is certified in financial forensics and as a valuation analyst. (Doc. 128, Exh. A, at Exh. 2.) She has 15 years of experience as a CPA, including work in litigation services and business valuations. (Id.) SEPH has proffered Cummings as an expert witness. According to her report, Cummings was retained “to analyze the assets and liabilities of Charles Trammell, his Estate, and Belinda Trammell as of January 26, 2011, December 12, 2011, April 25, 2012 and October 24, 2013 [the dates of the subject transfers] to determine the values of the assets, liabilities, and the amount of estimated assets greater than (less than) liabilities.” (Doc. 128, Exh. A at 6.)[3] Based on her review and analysis, Cummings expects to testify that, on each of the specified dates, the liabilities of each of Charles and Belinda Trammell were greater than the value of his or her assets both before and after the transfer of assets took place; and that the Trammells utilized those transfers to “shift[] ownership of approximately 69% of their total assets to their daughters.” (Id. at 7.)

         Although it appears that SEPH timely and properly disclosed Cummings as an expert witness, defendants did not avail themselves of the opportunity to take her deposition during the discovery phase of this action. Notwithstanding that omission, defendants have now filed a Motion in Limine to exclude Cummings' testimony “because it relies on inaccurate and disputed factual assumptions, unjustified methodology, and offers nothing more than what SEPH's attorneys already have argued and will argue in closing arguments.” (Doc. 119, at 1.) SEPH opposes the Motion.

         II. Analysis.

         A. Daubert Standard.

         Defendants' Motion in Limine is governed by black-letter Daubert principles. The Federal Rules of Evidence, as construed by the Supreme Court in the landmark case of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), “require[] expert scientific evidence to be both reliable and relevant pursuant to Rule 702, ” such that it “appropriately assists the trier of fact.” United States v. Henderson, 409 F.3d 1293, 1302 (11th Cir. 2005). In that regard, “[t]he court serves as a gatekeeper, charged with screening out experts whose methods are untrustworthy or whose expertise is irrelevant to the issue at hand.” Corwin v. Walt Disney Co., 475 F.3d 1239, 1250 (11th Cir. 2007). This gatekeeping function is guided by the well-established principle that “[t]he proponent of the expert testimony carries a substantial burden under Rule 702” to show admissibility of that testimony by a preponderance of the evidence. Cook ex rel. Estate of Tessier v. Sheriff of Monroe County, Fla., 402 F.3d 1092, 1107 (11th Cir. 2005); see also Boca Raton Community Hosp., Inc. v. Tenet Health Care Corp., 582 F.3d 1227, 1232 (11th Cir. 2009) (“The offering party must show that the opinion meets the Daubert criteria, including reliable methodology and helpfulness to the factfinder …, by a preponderance of the evidence.”).

         As a general proposition, “[i]n determining the admissibility of expert testimony under Rule 702, a district court considers whether (1) the expert is qualified to testify competently regarding the matter 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 expertise, to understand the evidence or to determine a fact in issue.” United States v. Douglas, 489 F.3d 1117, 1124-25 (11th Cir. 2007). “While there is inevitably some overlap among the basic requirements - qualification, reliability, and helpfulness - they remain distinct concepts and the courts must take care not to conflate them.” Rosenfeld v. Oceana Cruises, Inc., 654 F.3d 1190, 1193 (11th Cir. 2011) (citation omitted).

         This action is set for a non-jury trial, such that the Court will be acting in the capacity of finder of fact. There is considerable legal support for the proposition that the Daubert gatekeeping function is relaxed in the context of a bench trial. See, e.g., United States v. Brown, 415 F.3d 1257, 1268-69 (11th Cir. 2005) (“Those barriers are even more relaxed in a bench trial situation, where the judge is serving as factfinder and we are not concerned about dumping a barrage of questionable scientific evidence on a jury. … There is less need for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for himself.”) (citations and internal quotation marks omitted).[4] That said, it remains true that “[w]hile [the Daubert] concerns are of lesser import in a bench trial, where no screening [for] the factfinder can take place, the Daubert standards of relevance and reliability for scientific evidence must nevertheless be met.” Scott Bridge Co. v. Gresham Smith and Partners, 2015 WL 5996206, *4 n.5 (M.D. Ala. Oct. 14, 2015) (quoting United States v. Brown, 279 F.Supp.2d 1238, 1243 (S.D. Ala. 2003)).

         B. Defendants' “Helpfulness” Objection.

         Defendants first challenge Cummings' expert opinions as failing to satisfy the “helpfulness” requirement, which provides that expert testimony is admissible only if “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.” Rule 702(a), Fed.R.Evid. In evaluating a helpfulness objection, “the court must ensure that the proposed expert testimony is relevant to the task at hand …, i.e., that it logically advances a material aspect of the proposing party's case.” Allison v. McGhan Medical Corp., 184 F.3d 1300, 1312 (11th Cir. 1999) (citations and internal quotation marks omitted); see also Seamon v. Remington Arms Co., 813 F.3d 983, 988 (11th Cir. 2016) (the requirement of “helpfulness, or fit … goes primarily to relevance, ” and looks to whether the proffered opinion has a “valid scientific connection to the pertinent inquiry”) (citations omitted). Additionally, for expert testimony to satisfy the helpfulness prong, that testimony must offer insights “beyond the understanding and experience of the average citizen.” United States v. Rouco, 765 F.2d 983, 995 (11th Cir. 1985); see also Cook, 402 F.3d at 1111 (“Proffered expert testimony generally will not help the trier of fact when it offers nothing more than what lawyers for the parties can argue in closing arguments.”) (citations omitted).

         Defendants' helpfulness objection to Cummings' expert opinions is not persuasive. As noted, the issues joined for trial require inquiry into the relative magnitudes of Charles and Belinda Trammells' assets and liabilities at certain specific points in time, so as to assess whether each individual was insolvent at the time of (or as a result of) the challenged asset transfers. Cummings' opinions on that issue arise from technical expertise and calculations derived from her review and analysis of the relevant financial records. Her synthesis of the data, as documented in her expert reports and the numerous tables attached thereto as exhibits, will undoubtedly be helpful to the trier of fact in evaluating each of the Trammells' assets and liabilities for purposes of making a solvency determination as of the pertinent dates when the asset transfers occurred. Accountants have routinely been permitted to testify as experts as to valuation and magnitudes of assets and liabilities where insolvency is at issue.[5] Moreover, the Court has observed firsthand the need for CPA testimony to delineate the ...

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