This action arises out of a franchise relationship between the Plaintiffs Glenn Misiph and AASK Services, LLC, (together “Plaintiffs”), and the Franchisor Defendants, 360° Painting, LLC, Premium Service Brands, LLC, and Paul Flick (together “Defendants”).
Plaintiffs alleged that Defendants engaged in fraudulent misrepresentation through marketing materials and Franchise Disclosure Documents (“FDD”).
To support their claims, Plaintiffs retained Elisabeth O. da Silva, a forensic accountant and damages expert, to calculate, among other things, their damages claims.
In her report, Da Silva addressed Plaintiffs’ lost opportunity costs, actual and expected profits, and efforts to mitigate damages. The report also evaluated the accuracy of the financial figures disclosed by 360° Painting in its 2017 FDD.
In response, Defendants engaged Edward J. Herbst, a CPA and CFF with professional experience in both the private sector and federal law enforcement.
Herbst provided a rebuttal to da Silva’s report assessing her premises, methodology and approach, and rationale. His report concluded that da Silva’s analysis relied on inaccurate assumptions and failed to account for the specific financial and operational realities of the franchise.
Plaintiffs Glenn Misiph and AASK Services, LLC, and Defendants 360° Painting, LLC, Premium Service Brands, LLC, and Paul Flick filed cross motions in limine to exclude expert testimony.
Accounting Expert Witnesses
Elisabeth O’Toole da Silva is a certified public accountant (“CPA”) and is certified in financial forensics (“CFF”) with over 25 years of experience in forensic accounting, auditing, and economic damage calculations.
Her professional history includes investigating complex financial disclosures and serving as an expert witness for private litigants and the Securities and Exchange Commission. Da Silva also served as a neutral arbitrator in accounting and contract disputes.
Edward J. Herbst previously served as a managing director in the forensics practice of a private accounting firm and held a senior executive service position within the Federal Bureau of Investigation. His experience includes calculating economic losses in financial crime investigations and providing testimony in federal court regarding fraud and money laundering schemes.
Discussion by the Court
Elisabeth O. da Silva
Defendants sought to exclude all of da Silva’s testimony due to: (1) lack of “fit” between da Silva’s calculations and Plaintiffs’ claimed damages; (2) unreliable methodology; and (3) improper legal or narrative conclusions.
1. The “Fit” Of Damages
Defendants argued that da Silva’s “but-for” damages testimony did not “fit” the case because Plaintiffs sought rescission damages, and da Silva’s report calculated expectation damages (lost profits).
In her report, da Silva provided two damages methods. The first method provided a damages calculation that would restore Plaintiffs to the economic position they would have occupied absent Defendants’ representations, the so-called unwind damages theory. The second method accounts for Plaintiffs’ investment in the franchise and provided a damages calculation that would put Plaintiffs in the position they would have been in had 360° Painting fulfilled its obligations, the so-called but-for damages theory.
Under da Silva’s but-for damages theory, she calculated the difference between Plaintiffs’ actual profit and losses and Defendants’ financial projections for gross revenue and expenses. Testimony regarding this theory is integral to proving Plaintiffs’ damages on their fraud and breach of contract claims.
Under Massachusetts law, Plaintiffs who have proved negligent misrepresentation are entitled to recover damages including the pecuniary loss caused by their reliance on the false information.
Defendants argued that da Silva included no evidence regarding the worth of the franchise when Misiph purchased it.
However, even if Defendants believe da Silva’s testimony is insufficient to prove one specific metric of loss, that does not invalidate her entire testimony, particularly where that testimony is relevant to other categories of damages. Because Plaintiffs bear the burden of proving each of their requested damages, da Silva’s calculations are relevant to their various theories of recovery.
2. Methodology
Defendants argued that da Silva’s testimony should be excluded because her methodology does not include actual performance data and the data on which she relied is too narrow in scope.
Specifically, Defendants criticized: her reliance on an assumption that had Misiph continued as a franchisee, he would have operated his franchise for 10 years; her failure to clarify or quantify how franchisor support figured in her calculation; her failure to account for variables like COVID-19 or market conditions; and her failure to use internal tracking metrics in her calculations, among other criticisms. This Court found that these challenges go to the weight of the evidence, not its admissibility.
Here, da Silva clearly described the economic damages model she used, stating that she used a “widely accepted damages methodology.” Defendants have provided no evidence to the contrary. Indeed, Plaintiffs represent that at his deposition, Herbst did not take any issue with da Silva’s methodology. Further, the ten-year term used in the report is not unsupported speculation; rather, it is rooted in the initial term of the Franchise Agreement itself. The other variables da Silva used are clearly described and supported by a detailed economic model within her report.
3. Legal Or Narrative Conclusions
Finally, Defendants argued that da Silva’s opinions on the consistency of the FDD and Misiph’s mitigation efforts are improper narrative or legal argument. Specifically, Defendants contended that: (1) da Silva’s opinion that the FDD provided to Misiph is inconsistent with the financial information supplied during discovery is jury argument; and (2) her use of the word “materially” and her opinions regarding Misiph’s duty to mitigate damages constituted legal argument.
Here, da Silva’s analysis involves a mathematical reconciliation of disparate financial data sets. This Court found that an accounting of how these figures are derived and reconciled provides a technical framework that exceeds the common knowledge of a lay juror. Da Silva’s opinion would help the trier of fact to understand the evidence and/or to determine a fact in issue. It is therefore admissible.
In her testimony, da Silva did not purport to render an opinion that Defendants knowingly made a false representation of material fact to induce Misiph to enter the franchise agreement. Rather, she sought to opine that her calculations differed significantly from the figures stated in the FDD.
This Court did, however, find that da Silva’s opinion that “Misiph has a duty to mitigate damages and did, in fact, take reasonable, non-burdensome steps to avoid losses” must be excluded. While accountants may calculate any offset of earned income against claimed losses, they are not qualified to offer a legal conclusion regarding what the law requires of a Plaintiff’s mitigation efforts. Similarly, an expert accountant may not opine on the reasonableness of a Plaintiff’s mitigation efforts as this is a quintessential jury question. Rather, these facts may be offered to the jury, but not by da Silva in the form of expert opinion. The jury may then reach its own conclusion.
Edward J. Herbst
Plaintiffs sought to exclude Herbst’s testimony, alleging that he is unqualified to offer damages opinions, his methodology is unreliable, and his analysis rests on inaccurate factual data.
1. Qualifications
Plaintiffs argued that Herbst is unqualified because he has never testified as an expert and has admitted to lacking the competence to perform an independent damages model or business valuation.
As described above, Herbst, a CPA and CFF, has extensive experience in financial investigations. His lack of history as a testifying expert or prior experience in franchise disputes and business valuation does not disqualify him from serving as a rebuttal expert. An expert’s training in a general field, in this case forensic accounting, is often sufficient to permit testimony on specialized sub-topics within that field.
2. Methodology
Plaintiffs further challenged Herbst’s methodology, characterizing it as a subjective “armchair” critique that lacked an independent analytical framework.
Along with analyzing da Silva’s report and its accompanying premises, methodology, and findings, Herbst’s methodology consisted of reviewing documents such as the complaint, Defendants’ amended counterclaims, portions of deposition transcripts, and copies of Misiph’s 2019-2023 tax returns. Then, Herbst applied his forensic accounting background to identify what he characterized as incorrect or unstandardized variables in da Silva’s calculations.
His report indicated that he was looking for foundational support for da Silva’s opinion within the bounds of accounting principles. The fact that he did not perform independent calculations to show exactly how a change in variables would move the final damages number may diminish the weight of his testimony, but it does not make his methodology inherently unreliable. Accordingly, the Court held that Herbst’s testimony is not excludable on this basis.
3. Data Accuracy
Finally, Plaintiffs argued that Herbst’s analysis is based on incomplete information. Specifically, Plaintiffs alleged that Herbst reviewed only portions of Misiph’s and Flick’s depositions, which led Herbst to make incorrect assumptions and effected his analysis.
In a deposition, Herbst acknowledged certain errors, such as his misclassification of commissions which were actually fixed franchise fees. These admissions and other alleged inaccuracies go to the weight and credibility of his testimony.
A jury is capable of determining whether Herbst’s critique remains valid despite these errors or if his misunderstanding of the underlying data renders his conclusions unpersuasive.
Held
- The Court granted in part and denied in part Defendants’ motion to exclude all of Elisabeth O. da Silva’s testimony.
- The Court denied Plaintiffs’ motion to exclude Edward Herbst’s testimony.
Key Takeaway
The reliability of an expert’s methodology “is a flexible inquiry, allowing for consideration of factors like whether the expert’s methodology has been objectively tested; whether it has been subjected to peer review and publication; the technique’s known or potential error rate; and whether the expert’s technique has been generally accepted within the relevant industry.”
An expert’s failure to include specific variables in a complex financial model does not render the testimony inadmissible so long as the underlying assumptions are those that experts make with some frequency.
Case Details:
| Case Caption: | Misiph V. 360 Painting, LLC |
| Docket Number: | 1:22cv11778 |
| Court Name: | United States District Court, Massachusetts |
| Order Date: | March 03, 2026 |
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