Expert Witness Profiler

Tag: Appraisal

  • Appraisal Expert’s Testimony on Deceptiveness Excluded

    Appraisal Expert’s Testimony on Deceptiveness Excluded

    The Plaintiffs in this putative national class action are insureds who filed “total loss” claims for the actual cash value (“ACV”) of their totaled vehicles under their automobile insurance policies sold by State Farm Mutual Automobile Insurance Company or State Farm Fire and Casualty Company (collectively, “Defendants” or “State Farm”). Plaintiffs challenged State Farm’s application of a “typical-negotiation adjustment” (“TNA”) in the calculation of the ACV of Plaintiffs’ vehicles, which reduced Plaintiffs’ total loss payments based on the average difference between the list price and a lower price that a dealer would theoretically accept.

    Alleging that this methodology resulted in undervalued payments, Plaintiffs brought various claims, including breach of contract, breach of the covenant of good faith and fair dealing, fraudulent concealment, fraudulent inducement, unjust enrichment, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) and various other state consumer protection statutes.

    Defendants filed a motion to exclude the proposed testimony of Jason Merritt, Plaintiffs’ expert on personal property appraisal.

    Appraisal Expert Witness

    Jason W. Merritt has appraised over a thousand vehicles to determine their fair market, or actual cash, value. He is certified through the Bureau of Certified Auto Appraisers to appraise vehicles, including total losses.

    Want to know more about the challenges Jason Merritt has faced? Get the full details with our Challenge Study report.

    Discussion by the Court

    Plaintiffs retained Merritt to testify about “what an appraisal is,” “how to use the comparable methodology to appraise a vehicle’s [ACV],” and whether State Farm’s (via the company Audatex) application of a TNA in the calculation of the ACV of Plaintiffs’ vehicles is “appropriate when appraising a vehicle using a comparable [“comp”] methodology.”

    A. Merritt’s Qualifications

    State Farm did not challenge Merritt’s experience with appraisals. Rather, State Farm suggested that Merritt is unqualified to opine on Audatex’s methodology for lack of knowledge about the technical inputs on which the Autosource valuation actually runs.

    Merritt’s extensive background in ACV appraisals made him appropriately qualified to opine on how Audatex’s methodology compares to other industry practice even without first-hand experience in the Defendants’ technical systems. State Farm’s grievances with how Merritt applies his experience to the facts of this case are better suited for cross-examination.

    The same cannot be said for State Farm’s arguments about any opinions Merritt may attempt to offer regarding State Farm’s alleged deceptiveness or deceitfulness in this case. Experts generally cannot offer legal opinions or conclusions, and the exceptions to that rule are not applicable here.

    Merritt is free to testify to his view that there must be a specific evidence-based reason for making value deductions in a proper comp appraisal, and that Audatex’s TNA deviates from that standard.

    The same goes for his emphasis on the TNA being “baked in” rather than “explicitly applied to the valuation of the insured vehicle” in a visible way, which may make it hard for a consumer to identify the use of the TNA on their vehicle’s ACV determination. That, however, must be the end of the road for his testimony.

    Merritt cannot veer into legal conclusions, including but not limited to observations about deception. Any opinions that do so should be excluded under Rule 702. The Court thus granted State Farm’s motion to exclude Merritt’s testimony to the extent that it speaks to legal conclusions such as deception.

    B. Reliability of Merritt’s Testimony and Methodology

    i. Merritt’s First Opinion

    Defendants argued that Merritt’s opinion that Audatex’s typical negotiation adjustment conflicts with typical appraisal standards is unreliable for three reasons: that Merritt 1) compares Audatex’s work to general principles and not specific appraisal standards, 2) has insufficient knowledge about how Audatex calculates its TNAs, and 3) operates from the false premise that a used vehicle’s advertised cash price always equals its ACV.

    State Farm’s second contention amounts to a recycled version of its arguments about Merritt’s qualifications, addressed above, and can be disposed of accordingly. Further, State Farm did not suggest that Merritt’s actual report—which thoroughly addresses all aspects of the Audatex methodology it intended to dispute—actually gets anything wrong about how Audatex operates, instead primarily taking issue with his lack of internal company knowledge about how the TNA “was developed or is calculated.”

    State Farm’s third contention also missed the mark: nowhere did Merritt’s report indicate that he believes “a used vehicle’s advertised price always equals its actual cash value,” as State Farm puts it. Merritt espouses advertised internet prices as “an objective criterion for determining what the comparable vehicle would sell for on a particular day to a buyer purchasing a vehicle outright, without providing a trade in, financing the purchase through the dealership, or buying optional warranties or service plans.”

    That leaves State Farm’s first argument: that Merritt should be excluded because he compared Audatex’s work to general principles and not specific appraisal standards. Merritt, however, clearly outlined the comp appraisal methodology against which he is comparing Audatex’s methodology—moreover, he found that Audatex is “consistent with” his general methodology aside from the application of the TNA.

    ii. Merritt’s Second Opinion

    Defendants also argued that Merritt’s opinion that Audatex’s methodology, absent the TNA, produces a sound estimate of a vehicle’s ACV is unreliable for three reasons: Merritt 1) once again operated from the false premise that a used vehicle’s advertised cash price always equals its ACV, 2) utilized insufficient intellectual rigor because he is litigation-driven, and 3) incorrectly assumed that he can remove the TNAs without impacting other variables in the Audatex Reports.

    The first of these contentions was addressed and disposed of in this Court’s earlier analysis. The second argument incorrectly aims to merge two distinct practices of Merritt’s: his work as an individual appraiser, and his testimony as to how insurance companies will often appraise cars. In his individual practice, Merritt has been called upon to perform vehicle-specific appraisal verification after an insurance company uses third-party software to determine ACV.

    The lack of individualized inquiry in his report does not derive from that methodology’s likeliness to “sound a death knell to certification,” but rather the fact that insurance companies themselves do not utilize it, presumably believing it would be a death knell to their own bottom lines. It is not impermissibly “litigation-driven” for Merritt to compare and contrast his individualized inquiry approach with the standardized algorithmic approach common to insurance companies.

    Finally, State Farm’s argument that Merritt incorrectly assumed that he can remove the TNAs without impacting other variables in the Audatex Reports is best suited for cross-examination. Merritt permissibly made reasonable inferences to reach his conclusions and ultimately “stayed within reliable . . . bounds” in so doing. The Court has found that Merritt’s application of his methodology to the circumstances of the case have met that threshold, in accordance with the 2023 amendments.

    Held

    The Court granted in part and denied in part Defendants’ motion to exclude the testimony of Jason Merritt.

    Key Takeaway

    From the outset, it is clear that Merritt familiarized himself with—and relied upon—the relevant facts of this case. Among other things, he highlighted the way Audatex comes to its ACV calculations and compares that to the “take-price” adjustment that some appraisers utilize, ultimately finding that Audatex’s approach is insufficiently specific compared to that approach. His explanation about a generally accepted vehicle valuation methodology will help a trier of fact decide a central issue in this case—whether it is appropriate to apply a TNA while appraising a used vehicle.

    Case Details:

    Case Caption: Williams V. State Farm Mutual Automobile Insurance Company
    Docket Number: 1:22cv1422
    Court Name: United States District Court, Illinois Northern
    Order Date: March 09, 2026
  • Land Valuation Expert’s Opinions About the Current Market Value of the Properties Admitted

    Land Valuation Expert’s Opinions About the Current Market Value of the Properties Admitted

    Plaintiffs sought the partition and sale of a Boynton Beach property, a Miami property, and a West Palm Beach property (the “Properties”).

    The Defendants sought to exclude the opinions, analysis, and testimony of  Lara Swanson, an expert witness retained by Plaintiffs to provide an opinion of current market value for the properties at issue in this case.

    Land Valuation Expert Witness

    Lara Swanson is the President of Swanson Land Company located in Deerfield Beach, Florida. Swanson has over 20 years of experience in land acquisition, entitlement, and development across Florida.

    Get the full story on challenges to Lara Swanson’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Swanson’s Qualifications

    With regard to the Daubert analysis, the Swanson’s qualifications were not in dispute. However, it was noted that she is not a licensed appraiser and has no formal training in appraisal theory or in the Uniform Standards of Professional Appraisal Practice.

    The Court also independently found Swanson to be qualified in light of her credentials, to which she testified during her deposition.

    Reliability of Swanson’s Methodology

    Swanson’s studies were intended to provide opinions on the current market value of the properties at issue.

    The Defendants argued that Swanson’s methodology, which relied on Letters of Intent (LOIs), “did not address any real concerns with ‘lag times’ that are not already adequately addressed by traditional appraisal methods.”

    The Defendants further contended that Swanson improperly relied on hypothetical future values of the properties after making various assumptions.

    The Court held that Swanson shall be permitted to testify about the current market value of the properties. She shall, however, not be permitted to testify about the hypothetical future values of the properties.

    Held

    The Court denied the Defendant’s motion in limine to exclude the opinions of Lara Swanson.

    Key Takeaway:

    Swanson, with her extensive experience in land acquisition, entitlement, and development across Florida, was allowed to testify about the current market value of the properties.

    Case Details:

    Case Caption: Romade Asset Partners, L.P. Et Al V. Lester Et Al
    Docket Number: 9:22cv81914
    Court Name: United States District Court, Florida Southern
    Order Date: May 22, 2025
  • Sociology Expert is not Qualified to Offer opinions on the Propriety of an Appraisal

    Sociology Expert is not Qualified to Offer opinions on the Propriety of an Appraisal

    Plaintiffs Nathan Connolly and the Estate of Shani Mott (collectively “Plaintiffs”) alleged that Defendants Shane Lanham and 20/20 Valuations, LLC (collectively “Defendants”) racially discriminated while performing an appraisal of Plaintiffs’ home.

    Defendants have counter-sued for defamation. Each party has offered an expert to provide testimony regarding the propriety of Defendants’ appraisal of Plaintiffs’ home. Plaintiffs sought to strike what they believe is an impermissible sur-rebuttal by Defendants’ appraisal expert, Tobias Peter. Defendants sought to exclude the opinions of Plaintiffs’ appraisal expert, Dr. Junia Howell in their entirety.

    Housing Expert Witness

    Tobias Peter is a senior fellow and the codirector of the American Enterprise Institute’s Housing Center, where he focuses on housing risk and mortgage markets. Working closely with Edward Pinto, codirector of the AEI Housing Center, Peter has coauthored a variety of reports on housing policy, specifically on the impact of federal policy on housing demand and homeownership, housing finance risks, and first-time home buyers.

    He has a master’s in public policy from the Harvard Kennedy School and a bachelor’s degree in history and applied economics from the College of St. Scholastica.

    Get the full story on challenges to Tobias Peter’s expert opinions and testimony with an in-depth Challenge Study.

    Sociology Expert Witness

    Dr. Junia Howell is a visiting Assistant Professor of Sociology at the
    University of Illinois, Chicago. She obtained a Ph.D. in Sociology from Rice
    University in 2017.

    Her research interests include urban sociology, race and ethnicity,
    inequality and mobility, and quantitative methodology. She has published several articles about race and housing.

    Want to know more about the challenges Junia Howell has faced? Get the full details with our Challenge Study report.

    Discussion by the Court

    Plaintiffs’ Motion To Strike

    Plaintiffs have asked this Court to strike a supplemental report by Defendants’ appraisal expert, Tobias Peter, as an improper sur-rebuttal.

    Plaintiff’s rebuttal expert reports— including a report written by Junia Howell in rebuttal to a report by Defendants’ expert, Peter—were due on September 4, 2024.

    Howell’s rebuttal report, which featured substantial data analysis, and its underlying materials was submitted to the Defendants on the due date. Defendants deposed Howell on September 11, 2024. The following day, September 12, 2024, Defendants sent Plaintiffs a thirteen-page document styled as a “supplement” by Peter, which responded to Howell’s data analysis.

    Howell filed her opening report in June, 2024, which consisted of an analysis of Defendants’ appraisals over several years, comparing their work in White neighborhoods to their work in otherwise similar non-White neighborhoods. Defendants’ opening expert reports were due in August, 2024. Their expert, Peter, refuted Howell’s analysis by comparing it to an automated valuation model (“ AVM”) and stating that he believed her findings were without foundation.

    Defendants also provided Peter’s underlying data to Plaintiffs. In her September 4, 2024 rebuttal report, Howell used AVM data she created from publicly available information from Zillow.com (Zestimates).

    Analysis

    Essentially, Defendants argued, “it was not possible for Defendants’ expert to address and rebut Plaintiffs’ expert’s opinions on the Zillow AVM data until after Plaintiffs’ expert disclosed her opinions.” But perhaps more important, the deadline to supplement Rule 26(e)(2) expert disclosures was one week after the last expert deposition. The Defense provided Plaintiffs with Peter’s supplement well before that deadline, and over a month before Peter’s deposition.

    This Court agreed that the supplement was both timely given the parties’ agreed-upon schedule and appropriate under the circumstances. Peter responded to previously unraised arguments that he could not have responded to in his initial report. By submitting his supplement well before his own deposition, Plaintiffs had the opportunity to question him regarding the supplement.

    Defendants’ Motion To Exclude

    Howell issued her opening report on June 21, 2024. She conducted a data analysis of 1,996 appraisals performed by Defendants and compared them with each other and with other appraisers’ work.

    Howell described her report as essentially divided in three sections:

    “So the first bucket is looking just at Lanham’s appraisals and looking to what extent there is a racial difference.

    The second bucket is looking at his appraisals compared to another evaluation of the neighborhood. And that has like — that has four different ways of looking at that. One of those is FHFA data. One is his own evaluations of neighborhood median income. One is now added from the rebuttal, the AVM, and the fourth is the contract price. So that’s that middle bucket.

    The third bucket are examining to what extent his patterns of behavior in selecting comps and making adjustments are also racialized.”

    “Buckets” One and Two

    Defendants argued that errors in Howell’s analysis rendered her conclusions irrelevant, and they thus should be excluded under Rule 702.

    Howell used a regression model to conclude that “Defendant[s] systematically appraised homes in census blocks of color as less valuable than comparable homes in comparable White census blocks.”

    As a general matter, Howell found, homes in predominantly White neighborhoods in the Baltimore area sold for $165,000 more than comparable homes in neighborhoods predominantly populated by non-White people. Howell’s first opinion was, essentially, that Defendants generally appraised homes in White neighborhoods as more valuable than comparable homes in non-White neighborhoods.

    Howell offered five opinions within her second “bucket.” Each of those opinions tends to support the theory that Defendants appraised homes in non-White neighborhoods at a lower value than average, and homes in White neighborhoods at a higher value than average.

    Defendants argued that to the extent there is a differential between Defendants’ appraisals in White and non-White neighborhoods, such a differential exists for all appraisals, and it is therefore misleading to use this statistic alone to suggest that Defendants discriminated against non-White homeowners.

    Rather than striking her testimony, the Court believed the better course of action is to weigh at summary judgment if Howell’s analysis is sufficient to create a genuine issue of material fact regarding whether the Defendants appraised Plaintiffs’ home in a racially discriminatory manner.

    “Bucket” Three

    Howell opined that Defendants did not comply with the Uniform Standards of Professional Appraisal Practice (USPAP), which Maryland appraisers are required to follow, and their own practices in other appraisals.

    She continued that had they followed USPAP and their own standard practices, their valuation would have been over $600,000.

    Plaintiffs rejoin that Howell’s research on housing qualifies her to opine on appraisals. Because she is a leading expert on racial inequities in housing, they continue, and her research has included studies of appraisal practices, she has the experience required to opine on appraisals. She has spoken at conferences and written articles discussing appraisal.

    While this Court does not diminish Howell’s substantial expertise in housing, and even some aspects of appraisal, she is a sociologist, not an appraiser. While she certainly has expertise in sociology such that it is proper for her to offer statistical analysis regarding appraisals, she is not qualified to offer opinions on the propriety of an appraisal (including the specific selection of comparative properties and making adjustments) or an appraisal’s compliance with professional standards.

    By contrast, the Court held that Howell may permissibly opine that, based on her statistical analysis, Defendants deviated from their general practices in conducting this appraisal. She of course may not opine as to what Defendants should have done in the appraisal, but Plaintiffs made clear that she is not making any normative argument. As above, Defendants’ critiques of the approach Howell took in her assessment bear on its usefulness in determining whether summary judgment is warranted, and potentially whether liability is appropriate. The Court will consider those arguments in assessing whether Howell’s opinion contributes to the creation of a genuine issue of material fact.

    Held

    • The Court denied the Plaintiffs’ motion to strike a supplemental report by Defendants’ appraisal expert, Tobias Peter, as an improper sur-rebuttal.
    • The Court granted the motion to exclude Junia Howell’s opinions insofar as it applied to Howell opining on the validity of the appraisal of Plaintiffs’ home and whether that appraisal comported with professional standards or norms for appraisers. The motion was denied as to Howell’s opinions based on her statistical analysis comparing Defendants’ work in White neighborhoods with their own work in non-White neighborhoods and comparing Defendant’s work in non-White neighborhoods to the work of other appraisers.

    Key Takeaway:

    This Court does not find that an expert must always be a certified appraiser to opine on any facet of appraising. But even under a standard favoring inclusion, this Court cannot find that Howell is qualified to assess whether an appraisal was done in a manner consistent with professional standards and regulations without having ever conducted an appraisal or been subject to those standards.

    Case Details:

    Case Caption: Connolly Et Al V. Lanham Et Al
    Docket Number: 1:22cv2048
    Court Name: United States District Court, Maryland
    Order Date: April 17, 2025
  • Real Estate Expert’s Use of the Sales Comparison Approach is Permissible

    Real Estate Expert’s Use of the Sales Comparison Approach is Permissible

    Residents near a biomass power plant in Madison County, Georgia, owned and operated by the defendants, allege that the plant’s noise, vibrations, light, smoke, and soot are negatively impacting their property values. They have filed nuisance and negligence claims. The Defendants are challenging the admissibility of the Plaintiffs’ expert witness, real estate appraiser Kenneth Cantrell, under Federal Rule of Civil Procedure 702. While not disputing Cantrell’s qualifications, the Defendants argued that his appraisal, which assesses the decrease in property values due to plant noise, lacks sufficient factual basis and employs an unreliable methodology.

    Real Estate Expert Witness

    Kenneth Cantrell, a Georgia-based certified real estate appraiser, boasts a career spanning more than thirty years.

    Cantrell possesses a robust educational background in real estate and finance, demonstrated by his successful completion of coursework covering essential areas such as real estate valuation, finance, law, brokerage, and investment analysis. Furthermore, he has consistently pursued advanced professional development, either completing or successfully challenging numerous courses offered by esteemed organizations like the Appraisal Institute (AI) and the Commercial Investment Real Estate Council (CI), underscoring his commitment to maintaining a high level of expertise.

    Want to know more about the challenges Kenneth Cantrell has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Real estate appraiser Kenneth Cantrell used the sales comparison approach to assess the impact of the biomass plant on the Plaintiffs’ property values, claiming his work adheres to the Appraisal Institute’s Uniform Standards of Professional Appraisal Practice and the Appraisal Institute’s Code of Professional Ethics and Standards of Professional Appraisal Practice. 

    The Defendants challenged his methodology on three main points:

    1) They argued he failed to properly verify sales data for comparable properties. The Plaintiffs countered that Cantrell’s associate verified the data, which is permissible.

    2) The Defendants criticized the distance between comparable and appraised properties. The Plaintiffs responded that the rural setting justified the use of such comparables, under applicable appraisal standards.

    3) The Defendants claimed Cantrell relied on a biased report about the Madison plant’s impact. However, the Court found Cantrell’s use of that study as a factor, to determine the size of the impacted area, was permissible.

    The Court concluded that the Defendants’ criticisms pertain to the weight of Cantrell’s testimony, not its admissibility. Finding that Cantrell’s testimony is based on sufficient facts and reliable methodology, and would assist the jury, the Court denied the Defendants’ motion to exclude his testimony.

    Held

    The Court denied the Defendants’ motion to exclude Kenneth Cantrell’s testimony.

    Key Takeaways:

    • The Court recognized that in rural settings, broader geographic comparisons for real estate appraisals may be necessary and permissible, according to professional appraisal standards.
    • Criticisms regarding the methodology, data verification, and comparable properties were deemed to affect the weight of the appraisal evidence, not its admissibility.

    Case Details:

    Case Caption: Fowler Et Al V. Georgia Renewable Power LLC Et Al
    Docket Number: 3:23cv62
    Court: United States District Court for the Middle District of Georgia, Athens Division
    Order Date: March 15, 2025
  • Valuation Expert Witness’ Testimony About Neutral Third Party Appraisers Excluded

    Valuation Expert Witness’ Testimony About Neutral Third Party Appraisers Excluded

    McDonald’s Corporation (“Plaintiff”) filed this breach of contract action against Vanderbilt Atlantic Holdings LLC (“Defendant”). 

    The primary issue to be tried in this case is whether Vanderbilt failed to cooperate in the process set forth in an addendum to a lease between McDonald’s and Vanderbilt (the “Lease”) to evaluate the fair market rental value (“FMV”)—the basis to calculate McDonald’s rent—for the subject property (the “Property”).

    Vanderbilt’s appraiser, Tom Tener, estimated the FMV for the Property twice.

    Defendant retained Michael P. Hedden as an expert witness to testify about “(1) his professional background, experience and qualifications; (2) his review of Thomas Tener’s appraisal prepared on July 30, 2019 including Tener’s appraisal methods and techniques; and (3) the purpose and role of a neutral third-party appraiser.” 

    Plaintiff filed a motion to exclude his testimony on the basis that his expert opinion “is not based on sufficient facts or methodology” and lacked “independent analysis” to support testimony on the “Property’s highest and best use.” 

    Valuation Expert Witness

    Michael Hedden specializes in providing valuation, litigation support, and expert testimony services as a knowledgeable real estate professional in all aspects of market analysis and valuation of real property. He has experience in the appraisal of industrial, commercial, residential, and special purpose property including hospitality, hospital, and healthcare facilities. 

    Get the full story on challenges to Michael Hedden’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Hedden’s Report

    Hedden was retained to conduct an appraisal review, as opposed to an independent appraisal. As the report noted, the scope of the work was to determine whether: (1) Tener’s report contained adequate and relevant data; (2) the appraisal methods and techniques used were appropriate given the language of the Lease; and (3) the analyses, opinions, and conclusions in the report were appropriate, credible, and reasonable for the intended use of the intended user within the context of the Lease.

    Therefore, Hedden concluded that Tener’s “analysis, opinions and conclusions” were “appropriate, credible and reasonable.”

    Uniform Standards of Professional Appraisal Practice (USPAP) Standard 3 requires an appraisal reviewer to “identify the problem to be solved, determine the scope of work necessary to solve the problem, and correctly complete research and analyses necessary to produce a credible appraisal review.” The Court held that just because Hedden “did no independent research” does not mean he did not comply with USPAP standards or conduct an acceptable appraisal review. 

    The Court held that Plaintiff’s other bases for exclusion similarly are unavailing. Plaintiff’s comparison of Hedden’s appraisal review with that of Plaintiff’s expert is insufficient to exclude Hedden’s testimony. After all, the scope of their respective work appears to have been different as Hedden conducted a quality appraisal review, whereas Aaron conducted a more quantitative review. Moreover, Hedden’s consideration of Tener’s competency and experience is not improper, and does not reflect a rubber stamp of Tener’s report. Indeed, such a consideration would seem to be relevant in an appraisal review. 

    Hedden’s Opinion on the “Highest and Best Use” of the Property

    Plaintiff sought to preclude Hedden’s testimony that Tener “correctly concluded” that “the highest and best use required valuing the Property based on the construction of a new building consistent with the Property’s zoning which allowed for 39,000 square feet.” Plaintiff contended that this opinion is outside the scope of an appraisal review, and Hedden did not perform the analysis necessary to reach that opinion independently.

    The Court held the scope of Hedden’s appraisal review included determining whether “the appraisal methods and techniques used in the Report are appropriate given the language in the lease” and “the analyses, opinions and conclusions in the Report are appropriate, credible, and reasonable.” In other words, his opinion that Tener “correctly concluded” how to consider the highest and best use was an opinion of the quality, not value, of Tener’s appraisal.

    Hedden’s Expert Testimony About Neutral Third Party Appraisers

    Plaintiff sought to preclude Hedden’s testimony about the purpose and role of a neutral third party appraiser because such information was not included in the expert report and the topic is a matter of contract interpretation. 

    As an initial matter, the Court doubts that this testimony would aid the Court in any finding of fact. Moreover, as the Court previously stated, “the role of the third appraiser . . . is a matter of contract interpretation.” Further, this topic was not within the scope of Hedden’s appraisal review and was not discussed in the report.

    Held

    The Plaintiff’s motion to exclude the testimony of Hedden is denied in part and granted in part.

    Key Takeaway:

    Hedden, for the most part, complied with the USPAP standards but his testimony about the purpose and role of a neutral third party appraiser was excluded because the Court previously stated that the role of the third appraiser is a matter of contract interpretation.

    Case Details:

    Case Caption: McDonald’s Corporation V. Vanderbilt Atlantic Holdings Llc
    Docket Number: 1:19cv6471
    Court: United States District Court, New York Eastern
    Order Date: September 30, 2024
  • Management Consulting Expert Witness’ Opinions on Market Valuation of a Trademark Excluded

    Management Consulting Expert Witness’ Opinions on Market Valuation of a Trademark Excluded

    This is a case under New York’s Debtor & Creditor law to set aside a February 2019 transfer of the “Halston” and “Halston Heritage” trademarks to Defendants. Comfortex, a garment manufacturer based in Hong Kong alleged that Xcel had used its domination over House of Halston (“HOH”) and its wholly owned subsidiaries (defined below as the “Halston Entities”) to obtain the trademarks for $9 million when the Halston Entities were insolvent and fair consideration would have been $21 million or more.

    On July 6, 2018, Xcel obtained an appraisal of the trademarks prepared by Consensus Securities LLC. By August 4, 2018, the Halston Entities owed the Bank of HaPoalim, an Israeli bank, approximately $5.5 million dollars. On October 9, 2018, Xcel and the Halston Entities signed a letter of intent to transfer the “Halston” and “Halston Heritage” trademarks to Xcel for $11 million dollars. Consensus provided a second appraisal of the trademarks to Xcel on November 18, 2018.

    At some time before January 2019, Xcel asked Consensus to prepare a fairness opinion to determine an appropriate purchase price for the “Halston” and “Halston Heritage” trademarks. On January 23, 2019, Consensus Valuation Benchmarking and Analytical Services had presented its findings (the “Consensus Report”). The Consensus Report provided a $17,170,000 low value estimation, $21,655,000 middle value estimation, and $29,088,000 high value estimation. On October 31, 2022, Xcel served an expert report prepared by Andrew Jassin. Jassin provided an expert opinion on the elements of a fair market valuation of a trademark and whether the Consensus Report had included a fair market valuation of the “Halston” and “Halston Heritage” trademarks.

    Plaintiff Comfortex Company Limited filed a motion pursuant to Federal Rules of Evidence 403 and 702, to exclude the opinion testimony and expert report of Andrew Jassin.

    Management Consulting Expert Witness

    Andrew V. Jassin is founder and managing director of the Jassin Consulting Group, a management consulting firm providing strategy development and implementation services exclusively to the fiber, textile, apparel and home furnishings industries and related supply chain companies.

    In 1989 he formed the Marketing Management Group, Inc. (“MMG”), a consulting firm which helped fashion and retail businesses function effectively and provided independent expert counsel to top management on issues related to brand management, licensing, marketing and product evaluation. Jassin became one of the most influential and respected advisors in the fashion industries.

    To learn about other cases where Andrew V. Jassin has been involved as an expert witness, order an Expert Witness Profile report.

    Discussion by the Court

    Jassin opined that the Consensus Report was not a fair market valuation because it was prepared for Xcel, a buyer, when “fair market valuations are created for the benefit of the seller not for the buyer.” Specifically, Jassin stated a fair market valuation would contain 14 different factors, as he defined them.

    Moreover, Jassin’s report did not include any financial estimates about the value of the trademarks.

    Jassin failed to review the July 6, 2018 and November 21, 2018 appraisals conducted by Consensus

    Here, Jassin’s conclusion that the Consensus Report did not include a fair market valuation of the “Halston” and “H by Halston” trademarks was based, in part, on the Report’s failure to include a discussion of the 14 factors that Jassin contended were required to qualify as a fair market value report. As Comfortex pointed out, the Consensus Report explicitly referred to and incorporated prior appraisals prepared by Consensus on July 6 and November 21, 2018. It was undisputed that Jassin did not review the appraisals, both of which were produced in discovery and were available to the Defendants. 

    The Defendants argued that Comfortex failed to explain why the July 6 and November 21, 2018 appraisals would affect Jassin’s methodology.

    But Comfortex noted that the appraisals included a recitation of the 14 factors Jassin opined were necessary for a fair market value report. Defendants never disputed this point. In other words, Jassin did not review directly relevant parts of the record, which rendered his opinion unreliable.

    Because Jassin did not review relevant parts of the record, the Court found Jassin’s expert report was based on data that was “simply inadequate to support the conclusions reached,” such that Jassin lacked good grounds for his opinion that the Consensus Report was not a fair market value report.

    Jassin did not offer an opinion as to the value of the trademarks

    Comfortex argued that the report should be excluded under Rule 403 because it did not offer an opinion as to the value of the trademarks, and thus had no probative force. However, because Jassin’s expert report did not meet the requirements of Rule 702, the Court need not analyze whether it should also be excluded pursuant to Rule 403.

    Held

    The Court granted Comfortex’s motion to exclude Andrew Jassin’s expert report.

    Key Takeaways:

    Inadequate Data: When an expert opinion is based on data or a methodology that are simply inadequate to support the conclusions reached, Daubert and Rule 702 mandate the exclusion of that unreliable opinion testimony.

    Case Details:

    Case Caption: Comfortex Co., Ltd. v. Xcel Brands, Inc.
    Docket Number: 1:21cv7326
    Court: United States District Court, New York Southern
    Order Date:  March 25, 2024