FNB Bank v. Park National Corporation et al
ORDER granting in part and denying in part 160 Motion to Strike and Exclude The Expert Testimony of Donald Coker. Signed by Chief Judge William H. Steele on 1/27/2014. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
PARK NATIONAL CORPORATION, )
CIVIL ACTION 13-0064-WS-C
The plaintiff has filed a motion to strike the expert testimony of defense
expert Donald Coker. (Doc. 160). The defendants have filed a response, (Doc.
167), and the motion is ripe for resolution.
The plaintiff’s motion is filed pursuant to Federal Rule of Evidence 702 and
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). “Under
Daubert and its progeny, we conduct a three-part inquiry to determine the
admissibility of expert testimony ….” Tampa Bay Water v. HDR Engineering,
Inc., 731 F.3d 1171, 1183 (11th Cir. 2013). “Expert testimony may be admitted
into evidence if: (1) the expert is qualified to testify competently regarding 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 expertise, to understand the evidence or to
determine a fact in issue.” City of Tuscaloosa v. Harcros Chemicals, Inc., 158
F.3d 548, 562 (11th Cir. 1998) (quoted in Tampa Bay Water, 731 F.3d at 1183).
The burden of establishing these three requisites lies with the proponent. United
States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004) (en banc).1
The plaintiff argues that Coker is not qualified to render expert opinions
regarding participation loans. (Doc. 160 at 13-15). An expert may be qualified
“by knowledge, skill, experience, training, or education.” Fed. R. Evid. 702.
Despite his 40+ years experience as a banker and banking consultant, the plaintiff
denies that Coker has such qualifications as to participation loans because: (1) he
has not been employed as a banker since 1988; (2) he has had no experience with
participation loans since the early 1990s; (3) his curriculum vita does not describe
any “specific experience” with participation loans; and (4) in his deposition, he
likewise did not describe any “specific experience, education, or training” dealing
with participation loans. (Doc. 160 at 14-15).
Coker’s expert report states that his “background and experience include a
significant amount of training in all areas of banking and mortgage banking
including … participations ….” (Doc. 161, Exhibit A, ¶ 3). His “education,
training, work, and management experience include specific experience in
development and construction financing and loan participations.” (Id., ¶ 4).
Moreover, his “experience as a banking regulator included handling many
development and construction loans and numerous loan participations.” (Id.).
Whether to conduct an evidentiary hearing is a decision committed to the
Court’s sound discretion. Cook v. Sheriff of Monroe County, 402 F.3d 1092, 1113 (11th
Cir. 2005). “As we have explained previously, Daubert hearings are not required, but
may be helpful in complicated cases involving multiple expert witnesses.” Id. (internal
quotes omitted). For example, “[a] district court should conduct a Daubert inquiry when
the opposing party’s motion for a hearing is supported by conflicting medical literature
and expert testimony.” United States v. Hansen, 262 F.3d 1217, 1234 (11th Cir. 2001).
Neither side has requested a hearing, and the motion is sufficiently simple that a hearing
would be of no assistance. Accordingly, the Court exercises its discretion against
conducting such a hearing.
In his deposition, Coker testified that he had experience with participation
loans, which he managed or was otherwise involved with, at every bank with
which he was employed between 1968 and 1986, excluding only a one-year stint
with Ford Motor Credit. At least at Commercial Credit, where he worked from
1977 to 1983, he handled “a lot” of participations. After concluding his regular
banking employment in 1986, he managed two insolvent banking institutions for
over two years, each of which had “a lot” of participations. In the early 1990s,
Coker did consulting work involving loan participations for the FDIC concerning
two other institutions. (Coker Deposition at 19-22, 28-29; Doc. 161, Exhibit A at
It is clear from this evidence that Coker has more than adequate experience
with participation loans to offer expert testimony concerning them in this case.
While the plaintiff decries the absence of more detail concerning Coker’s “specific
experience” with participation loans (what the plaintiff might have in mind is left
unstated), it cites no authority for the proposition that such detail is a necessary
predicate to admissibility, and it ignores its own failure to seek such information
when it deposed Coker. And while the plaintiff suggests that Coker’s qualifying
training and experience is dated, it does not assert that participation loan practices,
standards and so forth changed at all in the 12-15 years between his last
experience and the subject participation loan, much less that they changed so
radically as to render his experience and training an unsuitable predicate for expert
testimony. The plaintiff’s challenge to Coker’s qualifications to testify as an
expert is rejected.
II. Opinions Contrary to the Evidence.
The plaintiff argues that expert opinions are inadmissible if they are
contrary to the facts of the case. (Doc. 160 at 15-16). The Supreme Court
decision to which the plaintiff’s authority may be traced provides that, “when
indisputable record facts contradict or otherwise render the [expert] opinion
unreasonable, it cannot support a jury’s verdict.” Brooke Group Ltd. v. Brown &
Williamson Tobacco Corp., 509 U.S. 209, 242 (1993). To the extent that Coker’s
opinions rest on assumed facts that have been established as non-existent, the
plaintiff may have an argument for exclusion, but the only two instances it cites do
not involve such a situation.
First, the plaintiff challenges Coker’s assumption that Darrell Melton had
no decision-making authority in regard to the Marine Park development. (Doc.
160 at 17). It appears uncontroverted that Melton originated the Loan, but the
plaintiff’s own evidence is that Melton did not make the decision to make the
Loan but only gathered information for underwriting and presented the proposed
loan to a committee to approve or disapprove. (Rhode Deposition at 65). While
the plaintiff has some evidence that Melton may have helped administer the Loan,
(id. at 65-66), the defendants have the affidavit of Melton himself, who denies any
such activity. (Doc. 134, Exhibit H, ¶ 3). Since Melton’s decision-making
authority is not “indisputable,” Coker’s opinions cannot be excluded on that basis.
Second, the plaintiff opposes Coker’s testimony that he disagrees with
defendant Park’s assessment of the Loan (material overfunding issues and material
cost overruns) and of the quality of Vision’s management and administration of
the Loan (poor). (Doc. 160 at 17-18). But the plaintiff has not attempted to show
that Park’s assessment of the situation constitutes an “indisputable record fac[t]”
that Coker (and the jury) must accept; on its face, Park’s assessment appears to be
in the nature of an opinion, with which Coker is of course free to disagree.
III. Factual Testimony.
The plaintiff asserts that an expert cannot be used as a “vehicle for factual
narrative.” (Doc. 160 at 19 (internal quotes omitted)). The two authorities on
which the plaintiff relies emphasize the limited scope of this rule. Securities and
Exchange Commission v. Tourre, ___ F. Supp. 2d ___, 2013 WL 3089031 at *3
(S.D.N.Y. 2013) (“Acting simply as a narrator of the facts does not convey
opinions …. Mere narration thus fails to fulfill Daubert’s most basic
requirements.”) (emphasis added); LaSalle Bank National Association v. CIBC
Inc., 2012 WL 466785 at *7 (S.D.N.Y. 2012) (“[A]n expert witness may not offer
testimony which merely rehashes the testimony of percipient witnesses.”)
(emphasis added). The sentences from Coker’s report – and they are only a few
sentences – to which the plaintiff objects do not constitute a “factual narrative”
and do not render Coker a mere narrator. Instead, they provide the necessary
factual underpinning for his opinions, without which his report would be subject to
attack as noncompliant with Rule 26(a)(2)(B).
The plaintiff asserts that Coker cannot testify as to its knowledge of certain
facts. (Doc. 160 at 20-29). But the single authority on which it relies does not,
and properly could not, preclude an expert from relying on factual assumptions as
to a party’s knowledge, at least not as long as a jury properly could find such
knowledge. There appears to be record evidence of each of Coker’s assertions as
to the plaintiff’s knowledge; certainly the plaintiff has not shown that the record
negates such knowledge.2
In particular, from prior motions and submissions in this case, the Court is aware
of evidence that: the plaintiff in August 2008 knew the Loan had been downgraded,
(Doc. 160 at 23-24); that the plaintiff knew the due date of the Loan, (id. at 26); and that
the plaintiff learned of the merger. (Id. at 27). It is less clear whether there is record
evidence that the plaintiff knew the Loan carried significant risk, (id. at 29), but the
plaintiff has not shown that it indisputably was unaware of such risk.
The plaintiff raises its knowledge objection as to two other portions of Coker’s
report, but neither actually asserts that the plaintiff had knowledge of a particular fact.
Coker states “it was known” that the construction cost was $21 million, not that the
plaintiff knew the cost. (Doc. 160 at 21-22). And Coker states that a particular
disbursement “was fully disclosed to Plaintiff on the closing statement,” not that the
plaintiff consciously knew of the disbursement. (Id. at 28).
The Court indulges the plaintiff’s assumption that Coker cannot testify as to
its subjective intent either as a fact (since he does not know the plaintiff’s mental
state) or as an opinion (since he is not qualified to render such an opinion). (Doc.
160 at 19, 20) The plaintiff identifies three alleged instances of Coker testifying
as to its mental state, but the Court finds no such testimony.
First, Coker states that “Plaintiff did not require the certificate of substantial
completion before it made its final funding.” (Doc. 160 at 27-28). This is a
statement of the plaintiff’s act or omission, not of its intent. Second, Coker states
that “Plaintiff knew that there were significant risks in the loan and voluntarily
took on those risks without proper due diligence,” proximately causing the
plaintiff harm. (Id. at 29). This may be a statement of knowledge, but it is not a
statement of intent. Finally, Coker states that, “[l]ogically, the acceptance of a
more severe downgrade from a 5 to a 6 [and there is evidence the plaintiff
accepted this downgrade] indicates that the Plaintiff also would have accepted the
earlier downgrade from a 4 to a 5.” (Id. at 23). This is not a statement of the
plaintiff’s intent but a prediction of how the plaintiff would have responded had it
been informed of the first downgrade.
VI. Legal Conclusions.
The plaintiff correctly notes that an expert may not offer legal conclusions.
(Doc. 160 at 18). But it goes off track when it asserts that Coker’s opinion that the
plaintiff did not suffer any damages from various alleged breaches by the
defendants is an impermissible legal conclusion. (Id. at 20-27).
“Although testifying experts may not offer legal conclusions, [Rule 704(a)]
provides, in relevant part, that ‘testimony in the form of an opinion or inference
otherwise admissible is not objectionable because it embraces an ultimate issue to
be decided by the trier of fact.’” Cook v. Sheriff of Monroe County, 402 F.3d
1092, 1112 n.8 (11th Cir. 2005) (quoting a former version of Fed. R. Evid.
704(a)).3 The existence vel non of damages, and of a causal connection between
any damages and the defendant’s conduct, are quintessentially ultimate issues to
be decided by the jury. E.g., Air Turbine Technology, Inc. v. Atlas Copco AB, 410
F.3d 701, 705 (11th Cir. 2005); Tampa Bay Shipbuilding & Repair Co. v. Cedar
Shipping Co., 320 F.3d 1213, 1221 n.15 (11th Cir. 2003); Harre v. A.H. Robins
Co., 750 F.2d 1501, 1505 (11th Cir. 1985).
A single objection is not captured by this analysis. Coker opines that the
existence of two liens “caused no damage to the title ultimately received by the
Plaintiff,” and the plaintiff objects that this constitutes a legal conclusion as to the
effect of a lien upon title. (Doc. 160 at 25). The defendant offers no response.
Because the effect of a lien upon title would appear to constitute a legal
conclusion, which Coker may not deliver, the motion in limine will be granted to
VII. Contract Interpretation.
“A witness also may not testify to the legal implications of conduct; the
court must be the jury’s only source of law.” Montgomery v. Aetna Casualty &
Surety Co., 898 F.2d 1537, 1541 (11th Cir. 1990). Under this rule, an expert may
not offer an opinion about the scope of an insurer’s duty under an insurance policy
(specifically, whether the insured’s duty to defend required it to retain counsel
specializing in tax matters) because “[t]his [i]s a legal conclusion …” Id.; see also
Maiz v. Virani, 253 F.3d 641, 668 n.19 (11th Cir. 2001) (the Montgomery Court
“ruled that the district court should not have allowed an expert to state his opinion
regarding the duties created by an insurance contract,” while the expert in Maiz, in
contrast, “did not purport to tell the jury how it should interpret the contracts”).
Rule 704(a) currently provides that “[a]n opinion is not objectionable just
because it embraces an ultimate issue.” The alteration in language is “stylistic only.”
Advisory committee notes, 2011 amendments.
The plaintiff, invoking Montgomery, argues that Coker’s report repeatedly violates
this rule. (Doc. 160 at 18-27).
Most of the instances cited by the plaintiff do not in fact implicate this rule.
In these instances, Coker does not purport to interpret the participation agreement
or any other contract, and the plaintiff’s beef is actually that Coker’s opinion
(usually concerning damages) is faulty because it “ignores” the relevant contract.
(Doc. 160 at 21-24, 28-29).
There are three instances in which Coker does reference contractual
provisions. First, he testifies that the defendants’ September 2007 loan to Bama
Bayou did not breach the participation agreement. (Doc. 160 at 24). Second, he
testifies that, “[i]n accordance with the construction loan agreement, an increase in
construction costs would have to be borne by the developer.” (Id. at 25-26).
Third, he testifies that the plaintiff “breached their [sic] duty by failing to monitor
the loan” and, similarly, “failed to exercise their [sic] duty to monitor the loan.”
(Id. at 26).
Testimony that conduct did or did not breach the participation agreement
appears plainly to be captured by Montgomery. The defendant ignores
Montgomery and instead urges the Court to follow a trial court decision from
Utah. (Doc. 167 at 11). That decision contains no analysis, involves
circumstances not shown to exist here, and cannot trump the Eleventh Circuit in
any event. The defendant’s two other cases – also from outside this Circuit –
permitted an expert to testify that a litigant performed in a “commercially
reasonable” manner as required by contract. (Id. at 12). Coker, however, offers
no comparable testimony but simply asserts that certain conduct did or did not
breach a contract.
Testimony as to whether the construction loan agreement requires an
increase in construction costs to be borne by the developer would appear to offer
an interpretation of the contract. “The Eleventh Circuit and courts within the
Eleventh Circuit have excluded expert testimony where it is simply a reiteration or
recasting of a parties’ [sic] interpretation of a contract.” North American Specialty
Insurance Co. v. Wells, 2013 WL 4482455 at *2 (S.D. Ga. 2013). The defendant
responds only that experts need not “refrain from relying on or making any
reference to the terms of a contract.” (Doc. 167 at 11). And this is no doubt
correct, but it does not address the problem of Coker positing, as an expert, an
interpretation of what the contract requires.
For the reasons set forth above, the plaintiff’s motion in limine is granted
to the extent that Coker will not be permitted to testify: (1) that the two liens
caused no damage to the title ultimately received by the plaintiff; (2) that the
September 2007 loan to Bama Bayou did not breach the participation agreement;
(3) that the construction loan agreement requires an increase in construction costs
to be borne by the developer; or (4) that the plaintiff breached its contractual duty
by failing to monitor the loan. In all other respects, the motion is denied.
DONE and ORDERED this 27th day of January, 2014.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?