Les Fields/C.C.H.I. Insurance Services v. Hines et al.,

Filing 126

ORDER by Judge Maria-Elena James granting 106 Motion in Limine; Ordering Plaintiff's Counsel to file Declaration no later than 5/15/2017. (mejlc3, COURT STAFF) (Filed on 5/10/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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LES FIELDS/C.C.H.I. INSURANCE
SERVICES,
Plaintiff,

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Case No. 15-cv-03728-MEJ
ORDER RE: MICHAEL NEALY MIL
Re: Dkt. No. 106

v.
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STUART M HINES, et al.,

United States District Court
Northern District of California

Defendants.
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After the parties and the Court discussed Defendants’ concerns about opinion testimony by

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Michael Nealy, C.C.H.I Insurance Services’ Chief Financial Officer (“CFO”), at the March 16,

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2017 Case Management Conference, the Court ordered Defendants to file a motion in limine

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regarding the issue no later than May 1, 2017. See CMO at 1, Dkt. No. 104. Defendant Stuart

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Hines did so on April 17, 2017. Mot., Dkt. No. 106. The Motion, which Defendant filed

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electronically on the Court’s Electronic Case Filing (“ECF”) system, consists of a memorandum

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of points and authorities, a request for judicial notice (“RJN”), and a declaration. See id.

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Defendant also served hard copies of the Motion, Declaration, and RJN on Plaintiff Les

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Fields/C.C.H.I. Insurance Services’ counsel. See Proof of Service, Dkt. No. 106-3. Instead of

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opposing the Motion on its merits, Plaintiff incorrectly and inexplicably argued Defendant had

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failed to file a Memorandum in support of his Motion and that the Court should deny the Motion

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for failure to comply with Civil Local Rule 7-4. See Opp’n, Dkt. No. 107. It appears Plaintiff did

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not open the link attached to the ECF Notice he received electronically or review the courtesy

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copy Defendant mailed to him, either of which would have made clear to him Defendant had filed

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the Memorandum, to which he attached as exhibits the Declaration, RJN, and proof of service.

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Defendant’s Motion complies with all applicable rules, including Civil Local Rule 7-4. Plaintiff’s

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Opposition violates both Federal Rules of Civil Procedure 1 and 11(b), and the Court ORDERS

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Plaintiff’s counsel to file a declaration no later than May 15, 2017 explaining whether he reviewed

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the documents Defendant e-filed and served and why his Opposition was not made in bad faith.
In addition to the lack of substantive opposition, the Court has reviewed Motion and finds

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it well taken. Plaintiff seeks to offer Nealy to testify about funds that were improperly withdrawn

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from bank accounts owned by Defendant RISK, which Plaintiff contends Defendant Stuart

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misappropriated. Because Plaintiff did not disclose Nealy as an expert witness, Plaintiff may not

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offer expert testimony by him at trial. See Fed. R. Civ. P. 37(c)(1). Nealy also will be precluded

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from offering any opinion testimony and will be limited to offering testimony that is “rationally

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based on [his] perception” (Fed. R. Evid. 701), and thus will not be allowed to testify about the

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United States District Court
Northern District of California

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reports he created to document the allegedly missing funds. Nealy testified at his deposition that

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he did not review the RISK bank accounts after February 2011 and admitted it “seems odd that the

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[CFO] wouldn’t look at the account for almost three years.” Nealy Dep. at 277:3-280:8, Dkt. No.

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106-2. He testified he created the reports after Plaintiff filed this lawsuit and obtained the RISK

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bank records by subpoena. Id. at 151:14-155:20, 280:16-21, 285:3-23. Nealy thus did not, as part

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of his job responsibilities, oversee the RISK account during the period of time the reports purport

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to describe, and did not prepare the reports as part of his regular responsibilities. On the contrary,

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Defendant has established Nealy prepared the reports in connection with this litigation and did not

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even discover the existence of the second “secret” RISK account until after the lawsuit was filed.

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Id. at 142:3-21, 143:8-148:9, 277:3-280:8. He also admitted in his deposition that some of the

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information he included in the report is based on assumptions—not personal knowledge. Id. at

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283:12-284:13 (“I said ‘perhaps’”), 291:18-22 (attributed $25,000 in his report documenting

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missing funds to Defendant even though “no information [was] available” connecting amount with

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Defendant).

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As he failed to oppose the Motion, Plaintiff has not established Nealy has personal

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knowledge about the two RISK accounts and the funds flowing through them, or that the reports

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are based on a combination of his personal observations and specialized knowledge obtained

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through his vocation. But Rule 701 “ensures that a party will not evade the expert witness
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disclosure requirements . . . by simply calling an expert witness in the guise of a lay person.” Fed.

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R. Evid. 701 Adv. Comm. Note (2000). The Court finds that is precisely what Plaintiff is

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attempting to accomplish through Nealy’s testimony about the reports he created from records

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subpoenaed after Plaintiff filed suit. Nealy may not offer lay testimony about funds “missing”

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from two accounts about which he has admitted he did not have “particularized knowledge” “by

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virtue of his . . . position in” the business. See id.; see also Pacific Coast Fed. of Fishermen’s

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Ass’n v. Murillo, 2016 WL 6648731, at 2-3 (E.D. Cal. Sept. 2, 2016) (“[L]ay witnesses employ a

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process of reasoning familiar in everyday life, and provide opinions drawn from a series of

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personal observations over time. . . . Additionally, lay witnesses may offer opinions based on a
combination of their personal observations and specialized knowledge obtained through their

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United States District Court
Northern District of California

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vocation.” (internal quotation marks and citations omitted)); FiTeq INC v. Venture Corp., 2016

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WL 693256, at *3-7 (N.D. Cal. Feb. 22, 2016) (excluding lay opinion about lost profits and

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valuation by business owners because they lacked particularized knowledge and experience to

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testify about a product that had never been sold, even though they had particularized knowledge

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and general experience with their business); Gallagher v. Holt, 2012 WL 3205175, at *13-14

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(E.D. Cal. Aug. 3, 2012) (citing cases holding that a forensic accountant is an expert witness, not a

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lay witness, and excluding testimony because defendant failed to disclose witness as expert).

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Defendant’s Motion in Limine to Exclude Lay Opinion Testimony by Michael Nealy is
GRANTED.
IT IS SO ORDERED.

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Dated: May 10, 2017
______________________________________
MARIA-ELENA JAMES
United States Magistrate Judge

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