Robson v. Duckpond LTD. et al
MEMORANDUM AND ORDER: Genuine disputes of material fact exist as to whether Robson misrepresented that the Duckpond valuation was GAAP-compliant and fraudulently induced Defendants to enter the Purchase Agreement for Robson's shares. Accordingly , the Court denies Robson's 39 Motion for Summary Judgment and Defendants' 79 Partial Motion for Summary Judgment. The Court also denies Robson's 74 Motion for Partial Summary Judgment, as it seeks an advisory opinion. The Court denies Robson's 77 Motion to Exclude Callahan's Expert Testimony, Robson's 72 Motion to Exclude Abelson's Expert Testimony, and Defendants' 69 Motion to Exclude Hilton's Expert Testimony. (SEE ORDER FOR ADDITIONAL DETAILS.) Signed by District Judge Stephen R. Clark on 3/31/2021. (CLL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
MICHAEL T. ROBSON,
DUCKPOND LTD., et al.,
Case No. 4:19-cv-01862-SRC
Memorandum and Order
The former co-owners and business partners of Duckpond Ltd. accuse each other of foul
play in connection with the June 2017 stock buyout of Plaintiff Michael T. Robson. Docs. 1, 25.
Duckpond is a holding company that invests in other companies, and it has a veritable skein of
subsidiaries. Doc. 88 at ¶ 2. Robson, along with Defendants ICC Global Investments Ltd. and
Tharros Emporium Ltd., each owned a third of Duckpond’s shares. Doc. 88 at ¶ 1. Robson
served as Duckpond’s treasurer since 2012. Doc. 88 at ¶ 48. He sat on Duckpond’s financial
steering committee alongside his fellow corporate officers, Anders Hummer and Alex
Alexandrov, who represented ICC Global and Tharros respectively. Doc. 88 at ¶ 4. In mid2017, Robson sold his Duckpond shares to his co-owners for $3,170,000. Doc. 88 at ¶ 3. But
two years later, Robson filed suit against Duckpond, ICC Global, and Tharros, claiming that
Defendants failed to pay their bill. Doc. 1. Defendants counterclaimed, alleging that Robson
misrepresented the basis for his stock purchase price, resulting in a bloated value of his
Duckpond stock. Doc. 25. With a raft of unresolved fact issues swirling around, the parties’
competing summary-judgment motions are dead in the water.
ICC Global and Tharros purchased Robson’s Duckpond stock and signed a promissory
note for $3,170,000. Doc. 88 at ¶ 3. But less than two years later, ICC Global and Tharros
halted payments on the note, claiming that the valuation the parties used to calculate Robson’s
buyout price violated the Duckpond shareholders’ agreement. Doc. 44 at ¶¶ 11–12; Doc. 80.
Robson now seeks to enforce the note. Doc. 1.
Defendants assert numerous affirmative defenses, as well as three counterclaims,
including fraud (fraudulent inducement), breach of fiduciary duty, and breach of duty of loyalty.
Doc. 25. Defendants allege that Robson, acting as Duckpond’s treasurer, fraudulently
misrepresented Duckpond’s valuation and his stock purchase price as complying with a pricing
formula in the Duckpond shareholders’ agreement. Id. According to Defendants, they already
paid Robson more than enough for his shares, based on the value set by the shareholders’
agreement, which was at most $1,064,648. Id.
Before the Court are Robson’s motions for summary judgment and partial summary
judgment, Docs. 39 and 74, as well as Defendants’ Motion for Partial Summary Judgment, Doc.
79. The Court also considers Robson’s Motions to Exclude Expert Testimony of H. Brian
Callahan and Brett Abelson, Docs. 72 and 77, as well as Defendants’ Motion to Exclude Expert
Testimony of Thomas Hilton, Doc. 69. The Court denies the parties’ motions for summary
judgment, Docs. 39, 74, and 79, because genuine issues of material fact exist regarding
Pursuant to Rule 56(g) of the Federal Rules of Civil Procedure, the Court finds the
following facts not genuinely in dispute and treats them as established in the case.
Robson’s stock buyout
Robson, through his Trust, is a former co-owner of Duckpond, along with ICC Global
and Tharros, which each owning a one-third interest in Duckpond. Doc. 88 at ¶ 1. Duckpond is
a holding company with various subsidiaries, including ICC, Inc. (not to be confused with the
similarly-named defendant ICC Global). Id. at ¶ 2. Robson decided to sell his Duckpond shares
in equal parts to ICC Global and Tharros in 2017. Id. at ¶ 3. For purposes of the stock buyout,
Anders Hummer and Alex Alexandrov acted as representatives of ICC Global and Tharros. Id.
at ¶ 4.
On June 8, 2017, ICC Global and Tharros executed a promissory note for $3,170,000 in
exchange for Robson’s Duckpond stock. Id. at ¶¶ 7–8; Doc. 44 at ¶¶ 1–3. The promissory note
provided that Duckpond had to pay the Robson Trust the principal amount of $3,170,000, plus
4% per annum simple interest accruing from June 8, 2017 to maturity (May 12, 2022), via
monthly payments of $58,380.37 beginning on June 12, 2017. Doc. 88 at ¶ 10; Doc. 44 at ¶ 3.
Soon after, the parties executed a Share Sale and Purchase Agreement for Robson’s Duckpond
stock, giving ICC Global and Tharros each 50% ownership of Duckpond. Doc. 88 at ¶¶ 5–6;
Doc. 44 at ¶¶ 4–6. Section 2.3 of the Purchase Agreement stated the following:
The Parties hereby waive any and all restrictions and conditions in the
Shareholders Agreement and the Articles or any other document, on the transfer
of shares in respect of Transfers, and they further waive any and all of their
respective rights of pre-emption, first refusal or similar or related rights with respect
to the Transfer Shares and the Transfers, of which they avail themselves in
accordance with Article V of the Shareholders Agreement, Article 5 of the Articles
or any other provision of the Shareholders Agreement or the Articles or however
so arising, and hereby consent to the Transfers and all of their terms, including
but not limited to the Purchase Price. For the avoidance of doubt, the Parties
agree that the Transfers are in compliance with the Shareholders Agreement and
the Articles. If there is a conflict between the terms of this Agreement and any
other agreement between the same parties, the terms of this Agreement shall
Doc. 44 at ¶ 7 (emphasis added). In connection with his stock buyout, Robson negotiated
an employment agreement with ICC, Inc., guaranteeing him a position at ICC, Inc. until
the end of 2022. Id. at ¶¶ 18–19.
Duckpond shareholders’ agreement
In 2014, Robson, Hummer, and Alexandrov negotiated an Amended and Restated
Shareholders’ Agreement for Duckpond Ltd. Id. at ¶¶ 11–12, 15. Article VI of the
Shareholders’ Agreement, titled “Purchase Price,” contains the following language regarding
share transfers in the case of a shareholder’s death, disability, or retirement:
The Purchase Price per Share is hereby agreed to be the total Value of the Company,
divided by the total number of outstanding Shares in the capital of the Company.
For the purpose of this Article VI, Section 1, for Shares transferred pursuant
to Article IV (Death), Article V Section 1 (Disability) or Article V Section 2
(Retirement), “Value” shall mean 3.5 times EBITDA for the Group over the
twelve-month period immediately preceding the date on which the Value is
determined, PLUS the Group’s consolidated net balance of all cash, short term
investments and current assets, less liabilities (as assessed under US GAAP)
(“Consolidated Net Current Assets”).
The Shareholders may review the Purchase Price and either decide that there is to
be no change or determine a new Purchase Price.
Doc. 88 at ¶¶ 13–14 (emphasis added); Doc. 44 at ¶ 24. When the parties negotiated the
Shareholders’ Agreement, Hummer expressed to Robson and Alexandrov that he wanted to
include a GAAP requirement in the Article VI Purchase Price formula, to ensure the financials
underlying the Purchase Price calculation would be materially accurate. Doc. 88 at ¶ 18.
Robson’s Duckpond valuation
Until 2017, Robson served as Duckpond’s treasurer, in charge of the company’s finances
and bookkeeping, while Hummer and Alexandrov were in charge of sales and operations. Doc.
at ¶¶ 48–49. In the months leading up to his stock buyout, Robson prepared several “Duckpond
valuation” spreadsheets, which he sent to both Hummer and Alexandrov. Id. at ¶¶ 22–23.
Robson labeled all of his valuation spreadsheets with the title: “Duckpond Purchase Price per
Article VI of the Amended and Restated Shareholders Agreement for Duckpond Ltd.” Id. at ¶
26. The Duckpond valuation spreadsheets use all of the definitions and terminology of Article
VI’s purchase price formula for share sales upon retirement (i.e., 3.5 times annualized EBITDA
plus Consolidated Net Current Assets), with the exception of any mention of GAAP compliance.
Id. at ¶ 27. The spreadsheets have line items and calculations for: “EBITDA(Consolidated Net
Ordinary Income for the previous 12 months),” “CONSOLIDATED NET CURRENT ASSETS,”
and “STOCK VALUE(3.5xannualized EBITDA+Net Current Assets).” Id. at ¶ 28. Robson
never communicated any other Duckpond valuation to Hummer and Alexandrov aside from that
contained in the valuation spreadsheets. Robson Dep. 101:22–102:7, 118:4–14.
On April 10, 2017, Robson circulated a Duckpond valuation spreadsheet for the first
quarter of 2017. Id. at ¶ 31. That spreadsheet announced that Duckpond’s “STOCK
VALUE(3.5xannualized EBITDA+Net Current Assets)” totaled $9,515,504. Id. at ¶ 32. The
parties used the figures in Robson’s valuation spreadsheet to determine his buyout price, setting
the price for Robson’s Duckpond shares at a third of Duckpond’s purported $9,515,504 value:
$3,170,000. Doc. 88 at ¶¶ 33–34. Robson admits that he knew the valuation was not GAAPcompliant and that he knew Hummer and Alexandrov relied on the valuation to determine his
buyout price, but he did not inform them that the valuation was not GAAP-compliant. Robson
Dep. 72:22–23, 75:24–76:1, 77:1–3, 81:3–9, 84:4–8.
Defendants halted their payments to Robson in March 2019. Doc. 44 at ¶¶ 11–12; Doc.
80. Robson sent Defendants a notice of default in May 2019, followed by an acceleration notice
in June 2019. Id. at ¶¶ 11–12, 14. Robson demanded payment of the remaining balance of
$2,094,148.82. Id. at ¶¶ 14–15. When Defendants did not pay, Robson filed this suit to recover
the amount under the promissory note. Id. at ¶¶ 16–17; Doc. 1.
The parties’ primary dispute is whether Robson actually represented to Hummer and
Alexandrov that the Duckpond valuation came from Article VI’s Purchase Price formula, which
requires GAAP compliance. Doc. 88 at ¶ 35. Defendants claim that the valuation spreadsheets’
reference to Article VI of the Shareholders’ Agreement falsely represents that the $3,170,000
purchase price followed the price formula for retirement in Article VI. Id. at ¶¶ 35–37.
Defendants assert that they would not have entered into the promissory note and Purchase
Agreement if they had known that the $3,170,000 purchase price was not based on a GAAPcompliant valuation. Doc. 88 at ¶ 39. Defendants state that they believed at the time that
Robson had been preparing and using GAAP-compliant financials for some time before his
buyout. Id. at ¶ 51. As evidence that they reasonably relied on Robson’s representations, they
point to Robson’s switch to “accrual” accounting and other significant revisions to Duckpond’s
financial statements, as well as Duckpond’s retention of an outside accounting firm to confirm
that their financials were GAAP-compliant . Id. at ¶¶ 51–54. Defendants claim that they learned
for the first time in late 2018 that the $3,170,000 purchase price was based on financials that did
not comply with GAAP. Id. at ¶ 46.
Robson claims that he never actually said that the valuation spreadsheets complied with
GAAP and that Hummer and Alexandrov already knew that Duckpond’s corporate financial
statements were not prepared in accordance with GAAP. Id. at ¶¶ 35–37. Robson points to
previous financial meetings with Hummer and Alexandrov, where the parties discussed
switching to GAAP-compliant accounting in the future, as well as a November 2, 2016 email
where Alexandrov expressed that a new change in Duckpond’s accounting system would “get
closer to GAAP.” Id. at ¶¶ 37, 51. Robson further argues that the switch to “accrual” accounting
and the retention of an outside accounting firm were merely steps towards making Duckpond’s
financial statements GAAP-compliant and that Duckpond did not retain the outside accounting
firm until long after Robson’s stock buyout. Id. at ¶¶ 52–54.
Robson insists that he pressed for a different buyout price in an email to Hummer and
Alexandrov on April 24, 2017. Id. at ¶ 58; Doc. 88-10. He stated in this email that the valuation
in Article VI of the Shareholders’ Agreement is only for purposes of death, disability, or
retirement, and none of those applied, so the purchase price was freely negotiable under the
Shareholders’ Agreement. Id. But notably, Robson’s email did not mention that the valuation
spreadsheet did not comply with Article VI and GAAP. Id.
The parties also dispute whether Robson retired in 2017 after selling his shares, as this
may affect whether Article VI of the Shareholders’ Agreement actually applied to Robson’s
stock buyout. When he signed the promissory note, Robson entered into a separate employment
agreement with Duckpond subsidiary ICC, Inc., which lasts until 2022 or until Robson decides to
terminate the agreement, whichever is earlier. Doc. 44 at ¶¶ 18–19. Robson contends that the
employment agreement is sufficient evidence that he continued to be an “employee” of
Duckpond’s group of companies, so he did not “retire” within the meaning of the Shareholders’
Agreement. Docs. 45, 44 at ¶ 20. Defendants counter with Hummer’s and Alexandrov’s sworn
testimony that Robson told them he was retiring and selling his shares according to the
retirement provision in the Shareholders’ Agreement, and that Robson only entered his
employment agreement with ICC, Inc. to keep his health insurance and other benefits. Doc. 42-1
at ¶¶ 6, 20; Doc. 42-2 at ¶¶ 5, 19. Defendants further claim that Robson is not an employee of
ICC, Inc. under Missouri law because he has not provided services to ICC, Inc. on a regular
basis, regularly attended work, submitted timesheets, or worked in excess of 25 hours, so ICC,
Inc. does not exercise control over the method or manner of Robson’s work. Doc. 42-1 at ¶¶ 14–
19; Doc. 42-2 at ¶¶ 13–18.
Summary judgment is proper if the evidence, viewed in the light most favorable to the
nonmoving party, demonstrates no genuine issue of material fact exists and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Cordry v. Vanderbilt Mortg. &
Fin., Inc., 445 F.3d 1106, 1109 (8th Cir. 2006) (quoting Bockelman v. MCI Worldcom, Inc., 403
F.3d 528, 531 (8th Cir. 2005)). In ruling on a motion for summary judgment, the Court must
give the non-moving party the benefit of all reasonable inferences to be drawn from the
underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The proponent
of the motion for summary judgment “bears the initial responsibility of informing the district
court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it
believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)).
In response to the proponent’s showing, the opponent’s burden is to “come forward with
‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)). A “genuine”
dispute of material fact is more than “some metaphysical doubt as to the material facts.” Id. at
586. “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving
party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986). A party attempting to avoid summary judgment through an affirmative defense must
demonstrate genuine issues of material fact specifically supporting the affirmative defense.
United States v. Farmers Co-op Co., 708 F.2d 352, 353 (8th Cir. 1983). Rule 56(c) “mandates
the entry of summary judgment, after adequate time for discovery and upon motion, against a
party who fails to make a showing sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp.,
477 U.S. at 322.
Motions for summary judgment
Robson’s motion for summary judgment
Robson claims that he is entitled to summary judgment because the uncontroverted facts
establish that Defendants breached their obligations under the promissory note. Doc. 39, 40.
Robson further argues that each of Defendants’ affirmative defenses and counterclaims fail
because Defendants knowingly consented to all of the terms in the Purchase Agreement,
including the purchase price. Id.
Under Missouri law, “[t]he elements for breach of promissory note are: (1) the existence
of a valid promissory note signed by the maker; (2) a balance due on the note; and (3) a demand
on the maker for payment which has been refused, leaving the maker in default.” Smithville,
LLC v. Citizens Bank & Trust Co., 2013 WL 434020, at *4 (W.D. Mo. 2013) (citing Bus. Bank of
St. Louis v. Apollo Invs., Inc., 366 S.W.3d 76, 80 (Mo. App. E.D. 2012)). Defendants have
admitted that: (1) they executed a promissory note worth $3,170,000, (2) they stopped paying
the balance in March 2019 without paying the full amount, and (3) they refused to pay anything
more after Robson demanded the remaining balance of $2,094,148.92 in May 2019. Doc. 44 at
¶¶ 1, 3, 11–12, 14–16. Thus, as an initial matter, Robson has established the elements for breach
of a promissory note.
Defendants raise several affirmative defenses and counterclaims, arguing that they
lawfully terminated their performance of the promissory note because Robson’s
misrepresentations induced them to purchase his shares for an inflated price. Docs. 42, 25; see
also Rodgers v. Czamanske, 862 S.W.2d 453, 459 (Mo. App. 1993) (“An affirmative defense
declares that even if the allegations in the plaintiff’s petition are established, the plaintiff cannot
prevail because additional facts exist which avoid the legal responsibility of the defendant.”).
Defendants allege that Robson fraudulently induced Defendants to enter into the Purchase
Agreement and breached his fiduciary duties to Duckpond by presenting a non-GAAP-compliant
share price in his valuation spreadsheets while purporting to follow the pricing formula in Article
VI of the Shareholders’ Agreement. Docs. 42, 25. Robson did not inform his co-owners that the
Duckpond valuation he presented was not GAAP-compliant, despite knowing that they relied on
it for determining the price of his shares. Id.
To state a claim for fraudulent inducement under Missouri law, a party must prove: “(1)
a false material representation; (2) the speaker’s knowledge of its falsity or his ignorance of its
truth; (3) the speaker’s intent that it should be acted upon by the hearer in the manner reasonably
contemplated; (4) the hearer’s ignorance of the falsity of the statement; (5) the hearer’s reliance
on its truth, and the right to rely thereon; and (6) proximate injury.” Gast v. Ebert, 739 S.W.2d
545, 547 (Mo. 1987). Defendants must meet a heavy burden to establish a case for fraudulent
inducement. Cantrell v. Superior Loan Corp., 603 S.W.2d 627, 634 (Mo. App. E.D. 1980)
(“Fraud of course is never to be presumed; and before evidence may be taken as reasonably
supporting an inference of fraud, it must rise above mere suspicion and point logically and
convincingly to that conclusion.” (citing Hunter v. Roberts, 267 S.W.2d 368, 372 (Mo. App.
1954)). Defendants may present even circumstantial evidence of fraud, however: “Fraud is
rarely susceptible of positive proof . . . fraud may be established by a showing of facts and
circumstances from which it reasonably and fairly may be inferred.” Id. at 634–35 (internal
quotations omitted) (quoting Glaze v. Glaze, 311 S.W.2d 575, 578–579 (Mo. App. 1958). The
Court finds that Defendants have presented sufficient evidence to create a genuine issue of fact
under each of the elements for fraudulent inducement.
After drawing all reasonable inferences in favor of Defendants, the Court finds that
factual disputes exist over whether Robson misrepresented that the Duckpond valuation
spreadsheets were GAAP-compliant to induce them into entering the Purchase Agreement. A
reasonable jury could find that Robson represented, through the valuation spreadsheets, that the
purchase price was GAAP-compliant because Robson labeled the spreadsheets “Duckpond
Purchase Price per Article VI of the Amended and Restated Shareholders Agreement for
Duckpond Ltd.” Doc. 88 at ¶ 26. Defendants also present evidence that Robson’s representation
was material because it caused them to accept Robson’s purchase price and enter into the
Purchase Agreement and promissory note. Schoen v. Lange, 256 S.W.2d 277, 281 (Mo. App.
1953) (“[A] representation is material if it relates directly to the matter in controversy and is of
such a nature that the ultimate result would not have followed if there had been no
representation, or if the one who acted upon it had been aware of its falsity.”). Defendants have
presented sufficient evidence of Robson’s knowledge and intent because Robson admitted in his
deposition that he knew Hummer and Alexandrov relied on the Duckpond valuation spreadsheet
to determine his buyout price but he failed to inform them that the valuation was not GAAP
compliant. Robson Dep. 72:22–23, 75:24–76:1, 77:1–3, 81:3–9, 84:4–8; see also Constance v.
B.B.C. Development Co., 25 S.W.3d 571, 588 (Mo. App. W.D. 2000) (questions of intent in a
fraud action “often present witness credibility issues, that lie within the peculiar province of the
Defendants have also established genuine issues of fact over whether they knew
Robson’s statements were false and had a right to rely on his representations. Defendants state
that they did not know until late 2018 that Robson’s Duckpond valuation contained non-GAAPcompliant financials and that they took Robson’s calculations at face value because they believed
that he calculated the purchase price under Article VI of the Shareholders’ Agreement. Doc. 88
at ¶¶ 45–46. Despite the Defendants’ equal footing with Robson and access to information
regarding the buyout price, “if the seller makes a distinct and specific representation, the buyer
has the right to rely thereon.” Colgan v. Washington Realty Co., 879 S.W.2d 686, 691 (Mo.App.
E.D. 1994). Additionally, “[t]he right to rely on a representation is ordinarily a question of fact
for the trier of fact.” Kratky v. Musil, 969 S.W.2d 371, 376 (Mo. App. W.D. 1998). Finally,
Defendants put forth evidence that Robson’s representations proximately caused them damages,
due to their overpayment on the promissory note as well as other expenses stemming from
Duckpond’s non-GAAP-compliant financials. Doc. 88 at ¶55–56.
Robson counters that Defendants’ affirmative defenses and counterclaims fail as a matter
of law: Defendants consented to the terms in the Purchase Agreement and waived the
restrictions in the Shareholders’ Agreement (including the GAAP-compliance provision in
Article VI), therefore, Defendants cannot bring a claim for fraud. Doc. 40. Robson contends
that Defendants waived the basis for their affirmative defenses and counterclaims through
Section 2.3 of the Purchase Agreement:
“[t]he Parties hereby waive any and all restrictions and conditions in the
Shareholders Agreement and the Articles or any other document, on the transfer of
shares in respect of Transfers . . . and hereby consent to the Transfers and all of
their terms, including but not limited to the Purchase Price. For the avoidance of
doubt, the Parties agree that the Transfers are in compliance with the Shareholders
Agreement and the Articles.”
Docs. 40, 44 at ¶ 7. Robson argues that the Purchase Agreement and promissory note supersede
all prior agreements between the parties, including the Shareholders’ Agreement, so the purchase
price did not have to satisfy the price formula in Article VI or come from a GAAP-compliant
Duckpond valuation. Doc. 40. Robson also observes that even if the Shareholders’ Agreement
was still in effect, Article VI’s price formula for death, disability, and retirement still did not
apply because Robson never retired from the Duckpond group of companies; he became an
employee of ICC, Inc. after selling his shares. Id. In sum, Robson asserts that his alleged
misrepresentations about GAAP compliance are not actionable or relevant because Defendants
waived the restrictions in the Shareholders’ Agreement and because the purchase price did not
have to comply with Article VI since he never retired. Id.
Robson fundamentally misinterprets the basis for Defendants’ counterclaims and
affirmative defenses. Defendants claim that the Purchase Agreement and promissory note are
voidable because Robson misrepresented whether the valuation spreadsheets were GAAPcompliant under Article VI of the Shareholders’ Agreement. Doc. 25. Parties cannot waive
claims of fraudulent inducement by agreement: “Missouri law . . . holds that a party may not, by
disclaimer or otherwise, contractually exclude liability for fraud in inducing that contract.” Hess
v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 767 (Mo. 2007); see also Wagner v.
Uffman, 885 S.W.2d 783, 786 (Mo. App. 1994) (“A party may not contractually exclude oneself
from fraud through the use of general disclaimers.”).
Robson’s misrepresentations about GAAP compliance are actionable so long as
Defendants rightfully relied upon them in determining the price for Robson’s stock and entering
the Purchase Agreement. Defendants have testified and presented evidence that that they never
would have bought Robson’s shares for $3,170,000 if they had known that the valuation
spreadsheet was not GAAP-compliant. Doc. 88 at ¶ 39. Even assuming that Defendants waived
the restrictions in Shareholders’ Agreement by signing the Purchase Agreement, Defendants may
still bring a claim for fraudulent inducement of the Purchase Agreement based on Robson’s
misrepresentations about GAAP compliance. See Hess, 220 S.W.3d at 767.
Because Defendants present genuine issues of fact over whether Robson fraudulently
induced them to enter the Purchase Agreement and promissory note, the Court denies Robson’s
Motion for Summary Judgment, Doc. 39. The Court need not address at this time whether
Defendants waived the restrictions in the Shareholders’ Agreement by entering the Purchase
Agreement or whether Robson retired for purposes of Article VI of the Shareholders’
Defendants’ partial motion for summary judgment
Defendants also move for summary judgment based on their affirmative defenses and
counterclaim for fraud, urging that Robson fraudulently induced the Purchase Agreement and
promissory note by representing that the purchase price was based on GAAP-compliant
financials in accordance with Article VI of the Shareholders’ Agreement. Docs. 79, 80.
Defendants assert that Robson has not presented sufficient evidence to create a genuine dispute
of material fact as to any of these issues, so they are entitled to summary judgment on their fraud
affirmative defenses and fraud counterclaim against Robson. Id.
The Court disagrees. As discussed above, fraudulent inducement requires a party to
prove: “(1) a false material representation; (2) the speaker’s knowledge of its falsity or his
ignorance of its truth; (3) the speaker’s intent that it should be acted upon by the hearer in the
manner reasonably contemplated; (4) the hearer’s ignorance of the falsity of the statement; (5)
the hearer’s reliance on its truth, and the right to rely thereon; and (6) proximate injury.” Gast,
739 S.W.2d at 547.
The Court finds that Robson has presented sufficient evidence to create a genuine dispute
of fact on whether he committed fraud. See id. Robson presents evidence that he never actually
told Defendants that the stock price was calculated based on GAAP-compliant financials and that
Defendants already knew that Duckpond’s financials were not GAAP compliant. Doc. 88 at ¶¶
35–37, 51. Robson also presents evidence that he did not intend for Defendants to act upon his
representations in the valuation spreadsheets and that he did not prepare the spreadsheets for the
purpose of determining his buyout price. Id. at ¶¶ 29, 58. Resolving these factual disputes over
fraudulent misrepresentation will involve witness credibility determinations and the weighing of
contrary evidence, both of which “lie within the peculiar province of the jury.” Constance v.
B.B.C. Development Co., 25 S.W.3d 571, 588 (Mo. App. Ct. 2000). The Court therefore denies
Defendants’ Partial Motion for Summary Judgment .
Robson’s partial motion for summary judgment
Robson also moves for partial summary judgment on several of Defendants’ damage
claims, claiming that Defendants are either not the proper parties to claim the damages or that
they present insufficient evidence to support recovery. Doc. 74. First, Robson argues that
Defendants are not the proper parties to claim damages related to the forgiveness of a promissory
note owed by Ryan Coates to Stichting Duckpond Foundation, because Stichting Duckpond
Foundation is not a party to this lawsuit.1 Id. Second, Robson argues that various employee
compensation, recruitment, and bonus damages claimed by Defendants were all paid by ICC,
Inc., which is also not a party to this lawsuit. Id. Third, Robson argues that Defendants cannot
prevail on their damage claims for the RubinBrown review costs and excessive employee
bonuses and other expenses from 2018 because Defendants present insufficient evidence to show
that the damages were a proximate cause of Robson’s actions. Id.
Awarding partial summary judgment for Robson on Defendants’ damage claims would
constitute an improper advisory opinion. See, e.g., Flast v. Cohen, 392 U.S. 83, 88 (1968) (“The
oldest and most consistent thread in the federal law of justiciability is that federal courts will not
give advisory opinions.”). For a federal court to render judgment, the issue before it must be:
definite and concrete, touching the legal relations of parties having adverse legal
interests. It must be a real and substantial controversy admitting of specific relief
through a decree of a conclusive character, as distinguished from an opinion
advising what the law would be upon a hypothetical state of facts.
Both Ryan Coates and Stichting Duckpond Foundation are non-parties in this action. Doc. 44 at ¶¶ 12–13; Doc.
95 at 3–4. Ryan Coates bought 10% of Duckpond’s shares in April 2018, and ICC Global and Tharros loaned
Coates $555,366 to finance the purchase. Id. ICC Global and Tharros loaned the money through a corporate
intermediary, Stichting Duckpond Foundation, but they forgave the loan after discovering that Duckpond’s
financials were not GAAP compliant. Id.
North Carolina v. Rice, 404 U.S. 244, 246 (1971) (citing Aetna Life Ins. Co. v. Haworth, 300
U.S. 227, 240–241 (1937)). Robson seeks a ruling from the Court on the extent of Defendants’
damages, should Defendants succeed in proving Robson’s liability for fraud and breach of
fiduciary duties. Doc. 74. But as discussed above, genuine issues of material fact exist on the
question of whether Robson fraudulently induced Defendants to enter the Purchase Agreement.
Awarding partial summary judgment on damages issues “which depend upon the
resolution of controverted matters would be tantamount to advisory opinions.” Marshall
Contractors, Inc. v. Peerless Ins. Co., 827 F. Supp. 91, 93 (D.R.I. 1993); see also Coy v. No
Limits Education, 2016 WL 7911333, at *3 (D. Minn. 2016) (“The Court will not offer an
advisory opinion on the applicability of various damages theories that might apply in the
alternative.”). Liability for Defendants’ fraud and breach of fiduciary duty counterclaims is an
unresolved threshold issue that the factfinder must resolve before the Court can address the
question of Defendants’ damage claims. Robson seeks a ruling on damages issues that the Court
may never need to resolve, placing the Court “in the untenable position of being asked to render
an advisory opinion on a hypothetical determination of critical facts.” Borup v. CJS Solutions
Group, LLC, 2019 WL 4820732, at *1 (D. Minn. 2019) (quoting Boden v. St. Elizabeth Med.
Ctr., Inc., 2018 WL 4855210, at *4 (E.D. Ky. 2018)). The Court therefore denies Robson’s
Motion for Partial Summary Judgment. Doc. 74.
Motions to exclude expert testimony
Robson filed motions to exclude the expert testimony of H. Bryan Callahan and Brett
Abelson, Docs. 72 and 77. Defendants filed a motion to exclude the expert testimony of Thomas
Hilton, Doc. 69. The Court will address each motion in turn.
To be admissible, Federal Rule of Evidence 702 requires that expert testimony: (1) help
the trier of fact determine facts at issue; (2) be based on sufficient facts or data; and (3) be the
product of reliable principles and methods. In addition, the expert must have reliably applied
those principles and methods to facts of the case. Id. The Court must act as a “gatekeeper” in
determining the admissibility of expert testimony and “determine whether the testimony has ‘a
reliable basis in the knowledge and experience of [the relevant] discipline.’” Kumho Tire Co.,
Ltd. v. Carmichael, 526 U.S. 137, 149 (1999) (quoting Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 592 (1993)).
Defendants’ expert H. Bryan Callahan
Defendants’ expert H. Bryan Callahan is a CPA and a partner in the Forensics and
Valuation Services practice of BKD, LLP, a large CPA and advisory firm. Doc. 78-1 at 4.
Defendants retained Callahan “to assess Robson’s calculation of damages and determine
applicable adjustments required to recalculate Robson’s valuation of Duckpond and its
subsidiaries as defined in Article VI of the Shareholders’ Agreement.” Id. at 5. Callahan opined
that the proper valuation for Robson’s buyout under Article VI of the Shareholders’ Agreement
was “no more than $1,146,106.16, but the value is likely lower due to other forgone revenue
recognition adjustments and the Duckpond Consolidated balance sheets as updated with
[RubinBrown’s adjusting journal entries] . . .” Id. at 10. Callahan based his Duckpond valuation
on GAAP adjustments related to: “(1) the proper consolidation of a Duckpond subsidiary, 301
Memorial LLC; and (2) proper revenue recognition for certain projects, for which sufficient
information remained available.” Id. at 7–10.
Robson does not challenge Callahan’s qualifications. Instead, Robson argues that the
Court should exclude certain opinions Callahan expressed because he did not rely on reliable
principles or methods. Doc. 78. First, Robson seeks to exclude Callahan’s opinion that the
foregone revenue-recognition adjustments might have reduced the value of Robson’s interest in
Duckpond to less than $1,146,106.16. Id. Second, Robson seeks to exclude Callahan’s opinion
on the consolidation of 301 Memorial. Id.
Foregone revenue-recognition adjustments
Callahan’s valuation opinion includes revenue-recognition adjustments that he argues
should have been included in the Duckpond valuation as of March 31, 2017. Doc. 78-1 at 9–10.
Callahan reviewed a combination of forecasted numbers, budgets, contract/purchase orders, job
cost detail/invoice registers, and other data for eight projects. Id. Callahan reviewed similar
adjustments to balance sheets for several other projects, but Callahan did not have enough
detailed information on these projects to include those “foregone revenue recognition
adjustments” in his valuation opinion. Id. at 10. After considering Duckpond’s adjusted balance
sheet and project information, as well as RubinBrown’s adjusting journal entries, Callahan stated
that the value of Robson’s shares was “no more than $1,146,106.16,” but he also claimed that
this valuation was “conservative” and that Robson’s actual buyout value was “likely lower.” Id.
Callahan did not include the foregone revenue-recognition adjustments in his official valuation,
but he went on to calculate the possible effect of those adjustments on the valuation anyway,
suggesting that Robson’s stock value could have been as little as $733,915.82 due to those
Robson seeks to exclude Callahan’s opinion on the foregone revenue-recognition
adjustments as speculative and unreliable. Doc. 78-1 at 10. Callahan admitted in his report that
he “was unable to calculate reliable revenue recognition adjustments for the other Fixed Fee
projects.” Id. But he explained that his opinions on the foregone revenue-recognition
adjustments were based on estimated forecasted costs only because Duckpond’s accounting
system no longer contained the actual-cost data. Doc. 78-1 at 10.
Callahan also opined that his $1,146,106.16 valuation was “conservative” and that the
value was “likely lower” than $1,146,106.16. Doc. 78-1 at 10. Callahan stated that “the value is
likely lower due to other forgone revenue recognition adjustments and the Duckpond
Consolidated balance sheets as updated with RB’s AJEs.” Doc. 78-1 at 10. These comments
were based on his review of Duckpond’s financial statements and project data as well as
RubinBrown’s adjusted journal entries. Id.
Callahan’s opinions on the foregone revenue-recognition adjustments are not “so
fundamentally unsupported that [they] can offer no assistance to the jury.” Synergetics, Inc. v.
Hurst, 477 F.3d 949, 956 (8th Cir. 2007). “As a general rule, the factual basis of an expert
opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing
party to examine the factual basis for the opinion in cross-examination.” Bonner v. ISP Tech.,
Inc., 259 F.3d 924, 929 (8th Cir. 2001). The Court will not exclude Callahan’s opinions on the
foregone revenue-recognition adjustments.
301 Memorial consolidation
Callahan also opined that under GAAP consolidation guidance, the Duckpond valuation
should have consolidated 301 Memorial due to ICC, Inc.’s 99% interest in 301 Memorial. Doc.
78-1 at 8–9. Callahan cited Financial Accounting Standards Board (“FASB”) Codification ASC
810-10-15-8, a general consolidation rule based on an entity’s majority voting-interest in another
corporation (“voting-interest model”). Id. Robson seeks to exclude Callahan’s opinion on the
consolidation of 301 Memorial for failing to consider an exception to the voting-interest model
that Robson’s rebuttal expert, Hilton, claimed would apply in this circumstance. Doc. 78. The
Court observes that Callahan supplemented his report to analyze the applicability of this
exception to the voting-interest model in the context of the 301 Memorial consolidation. Doc.
Callahan opined in his supplemental report that the exception to the voting-interest model
does not apply here, because three out of four of the non-controlling-members of 301 Memorial
were the three shareholders in Duckpond: Robson, ICC Global, and Tharros. Doc. 66-4 at 6–7.
Callahan concluded that Duckpond “directly or indirectly” held 99.75% of the voting rights in
301 Memorial, so the Duckpond financial statements should have consolidated 301 Memorial.
Id. at 7. The Court finds that Callahan’s supplemental opinion meets the relevance and
reliability requirements of Rule 702 because Defendants have shown by a preponderance of
evidence that Callahan’s reasoning and methodology “[was] applied properly to the facts in
issue” and that Callahan was “qualified to render the opinion and that the methodology
underlying his conclusions [was] scientifically valid.” See Marmo v. Tyson Fresh Meats, Inc.,
457 F.3d 748, 757–58 (8th Cir. 2006) (“Courts should resolve doubts regarding the usefulness of
an expert's testimony in favor of admissibility.”). Therefore, the Court will not exclude
Callahan’s opinion on the 301 Memorial consolidation. The Court denies Robson’s motion,
Defendants’ expert Brett Abelson
Defendants’ expert Brett Abelson is a CPA and the CFO of ICC, Inc. since 2018. Doc.
73-1 at 2. Defendants present Abelson as a non-retained expert to opine that Robson based his
Duckpond valuation on non-GAAP-compliant financials and to testify about the financial
statements and valuation documents that Duckpond used for Robson’s buyout in 2017. Id.
Defendants further state that Abelson will opine that Duckpond’s consolidated financials
contained material misstatements, resulting in an inflated price for Robson’s stock. Id. Robson
argues that the Court should prevent Abelson from offering opinion testimony as a non-retained
expert because he has no personal knowledge of the facts surrounding the sale of Robson’s
interest in Duckpond and because Abelson’s opinions will be needlessly cumulative of
Callahan’s expert testimony. Doc. 73. While the Court observes that Abelson’s ability to
determine the alleged inflated value undercuts Defendants’ argument that they could not have
discovered the true value of the stock earlier, the Court will allow Abelson to testify as set forth
Personal knowledge as a non-retained expert
Robson argues that because Abelson started working at ICC, Inc. in 2018, a year after
Robson’s buyout, Abelson does not have personal knowledge of the facts at issue. Doc. 73.
Robson correctly asserts that non-retained experts may only testify to facts within their personal
knowledge. See InfoDeli, LLC v. Western Robidoux, Inc., 2018 WL 10638455, at *2 (W.D. Mo.
2018) (prohibiting a non-retained expert “from testifying about any information learned or
compiled during the discovery process in this case since that testimony would not be based on
percipient knowledge of the underlying dispute.”). According to Robson, Abelson’s testimony
would simply summarize facts taken from the discovery record. The Court disagrees with
Robson’s characterization of Abelson’s testimony. Abelson’s testimony is not based on an afterthe-fact review of discovery documents; Abelson personally assisted Defendants in conducting
an internal audit of Robson’s Duckpond valuation and stock buyout price in 2018. Doc. 86.
Abelson also worked with Duckpond’s independent auditor, RubinBrown, to identify the GAAPcompliance issues in Duckpond’s overall financials. Id. And although Abelson may rely on
documents created before his employment at ICC, Inc., he can still testify regarding his
knowledge of Duckpond’s financial reports, files, and data gained through his experience as ICC
Inc.’s CFO. Id.
The Court further explains that the issue of the extent of a non-retained expert’s personal
knowledge goes to the weight of the expert’s testimony rather than its admissibility. Smith v.
Curators of the Univ. of Missouri, 2018 WL 6729653, at *2 (W.D. Mo. 2018) (“Plaintiff also
contends [the non-retained expert] should be precluded from testifying to particular time periods
or facts due to a lack of personal knowledge. However, that issue is suited for cross-examination
and does not warrant the exclusion of an expert witness.” (emphasis added)) (citing Synergetics,
Inc., 477 F.3d at 955–56 (denying a plaintiff’s motion to exclude a non-retained expert from
testifying, explaining that the factual basis of expert’s testimony went to weight rather than
Robson also contends that the Court should exclude Abelson’s opinions as needlessly
cumulative under Federal Rule of Evidence 403, because both Abelson and Callahan will opine
on the GAAP-compliance issues with Robson’s 2017 Duckpond valuation. See Fed. R. Evid.
403; Sellers v. Bayer HealthCare Pharm. Inc., 2016 WL 9049600, at *2 (W.D. Mo. 2016) (“Rule
403 of the Federal Rules of Evidence…provides expert testimony should be excluded ‘if its
probative value is substantially outweighed by a’ risk of ‘unfair prejudice, confusing the issues,
misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.’”).
Robson claims that Abelson and Callahan’s opinions are nearly identical and that they testify
from the same professional perspective as CPAs, so the Court should exclude any of Abelson’s
opinion testimony that contains a “substantial overlap” with Callahan’s testimony. See C.C. v.
Suzuki Manufacturing of Am. Corp., 2018 WL 3861354, at *13 (E.D. Mo. 2018) (“Expert
testimony is unnecessarily cumulative when ‘there is ‘substantial overlap’ between the areas on
which two experts will testify.’ However, ‘testimony on the same topic by different experts...is
not needlessly cumulative where the experts will testify from different perspectives.’ Generally
speaking, experts testify from different professional perspectives when they work in different
professions.” (internal citations and quotations omitted)).
In response, Defendants state that even when expert testimony overlaps, the testimony is
not overly cumulative when it addresses the very “root of the matter in controversy” between the
parties. See J.B. by & through Bullock v. Missouri Baptist Hosp. of Sullivan, 2018 WL 746302,
at *6 (E.D. Mo. 2018) (denying plaintiff’s motion to exclude cumulative expert testimony from
five experts on the same two opinions and deferring decision to limit cumulative evidence until
trial). Defendants admit that courts need not permit limitless expert testimony on the central
issue, but they claim that exclusion is unwarranted absent a showing that the prejudicial effect of
expert testimony substantially outweighs its probative value. See id.
The Court finds that the probative value of Abelson’s testimony is not “substantially
outweighed” by a danger of “needlessly presenting cumulative evidence.” See Fed. R. Evid.
403. When weighing the probative value of evidence against the considerations in Rule 403,
courts generally strike the balance in favor of admission. Miller v. Bayer HealthCare
Pharmaceuticals Inc., 2016 WL 9049604, at *1 (W.D. Mo. 2016) (citing United States v.
Dennis, 625 F.2d 782, 797 (8th Cir. 1980)). The GAAP-compliance issues with Robson’s 2017
Duckpond valuation lie at the root of the controversy between the parties, so Abelson’s
testimony has a significant probative value. See Missouri Baptist Hosp. of Sullivan, 2018 WL
746302, at *6. And the danger of cumulative evidence is not high. Abelson’s testimony comes
from a different perspective than Callahan’s. See id. (refusing to exclude expert testimony when
“each expert’s background and analysis is unique, and the testimony is complimentary, rather
than cumulative.”). Both experts have the same professional background as CPAs, but
Defendants offer Abelson’s testimony as a non-retained expert with personal knowledge of the
facts at issue. While Callahan will opine as to a GAAP-compliant Duckpond valuation based on
forensic accounting principles, Abelson will recount the GAAP-compliance issues uncovered by
Defendants in 2018 and will provide his perspective into Duckpond’s financials as ICC, Inc.’s
Conclusion on Abelson
The Court holds that Abelson can testify as Defendants’ non-retained expert to the extent
that his opinions stem from facts within his personal knowledge. And the Court will not exclude
Abelson’s testimony on the basis of Rule 403, although it may limit Abelson’s testimony should
his opinions become unnecessarily cumulative during trial. The Court denies Robson’s motion
to exclude, Doc. 72.
Plaintiffs’ rebuttal expert Thomas Hilton
Plaintiff’s expert Thomas Hilton is a CPA and a partner at Anders Minkler Huber &
Helm, LLP. Doc. 70-2 at 1. Plaintiffs retained Hilton “to review and rebut certain opinions of
the Defendants’ expert witness contained in the expert report of H. Bryan Callahan.” Id. at 2.
Hilton expressed that Callahan’s opinion regarding the 301 Memorial consolidation was
incorrect because of an exception to the voting-interest model (FASB ASC 810-10-15-10(a)) that
Callahan did not address. Id. at 4. According to Hilton, even though ICC, Inc. had a 99%
ownership interest in 301 Memorial, the non-controlling-member rights in the 301 Memorial
Operating Agreement were so restrictive as to call into question ICC, Inc.’s control over 301
Memorial. Id. at 5–6. Hilton concluded that GAAP did not require the consolidation of 301
Memorial in Duckpond’s financial statements and that Callahan’s opinion on the value of
Robson’s Duckpond shares was incorrect. Id. at 6.
Defendants argue that Hilton’s testimony is: (1) ill-supported, because Hilton did not
consider alternative rationales for consolidation, and (2) unreliable, because Hilton did not
conduct an adequate analysis to support his conclusion. Doc. 70. First, Defendants argue that
Hilton’s opinion on the 301 Memorial consolidation is ill-supported because Hilton narrowly
considered one possible exception to the voting-interest model but did not analyze consolidation
under an alternative rationale, such as the variable-interest model (a/k/a, economic-influence
model). Id. Second, Defendants argue that Hilton’s attack on Callahan’s valuation opinion is
unreliable because Hilton did not address other possible rationales for consolidation that would
support Callahan’s valuation opinion. Id.
301 Memorial consolidation
Hilton opined that Callahan did not need to consolidate 301 Memorial under GAAP
consolidation guidance because of an exception to the voting-interest model. Doc. 70-2 at 5–6.
Hilton admitted that “ASC 810 considers consolidation under one of two models: an economicinfluence model or a voting-interest model,” but as a rebuttal witness, Hilton explained that
“[f]or purposes of this report, I am addressing the voting-interest model utilized by Mr. Callahan
in his calculations and report.” Id. at 3. Defendants seek to exclude Hilton’s rebuttal opinion on
the consolidation of 301 Memorial for failing to analyze alternative rationales for consolidation,
like the variable-interest model. Doc. 70.
The Court observes, as an initial matter, that Defendants seek to exclude Hilton’s
testimony for not addressing the variable-interest model, despite Callahan’s not raising this
rationale in his original report. Doc. 78-1. On the very last day of discovery, Defendants filed a
supplemental report for Callahan with a new analysis of the variable-interest model. Doc. 66-4.
The Court struck this portion of Callahan’s supplemental report, holding that it constituted a
“new opinion” on consolidation that could not enter the record for the first time through a
supplemental report. Doc. 110. As the rebuttal expert for Callahan, Hilton could not possibly
have predicted or responded to Callahan’s untimely disclosure.
Additionally, Hilton need not address every possible rationale for the 301 Memorial
consolidation. Hilton is a rebuttal expert, and “[t]he function of rebuttal testimony is to explain,
repel, counteract or disprove evidence of the adverse party.” Marmo v. Tyson Fresh Meats, Inc.,
457 F.3d 748, 759 (8th Cir. 2006) (“[R]ebuttal evidence may be used to challenge the evidence
or theory of an opponent—and not to establish a case-in-chief.”); see also Aviva Sports, Inc. v.
Fingerhut Direct Marketing, Inc., 829 F.Supp.2d 802, 835 (D. Minn. 2011) (collecting cases)
(rebuttal expert witnesses may criticize other experts’ theories without offering their own
alternative analysis, and “[c]ontrary to plaintiffs’ suggestion, a rebuttal expert who critiques
another expert’s theories or conclusions need not offer his own independent theories or
The Court finds that Hilton’s failure to address alternative rationales for the 301
Memorial consolidation is not a basis for excluding his testimony, rather, this argument goes to
the weight of Hilton’s testimony. See Sphere Drake Ins. PLC v. Trisko, 226 F.3d 951, 955 (8th
Cir. 2000) (“Attacks on the foundation for an expert’s opinion, as well as the expert’s
conclusions, go to the weight rather than the admissibility of the expert’s testimony.”). The
Court will not exclude Hilton’s rebuttal opinion on this basis.
Hilton concluded in his report that Callahan’s recalculation of Robson’s stock buyout
price was “incorrect” because it relied on the 301 Memorial consolidation and because Callahan
had ignored the exception to the voting-interest model. Doc. 70-2 at 6 (“[P]ursuant to the
exception of ASC 810-10-15-10-(a)(1)(iv), Memorial should not be consolidated with Duckpond
. . . Callahan’s recalculation of the purchase price of the shares . . . which was based upon the
consolidation of Memorial with Duckpond, Ltd. and Subsidiaries, is incorrect.”). Defendants
urge that Hilton’s overarching conclusion is unreliable because of the “analytical gap” between
Hilton’s opinion on the voting-interest model and Hilton’s conclusion that 301 Memorial should
not have been consolidated at all. Doc. 70; 87. Defendants challenge the foundation for Hilton’s
opinion that 301 Memorial should not have been consolidated, because that conclusion does not
necessarily flow from the rest of Hilton’s opinion. Id. To reach that conclusion, Defendants
contend, Hilton would have had to analyze both the voting-interest model and the variableinterest model for consolidation. Id.
Usually, “the factual basis of an expert opinion goes to the credibility of the testimony,
not the admissibility, and it is up to the opposing party to examine the factual basis for the
opinion in cross-examination.” Arkwright Mut. Ins. Co. v. Gwinner Oil, Inc., 125 F.3d 1176,
1183 (8th Cir. 1997) (quoting Hose v. Chicago Northwestern Transportation Co., 70 F.3d 968,
974 (8th Cir.1995)). The Court will exclude an expert’s opinion, however, if it “is so
fundamentally unsupported that it can offer no assistance to the jury.” Nebraska Plastics, Inc. v.
Holland Colors Americas, Inc., 408 F.3d 410, 416–17 (8th Cir. 2005) (affirming exclusion of
expert’s damages calculation testimony because it “failed to take into account a plethora of
The Court will not exclude Hilton’s conclusion, because Hilton’s failure to address the
variable-interest model does not make it “fundamentally unsupported” by the relevant facts. See
Nebraska Plastics, Inc., 408 F.3d at 416. Hilton’s conclusion that “Memorial should not be
consolidated with Duckpond” is based on his rebuttal of Callahan’s opinion, rather than his own
analysis of the consolidation guidelines. Doc. 70-2 at 6. But Defendants may address the
limited basis for Hilton’s opinion on cross examination. See Bonner v. ISP Techs., Inc., 259 F.3d
924, 929–30 (8th Cir. 2001) (“As a general rule, the factual basis of an expert opinion goes to the
credibility of the testimony, not the admissibility, and it is up to the opposing party to examine
the factual basis for the opinion in cross-examination. Only if the expert’s opinion is so
fundamentally unsupported that it can offer no assistance to the jury must such testimony be
excluded.”); see also Trisko, 226 F.3d at 955. Accordingly, the Court denies Defendants’ motion
to exclude .
Genuine disputes of material fact exist as to whether Robson misrepresented that the
Duckpond valuation was GAAP-compliant and fraudulently induced Defendants to enter the
Purchase Agreement for Robson’s shares. Accordingly, the Court denies Robson’s  Motion
for Summary Judgment and Defendants’  Partial Motion for Summary Judgment. The Court
also denies Robson’s  Motion for Partial Summary Judgment, as it seeks an advisory
The Court denies Robson’s  Motion to Exclude Callahan’s Expert Testimony,
Robson’s  Motion to Exclude Abelson’s Expert Testimony, and Defendants’  Motion to
Exclude Hilton’s Expert Testimony.
So Ordered this 31st day of March 2021.
STEPHEN R. CLARK
UNITED STATES DISTRICT JUDGE
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