Schatzki et al v. Weiser Capital Management, LLC et al

Filing 239

OPINION re 172 MOTION in Limine seeking the Court's permission to inquire into the professional sanctions against Plaintiffs' Pro-offered Expert, Edward Donnelly should the Daubert motion be denied: Given the reasoning above, Defendants' motion is denied. It is so ordered. (Signed by Judge Robert W. Sweet on 12/31/2013) (tn)

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------x DEBRA SCHATZKI and BPP WEALTH, INC., intiffs, -against- 10 Civ. 4685 OPINION WEISER CAPITAL MANAGEMENT, LLC, WEISERMAZARS, LLP and HOITSZ (A/K/A "CARIJN") MICHEL, Defendants. -----------------------------------------x A P PEA RAN C E S: Attorneys for Plaintiff LAWLER MAHON & ROONEY LLP 36 West 44th Street, Suite 1400 New York, NY 10036 By: Albert K. Lawler, Esq. Christopher S. Rooney, Esq. James J. Mahon, Esq. Attorneys for Defendants STARK & STARK, P.C. 993 Lenox Drive Lawrenceville, NJ 08543 By: Scott I. Unger, Esq. Johnathan A. Scobie, Esq. 1 Sweet, D.J. Defendants WeiserMazars, "Michel") limine Capital ("Weiser") LLP Weiser and Management, Hoitsz Michel LLC ("WCM"), ("Carijn" or (collectively, the "Defendants ") have made a motion in to inquire Plaintiffs' Debra into certain Schatzki ("BPP" ) (collectively, C.P.A., (" Donnelly") ("Schatzki") the on professional and "Plaintiffs") his sanctions BPP expert cross-examination against Wealth, Ed Inc. Donnelly, pursuant to Federal Rules of Evidence 608(b). Based on the reasoning below, Defendants' motion is denied. I. Prior Proceedings This 16, 2010 action was arising out of initiated by the the termination Plaintiffs on June of the relationship between the parties and a dispute over the use of the internet­ based management program, SmartOffice. A motion to dismiss the First Amended Complaint was denied on January 26, 2011. A Second Amended Complaint was filed on August summary 4, 2011. judgment A motion and determined by opinion a on by the Defendants cross-motion January 2 19, by 2012 for partial Plaintiffs (the were "January 2012 Opinion"). A motion to amend by the Plaintiffs was granted in part and denied in part by opinion on June 30, 2012 Opinion"). A Third Amended Complaint 2012 ("TAC") (the "June was filed on July 23, 2012. The magistrate on May 8, 2013 considered discovery complete except for one short deposition. A motion by Plaintiffs to disqualify Defendants' for counsel and Defendants' sanctions were denied and Plaintiffs' cross motion motion to limit the testimony of Thomas Giachetti was granted by opinion on November 26, 2013. Plaintiffs' opinion on motion Defendants' cross-motion for November 26, for summary judgment and summary judgment were resolved by 2013 (the "November 2013 Summary Judgment Opinion"). Several motions in limine were also resolved via opinion on December 4, The instant motion was 2013 marked (the "December 2013 Opinion"). fully submitted on October 16, 2013. II. Defendants' Motion to Inquire Into Prior Professional Sanctions Against Donnelly Is Denied Defendants conduct and seek sanctions cross-examination. to of Donnelly, inquire Plaintiffs' into prior in his a certified public accountant, has 3 expert professional Donnelly been identified by Plaintiffs as a valuation expert for claim of conversion. On March 1, 2013, Donnelly testi their ed in his deposition that he was sanctioned in the past by the Office of Professional Discipline of the New York State Department of Education ("OPD") as well as the American Institute of Certified Public Accountants by the (" AICPA"). OPD and AICPA, criminal misdemeanor government official government agency In December 1996, after a hearing Donnelly pled guilty for without 18 under to the charge supplementing the receiving the permission U.S.C. 209. § salary (Pl. Op., of of at of a that 1.) Donnelly received sanctions from the OPD and AICPA and was fined by the OPD and suspended. The suspension was stayed at the time. (Donnelly Deposition at 15:18-16:18 [hereinafter Donnelly Dep.]; Pl. Op., at 2.) Donnelly explained the background to his sanctions in his deposition: In or around 1996, Internal $1, 000 when the IRS financial help." {Donnelly Dep. at 13:18-14:15., In exchange for $1,000, the IRS unidentified project. a. "close personal an (" IRS") employee a gave Revenue Service the employee, Donnelly "repeatedly asked employee (Id.) The Applicable Standard 4 worked for friend [] , " [Donnelly] Donnelly on for an Under Fed. R. Ev. 608 (b), "extrinsic evidence is not admissible to prove specific instances of a witness's conduct in order to attack truthfulness" or but a support Court the may, on witness's cross character examination, for allow specific instances of a witness's conduct "to be inquired into if they are probative untruthfulness of of the (1) . character for the witness." truthfulness Fed. R. Ev. or 608 (b). Whether an act speaks to a witness's truthfulness depends on the specific transgression. witness' truthfulness, the witness' "[AJ cts such as perjury reflect on the acts such as communication of threats or failure to pay debts do not." Davidson Pipe Co. v. Laventhol and Horwath, 120 F.R.D. 455, 462 (S.D.N.Y. 1988). b. Donne11y ' s Past Cr~ina1 ~sdemeanor and Sanctions Are Not Sufficient1y Probative of His Character for Truthfu1ness Defendants seek to cross-examine Donnelly criminal misdemeanor and corresponding sanctions 17 years ago. However, omission of the issues that is regarding occurred the more prudent course. The criminal charge was a misdemeanor and not a more serious crime. government official The charge was not the result of bribing a pursuant to 18 U.S.C. § 201, but from supplementing a government official's salary in violation of 18 5 § 209. U.S.C. employee There is provided to no evidence Donnelly that for the the work $1, 000 the IRS implicates Donnelly I s character for truthfulness or that Donnelly provided the money to the IRS employee for an improper or illegal purpose. The criminal conviction and sanctions also occurred 17 years ago, and the probative value of this misdemeanor is weakened by its age. See, e.g., Pepe v. Jayne, 761 F. Supp. 338, 343 (D.N.J. eleven year 1991) old (finding that misdemeanor "the probative conviction for value filing of false an tax returns was slight" under Fed. R. Ev. 609). With regards to Donnelly's professional sanctions, the sanctions were imposed due to the criminal misdemeanor, and Donnelly received only a fine and had his CPA license suspended. Donnelly's suspension was simultaneously stayed at the same time it was imposed. punishment That from the Donnelly did not sanctions receive suggests that a the more serious sanctions and his actions leading up to the sanctions were not egregious, and they are inquiry. not In sufficiently addition, serious nothing to indicates warrant that Rule the 608(b) sanctions themsel ves were imposed as a result of Donnelly I s professional competency or ability. 6 As noted in the reasoning above, Donnelly's previous criminal misdemeanor conviction and professional sanctions as a result of Donnelly's the conviction character for is not sufficiently truthfulness or probative of untruthfulness to warrant the issues to be raised in cross-examination under Fed. R. Ev. 608. sanctions value . are Given Donnelly's Furthermore, the nature unfairly prejudicial such, Defendants professional are sanctions Donnelly's cross-examination. 7 and of outweigh barred and the from related conviction its and probative inquiring misdemeanor into in ;'"J 1:1:1:. Conclusion Given the reasoning above, Defendants' motion denied. It is 90 ordered. Nfl... York, NY ROBERT W. 8 SWEET is

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