King et al v. Wang et al

Filing 313

OPINION AND ORDER re: 300 MOTION in Limine to Preclude Plaintiff's Untimely-Disclosed Damages Theory filed by Andrew Wang. For the foregoing reasons, the motion in limine is DENIED. The Clerk of Court is directed to close the motion at Dkt. No. 300. SO ORDERED. (Signed by Judge Lewis J. Liman on 11/12/2021) (va)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
YIEN-KOO KING,
:
:
Plaintiff,
:
:
-v:
:
ANDREW WANG, et al.,
:
:
Defendants.
:
:
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11/12/2021

14-cv-7694 (LJL)
OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:
This matter is scheduled to go to trial before a jury on November 29, 2021. Before the
Court is a motion in limine brought by defendants Andrew Wang (“A. Wang”) and Shou-Kung
Wang (“S.K. Wang,” and together, the “Wangs” or “Defendants”) to preclude plaintiff Yien-Koo
King (“Plaintiff” or “Y.K. King”), in her capacity as preliminary executrix of C.C. Wang’s estate
(the “Estate”), from pursuing at trial a damages theory that differs from the damages theory set
forth in her Rule 26 disclosures and that Defendants contend “she disclosed for the first time on
November 21, 2021.” Dkt. No. 301 at 1.
For the following reasons, the Court denies the motion in limine.
LEGAL STANDARD
Federal Rule of Civil Procedure 26 governs required disclosures by parties in civil
litigation and requires, among other things, disclosure of “a computation of each category of
damages claimed by the disclosing party.” Fed. R. Civ. P. 26(a)(1)(A)(iii). It also requires each
party to “supplement or correct its disclosure or response . . . in a timely manner if the party
learns that in some material respect the disclosure or response is incomplete or incorrect, and if

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the additional or corrective information has not otherwise been made known to the other parties
during the discovery process or in writing.” Fed. R. Civ. P. 26(e)(1).
Federal Rule of Civil Procedure 37(c)(1) provides that “[a] party that without substantial
justification fails to disclose information required by Rule 26(a) . . . is not, unless such failure is
harmless, permitted to use as evidence at trial, at a hearing, or on a motion any witness or
information not so disclosed.” “The purpose of the rule is to prevent the practice of
‘sandbagging’ an opposing party with new evidence.” Ebewo v. Martinez, 309 F. Supp. 2d 600,
607 (quoting Ventra v. United States, 121 F. Supp. 2d 326, 332 (S.D.N.Y. 2000); Johnson Elec.
N. Am. v. Mabuchi Motor Am. Corp., 77 F. Supp. 2d 446, 458 (S.D.N.Y. 1999)). “Courts in this
Circuit recognize that preclusion of evidence pursuant to Rule 37(c)(1) is a drastic remedy and
should be exercised with discretion and caution.” Id.
“In considering whether to exclude evidence under this standard, courts refer to a
nonexclusive list of four factors: (1) the party’s explanation for its failure to disclose, (2) the
importance of the evidence, (3) the prejudice suffered by the opposing party, and (4) the
possibility of a continuance.” Agence France Presse v. Morel, 293 F.R.D. 682, 685 (S.D.N.Y.
2013); see also Patterson v. Balsamico, 440 F.3d 104, 117 (2d Cir. 2006) (listing the same
factors: “(1) the party’s explanation for the failure to comply with the disclosure requirement; (2)
the importance of the testimony of the precluded witnesses; (3) the prejudice suffered by the
opposing party as a result of having to prepare to meet the new testimony; and (4) the possibility
of a continuance.” (internal quotation marks and alterations omitted) (quoting Softel, Inc. v.
Dragon Med. & Scientific Commc’ns, Inc., 118 F.3d 955, 961 (2d Cir. 1997))).

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DISCUSSION
This motion arises out of Plaintiff’s proposed insert for the Joint Pretrial Order, which
states, in relevant part:
The Plaintiff calculates damages . . . based upon the Defendants’ procuring
discounts on the Estate’s asking price for each of the 84 paintings sold thereby (i.e.,
the Sotheby’s Appraisal Price + 20%) by means of fraudulent pretense. . . . Listed
below is the amount sought in damages based upon the failure to include the 20%
addition for each of the Estate’s sales.
(the “Sotheby’s + 20%” damages theory) Dkt. No. 302, Ex. 4 at 4.
The Court assumes that Plaintiff will support this theory based on evidence that already
has been developed in discovery—the Sotheby’s appraisal price, the mathematical exercise of
calculating 20% of that price, and the price that the Estate received for the sale of the paintings.
Plaintiff will adduce no new expert testimony for this theory. If Defendants choose not to
present their expert, Plaintiff will not be able to call him in her case.
The parties do not dispute that Plaintiff failed to disclose this damages theory and
calculation in her Rule 26 disclosures. See Dkt. No. 301 at 2 (Defendants arguing that the Rule
26(a) disclosures calculated damages based on appreciation damages and that the proposed insert
“proposed an entirely new damages theory and calculation”); Dkt. No. 308 at 1 (Plaintiff arguing
that “the failure to include the computation in her Rule 26(a) disclosures was substantially
justified and harmless”). The question before the Court, therefore, is whether this failure
warrants the “drastic remedy” of preclusion. Ventra, 121 F. Supp. 2d at 332.
Defendants argue that “[b]ecause this belatedly-disclosed damages theory and method of
calculation is untimely, unjustified, and prejudicial, the Court must preclude Plaintiff from
presenting it to the jury.” Dkt. No. 301 at 3. Plaintiff argues that the failure to include this
damages theory in her Rule 26 disclosures was “substantially justified and harmless.” Dkt. No.
308 at 1.
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The Court finds Plaintiff’s argument that her failure to disclose this damages theory
earlier was substantially justified, and that there was a reasonable explanation for such
nondisclosure, unpersuasive. Plaintiff argues that “it was not until experts opined on the facts of
this case that the amount of available damages crystalized.” Dkt. No. 308. However, even
assuming this to be the case, Plaintiff was still obligated at that point to supplement her Rule 26
disclosures, under Rule 26(e), to reflect her newly-discovered potential damages theory.
Plaintiff has not identified any new facts available to it now that were not available to her
significantly earlier than 29 days before trial that would explain her non-disclosure of the
Sotheby’s + 20% damages theory as an affirmative alternative ground for damages until now.
As to the importance of the theory, Defendants argue that “[t]he relative lack of
importance of this damages theory is clear from the fact that it was an afterthought that
aggregates to only $329,300.00 in a case in which Plaintiff seeks $200,000,000.00,” Dkt. No.
301 at 4, whereas Plaintiff argues that “because the Court has precluded the Plaintiff’s expert
from testifying as to his appraisal opinions, the Sotheby’s plus 20% calculations may now be the
most important component of this seven-year-old lawsuit,” Dkt. No. 308 at 4. Plaintiff is correct.
Although the damages theory might not have been critical at a time when Plaintiff was
purporting to offer in its damages case an expert who could testify to the value of the paintings in
2019, the Court since has excluded that evidence. The claim that Plaintiff was damaged when
the paintings were sold without the 20% premium now is, as Plaintiff argues, at least one of the
most important components of the case. The Court thus finds that this factor favors Plaintiff.
Preventing Plaintiff from arguing that it was damaged by the failure to sell the paintings for a
price that included a 20% premium over the Sotheby’s appraisal would be a particularly harsh
sanction.

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Most importantly, the Court finds Defendants’ argument that allowing Plaintiff to pursue
this theory would cause them significant prejudice unpersuasive. Defendants assert that
Plaintiff’s new damages theory raises issues of fact and expert testimony that they did not
explore or have incentive to explore earlier and that “[a]mong other things, Defendants would
need to conduct discovery on the extent to which the Estate cared about the internal price
allocations within each sale and the extent to which it would have been feasible to obtain 120%
of the Sotheby’s appraised value for particular paintings, which would require extensive
additional fact and expert discovery.” Dkt. No. 301 at 5. But Defendants fail to identify with
any specificity the testimony and evidence they would require if Plaintiff is permitted to raise the
Sotheby’s + 20% theory with the jury in this case or why the discovery that they already took
would not be sufficient to address any new arguments that Plaintiff might make based on that
theory. See, e.g., Gary Price Studios, Inc. v. Randolph Rose Collection, Inc., 2006 WL 2381817,
at *2–3 (S.D.N.Y. Aug. 16, 2006) (declining to preclude untimely-disclosed evidence because
“Plaintiffs arguments on this motion are not persuasive because they have not shown that they
have been harmed by Defendants’ delay in identifying these documents,” and noting that
although Plaintiffs generally argued that they were prejudiced, they failed to “point[] to any
specific prejudice that might ensue”).
The factual issues that the Sotheby’s + 20% damages theory raises have been present in
this case since its inception: the process by which the paintings were sold, the Sotheby’s
appraisal and the view that the paintings should be sold for 20% more than the appraisal, the
price the Estate realized for the sale of the paintings, and whether the paintings were sold for fair
market value. Thus, for example, A. Wang testified both regarding the Sotheby’s appraisal and
the 20% figure, the price the paintings were sold for, and the relationship of that sale price to fair

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market value. As one of the two Defendants, A. Wang presumably is available to testify at trial.
Paper discovery also addressed the 20% figure. See Dkt. No. 309-4 (email from Marty Klein to
A. Wang stating that “the PA is concerned with a private sale not bringing the best price to the
Estate, that is why she felt that a sales price of AT LEAST 20% above Sotheby’s appraised value
would provide a level of comfort that she needed to defend a challenge that the Estate did not
receive the best price for the art”). The Public Administrator was also asked about the 20%
figure at deposition, although the excerpts of testimony before the Court indicate that she did not
recall the reason for a specific notation of a “20% addition” to a proposed sale price. There is no
basis to assume there was evidence from the Public Administrator that the Defendants could
have obtained with respect to the Sotheby’s + 20% theory that Defendants did not obtain. And
both parties had every incentive to develop evidence regarding the Public Administrator’s
original basis for the 20% figure and whether the paintings were sold at or below fair market
value. After all, the relationship of the sale price to fair market value was and is important not
only to damages but to the central liability question in this case—whether Defendants in effect
sold the paintings to themselves in order to cheat the Estate or whether they were sold to third
parties in arms-length transactions. Evidence that the paintings were sold below market value
would tend to support Plaintiff’s theory; evidence that the paintings were sold at market value
would tend powerfully to support Defendants. Thus, even if Plaintiff’s damages theory is new,
the factual issues upon which it rests is not.
Moreover, Defendants have long known that Plaintiff disputes that the paintings were
sold for 20% above the Sotheby’s appraisal. Plaintiff’s theory arises from the report submitted
by Defendants’ expert. In that report, the expert opines: “It is my opinion that the Estate
suffered no damages from the sale of the 98 artworks via private sales.” Dkt. No. 238 ¶ 44. At

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deposition, the expert testified that the sole basis for his opinion was “that the original document
upon which sale prices were asked was performed by the leading expert in Chinese classical
painting as of the date of death, and the addition of 20 percent later on, which I understood took
place, was sufficient to render the sale values within reason.” Dkt. No. 309-1 at 126:11–25.
Plaintiff challenged the factual basis for this in her motion for summary judgment. She argued
that Defendants’ claim that the Estate suffered no damages was in error because it was
predicated solely on their expert’s opinion that a 20% premium was obtained, which was
factually incorrect. As support, she identified evidence—adduced in discovery—that the Estate
had not always received the 20% premium above the Sotheby’s appraisal. See Dkt. No. 309-2 at
29.1
As to the possibility of a continuance, this case has been pending since 2014, and the
upcoming trial date is the result of a lengthy continuance granted in May of this year on the eve
of trial. A further continuance is not warranted or necessary here, where Defendants have not
demonstrated that any additional discovery is necessary to allow them to defend against the
Sotheby’s + 20% damages theory.
Thus, although the Court finds that Plaintiff violated Rule 26(a) by failing to disclose the
Sotheby’s + 20% damages theory in a timely fashion and was not justified in doing so, the Court
declines to exercise its discretion to award the extraordinary sanction of preclusion because
Defendants have not identified any significant prejudice if Plaintiffs are allowed to pursue this
damages theory at trial.

1

This argument does not, as Plaintiff argues here, constitute disclosure that Plaintiff might
pursue the Sotheby’s + 20% damages theory at trial; Plaintiff did not suggest that this would or
could be her measure of damages, but rather argued that Defendants’ theory was not supported
by the evidence.
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CONCLUSION
For the foregoing reasons, the motion in limine is DENIED. The Clerk of Court is
directed to close the motion at Dkt. No. 300.
SO ORDERED.
Dated: November 12, 2021
New York, New York

__________________________________
LEWIS J. LIMAN
United States District Judge

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