Court Rejects Bid to Submit Expert Report a Year Late

On May 18, 2018, Justice Kornreich of the New York County Commercial Division issued a decision in NexBank, SSB v. Soffer, 2018 NY Slip Op. 30974(U), rejecting a request to file an expert report over a year after the deadline for exchanging reports, explaining:

Commercial Division Rule 13 requires a plaintiff who intends to call an expert at trial to submit a report after the close of fact discovery, but before the filing of the Note of Issue. Expert disclosure provided after the filing of the Note of issue without good cause will be precluded from use at trial.

Here, plaintiff proposes serving new expert reports more than a year after the deadline. Whether the court should grant leave to do so is a matter of discretion. As defendants correctly observe, this court and others in the Commercial Division have precluded expert reports served well after the court ordered deadline. The Appellate Division has approved of this practice.

The court agrees with defendants that plaintiff has not proffered good cause to justify its service of late expert reports. The facts, record evidence, and the parties' legal theories were clearly established prior to the filing of the Note of Issue. Plaintiff made the calculated decision to attempt to prove damages exclusively through its credit bid and the unencumbered value of the Property (the latter of which is res judicata). In fact, plaintiff has argued extensively in this action that expert testimony would be unreliable and inappropriate. Plaintiff instead has argued that its lay witness testimony and documentary evidence is sufficient to prove its damages and in fact is a better, more reliable method of proof than expert testimony.

Plaintiffs' strategy ran into a brick wall after the court issued the October 2017 Decision, which made it quite clear that expert testimony was required to prove the Property's encumbered value. The court's holding was foreseeable and, frankly, unremarkable. New York case law is clear that expert appraisal evidence is the method for proving the value of real property in litigation. It is simply implausible to believe that plaintiff and its counsel, who are extremely sophisticated, were unaware of this rule. Instead, for strategic reasons, they chose not to rely on expert testimony. Now that the court has squarely rejected that approach, plaintiff seeks a second bite at the apple and proffers new expert reports. Plaintiff cites no commercial case in which such a tactic was approved or found to constitute good cause. This court sees no reason to permit parties to preview the court's view of their trial strategy at summary judgment, and then abandon that strategy if the court signals.that it is unlikely to prevail. To hold otherwise would severely prejudice defendants. Summary judgment is an exercise in issue spotting for trial. It is not, for the unsuccessful movant, an opportunity to reformulate its case.

Plaintiffs stark pivot in its proposed proof is simply too great to permit at this late stage. There is a significant difference between proving encumbered value merely with a credit bid rather than with robust expert evidence. Moreover, the proposed expert who seeks to address the effects of the Nevada litigation is opining on matters well beyond the scope of plaintiffs' original expert disclosure. To force defendants to now counter these new expert opinions, which require further rebuttal reports and depositions, is extremely prejudicial on the eve of trial. Under these circumstances, it is simply too late for plaintiff to deviate from the course it has charted.

(Internal quotations and citations omitted).

An issue that arises in almost all complex commercial litigation is the use of experts to explain evidence that is unfamiliar to a typical juror (or judge). Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding the admission of expert evidence.