Expert Report Excluded for Failure to Explain Basis for Opinions

On July 11, 2019, Justice Cohen of the New York County Commercial Division issued a decision in 30-32 W. 31st LLC v. Heena Hotel LLC, 2019 NY Slip Op. 32016(U), excluding an expert report because it failed to explain the basis for the expert's opinions, explaining:

Defendants seek to strike the report on the grounds that: 1) The report is unsigned and inadmissible as a matter of law; 2) the report fails to comply with Commercial Division Rule 13; and 3) Plaintiffs failed to comply with controlling discovery orders. The Court will address each argument in turn.

First, Defendants are correct that the Chait Report is inadmissible because it is not signed or sworn.

In addition, the Chait Report does not comply with Commercial Division Rule 13 and the Court's prior discovery order, which mandate that all expert reports contain, among other things: (A) a complete statement of all opinions the witness will express and the basis and the reasons for them; and (B) the data or other information considered by the witness in forming the opinions. Neither the Rule nor the Order sets a different standard for rebuttal reports, such as the Chait Report.

Mr. Chait's report states that he disagrees with the report offered by Defendants expert, James Ashe, CPA, but does not offer a basis or reason for that conclusion. For instance, Mr. Chait writes, "At this time and on a preliminary basis I find that I do not concur with the conclusion reached by James Ashe, CPA ("Ashe") of the Marcus firm. Additional forensic accounting work is required, and I reserve the right to amend and supplement this initial draft." No supplemental report was provided and there is no indication that the "required" additional forensic accounting work was ever performed, let alone disclosed to Defendants. Mr. Chait also states summarily that the Ashe Report "presumes information as factual that is in dispute," but then fails to identify those purportedly disputed factual assertions.

In page 2 of his 2-page report, Mr. Chait also states that there are "significant intercompany transactions that require a detailed forensic accounting review," but does not identify any specific transactions at issue or provide opinions as to whether the intercompany transactions were proper. While he complains about Defendants' general accounting practices - a central issue in this matter - Mr. Chait again states "additional forensic work is required to determine if the accounting records [of Defendants] were actually maintained on an accrual basis." Again, such a disclosure (which was never amended) provides insufficient notice of any opinions Mr. Chait proposes to offer or the bases for those opinions. Finally, and in further violation of Rule 13 and the Court's Order, the Chait Report fails to identify which documents he relied on in forming his opinion and generating the report.

The fact that Mr. Chait is being called as a rebuttal witness does not change the standard of specificity applicable to his report. In these circumstances, the Court concludes that it is appropriate to strike Mr. Chait's report and proposed testimony.

(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.