Vieira v. Think Tank Logistics, LLC (In re Levesque)

653 B.R. 127

IN RE, Alan Keith LEVESQUE, Debtor(s).

Michelle Vieira, Chapter 7 Trustee for Alan Keith Levesque, Plaintiff(s), v. Think Tank Logistics, LLC IGL Logistics, Inc. James Burke, Defendant(s).

C/A No. 20-03330-EG

Adv. Pro. No. 22-80008-EG

United States Bankruptcy Court, D. South Carolina

Signed August 18, 2023

Christine E. Brimm, Barton Brimm, PA, Myrtle Beach, SC, for Plaintiff.

Richard R. Gleissner, Gleissner Law Firm, L.L.C., Columbia, SC, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS IN LIMINE REGARDING EXPERT WITNESS REPORTS AND TESTIMONY

Elisabetta G. M. Gasparini, United States Bankruptcy Judge District of South Carolina

This matter is before the Court on Plaintiff's Motion to Strike Expert Report and Deposition of John R. Markel, and Motion to Exclude his Testimony at Trial¹ ("Plaintiff's Motion") and Defendants' Motion to Exclude Evidence² ("Defendants' Motion"). Defendants filed an objection to Plaintiff's Motion,³ and Plaintiff filed an objection to Defendants' Motion.⁴ Through this adversary proceeding, the Chapter 7 Trustee seeks to avoid Debtor's transfer of his interest in two corporate entities and recover either the membership/ownership interests themselves or the value of such interests from Defendants. The pivotal issues in this adversary proceeding are the value of Debtor's minority interests in the two entities and the consideration paid to Debtor in exchange for the transfers, and both sides intend to use reports and testimony of their respective experts to advance their position as to the value of the transferred ownership interests. The issues presented in the motions currently before the Court can be summarized as follows: (1) whether the Defendants' expert report and testimony meet the requirements for admissibility under the Federal Rules of Evidence and satisfy the standards of Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) and ensuing precedents and (2) whether Plaintiff's expert is qualified and his reports meet the requirements of Federal Rule of Civil Procedure 26(a)(2)(B) and satisfy the requirements for admissibility under the Federal Rules of Evidence and the Daubert standards. After reviewing the motions, exhibits attached thereto, and applicable law, the Court rules as follows:

FACTUAL BACKGROUND

Michelle L. Vieira ("Plaintiff or Trustee"), the Chapter 7 Trustee for the bankruptcy estate of Alan Keith Levesque ("Debtor" or "Levesque"), commenced this adversary proceeding on February 28, 2022, by filing a Complaint against Think Tank Logistics, LLC ("TTL"), IGL Logistics, LLC ("IGL"), and James Burke (collectively "Defendants"). The Complaint alleges eight causes of action against Defendants, all of which arise from the same factual allegations relating to Debtor's transfer of his interests in TTL and IGL through his execution of certain membership/ownership interest redemption agreements on May 31, 2019 ("Redemption Agreements"):

1. Avoidance of the TTL transfer pursuant to 11 U.S.C. § 544 and S.C. Code Ann. § 27-23-10 ("Statute of Elizabeth");

2. Avoidance of the TTL transfer pursuant to 11 U.S.C. § 548(a)(1)(B);

3. Avoidance of the TTL transfer pursuant to 11 U.S.C. § 544 and N.C. Uniform Voidable Transactions Act;

4. Avoidance of the IGL transfer pursuant to 11 U.S.C. § 544 and S.C. Code Ann. § 27-23-10;

5. Avoidance of the IGL transfer pursuant to 11 U.S.C. § 548(a)(1)(B);

6. Avoidance of the IGL transfer pursuant to 11 U.S.C. § 544 and N.C. Uniform Voidable Transactions Act;

7. Recovery of the Avoided Transfers pursuant to 11 U.S.C. § 550; and

8. Breach of Fiduciary Duty.

Defendants filed an Answer to the Complaint on March 31, 2022. Following a lengthy discovery period, the parties filed cross motions for summary judgment, which were both denied by Order entered on April 7, 2023.

The Court conducted a pretrial conference on May 2, 2023, and thereafter entered a scheduling order on May 3, 2023, setting deadlines for the filing of a joint pretrial order and pretrial evidentiary motions and responses. The scheduling order provided that "[t]he Court may set any [motion in limine or other motion pertaining to evidence] for hearing or may issue a ruling without a hearing. After all motions have been ruled upon, the Court will schedule a status conference to set this matter for trial." On June 6, 2023, Plaintiff and Defendants filed the motions presently before the Court. On June 20, 2023, Defendants filed an objection to Plaintiff's Motions and Plaintiff filed an objection to Defendants' Motion. The facts and arguments were adequately presented in the pleadings and, after a thorough review the Court has concluded that oral argument would not aid the decisional process and that a hearing is unnecessary to rule on the Motions before the Court.

Plaintiff's Motion

Pursuant to Federal Rules of Evidence 702, 703, and 403, Plaintiff requests that the Court strike the expert report (the Markel Report") and deposition testimony of Defendants' expert witness, John R. Markel ("Markel"). Plaintiff further seeks an order prohibiting Markel from testifying at the trial on this matter. For the reasons stated below, Plaintiff's Motion is granted in part and denied in part.

Defendants' Motion

Defendants seek to exclude the testimony of Plaintiff's expert witness, Christopher Nowell ("Nowell"), and exhibits 62 through 65, which include Nowell's Curriculum Vitae and expert reports regarding the valuation of IGL as of May 31, 2019, August 21, 2020, and December 31, 2021 (collectively, "the Nowell's Reports"), pursuant to Fed. R. Civ. P. 26(a)(2)(B) and Federal Rules of Evidence 403 and 702. Defendants assert that Nowell is not a qualified expert as required by Federal Rule of Evidence 702 and that the Nowell's Reports and testimony are irrelevant to this case, lack any probative value and are unduly prejudicial to the Defendants.⁵ For the reasons stated below, Defendants' Motion is granted in part and denied in part.

LEGAL STANDARD

The following legal standard applies to the Court's review of both expert motions.

I. Applicable Legal Standard

a. Motions in Limine

A motion in limine aids the trial process by allowing the Court to rule in advance of trial on the relevance and admissibility of certain evidence that is expected to be presented, thus avoiding delay caused by the interruption of the trial to hear argument on these issues. See In re Aqueous Film-Forming Foams Prods. Liab. Litig., No. 2:18-cv-3487, 2023 WL 3409039, at *1 (D.S.C. May 12, 2023); see also In re Corp. Res. Servs., Inc., 603 B.R. 888, 892 (Bankr. S.D.N.Y. 2019). Judges have broad discretion when ruling on motions in limine. See Aqueous, 2023 WL 3409039, at *1 (citing Kauffman v. Park Place Hosp. Grp., 468 F. App'x 220, 222 (4th Cir. 2012)). Only evidence that is "clearly inadmissible on all potential grounds" should be excluded on a motion in limine. Id. (quoting United States v. Verges, No. 1:13-222, 2014 WL 559573, at *3 (E.D. Va. Feb. 12, 2014)). The proponent of the evidence bears the burden of establishing that the admissibility requirements are met by a preponderance of the evidence. See Bourjaily v. United States, 483 U.S. 171, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987); see also In re Corp. Res. Servs., Inc., 603 B.R. at 895 ("The party seeking to admit an expert bears the burden of demonstrating admissibility by a preponderance of the evidence.").

b. Federal Rule of Evidence 403

Federal Rule of Evidence 403 allows the Court to exclude relevant evidence "if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403. The Court "must balance the probative value of and need for the evidence against the harm likely to result from its admission." Nat'l Ass'n for Advancement of Colored People, Inc. v. City of Myrtle Beach, 503 F. Supp. 3d 390, 394 (D.S.C. 2020).

c. Federal Rules of Evidence 702 & 703

Federal Rule of Evidence 702 requires a judge to ensure that all scientific, technical, or other specialized knowledge is not only relevant but also reliable. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 147, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). Rule 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. The judge's role when deciding whether to admit an expert report or testimony is to act as a gatekeeper with wide discretion. Hanckel v. Campbell (In re Hanckel), C/A No. 12-04936, Adv. No. 14-80116, 2015 WL 8607388, at *15 (Bankr. D.S.C. Dec. 11, 2015) (citing Cooper v. Smith & Nephew, Inc., 259 F.3d 194, 199 (4th Cir. 2001)). To be admissible as evidence, the Court must find that the expert testimony is both reliable and relevant. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993); Fed. R. Evid. 402 ("Irrelevant evidence is not admissible."). When determining reliability of an expert opinion, the judge "must ensure that the proffered expert opinion is based on scientific, technical, or other specialized knowledge and not on belief or speculation, and inferences must be derived using scientific and other valid methods." Nease v. Ford Motor Co., 848 F.3d 219, 229 (4th Cir. 2017). As to the relevancy of the evidence, the standard under the Federal Rules of Evidence is liberal—evidence from an expert is relevant if it helps the trier of fact...