Wells Fargo Bank, N.A., v. LaSalle Bank National Association, No. 2:2008cv01448 - Document 165 (D. Nev. 2011)
Court Description: ORDER Denying 110 Motion to Exclude the Expert Report of David Abshier and to Exclude David Abshier's Related Testimony. Signed by Judge James C. Mahan on 2/23/11. (Copies have been distributed pursuant to the NEF - ASB)
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Wells Fargo Bank, N.A., v. LaSalle Bank National Association Doc. 165 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 WELLS FARGO BANK, N.A., 8 9 10 11 12 2:08-CV-1448 JCM (RJJ) Plaintiff, v. LaSALLE BANK NATIONAL ASSOCIATION, Defendant. 13 14 ORDER 15 Presently before the court is plaintiff Wells Fargo Bank N.A.’s motion to exclude the expert 16 report of David Abshier and his related testimony. (Doc. #110). Defendant LaSalle National 17 Association filed an opposition. (Doc. #126). Plaintiff filed a reply. (Doc. #143). 18 In the plaintiff’s complaint, it asserts that, due to defendant’s alleged breach of warranties 19 and representations regarding fourteen multifamily loans, LaSalle should be required to repurchase 20 the loans which LaSalle originated and securitized. Specifically, Wells Fargo asserts that the 21 defendant breached representation 23, which warranted that the “origination, servicing and collection 22 practices used by [LaSalle]... with respect to such [m]ortgage [l]oans have been in all material 23 respects legal and have met customary industry standards.” (Doc. #110-1). To rebut that this 24 representation was breached, LaSalle offers the expert report and testimony of David Abshier, among 25 others, who assert that this representation does not apply to LaSalle’s underwriting and closing of 26 the loans at issue in the case. Additionally, Mr. Abshier purports to opine regarding whether any 27 breach of representation 23 had a material and adverse effect. 28 James C. Mahan U.S. District Judge Dockets.Justia.com 1 Expert Witness David Abshier 2 In the present motion to exclude the expert report and testimony of Mr. Abshier (doc. #110), 3 plaintiff asserts that the testimony should be excluded because he lacks any experience in the 4 commercial mortgage backed securities loan (hereinafter “CMBS”) industry, he did not specifically 5 analyze LaSalle’s underwriting, closing or servicing of the individual loans, his opinions on material 6 and adverse effects rely on irrelevant post-securitization events, and his opinions regarding 7 representation 23 “are duplicative of another, perhaps more qualified, LaSalle expert.” 8 Pursuant to Federal Rule of Evidence 702, 9 If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact at issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. 10 11 12 13 As enumerated by the Ninth Circuit and the Supreme Court, an expert’s testimony is 14 admissible only if (1) the expert is qualified, (2) his opinion is reliable, and (3) his testimony is 15 relevant and will assist the trier of fact. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 58816 595 (1993); General Electric Co. v. Joiner, 522 U.S. 136 (1997); Kumho Tire Co. v. Carmichael, 17 526 U.S. 137 (1999); Primiano v. Cook, 2010 WL 1660303, *3, _F.3d_ (9th Cir. 2010); Morin v. 18 United States, 534 F.Supp.2d at 1184, 1187 (D. Nev. 2005). 19 1. Mr. Abshier’s Qualification To Opine Regarding The CMBS Industry 20 The court in Kumho held that a court should consider “the expert’s particular expertise, and 21 the subject of his testimony” when determining if an expert is qualified. Kumho, 526 at 147. Plaintiff 22 asserts that expert Mr. Abshier is not qualified in the CMBS industry, which is allegedly the relevant 23 industry for purposes of representation 23. Specifically, it asserts that his knowledge and background 24 are solely in the traditional balance sheet commercial lending industry1, and that he has no CMBS 25 26 1 27 28 James C. Mahan U.S. District Judge Mr. Abshier’s employment history consists of working for the Union Bank, Office of Thrift Supervision, Long Beach Financial Services, First Fidelity, Abshier & Associates and, for his current employer, LECG, none of which involve securitized and/or multifamily/commercial loans. -2- 1 experience. 2 In defendant’s opposition (doc. #126), it asserts that Mr. Abshier’s “more than twenty-five 3 years of experience in the banking and commercial lending industries, as a regulator, credit officer 4 and consultant,” and his experiences “involving credit review, loan underwriting and loan 5 securitization issues,” make him more than qualified to testify regarding the underwriting standards 6 applicable to multifamily loans like the loans at issue. Moreover, defendant assert that the experience 7 Mr. Abshier has in the particular field of CMBS goes to the weight of the testimony and not to its 8 admissibility. 9 This court agrees, and holds that the expert’s alleged lack of specialization “affects the 10 weight of the expert’s testimony, not its admissibility,” and that “vigorous cross-examination, 11 presentation of contrary evidence, and careful instruction on the burden of proof are the traditional 12 and appropriate means of attacking shaky but admissible evidence.” E.g., Wolkowitz v. Lerner, No. 13 SA CV 07-777-CAS, 2008 WL 1885770, at *3 (C.D. Cal. Apr. 21, 2008); See Butler v. Home Depot, 14 Inc., 984 F. Supp. 1257, 1261 (N.D. Cal. 1997) (quoting Daubert v. Merrell Dow Pharm., Inc., 509 15 U.S. 579, 596 (1993)). Thus, the court is not inclined to exclude the expert testimony and report of 16 Mr. Abshier as they pertain to the CMBS industry. 17 2. 18 Plaintiff asserts that Mr. Abshier’s testimony regarding whether LaSalle breached 19 representation 23 is unreliable because it is not “based on an analysis of the [l]oan-specific facts and, 20 therefore, must be excluded.” Specifically, plaintiff asserts that Mr. Abshier cannot opine as to 21 whether the underwriting of the loans met customary standards because he admitted that he “did not 22 go into a point-by-point” or “allegation-by-allegation” assessment of each of the allegations, and that 23 he did “not go to the granular detail that [the other expert] provided.” Further, plaintiff asserts that 24 he offers no detailed opinion or analysis of his own, and that his opinions cannot stand on their own 25 because he did not perform an independent analysis and is relying simply on the analysis of the other 26 expert. 27 Mr. Abshier’s Reliability In asserting this, plaintiff relies on the court in Butler, when it held that the court must 28 James C. Mahan U.S. District Judge -3- 1 “determine whether the reasoning or methodology underlying the testimony is scientifically valid 2 and whether that reasoning or methodology can be applied to the facts in issue.” Butler, 984 F. Supp. 3 at 1257, 1259. (citing Duabert, 509 U.S. at 592-93). Further, plaintiff asserts that the court should 4 undertake “a rigorous examination of the facts on which the expert relies, the method by which the 5 expert draws an opinion from those facts, and how the expert applies the facts and the methods to 6 the case at hand.” Neal-Lomax v. Las Vegas Metropolitan Police Dept., 574 F. Supp.2d 1193, 1202 7 (D. Nev. 2008) (citing Kumho, 526 U.S. at 152). 8 Defendant opposes the exclusion of Mr. Abshier’s testimony, and asserts that he provided 9 a 57 page analysis where he “reviewed the relevant background information..., assessed the opinions 10 set forth in [the opposing expert’s] report,” and relied on and cited “specific facts, deposition 11 testimony, underwriting guidelines, and information regarding the loans at issue.” Further, as above, 12 defendant asserts that any alleged issue regarding the “methodology” is one that goes to the weight 13 of the testimony, and not to its admissibility. 14 In Kennedy v. Collagen Corp., 161 F.3d 1226, 1231 (9th Cir. 1998), the Ninth Circuit held 15 that any faults in the methodology used by an expert goes to the weight of the report or testimony, 16 and not to the admissibility. As the plaintiff is essentially attacking the method by which Mr. Abshier 17 comes to his conclusion regarding underwriting industry standards, this court is not inclined to 18 exclude his opinion. The plaintiff may cross-examine and present contradicting testimony to properly 19 address its concerns. 20 3. 21 In deciding if an expert’s testimony will assist the trier of fact, the court looks at whether the 22 testimony is relevant, whether it is within the juror’s common knowledge and experience, and 23 whether it will usurp the juror’s role of evaluating a witnesses’ credibility. United States v. Hankey, 24 203 F.3d 1160, 1168 (9th Cir. 2000). The court in Daubert elaborated, when it held that the court 25 must look at “whether [the] reasoning and methodology properly can be applied to the facts in issue.” 26 Daubert, 509 U.S. at 593, 113 S.Ct. 2786. 27 Relevancy of Mr. Abshier’s Testimony As plaintiff asserts, for it to prevail on the issue of representation 23, it must prove that the 28 James C. Mahan U.S. District Judge -4- 1 breach “materially and adversely effect[ed] the value of such [m]ortgage [l]oan, the related 2 [m]ortgaged [p]roperty or the interests of the [t]rustee or any [c]ertificateholder in the [m]ortgage 3 [l]oan or the related [m]ortgage [p]roperty.” (Doc. #110-7). Mr. Abshier purports to opine that any 4 breach did not have a material and adverse effect. However, plaintiff asserts that this opinion should 5 be excluded due to the fact that he has not reviewed the evidence necessary to provide a reliable 6 opinion, and that the evidence he has reviewed is irrelevant. 7 a. Failure to Review Depositions of Plaintiff’s Witnesses 8 Specifically, plaintiff asserts that Mr. Abshier did not review the depositions of two 9 investors/certificateholders regarding their expectations and what effect prior knowledge would have 10 had. 11 Defendant asserts that Mr. Abshier’s testimony should not be excluded because he relied 12 upon and cited to numerous documents and deposition transcripts of witnesses, including those 13 witnesses with personal knowledge of MFG’s practices. Further, it asserts that the exclusion is not 14 proper due to his failure to consider “a few passages from the depositions of two witnesses,” since 15 that simply goes to the weight of his opinions and not their admissibility. See Butler, 984 F. Supp. 16 1257, 1261 &1266 n.13. 17 Further, defendant asserts that Mr. Abshier’s testimony and report set forth “ample facts and 18 reasoning supporting his opinion that the alleged breaches did not have a material and adverse effect 19 on the value of the loans,” and demonstrate the lack of “any evidence in the record that the declines 20 in the value of the loans or properties in question were caused by the alleged breaches.” Moreover, 21 defendant asserts that the two witnesses’ testimonies are irrelevant as to whether the breach was 22 material and adverse, as they merely state that they would be “concerned” to learn that LaSalle 23 allegedly loosened its underwriting standards and were unaware of LaSalle’s so-called “top 10 24 broker program.” Defendant argues that these statements do not pertain in any way to whether the 25 alleged breach was material and adverse, and defendant’s expert need not necessarily consider them. 26 The court agrees that Mr. Abshier’s failure to consider the two depositions may go to the weight of 27 his opinion, but does not support excluding his opinions all together. 28 James C. Mahan U.S. District Judge -5- 1 b. Considering Post-Securitization Events 2 Mr. Abshier relied only on post-securitization information to reach his conclusion that the 3 decline in the housing and real estate markets in Las Vegas in 2007-2009 caused material and 4 adverse affects, not a breach of any representation. Plaintiff asserts that this is irrelevant, because 5 according to LaSalle’s other expert Mr. Dwyer, the determination of the material and adverse effect 6 of a breach is determined as of the closing date, March 30, 2006. 7 Defendant argues that events occurring after the closing date are relevant, because “the 8 concept of ‘effect’ necessarily entails that the effect occurred later in time than the preceding cause.” 9 Further, defendant asserts that the opinion of Mr. Dwyer cannot be used as an admission against 10 LaSalle, and regardless, plaintiff took Mr. Dwyer’s deposition testimony out of context, as he 11 actually opined in his deposition that post-closing events are in fact relevant. (Doc. #126-12). 12 The court is not inclined to exclude Mr. Abshier’s testimony and report regarding the 13 material and adverse effect, as the record indicates that Mr. Dwyer’s deposition testimony does in 14 fact refer to “future performance of the loan” when discussing a determination of material and 15 adverse effects. (Doc. #126-12). Thus, the plaintiff’s reliance on Mr. Dwyer’s testimony2 to support 16 its assertion that the determination must be made as of the closing date is misplaced and does not 17 warrant the exclusion of Mr. Abshier’s testimony 18 4. 19 La Salle asserts that, in addition to the reasons set forth above, Mr. Abshier’s testimony 20 concerning representation 23 should be excluded because it is superfluous. Specifically, plaintiff 21 asserts that both Mr. Dwyer’s and Mr. Abshier’s opinions purport to opine regarding whether 22 LaSalle breached representation 23, the definition of “origination” as used in representation 23, 23 whether any breaches resulted in material and adverse effects, and the relevant industry standards 24 in relation to representation 23. Duplicative Testimony 25 26 27 28 James C. Mahan U.S. District Judge 2 Further, Mr. Dwyer submitted an errata sheet in connection with his deposition clarifying the testimony that plaintiff cites, which states that “he never believed, and certainly did not believe at the time of the deposition, that the required material and adverse effect of a breach had to be in existence on the closing date.” (Doc. #126-23). -6- 1 Plaintiff relies on the court in United States v. Elksnins, 528 F.2d 236, 239 (9th Cir. 1975), 2 in asserting that since “[t]he exclusion of relevant, but cumulative, evidence is within the sound 3 exercise of the trial court’s discretion,” the court should exclude Mr. Abshier’s opinion. See also 4 United States v. Marabelles, 724 F.2d 1374, 1382 (9th Cir. 1984). 5 Defendant argues that the exclusion of Mr. Abshier’s opinion is improper, because each 6 report offers “independent opinions and analyses that are not contained in the other experts’ reports.” 7 Further, defendant asserts that any overlap among the experts is permissible and is not a basis to 8 exclude the expert’s opinions. See e.g. Hernandez v. Sutter Med. Ctr. Of Santa Rosa, No. C 06-3350 9 SBA, 2009 WL 1227903, at *2 (N.D. Cal. May 1, 2009); Schwartz v. Hawkins &Powers Aviations, 10 Inc., No. 04-cv-195-D, 2005 WL 3164277, at *2 (D. Wyo. Nov. 7, 2005). 11 The court exercises its discretion not to exclude the opinion of Mr. Abshier based on the 12 defendant’s assertion that he allegedly opines on the same issues that Mr. Dwyer purports to opine 13 on. Elksnins, 528 F.2d 236, 239. Moreover, this situation is distinguishable from one where an 14 expert’s opinion can be excluded because it merely relies on or “bootstraps” the opinion of another 15 expert without having an independent basis for his own opinion. 16 Accordingly, 17 IT IS HEREBY ORDERED ADJUDGED AND DECREED plaintiff Wells Fargo Bank 18 N.A.’s motion to exclude the expert report of David Abshier and his related testimony (doc. #110) 19 be, and the same hereby is, DENIED. 20 DATED February 23, 2011. 21 22 UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 James C. Mahan U.S. District Judge -7-
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