643 B.R. 128
Bankr. S.D.W. Va.2022Background
- Debtors (Blackjewel, et al.) filed Chapter 11; the Blackjewel Liquidation Trust sued United Bank alleging the bank interfered with proposed DIP financing, causing a forced liquidation and resulting damages.
- The Trust disclosed John Weiss, a mining engineer and VP of John T. Boyd Company, as its sole expert on coal/mineral valuation and damages.
- Weiss relied principally on profit-and-loss and pro forma financial reports prepared by FTI Consulting and on his industry experience; he did not perform a formal valuation or show detailed calculations tying data to his damages ranges.
- United Bank moved to exclude Weiss under Daubert/Fed. R. Evid. 702, arguing Weiss lacked appropriate qualifications for damages opinions, relied on unverified data, and used no reliable methodology.
- The Court held Weiss is qualified to testify based on experience, and his reliance on FTI materials was permissible under Rule 703, but excluded Weiss’s damages and valuation opinions as unreliably connected to the underlying data (ipse dixit), while allowing the possibility of an amended report.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Expert qualification | Weiss’s decades of mining and valuation experience qualifies him to opine on sale prices and lost profits | Weiss lacks finance/economic training; not qualified to give damages opinions | Qualified: experience sufficed; Motion denied as to qualification |
| Reliance on underlying financial data | Weiss properly relied on FTI-prepared company financials and discussions with FTI under Rule 703 | Underlying data unreliable/unverified; reliance improper | Reliance on FTI reports is permissible; Motion denied as to reliance |
| Methodology linking data to damages | Weiss’s industry experience justifies percentage adjustments and ranges instead of formal models | Weiss offered no calculations, formulas, or disclosed valuation methodology—opinions are ipse dixit | Excluded: damages/valuation opinions inadmissible for lack of reliable methodology; Motion granted as to those opinions |
Key Cases Cited
- Daubert v. Merrell Dow Pharms., 509 U.S. 579 (establishes gatekeeping factors for expert admissibility)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (expert ipse dixit insufficient; Daubert gatekeeping applies to non-scientific testimony)
- General Elec. Co. v. Joiner, 522 U.S. 136 (court may reject expert opinion with insufficient factual basis linking data to conclusions)
- Cooper v. Smith & Nephew, Inc., 259 F.3d 194 (4th Cir. guidance on Rule 702 reliability and applicability of Daubert factors)
- Tuf Racing Prods., Inc. v. Am. Suzuki Motor Corp., 223 F.3d 585 (expert may qualify on knowledge, skill, experience, training, or education)
- Tyger Constr. Co. v. Pensacola Constr. Co., 29 F.3d 137 (expert reliance and reasonableness under Rule 703)
- Int'l Adhesive Coating Co. v. Bolton Emerson Int'l, 851 F.2d 540 (company records and employee statements may be reasonably relied upon by experts)