Girozentrale v. Tilton, Index No. 651695/2015

CourtUnited States State Supreme Court (New York)
Writing for the CourtHON. JOEL M. COHEN, Judge.
Citation2022 NY Slip Op 31854 (U)
PartiesNORDDEUTSCHE LANDESBANK GIROZENTRALE, HANNOVER FUNDING COMPANY LLC, Plaintiffs, v. LYNN TILTON, PATRIARCH PARTNERS, LLC, PATRIARCH PARTNERS XIV, LLC, PATRIARCH PARTNERS XV, LLC, Defendants.
Decision Date10 June 2022
Docket NumberMOTION SEQ. No. 028,Index No. 651695/2015

2022 NY Slip Op 31854(U)

NORDDEUTSCHE LANDESBANK GIROZENTRALE, HANNOVER FUNDING COMPANY LLC, Plaintiffs,
v.

LYNN TILTON, PATRIARCH PARTNERS, LLC, PATRIARCH PARTNERS XIV, LLC, PATRIARCH PARTNERS XV, LLC, Defendants.

Index No. 651695/2015, MOTION SEQ. No. 028

Supreme Court, New York County

June 10, 2022


Unpublished Opinion

DECISION + ORDER ON MOTION

HON. JOEL M. COHEN, Judge.

The following e-filed documents, listed by NYSCEF document number (Motion 028) 1033, 1034, 1035, 1036, 1037, 1038, 1039, 1040, 1041, 1042, 1043, 1044, 1045, 1046, 1047, 1048, 1049, 1050, 1051, 1052,1053, 1061, 1121, 1122, 1123, 1124, 1125, 1126, 1127, 1169 were read on this motion to PRECLUDE

In this motion Defendants Lynn Tilton, Patriarch Partners, LLC, Patriarch Partners XIV, LLC, and Patriarch Partners XV, LLC ("Defendants") seek to preclude Plaintiffs Norddeutsche Landesbank Girozentrale and Hannover Funding Company LLC ("Plaintiffs") from introducing the expert testimony of Professor Ethan Yale ("Yale" or "Professor Yale"). For the reasons described below, the motion is granted in part.

"The admission of an expert opinion is a matter within the sound discretion of the court" (Oboler v City of New York, 31 A.D.3d 308, 308 [1st Dep't 2006] [citation omitted]). "The guiding principle is that the expert opinion is proper when it would help to clarify an issue calling for professional or technical knowledge, possessed by the expert and beyond the ken of the typical juror" (De Long v Cnty. of Erie, 60 N.Y.2d 296, 307 [1983]). "For a witness to be qualified as an expert, the witness must possess the requisite skill, training, education,

1

knowledge or experience from which it can be assumed that the opinion rendered is reliable" (Schechter v 3320 Holding LLC, 64 A.D.3d 446, 449 [1st Dep't 2009] [citation omitted]).

Ethan Yale is a Professor of Law at University of Virginia School of Law with a "research and teaching focus on federal income taxation with an emphasis on the taxation of business entities, tax shelters, and tax policy" (NYSCEF 1037, at 1). Yale teaches "classes focusing on the tax, securities, and corporate law governing private fund investments. [He] also teach[es] and ha[s] studied and written about, the tax treatment of distressed debt" (Id.). Additionally, Yale has experience consulting "with taxpayers regarding the tax consequences of business and personal transactions" (Id.).

In his report, Yale offers three opinions: (1) "[c]ertain Patriarch entities maintained tax databases on behalf of the Zohar funds. The tax databases were used to determine, record, and report the tax characterization of cash received by the funds with respect to loans held by the funds;" (2) "[t]he tax characterization claimed by the owners of the Zohar funds - ultimately Lynn Tilton - depended on the assumption that repayment of many loans held by the funds was doubtful. In other words, Tilton, the taxpayer to whom the funds' taxable income flowed, took the position on her tax returns that the likelihood of repayment of the loans was low;" and (3) "[l]oan credit quality, reported to be low for tax purposes, was reported as high in the funds' financial statements and monthly investor reports. Thus, the Patriarch entities were making inconsistent claims regarding loan credit quality depending on the audience" (Id.).

As an initial matter, the Court rejects Defendants' position that tax-related evidence...

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