Investor Resource Services, Inc. v. Cato

• Decision Date: 25 June 2009
• Docket Number: No. 2007-IA-01458-SCT.,2007-IA-01458-SCT.
• Citation: 15 So.3d 412
• Parties: INVESTOR RESOURCE SERVICES, INC., A Florida Corporation; Barbara Archuletta Morelli, and the Estate of Bernece Rigirozzi v. Marvin CATO, Charles Cato, Laverne Cato and Rainbow Entertainment, Inc.
• Court: Mississippi Supreme Court

15 So.3d 412

INVESTOR RESOURCE SERVICES, INC., A Florida Corporation; Barbara Archuletta Morelli, and the Estate of Bernece Rigirozzi v. Marvin CATO, Charles Cato, Laverne Cato and Rainbow Entertainment, Inc.

No. 2007-IA-01458-SCT.

Supreme Court of Mississippi.

June 25, 2009.

Rehearing Denied September 3, 2009.

James W. Craig, Fred L. Banks, Jerome C. Hafter, Elizabeth Jane Hicks, Jackson, attorneys for appellants.

John H. Daniels, Greenville, Willie Bailey, James P. Streetman, Jackson, David Lee Gladden, Jr., Blayne Thomas Ingram, attorneys for appellees.

Before WALLER, C.J., LAMAR and PIERCE, JJ.

PIERCE, Justice, for the Court.

¶ 1. This case involves whether a trial court properly excluded an expert from testifying based on her status as a Certified Public Accountant (CPA) and her alleged lack of expert knowledge in derivative actions. Investor Resource Services, Inc., Barbara Morelli, and the Estate of Bernece Rigirozzi (Investor Resource) filed suit in the Circuit Court of Washington County against Marvin Cato, Charles Cato, Laverne Cato, and Rainbow Entertainment, Inc., (the Defendants) alleging both derivative and individual shareholder claims such as fraud in the inducement and fraudulent misrepresentation.¹ Prior to trial, the Defendants filed a motion in limine to exclude Investor Resource's expert witness, Glenda B. Glover, Ph.D. After a hearing on the matter, the trial court granted the Defendants' motion to exclude Dr. Glover as an expert witness. The trial court based its exclusion on two factors: (1) Dr. Glover was not a properly licensed certified public accountant at the time she submitted her expert report and gave deposition testimony, and (2) Dr. Glover was not an expert in the field of derivative actions. The trial court also denied Investor Resource's motion for reconsideration.² Thereafter, Investor Resource filed a petition for interlocutory appeal with this Court. On September 25, 2007, this Court granted the petition for interlocutory appeal and stayed the trial court proceedings.

DISCUSSION

Whether the circuit court erred by granting the Defendants' motion in limine and excluding the expert testimony of Dr. Glover based on her status as a certified public accountant and her alleged lack of expertise in derivative actions.

¶ 2. The standard of review for the admission or exclusion of evidence, such as expert testimony, is an abuse of discretion. Adcock v. Miss. Transp. Comm'n, 981 So.2d 942, 946 (Miss.2008); see also Miss. Trans. Comm'n v. McLemore, 863 So.2d 31 (Miss.2003).

¶ 3. Rule 702 of the Mississippi Rules of Evidence concerns the admissibility of expert testimony and provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto 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.

¶ 4. In McLemore, this Court adopted the test to determine admissibility of expert witness testimony stated in Daubert v. Merrell Dow Pharmaceuticals., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and as modified in Kumho Tire Co. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). McLemore, 863 So.2d at 35. Expert testimony is admissible, pursuant to Rule 702, if it is relevant and reliable. Id. at 38; Tunica County v. Matthews, 926 So.2d 209, 213 (Miss.2006). In other words, (1) "the witness must be qualified by virtue of his or her knowledge, skill, experience or education," and (2) "the witness's scientific, technical or other specialized knowledge must assist the trier of fact in understanding or deciding a fact in issue." McLemore, 863 So.2d at 35. However, in McLemore, this Court noted that Rule 702 "does not relax the traditional standards for determining that the witness is indeed qualified to speak an opinion on a matter within a purported field of knowledge." Id. (quoting M.R.E. 702 cmt.). The trial judge is the gatekeeper who assesses the value of the testimony. Tunica County, 926 So.2d at 213. (citing McLemore, 863 So.2d at 39). "To be relevant and reliable, the testimony must be scientifically valid and capable of being applied to the facts at issue." Id. (citing McLemore, 863 So.2d at 36).

¶ 5. This Court and the Mississippi Court of Appeals have reversed and remanded cases in which the trial court erroneously included or excluded expert testimony. Indeed, this Court, in McLemore, the foremost Mississippi case adopting the modified Daubert standard for the admissibility of expert witness testimony, reversed and remanded for a new trial, finding that the trial court had erred by admitting the expert testimony of an appraisal witness. McLemore, 863 So.2d at 43. See Giannaris v. Giannaris, 960 So.2d 462, 471 (Miss.2007) (determining, based on modified Daubert analysis, that the "trial court erred in granting any weight to [the expert's] testimony, as it lacked sufficient reliability under Miss. R. Evid. 702" and the admission of the testimony "amounted to an abuse of discretion"); Brown v. Mladineo, 504 So.2d 1201 (Miss.1987) (holding that the trial court had erred by excluding the expert testimony of a doctor). See also Int'l Paper Co. v. Townsend, 961 So.2d 741, 760 (Miss.Ct.App.2007) (determining that the trial court had erred by the admission of expert testimony where the trial court had denied the voir dire of the expert, and the expert was not qualified to testify on various issues based on his testimony); Partin v. N. Miss. Med. Ctr., Inc., 929 So.2d 924, 931 (Miss.Ct.App.2005) (reversing in part a grant of summary judgment as to one doctor, finding the trial court had erred for failing to admit expert medical witness testimony).

1. Relevance.

¶ 6. Mississippi Rule of Evidence 401 defines relevant evidence as having "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable that it would be without the evidence." M.R.E. 401. Rule 401 favors admission of the evidence if it has any probative value. McLemore, 863 So.2d at 40 (citing Holladay v. Holladay, 776 So.2d 662, 676 (Miss.2000)). "[T]he threshold for admissibility of relevant evidence is not great. Evidence is relevant if it has any tendency to prove a consequential fact." Id. (quoting Whitten v. Cox, 799 So.2d 1, 15 (Miss.2000)). Dr. Glover's testimony regarding the actions of the corporate officers and directors, the damages, and the methods she applied to determine the damages incurred by the actions of the corporate officers and directors was relevant in this lawsuit. Accordingly, Dr. Glover's reports and deposition meet the first prong of the modified Daubert standard. Daubert, 509 U.S. at 589, 113 S.Ct. 2786; McLemore, 863 So.2d at 40. Indeed, the trial court determined that Dr. Glover's reports and testimony were relevant. Notwithstanding the finding that Dr. Glover's testimony was relevant, the trial court determined that her testimony was unreliable.

2. Reliability.

¶ 7. In Adcock, this Court analyzed the reliability of the expert witness and stated:

The party offering the expert testimony also must show that the expert's opinion is based upon scientific methods and procedures, not unsupported speculation. Id. at 36 (citing Daubert, 509 U.S. at 590, 113 S.Ct. 2786). Factors to consider may include "whether the theory or technique can be and has been tested; whether it has been subjected to peer review and publication; whether ... there is a high known or potential rate of error; whether there are standards controlling the technique's operation; and whether the theory or technique enjoys general acceptance" within the expert's particular field. McLemore, 863 So.2d. at 37 (citing Daubert, 509 U.S. at 592-94, 113 S.Ct. 2786).

Adcock, 981 So.2d at 947. Although there are many factors to consider in the analysis of whether an expert's opinion is reliable, none of the factors is steadfast in every case. In other words, the factors are used as guidance, and all need not be applied in every case, but should be applied only as appropriate for each particular case. McLemore, 863 So.2d at 40.

A. Dr. Glover's status as a certified public accountant.

¶ 8. The trial court excluded Dr. Glover's testimony, in part, based on the fact that she had allowed her CPA license to lapse and was not licensed as an active CPA at the time of her reports and deposition testimony. In her two written reports, Dr. Glover stated that she was a CPA. In her deposition testimony, Dr. Glover stated that she was a CPA, however, she no longer practiced as a CPA. The trial court excluded Dr. Glover's testimony, in part, due to her alleged false assertions of being a CPA in her reports and depositions and in alleged violation of the Mississippi Code.

¶ 9. Investor Resource argues that there is a distinction between the qualifications of a witness to provide expert testimony and a witness's certification to practice a profession. To support its argument, Investor Resource relies on Watts v. Lawrence, 703 So.2d 236 (Miss. 1997). In Watts, a case predating our adoption of Daubert analysis, this Court upheld the expert testimony of a retired real-estate broker on matters of real-estate property value even though the expert no longer had a real-estate appraiser license. Id. at 238-29. This Court found that "[o]ur Rules of Evidence require only that an expert witness be qualified by knowledge, skill, experience, training, or education." Id. at 238. In that case, this Court held that the expert was qualified under Rule 702 based on his knowledge and experience in the field. Id. at 239. See also King v. Murphy, 424 So.2d...