ResCap Liquidating Trust v. Primary Residential Mortg., Inc. (In re ResCap Liquidating Trust Litig.)
| Decision Date | 14 January 2020 |
| Docket Number | Case No. 13-cv-3451 (SRN/HB) |
| Citation | 432 F.Supp.3d 902 |
| Parties | IN RE: RESCAP LIQUIDATING TRUST LITIGATION This document relates to: ResCap Liquidating Trust v. Primary Residential Mortgage, Inc., No. 16-cv-4070 |
| Court | U.S. District Court — District of Minnesota |
TABLE OF CONTENTS:
II. BACKGROUND...913
III. DISCUSSION...913
Before the Court are the parties' cross motions to exclude certain expert opinions and testimony. On December 11, 2019, the Court heard oral argument on the parties' motion. For the reasons set forth below, Defendant's Motion to Exclude Certain Opinions of Plaintiff's Experts [Doc No. 5252] is granted in part, denied in part, and denied in part as moot, and Plaintiff's Motion to Exclude Certain Opinions of Defendant's Experts [Doc No. 5282] is granted in part, denied in part, and denied in part as moot.
The factual and procedural background of this litigation is thoroughly set forth in the Court's December 20, 2019 Memorandum Opinion and Order on Motions for Summary Judgment, In re ResCap Liquidating Tr. Litig. , Nos. 13-cv-3451, 16-cv-4070, 2019 WL 7038234, 428 F.Supp.3d 53 (D. Minn. Dec. 20, 2019) (" PRMI SJ Order ") [Doc. No. 5361], which is incorporated by reference here.
Federal Rule of Evidence 702 governs the admissibility of expert testimony:
Fed. R. Evid. 702. Under Rule 702, proposed expert testimony must satisfy three prerequisites to be admitted. Lauzon v. Senco Prods., Inc. , 270 F.3d 681, 686 (8th Cir. 2001). "First, evidence based on scientific, technical, or other specialized knowledge must be useful to the finder of fact in deciding the ultimate issue of fact." Id. (citation omitted). "Second, the proposed witness must be qualified to assist the finder of fact." Id. (citation omitted). "Third, the proposed evidence must be reliable or trustworthy in an evidentiary sense, so that, if the finder of fact accepts it as true, it provides the assistance the finder of fact requires." Id. (citation omitted) (internal quotation marks omitted).
These requirements reflect the Supreme Court's analysis in Daubert v. Merrell Dow Pharmaceuticals, Inc. , in which the Court emphasized the district court's gatekeeping obligation to make certain that all testimony admitted under Rule 702 "is not only relevant, but reliable." 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ; see also Kumho Tire Co., Ltd. v. Carmichael , 526 U.S. 137, 149, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) (). Under Daubert , the cornerstone for admissibility is assistance to the trier of fact. See Larson v. Kempker , 414 F.3d 936, 940–41 (8th Cir. 2005). When this Court sits as the finder of fact, however, there is "less need for the gatekeeper to keep the gate[.]" David E. Watson, P.C. v. United States , 668 F.3d 1008, 1015 (8th Cir. 2012) (citation omitted) (internal quotation marks omitted), cert. denied , 568 U.S. 888, 133 S.Ct. 364, 184 L.Ed.2d 160 (2012). Nonetheless, the Court still must assess whether expert testimony satisfies Daubert , while under a more "relax[ed] application for bench trials." Id. (citation omitted).
Under this standard, proponents must demonstrate by a preponderance of evidence that the expert's opinion is reliable. Courts generally support "an attempt to liberalize the rules governing the admission of expert testimony," and favor admissibility over exclusion. See Lauzon , 270 F.3d at 686 (citation omitted) (internal quotation marks omitted); Daubert , 509 U.S. at 596, 113 S.Ct. 2786 (). Doubts regarding the usefulness of an expert's testimony should be resolved in favor of admissibility, United States v. Finch , 630 F.3d 1057, 1062 (8th Cir. 2011), and gaps in an expert witness's qualifications or knowledge generally go to the weight of the testimony and not its admissibility, Robinson v. GEICO Gen. Ins. Co. , 447 F.3d 1096, 1100 (8th Cir. 2006) (citing 29 Charles Alan Wright & Victor James Gold, Federal Practice and Procedure: Evidence § 6265 (1997) ).
PRMI moves the Court for an order excluding (1) in its entirety, the testimony of ResCap's damages expert, Dr. Karl Snow; (2) certain opinions of re-underwriter Mr. Steven Butler, relating to the interpretation of certain trust-level representations, warranties, and disclaimers, as well as his reliance on MLS proxy data; (3) certain opinions of Mr. Donald Hawthorne regarding re-underwriting performed in RFC's bankruptcy and his discussion of financial reports; and (4) in its entirety, the opinions of ResCap's appraisal experts, Dr. John Kilpatrick, Mr. Steven Albert, and Dr. Albert Lee. (Def.'s Mem. at 1–2.)1 The Court addresses each expert in turn.
Karl Snow, PhD, is an economist and partner at the Bates White economic consulting firm. ResCap retained Dr. Snow to provide expert analysis regarding the measure and allocation of damages, (see id. ¶ 3), and he crafted the Allocated Breaching Loss Approach methodology for doing so. (Id. ¶ 36.)
The Allocated Breaching Loss model measures damages in relation to the liabilities that RFC incurred in the Settlements, rather than the economic harm caused by breaching mortgages. In re RFC & ResCap Liquidating Tr. Litig. ("Common SJ Order"), 332 F. Supp. 3d 1101, 1198 (D. Minn. 2018). To assess damages that RFC incurred on RMBS Trust claims, Dr. Snow measures PRMI's share as a product of a settlement factor and the total losses on PRMI's breaching loans. Id. To measure damages under this approach, Dr. Snow estimates breach rates based on samples drawn from approximately 463,000 at-issue loans. (Smallwood Decl., Ex. 4 His methodology excludes loans that had less than $500 of loss or were less than 90 days delinquent as of ...
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