Opinion
Civil Action No. 3:00-CV-0448-L
November 15, 2002
MEMORANDUM OPINION AND ORDER
Pursuant to the District Court's Special Order No. 3-214, filed September 11, 2002, Plaintiff's Motion to Exclude and Strike Expert Testimony Together with Supporting Authority, filed July 5, 2002, was referred to United States Magistrate Judge Irma Carrillo Ramirez for hearing, if necessary, and determination. At issue in this motion is whether or not an expert may testify to interpret a contract. The motion is now before the Court, has been fully briefed, and is ripe for determination. Upon consideration of the motion, the parties' briefs, supplemental brief, and counsel's oral arguments, the Court is of the opinion that Plaintiffs' Motion to Exclude and Strike Expert Testimony should be GRANTED.
BACKGROUND
Larry Wright ("Debtor") divorced Melinda Aldridge ("Ex-wife") on December 16, 1988. During divorce, they entered into Agreement Incident to Divorce ("AID"), under which, Debtor agreed to pay for their sons' college expenses. On January 6, 1997, Debtor received a demand letter for expenses totalling $30,000 pursuant to the AID. In Februrary 1997, Debtor contacted McShane Davis Hance, L.L.P., ("McShane Davis") about representing him in response to Ex-wife's letter. McShane Davis accepted the representation and assigned one of their attorneys, George Beinfang, ("Beinfang") to the case.On March 3, 1997, Ex-wife filed a Motion for Enforcement of Child Support Order and Decree of Divorce in Texas family court to enforce the AID. Beinfang represented Debtor in response to that motion. Weeks before trial on the motion, Beinfang referred Debtor to a bankruptcy attorney, John Leslie ("Leslie"), to consider filing bankruptcy as a means of protecting him against the AID's enforcement. Debtor met with Leslie, and on August 6, 1997, Leslie filed a voluntary Chapter 7 bankruptcy petition on Debtor's behalf. Jim Cunningham, the Chapter 7 Trustee commenced administering Debtor's estate. The bankruptcy court issued a stay against the state proceedings to enforce the AID. McShane Davis remained Debtor's attorneys of record in the stayed state proceeding while Leslie represented Debtor in the bankruptcy proceeding.
Subsequently, Ex-wife filed an adversary proceeding in the bankruptcy court challenging the AID's dischargeability. Before trial on the adversary proceeding, Debtor fired Leslie and proceeded pro se. On January 11, 1999, Debtor entered into a settlement agreement ("Settlement Agreement") for $360,000, settling Debtor's obligations under the AID. On January 14, 1999, the adversary proceeding closed on entry of an agreed judgment ("Agreed Judgment") based upon the Settlement Agreement. In the Agreed Judgment, the Court awarded Ex-wife and the sons a nondischargeable judgment against Debtor in the amount of $360,000, together with all future taxable costs, and with interest thereon at the rate of 4.513% compounded annually. Trustee then brought this legal malpractice action alleging that the Attorneys' representation fell below the acceptable standard of care in the six months they represented Debtor against the motion to enforce the AID and in recommending that Debtor consider filing for bankruptcy protection. The Attorneys countered that Trustee's damages were either the Debtor's or a third party's fault, and that Debtor failed to mitigate his damages. To that end, the Attorneys offer two experts to testify that the Settlement Agreement and Agreed Judgment created a liability to Debtor's estate of only $30,000, or if the estate suffered any damage, Debtor failed to mitigate those damages. The Trustee now challenges the admissibility of both experts' testimony on those issues.
ANALYSIS
A. Standard for Admitting Expert Testimony
Federal Rule of Evidence 702 governs the admissibility of expert testimony and requires that "[i]f specific, 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 opinion or otherwise." FED. R. EVID. 702. When faced with a proffer of expert testimony, the trial court must "determine whether the testimony has a reliable basis in the knowledge and experience of the relevant discipline" and whether it will assist the factfinder. Kumho Tire Co., Ltd. v. Carmichael 526 U.S. 137, 149 (1999). The requirement that the testimony assist the trier of fact means the evidence must be relevant. Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 591 (1993). Federal Rule of Evidence 401 defines relevant evidence as that which has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." The burden is on the party offering the expert to prove by a preponderance of the evidence that the expert's proffered testimony satisfies Rule 702 and the Daubert-Kuhmo standard. See Kumho Tire, 526 U.S. at 147; see also Mathis v. Exxon Corp., 302 F.3d 448, 459-460 (5th Cir. 2002). Mainly, an expert "must have testimony that will assist the trier of fact to understand the evidence or determine a fact in issue" and provide for the jury more than the lawyers can in argument. Tittle v. Raines, 2002 WL 2003181, *13 (N.D. Tex. Aug. 29, 2002) (Lindsay, J.).
The Trustee challenges both expert's qualifications only to the extent that they are unqualified to testify as to the "meaning of the Settlement Agreement or the related documents." Pls. Issues in Dispute at 2, ¶¶ II, III. Because the Court strikes both expert's testimony on the meaning" of the Settlement Agreement and the Agreed Judgment, the Court need not address the experts' qualifications.
B. Contract Interpretation
Contract interpretation is a matter of law for the court to decide. Amica Mutual Ins. Comp. v. Moak, 55 F.3d 1093, 1096 n. 5 (5th Cir. 1995). Unless there is a need to employ specific, technical, or other specialized knowledge to clarify terms of art, science, trade, or other industry-specific language, expert opinion testimony offered to interpret contract language is inadmissible. Id. Here, the Settlement Agreement was not drafted using terms of art or other terms specific to bankruptcy practice. Moreover, both parties admit that the Settlement Agreement and its terms are unambiguous. Pls. Mot. at 3; Defs. Supp. Br. at 6.
Despite its unambiguity, the Attorneys continue to argue that the Settlement Agreement's legal effect is unclear. The Attorneys argue that their experts are necessary to explain the "legal effect of the provisions of the settlement, assignment and limiting provisions" to assist in "the jury's consideration of damages in this case." Defs. Issues in Dispute at 2, ¶ I, B; 4, ¶ IV, B. However, any testimony regarding the true liability under the Settlement Agreement would require interpreting the agreement, which, given its straightforward drafting, is unnecessary and not the proper subject of expert testimony. Kona Technology Corp., 225 F.3d at 611.
In their response, and at the oral argument, the Attorneys argue that their experts' testimony is crucial to show that "the parties to the settlement agreement and other contracts therefore appear to have arranged the deal so that [Debtor] could seek bankruptcy protection after paying only a small amount." Defs. Resp. at 14. The Attorneys also assert that their experts' opinions may "determine whether or not the parties to the settlement were, in effect, trying to defraud the U.S. government and fleece defendants." Id. at 6. Certainly, the Attorneys will have an opportunity to address the parties' intent with fact witnesses, but expert testimony on this issue is inadmissible. See Coregis v. Bell, 1999 WL 244097, *1 (E.D. La. April 21, 1999) (unpublished); Tasch v. Sabine Offshore Serv., Inc., 1999 WL 596261, *1 (ED. La. Aug. 5, 1999) (unpublished). Consequently, because the Settlement Agreement and Agreed Judgment are unambiguous and contain no terms of art, science, trade, or other industry-specific language, expert opinion offered to interpret them as a whole or terms within them is inadmissible. Expert testimony to show the parties' intent in drafting the Settlement Agreement is likewise inadmissible.
C. Mitigation of Damages
The Attorneys next argue that their experts' testimony is necessary to provide an accurate measure of the amount, if any, by which Debtor mitigated his damages. Mitigation of damages is a method of apportioning damages between the parties where the injured party has, subsequent to infliction of the harm, failed to exercise that degree of care society demands of the reasonable person." Pennzoil Producing Co. v. Offshore Exp., Inc., 943 F.2d 1465, 1475 (5th Cir. 1991). The Trustee argues that the fact of settlement, and not the settlement amount, is enough to show that Debtor exercised that reasonable care and mitigated his damages. Pls. Reply at 4. Conversely, the Attorneys argue that Debtor did not mitigate his damages, but if he did, the amount of the settlement adjudged by the value of the assets subject to collection, approximately $30,000, shows that Debtor fully mitigated his losses and therefore suffered no damage. Defs. Supp. Br. at 5. The Attorneys argue that the remaining $330,000 represents loss resulting from Debtor's failure to use reasonable care. See, e.g., Pennzoil Producing Co., 943 F.2d at 1475. The fact of settlement alone is not enough to settle this issue. However, while the $30,000 value of the assets subject to collection varies from Debtor's total settlement liability of $360,000, the Attorneys are not free to use this as a window to interpret the Settlement Agreement or Agreed Judgment. The parties may argue over who is responsible for the entire $360,000, and the experts may use their bankruptcy expertise to accurately value the assets subject to collection, but the experts may not vary their explanation of the settlement's terms from the Court's interpretation.
CONCLUSION
In sum, Akerly's and Rubin's proffered testimony shall be stricken as it relates to interpretation of the Settlement Agreement and Agreed Judgment. Consequently, the Court hereby GRANTS Trustee's Motion to Exclude and Strike Expert Testimony.