Opinion
12905-20
03-30-2023
CINDAT MANHATTAN HOTEL PORTFOLIO LLC, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
L. Paige Marvel Judge.
On March 8, 2023, petitioner filed a Motion for Leave to File Report (Motion). In its Motion, petitioner requested leave to file an expert report pursuant to Rule 143(g) addressing the terms of the instrument at issue in this case, as well as petitioner's creditworthiness or capitalization. On March 13, 2023, we ordered respondent to file a response to petitioner's Motion by March 30, 2023. On March 22, 2023, respondent filed his Response to Motion for Leave to File Report. We will deny petitioner's Motion without prejudice.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Despite requesting leave to file an expert report, petitioner has not lodged an expert report with the Court. Instead, petitioner represents that it "has had an initial discussion with a proposed expert to prepare a report and to testify[.]" Petitioner states that it is filing its Motion now, instead of when a report is available, "to avoid the time and expense of retaining an expert and having the expert issue a report only to have the Court agree with Respondent's previously stated objection to the introduction of expert testimony on the terms of the Note." Respondent argues that "[i]f petitioner plans to call an expert witness at trial, petitioner must file a motion for leave to file an expert report and lodge the expert report in compliance with T.C. Rule 143(g) and the Court's Standing Pretrial Order, which is to be issued."
Petitioner characterizes respondent as having indicated that he "would object to any motion filed by Petitioner related to the introduction of expert testimony." Respondent disputes this characterization of his objection, stating that he objected to petitioner's attempt to introduce expert testimony in this case when it was still set for trial at our February 27, 2023, New York City, New York, trial session because petitioner failed to comply with Rule 143(g)(1) and (2) and with the procedures set forth in our October 26, 2022, Standing Pretrial Order. This dispute is immaterial to our resolution of petitioner's Motion.
We agree with respondent. Under Rule 143(g)(2), an expert report is received into evidence as the expert witness's direct testimony, and the Court must determine whether the expert witness is qualified before receiving it. Additionally, the Court must determine whether the expert report complies with the Federal Rules of Evidence before receiving it into evidence. See § 7453; Rule 143(a); see also Purple Heart Patient Ctr. v. Commissioner, T.C. Memo. 2021-38, at *15-22. Engaging in such evidentiary gatekeeping is impossible without the expert report or the identity of the expert witness. Rule 143(g)(2) also requires a party to serve a copy of an expert report on each other party no later than 30 days before the call of the trial calendar. One purpose of this requirement is to allow an opposing party to review the expert report and then file a motion in limine or otherwise object before the expert report is received into evidence. Cf. Trimmer v. Commissioner, 148 T.C. 334, 359 (2017) (excusing missed expert report deadline in part because "[r]espondent's counsel was able to prepare a thorough motion in limine detailing objections to the testimony" and "[r]espondent's counsel also ably argued her motion in limine and ably cross-examined" the expert witness). This purpose would not be served by granting petitioner leave to file an expert report before the expert report even exists and before respondent has a fair opportunity to review it and object to it.
We also doubt whether petitioner's request to afford it the prerogative to introduce into evidence an expert report that has not yet been written, notwithstanding any meritorious objection that respondent might have once it is written, comports with fundamental fairness or the just determination of this case. Cf. Rule 1(d). Petitioner is not entitled to blanket permission to introduce, for example, a report by an unqualified expert witness, an expert report that uses an unreliable methodology, or an expert report that would not be helpful to the Court in trying this case. See Purple Heart Patient Ctr., T.C. Memo. 2021-38, at *15-22. While petitioner has a justifiable concern about the expense of an expert witness, section 7430 prescribes the procedure by which a prevailing party in a court proceeding related to the determination, collection, or refund of tax may be awarded reasonable litigation costs. In particular, section 7430(c)(1)(B)(i) addresses the reimbursement of a prevailing party for expert witness expenses.
We also note that the Court's Standing Pretrial Order dated October 26, 2022, states expressly that
If a party plans to call an expert witness at trial, that party must file a Motion for Leave to File an Expert Report and lodge (that is, submit separately through DAWSON if registered for eFiling or otherwise submit in paper) the expert report. An expert witness's testimony may be excluded if the party fails to comply with this Order and Rule 143(g).
While no standing pretrial order is currently in effect because this case is not scheduled on a trial calendar, we will likely issue the same or a very similar order if and when this case is again placed on a trial calendar. It would circumvent our regular and longstanding procedures to grant leave to file an expert report when a party has not lodged the expert report with the Court. Because petitioner's request for leave to file an expert report is premature, it is
ORDERED that petitioner's Motion for Leave to File Report, filed March 8, 2023, is denied without prejudice.