Opinion
C.A. No. 02C-10-223 SCD.
Submitted: October 14, 2005.
Decided: October 19, 2005.
Upon Defendants' TransCapital Corporation, TransCapital Computer Corporation and Equipment Leasing Associates 1995-VI Limited Partnership Motion in Limine.
OPINION
The defendant has filed a motion in limine seeking to preclude evidence of TransCapital Corporation ("TCC") payment for the computers it purchased from Iso-Trade. It is undisputed that TCC's cost was approximately $16 million and that the sale price to FA, Inc. was approximately $40 million.
Defendants argue that TCC had no duty to disclose its cost to FA, that FA knew the purchase price was not being disclosed, and that TCC's cost is irrelevant to a calculation of the fair market value of the computers.
Def.'S Mot. In Lim. 3.
The plaintiff responds that "the inflating of FA's purchase price on the basis of nonrecourse debt was an integral part of TransCapital's scheme to defraud FA by seemingly providing the tax benefits associated with the higher purchase price; while unbeknownst to FA, its purchase price far exceeded the equipment's FMV."
Pl.'s Resp. to Def.'s Mot. In Lim. 3.
Plaintiff provides case law for the proposition that fair market value is the price reached by a willing buyer and a willing seller, both of whom are "fully informed of all the relevant facts and circumstances." In essence, plaintiff argues that if the appraiser at Murray Devine had been provided with information about the actual price paid by TCC, that information "would have immediately raised a red flag regarding TransCapital's representation of the equipment's original cost."
Pl.'s Resp. 2.
Pl.'s Res. 3.
The individual who performed the appraisal for Murray Devine is deceased. The appraisal document explains that it uses the Market Approach to determine the current fair market value of the assets. Within that approach, it uses a "technique" called the Percent of Cost. That technique "is nothing more than establishing the ratio of the sales price to the current cost new of an asset at the time of sale." The second technique used in establishing value was the "comparable match which involves the development of value based on analysis of similar (but not identical) assets. . . ."
Def.'s Mot. Ex. G. FA-343.
Def.'s Mot. Ex. G. FA-344.
The conclusion of the report was that the current fair market value of the property was $40,953,220. There is nothing in the report which indicates that the appraiser needed the TCC purchase price to do his calculation.
The defendant has taken the deposition of the plaintiff's expert who calculated the fair market value of the computers at issue at the time of the sale. He testified that it was the historical cost, the cost of the equipment when it first went into service, that was necessary to determine value.
This case was previously scheduled for trial in June 2004. A pre-trial stipulation was filed on May 25, 2004, wherein the defendant indicated that it intended to file a motion in limine related to TCC's purchase price of the computers. Because of the delay in the trial, that motion was not filed until September 22, 2005. The record before me contains nothing to support the plaintiff's assertion that knowledge of TCC's purchase price would have had the consequence urged here.
Discussion
In order for evidence to be admissible, it has to be relevant. Relevant evidence is "evidence 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 than it would be without the evidence." The defendant has made a persuasive argument to support its contention that the evidence has no probative value. That is so because TCC's purchase price was clearly concealed throughout the transaction. The cost was redacted from documents provided to the appraiser, who conducted the appraisal and issued a report based on other information provided. This dispute has always centered on the allegation that the appraisal was faulty because the historical cost of the equipment was represented to have been $100 million when it was not. Whether that sum was told to the appraiser, and by whom, and with what state of mind, are focuses of the factual disputes. Further, defendant argues that the plaintiff's expert has candidly indicated that what he needed to know to form an opinion in this case was the historical cost, not TCC's cost. He testified that TCC's cost would have been "good to know, in terms of a reference point," but the historical cost is what mattered.
D.U.R.E. 401.
Hagialas Dep. 125.
The plaintiff makes a common sense argument. It argues that the actual purchase price of the computers was so significantly lower than the resale price to FA, Inc. a short time later that the independent appraiser would have valued the assets differently if it had known what TCC paid. No doubt the plaintiff would invite the jury to draw the inference that such a large profit for TCC had to be fraudulent.
At the argument of this motion last week, I suggested that it might be appropriate to permit the expert to clarify his position. I have reconsidered that suggestion, in view of the fact that this issue was raised over a year ago and the plaintiff has not provided any record to demonstrate the relevance of this evidence. Further, the defendant has deposed the plaintiff's expert, which deposition provided the basis for this motion, and defendant is entitled to rely on that testimony. The evidence of TCC's actual purchase price was not required for this transaction to take place, or for the plaintiff's expert to express an opinion about the fair market value of the property at the time of the transaction at issue. It would be just as speculative to conclude that a "red flag" would have been raised if the appraiser had the information, as it would be to conclude that the appraiser issued the report without sufficient data to do so. There are numerous potential reasons why merchandise might have been sold to TCC for a sum less than fair market value. And it is obvious to all that TCC intended to make a profit on the transaction. Permitting the plaintiff to introduce this evidence would lead to the admission of other irrelevant evidence, none of which would get us closer to the truth sought by the trial process.
The defendant's motion in limine is GRANTED.
IT IS SO ORDERED.