Bazarian International Financial Associates, LLC v. Desarrollos Hotelco, C.A. ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BAZARIAN INTERNATIONAL
FINANCIAL ASSOCIATES, LLC,
Plaintiff, Civil Action No. 13-1981 (BAH)
v. Chief Judge Beryl A. Howell
DESARROLLOS AEROHOTELCO, C.A., et
al.,
Defendants.
MEMORANDUM OPINION
Pending before the Court is the defendants’ Daubert Motion in Limine to Exclude the
Testimony & Reports of Williston H. Clover (“Defs.’ Mot.”), ECF No. 65. The plaintiff
originally offered Clover as an expert to opine on what appears to be eleven distinct topics, for
which the plaintiff asserted expert testimony would be relevant and aid the jury in resolving
disputed issues between the parties. See generally Pl.’s Opp’n Defs.’ Daubert Mot. Lim.
Exclude Test. & Report Williston H. Clover (“Pl.’s Opp’n”), ECF No. 69. At the pre-trial
conference, as clarified in a subsequent notice, the plaintiff withdrew three of those topics. Pl.’s
Notice of Withdrawal of Portions of the Expert Report & Rebuttal Expert Report of Williston H.
Clover (“Pl.’s Not.”), at 1–2, ECF No. 95. The defendants assert that Clover is unqualified to
offer expert testimony and failed to submit a report that complies with Rule 26(a)(2)(B) of the
Federal Rules of Civil Procedure, and, in any event, that Clover’s opinions are irrelevant, go to
matters of common understanding, rest on unreliable data and methods, and are unduly
prejudicial in light of their probative value. See Defs.’ Mot. For the reasons that follow, the
defendants’ motion is granted in part and denied in part.
I. FACTUAL BACKGROUND
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The Court’s prior Memorandum Opinion denying the defendants’ motion to dismiss the
plaintiff’s breach of contract claim, see Bazarian Int’l Fin. Assocs., LLC v. Desarrollos
Aerohotelco, C.A., 168 F. Supp. 3d 1, 24 (D.D.C. 2016), as well as the Court’s Memorandum
Opinion dismissing the plaintiff’s prior lawsuit against the defendants’ alleged predecessor
entity, Bazarian Int’l. Fin. Assocs., LLC v. Desarrollos Aerohotelco, C.A., 793 F. Supp. 2d 124,
125–27 (D.D.C. 2011), lay out in detail the present dispute’s factual background and, thus, will
not be recounted again here. In summary form, the plaintiff alleges that the defendants have
breached a written Agreement requiring payment of a fee to the plaintiff for facilitating the
financing for construction and operation of the Ritz-Carlton Hotel in Aruba. Under the
Agreement, the plaintiff was to “perform exclusive investment banking services,” requiring the
plaintiff to, among other things, (1) “structure the financial package for the Project and prepare
[a] self-contained Information Memorandum, including total project costs, proper debt/equity
ratios, and projected investor returns,” and (2) “conduct negotiations with” various institutional
lenders “to secure, on a best efforts basis, financing for the project.” Amend. Compl., Ex. A,
Agreement §§ 1.C, 1.D, ECF No. 13-1; see also id. § 1.D (providing that the plaintiff “will act as
the Company’s exclusive advisor and investment banker in working with financial institutions,
investors, and funding sources to raise the debt financing for the Company.”).
In consideration for these services, the Agreement provided that the plaintiff would
receive a “debt fee” to be “based on a flat two percent (2%) of the gross amount of the debt
financing provided to the Project, net of” certain amounts not at issue here. Id. § 2.C. Such fees
“are due and will become payable only upon the earlier of the first draw-down of funds and/or
the first infusion of equity capital, provided that financing has been committed to the Project as a
result of the efforts of Bazarian International.” Id. § 2.D. “Bazarian International will still be
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entitled to the . . . fee[],” pursuant to the Agreement, “if the financing for the Project is
concluded within thirty-six (36) months following the termination of this Agreement from
sources introduced to the Project by Bazarian International.” Id. § 3. Finally, the Agreement
directed that “[t]he Agreement will immediately become part of the relevant loan documents,
management agreements, joint-venture agreements, guaranty agreements, bridge loan facilities
and Memorandum of Association for this Project amongst and between the equity shareholders
and lenders.” Id.
The defendants timely filed the pending motion in limine, see Scheduling Order, dated
Nov. 14, 2017, and, following oral argument at the final Pre-Trial Conference on April 20, 2018,
this motion is now ripe for consideration before the trial scheduled to begin with jury selection,
on May 7, 2018.1
II. DISCUSSION
The defendants challenge the admissibility of Clover’s testimony on four grounds. First,
the defendants argue that Clover is unqualified to provide his proposed expert testimony and
relies on unsound methodology. Second, the defendants argue that Clover failed to submit a
report compliant with Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure, requiring his
testimony’s exclusion. Third, the defendants argue that the testimony Clover proposes to provide
goes to matters that do not call for expert opinion and thus is not relevant. Finally, the
defendants argue that Clover’s proposed testimony is unduly prejudicial in light of its probative
value and thus merits exclusion. Each of these arguments is addressed in turn.
A. CLOVER’S QUALIFICATIONS AND RELIABILITY OF HIS
METHODOLOGY
1
The defendants also timely filed a Motion in Limine to Exclude Testimony Regarding Defendants’ Foreign
Status, ECF No. 67, but the parties “have resolved this Motion,” see Joint Pre-Trial Statement (“JPTS”) at 6, ECF
No. 71, and the Court has entered an order memorializing the parties’ resolution of the issue, see Order, ECF No. 96.
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The defendants challenge Clover’s credentials and methodology as a basis for excluding
his proposed expert testimony. For the reasons that follow, Clover’s qualifications are sufficient
to satisfy the requirements of Rules 702 and 703.
“A witness who is qualified as an expert by knowledge, skill, experience, training, or
education may testify in the form of an opinion or otherwise” only if four conditions are met: (1)
“the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue,” (2) “the testimony is based on sufficient
facts or data,” (3) “the testimony is the product of reliable principles and methods,” and (4) “the
expert has reliably applied the principles and methods to the facts of the case.” FED. R. EVID.
702. In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Supreme Court
articulated a “two-prong analysis” under Rule 702 “that centers on evidentiary reliability and
relevancy: the district court must determine first whether the expert’s testimony is based on
‘scientific knowledge;’ and second, whether the testimony ‘will assist the trier of fact to
understand or determine a fact in issue.’” Ambrosini v. Labarraque, 101 F.3d 129, 133 (D.C.
Cir. 1996) (quoting Daubert, 509 U.S. at 592)).
Certainly, a critical aspect of the reliability of a proffered expert’s opinion stems from
that witness’s qualifications. In this regard, “experience” alone can constitute a basis of “reliable
principles and methods.” FED. R. EVID. 702(C); see also id. advisory committee’s note to 2000
amendment (“[T]he text of Rule 702 expressly contemplates that an expert may be qualified on
the basis of experience.”); Cedar Hill Hardware & Constr. Supply, Inc. v. Ins. Corp. of
Hannover, 563 F.3d 329, 343 (8th Cir. 2009) (holding that an expert’s proposed testimony was
admissible under Daubert due to the expert’s “exhaustive experience in the insurance industry”);
First Marblehead Corp. v. House, 541 F.3d 36, 41 (1st Cir. 2008) (determining an expert to be
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qualified based on “nearly two decades of experience as a consultant in economics, finance, and
strategy consulting”); Shaw Grp., Inc. v. Marcum, 516 F.3d 1061, 1068 (8th Cir. 2008) (finding a
witness qualified as an expert “based on his experience working with military contracts similar to
the” contract at issue); Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1016,
1018 (9th Cir. 2004) (recognizing that non-scientific or technical testimony need not be
“contingent upon a particular methodology or technical framework,” so long as an expert’s
testimony is “reliable based on his knowledge and experience,” and determining an expert to be
qualified based on “twenty-five years’ experience working for insurance companies and as an
independent consultant”); Kona Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d 595, 611-12 (5th
Cir. 2000) (recognizing “that a trial court's reliance on individuals experienced in a particular
field for the purposes of obtaining explanation of the technical meaning of terms used in the
industry is prudent.” (internal quotations and citation omitted)); Lauria v. Nat’l R.R. Passenger
Corp., 145 F.3d 593, 599 (3d Cir. 1998) (recognizing that an expert’s knowledge “need not be
based on testing or experiments beyond common understanding” so long as the expert’s
“testimony would be reliable or trustworthy in light of [the expert’s] practical background and
training”); Thomas v. Newton Int’l Enters., 42 F.3d 1266, 1270 n.3 (9th Cir. 1994) (“[N]on-
scientific testimony need only be linked to some body of specialized knowledge or skills” rather
than “to the scientific method.”). At the same time, however, an expert witness who “is relying
solely or primarily on experience . . . must explain how that experience leads to the conclusion
reached . . . and how that experience is reliably applied to the facts,” rather than expect a court to
“simply ‘tak[e] the expert’s word for it.’” Thomas v. City of Chattanooga, 398 F.3d 426, 432
(6th Cir. 2005) (internal quotation marks omitted) (quoting FED. R. EVID. 702 advisory
committee’s note to 2000 amendment)).
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1. Clover’s Qualifications
At the outset, the defendants’ critical assessment of Clover’s background falls short of
showing that he is unqualified to serve as an expert. The defendants point out that “Clover did
not graduate from college and has never held any real estate or investment banking licenses,” and
“has absolutely no background in investment banking.” Defs.’ Mot. at 21. This view of
Clover’s lack of qualifications is bolstered by the fact that “Clover in his reports frequently
interchanges the terms investment ‘banker’ and ‘broker,’” which the defendants assert “are
distinct professions and subject to different standards, licensing requirements, etc.” Id. “This
conflation of such a basic principle,” the defendants argue, “highlights Clover’s inadequacies
when it comes to investment banking.” Id. Indeed, the defendants complain that Clover
identified his industry in his deposition as “[f]inance, development, consulting, marketing,”
rather than investment banking services. Id. at 21 (quoting Williston H. Clover Dep. (“Clover
Dep.”) at 5:22–25, ECF No. 66-1).
The defendants’ criticism misses the mark because Clover does not hold himself out as an
investment banker. Instead, Clover’s Report states that he “ha[s] owned or been a board member
of companies involved in United States and international real estate development, finance,
consulting, and marketing for more than 50 years,” and “ha[s] extensive firsthand experience in
virtually every aspect of the industry, including finance, brokerage, consulting, development, and
property ownership.” Defs.’ Mot, Ex. A, Expert Report Williston H. Clover (“Clover’s Rpt.”) ¶
1.1, ECF No. 65-1. His experience appears to be directly related to “[t]he agreement at issue in
this case,” which “relates to securing financing (i.e. investment) from a bank for construction of
a hotel.” Pl.’s Opp’n at 18. Thus, Clover is qualified to opine on this subject regardless of the
specific terminology used, and his testimony is not excludable merely because the defendants
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may prefer “a different characterization of his specialization.” Id. Any of the defendants’
challenges to Clover’s qualifications go to the weight rather than admissibility of Clover’s
testimony and can be addressed through “[v]igorous cross-examination, presentation of contrary
evidence, and careful instruction on the burden of proof.” Daubert, 509 U.S. at 596.
2. Reliability of Clover’s Methodology
The defendants contend that Clover’s proffered expert opinions “fail[] to satisfy the
reliability requirement” because Clover “failed to employ any methodology, let alone one that
was valid and consistent.” Defs.’ Mot. at 16. In this regard, the defendants assert, “Clover
merely referred to what he claimed is ‘custom in the industry’ or industry standard, but failed to
explain how he complied with each to come to his opinions.” Id. Clover’s reliance on his
extensive experience in the industry is sufficient to support the opinions proffered in his Report.
A particular example is instructive on this point. In United States v. Vesey, the Eighth
Circuit determined that the district court abused its discretion in excluding the testimony of the
government’s expert witness, “a convicted drug trafficker and a confidential informant for law
enforcement” who “sought to present evidence of how illegal drug operations are normally
conducted and to counter the testimony of the government's expert witness.” 338 F.3d 913, 916
(8th Cir. 2003). The expert witness had “testified that he had extensive knowledge of the sale,
use, and distribution of narcotics as a result of his experience as a drug trafficker and as an
informant,” “used his knowledge to formulate general rules of drug trafficking behavior and to
explain the logic and reasoning behind that behavior from the point of view of drug dealers,” and
“then applied both the rules and the reasoning behind them to the behavior of the actors in this
case.” Id. at 917–18. Vesey concluded that the expert witness had provided sufficient evidence
that such testimony constituted “appl[ication of] principles and methods.” Id. at 918.
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Clover, as in Vesey, has “testified that he had extensive knowledge of,” id. at 917,
“international real estate development, finance, consulting, and marketing,” Clover’s Rpt. ¶ 1.1,
“as a result of his experience,” Vesey, 338 F.3d at 917, “in virtually every aspect of the industry,
including finance, brokerage, consulting, development, and property ownership,” Clover’s Rpt. ¶
1.1. Clover also states that he has “used his knowledge to,” Vesey, 338 F.3d at 917, formulate
his opinions, Clover’s Rpt. ¶¶ 4.1–4.11, and that he has “applied both the rules and the reasoning
behind them to the behavior of the actors in this case,” Vesey, 338 F.3d at 918. Specifically,
Clover opined, among other things, that (1) the lease proposal that the plaintiff prepared and
submitted to the Government of Aruba contained all the components of a typical Information
Memorandum, including “total project costs,” “proper debt/equity ratios,” and “projected
investor returns,” Clover’s Rpt. ¶ 4.4; (2) “Bazarian satisfied the requirement for financial
structuring” as that term is understood in the industry, id. ¶¶ 4.5–4.5.2; and (3) “[t]he term
‘commitment’ has various potential applications in the industry, and there are both binding
commitments and other, lesser types of commitments, including conditional commitments and
indicative term sheets,” with the commitments referred to in Section 2.B of the Agreement being
of the latter, non-binding type, id. ¶ 4.8. Clover’s proposed testimony thus satisfies Daubert’s
reliability requirement. To require Clover to go into more painstakingly and minute detail as to
how exactly he formulated his understandings of what the terms “Information Memorandum,”
“structuring,” and “commitments” mean and how precisely he “applied” those terms here would
be pedantic and set an impossibly high standard for expert witnesses to satisfy. See, e.g., Kumho
Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999) (“Daubert’s gatekeeping requirement [merely]
. . . make[s] certain that an expert, whether basing testimony upon professional studies or
8
personal experience, employs in the courtroom the same level of intellectual rigor that
characterizes the practice of an expert in the relevant field.”).
The defendants next argue that “Clover constructed his opinions specifically and solely
for use in this litigation and based predominantly on information supplied by Plaintiff, factors
that weigh in favor of excluding the proffered testimony.” Defs.’ Mot. at 17 (footnote omitted).
As the plaintiff correctly notes, however, “every expert is asked to opine on factual information
supplied to them by a party and, . . . if Defendants contend[] that he failed to adequately consider
other facts, such is a basis for cross examination, not exclusion of his opinions altogether.” Pl.’s
Opp’n at 24. Indeed, Daubert stated that “[v]igorous cross-examination, presentation of contrary
evidence, and careful instruction on the burden of proof are the traditional and appropriate means
of attacking shaky but admissible evidence.” 509 U.S. at 596.
In a similar vein, the defendants assert that “Clover makes multiple factual errors and
wrongful assumptions in coming to his opinions, including his narrative regarding the
relationship between Plaintiff and AIB Bank and the introduction of AIB to Defendants and the
Project.” Defs.’ Mot. at 19. The crux of the defendants’ argument is that Clover’s opinions
disregard other witnesses’ testimony, which the defendants argue is correct. See id. at 19–20.
This does not constitute a factual error or wrongful assumption, but a dispute of fact properly left
to the jury. Furthermore, even if Clover made factual errors or incorrect assumptions, these go
only to the weight, not admissibility, of Clover’s testimony. See, e.g., Rosenfeld v. Oceania
Cruises, Inc., 654 F.3d 1190, 1193 (11th Cir. 2011) (“[I]n most cases, objections to the
inadequacies of a study are more appropriately considered an objection going to the weight of
the evidence rather than its admissibility.” (quoting Hemmings v. Tidyman’s Inc., 285 F.3d 1174,
1188 (9th Cir.2002)); United States v. Jakobetz, 955 F.2d 786, 800 (2d Cir. 1992) (“[W]hether
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accepted protocol was adequately followed in a specific case . . . go[es] more to the weight than
to the admissibility of the evidence.”); Chefs Diet Acquisition Corp. v. Lean Chefs, LLC, Civ.
No. 14-8467, 2016 WL 5416498, at *10 (S.D.N.Y. Sept. 28, 2016) (“[C]ontentions that the
assumptions are unfounded go to the weight, not the admissibility, of the testimony.” (internal
quotation marks omitted)).
Accordingly, the defendants’ objections to Clover’s qualifications to serve as an expert
are overruled.
B. CLOVER’S REPORT SATISFIES RULE 26(a)(2)(B).
The defendants next contend that Clover’s Report fails to satisfy Federal Rule of Civil
Procedure Rule 26(a)(2)(B) and thus should be excluded under Rule 37(c). Defs.’ Mot. at 7–11.
With one exception, Clover’s Report satisfies each of Rule 26(a)(2)(B)’s requirements, as the
Rule does not require the granularity of detail upon which the defendants insist. Although
Clover fails to provide a complete list of all publications authored over the last 10 years, as Rule
26(a)(2)(B)(iii) requires, such error is harmless under Rule 37(c) in light of Clover’s offer to
provide such a list upon request. Thus, neither Clover’s Report nor testimony merit exclusion on
this basis.
1. The Requirements of Fed. R. Civ. P. 26(a)(2)(B)
Rule 26(a)(2)(B) requires that an expert witness disclosure must be accompanied by a
written report containing: (1) “a complete statement of all opinions the witness will express and
the basis and reasons for them;” (2) “the facts or data considered by the witness in forming
them;” (3) “any exhibits that will be used to summarize or support them;” (4) “the witness’s
qualifications, including a list of all publications authored in the previous 10 years;” (5) “a list of
all other cases in which, during the previous 4 years, the witness testified as an expert at trial or
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by deposition;” and (6) “a statement of the compensation to be paid for the study and testimony
in the case.” FED. R. CIV. P. 26(a)(2)(B).
“The purpose of [Rule 26(a)(2)(B)] is to avoid unfair surprise to the opposing party.”
Heller v. District of Columbia, 801 F.3d 264, 270 (D.C. Cir. 2015) (internal quotation marks
omitted). Rule 26(a)(2)(B), however, “does not limit an expert’s testimony simply to reading his
report,” but rather “contemplates that the expert will supplement, elaborate upon, and explain his
report in his oral testimony.” Muldrow ex rel. Estate of Muldrow v. Re-Direct, Inc., 493 F.3d
160, 167 (D.C. Cir. 2007) (internal alterations and quotation marks omitted). A report that
“recounts in detail the expert’s relevant experience” and “contain[s] an explicit statement as to
the basis for that witness’s opinion”—namely, that the “report was based ‘on my experience, my
review of numerous studies and books, [relevant] laws and regulations, and discovery materials
from this case made available to me”—satisfies Rule 26(a)(2)(B). Heller, 801 F.3d at 271.
Rule 37(c)(1), meanwhile, provides that a party who fails to comply with Rule
26(a)(2)(B) “is not allowed to use that information or witness to supply evidence on a motion, at
a hearing, or at a trial, unless the failure was substantially justified or is harmless.” FED. R. CIV.
P. 37(c)(1). “In addition to or instead of this sanction,” however, “the court, on motion and after
giving an opportunity to be heard,” may (1) “order payment of the reasonable expenses,
including attorney’s fees, caused by the failure;” (2) “inform the jury of the party’s failure;” and
(3) “impose other appropriate sanctions.” Id.
2. Analysis
The defendants challenge the sufficiency of Clover’s Report on three grounds. First, the
defendants argue that “Clover’s Report is incomplete, as it fails to provide the basis and
reasoning behind each of his purported opinions.” Defs.’ Mot. at 9. This is incorrect, as
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Clover’s Report, like the reports admitted in Heller, identifies Clover’s relevant experience and
the documents Clover considered in formulating his opinions. Clover’s Rpt. ¶¶ 1.1–1.8, 3.1–
3.1.17; see Heller, 801 F.3d at 271.
Second, the defendants argue that “Clover’s Report, apart from listing ‘Documents and
Source Material Considered,’ fails to set forth the specific facts or data considered by Clover in
forming his opinions and fails to attach even one exhibit supporting these opinions.” Defs.’ Mot.
at 9. Rule 26(a)(2)(B) does not, however, require an expert to identify the facts or data they
considered in such granular detail; to the contrary, Heller held that a district court did not abuse
its discretion in admitting expert reports that stated merely that the experts had based their
conclusions on their experience, review of books and article, review of relevant legal authority,
and discovery materials. 801 F.3d at 271; see also Chefs Diet Acquisition Corp., 2016 WL
5416498, at *10 n.6 (S.D.N.Y. Sept. 28, 2016) (holding that an expert properly identified the
materials on which he had relied in formulating his opinions by “provid[ing] an Attachment
listing the materials, all of which were apparently produced to Defendants as part of discovery”).
Furthermore, Rule 26(a)(2)(B) does not require an expert to rely on exhibits, only that an expert
must attach any exhibits used to summarize or support the expert’s opinions. See FED. R. CIV. P.
26(a)(2)(B)(iii) (requiring an expert’s report to contain “any exhibits that will be used to
summarize or support [the expert’s opinions]” (emphasis added)). The plaintiff explains that
“Clover did not include any exhibits as part of his Report because he does not intend to use
exhibits to summarize or support his opinions.” Pl.’s Opp’n at 11; see also Malibu Media, LLC
v. Harrison, Civ. No. 1:12-CV-01117-WTL, 2014 WL 5598582, at *5 n.2 (S.D. Ind. Nov. 3,
2014) (holding that a plaintiff did not improperly fail to attach exhibits to an expert report where
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“neither Plaintiff nor [the expert] will use any exhibits to summarize or support [the expert’s]
report” (internal alterations and quotation marks omitted)).
Third, the defendants assert that “Clover’s Report fails to sufficiently provide Clover’s
qualifications,” as the “[p]laintiff did not include in its disclosure materials a curricul[um] vitae
or other statement of qualifications identifying Clover’s credentials, educational background,
licensures (if any), etc.” Defs.’ Mot. at 9. Instead, “some of the ‘qualifications’ listed by Clover
in his report are referencing his company’s qualifications and experience rather than his own.”
Id. at 9–10 (footnote omitted). The defendants take issue with Clover’s reliance on “his
experience in the industry” as a basis for his asserted expertise, asserting that Clover fails “to
sufficiently identify an applicable ‘industry.’” Id. at 10. In this regard, the defendants contend
that Clover identifies his industry too broadly or vaguely and that Clover fails to explain
adequately the reasoning, but defendants identify no legal authority requiring Clover to explain
his expertise or reasoning with greater granularity. Id.
The very first sentence of Clover’s Report states that Clover is experienced in
“international real estate development, finance, consulting, and marketing.” Clover’s Rpt. ¶ 1.1.
Clover then details his experience and qualifications over eight paragraphs, including his
employers, job titles, length of experience, responsibilities, speaking engagements, and examples
of projects on which he has worked. Id. ¶¶ 1.1–1.8. Rule 26(a)(2)(B) does not require an expert
to provide a curriculum vitae—only “the witness’s qualifications, including a list of all
publications authored in the previous 10 years.” FED. R. CIV. P. 26(a)(2)(B). Although Clover
does not provide a complete list of publications, as Rule 26(a)(2)(B) requires, he states that he
has “published several articles on development, finance, and leadership in Overseas Property
Professional (UK),” and, more importantly, that he “would be happy to provide copies of them
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upon request.” Clover’s Rpt. ¶ 2.2. In light of this offer, any failure to provide a complete list of
Clover’s publications is harmless. See FED. R. CIV. P. 37(c)(1) (allowing an expert to testify
where a failure to comply with Rule 26(a) is “harmless”). Finally, references to the
qualifications of “the company that Clover personally owns and operates” are merely
“background information to Clover’s qualifications.” Pl.’s Opp’n at 12. Rule 26(a)(2)(B)
requires an expert report to provide information sufficient to “avoid unfair surprise to the
opposing party.” Heller, 801 F.3d at 270 (internal quotation marks omitted). Clover’s Report
satisfies this standard, even if it does not provide all the information the defendants would like.
For these reasons, Clover’s Report does not violate Rule 26(a)(2)(B) except as to Clover’s failure
to provide a complete list of publications, which is harmless.
C. The Relevance of Clover’s Proposed Testimony
The plaintiff originally proposed to offer Clover’s expert opinions and conclusions
seemingly on eleven issues, see Clover’s Rpt. ¶¶ 4.1–4.11, but as detailed below, withdrew three
of his proffered opinions at the pretrial conference and in a subsequent notice, see Pl.’s Not. at 1–
2. The defendants challenge Clover’s testimony as irrelevant, contending that the proffered
testimony would not assist a trier of fact in resolving any factual dispute between the parties.
Defs.’ Mot. at 11–15. The relevant legal principles governing contractual interpretation and the
admission of expert testimony are set out below, and addressed in application to the remaining
parts of Clover’s proposed testimony.
1. Overview: Use of Expert Testimony in Contract Interpretation
“The proper interpretation of a contract, including whether a contract is ambiguous, is a
legal question.” Abdelrhman v. Ackerman, 76 A.3d 883, 887 (D.C. 2013) (internal quotation
marks omitted) (citing Tillery v. D.C. Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 2006)).
Under D.C. law, “the written language embodying the terms of an agreement will govern the
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rights and liabilities of the parties [regardless] of the intent of the parties at the time they entered
into the contract, unless the written language is not susceptible of a clear and definite
undertaking.” Id. at 888 (internal quotation marks omitted) (quoting Dyer v. Bilaal, 983 A.2d
349, 354–55 (D.C. 2009)). The task of interpreting the terms of a contract starts with the “plain
meaning of the language on the face of a fully integrated contract.” Id. (citing Tillery, 912 A.2d
at 1176). A contract is not ambiguous if “the court can determine its meaning without any other
guide than a knowledge of the simple facts on which, from the nature of language in general, its
meaning depends.” Sahrapour v. LesRon, LLC, 119 A.3d 704, 708 (D.C. 2015) (internal
quotation marks omitted) (quoting Joyner v. Estate of Johnson, 36 A.3d 851, 856 (D.C. 2012)).
Conversely, “[a] contract . . . is ambiguous if ‘it is, or the provisions in controversy are,
reasonably or fairly susceptible of different constructions or interpretations, or of two or more
different meanings.” Id. (quoting Joyner, 36 A.3d at 856). If the contract’s terms are ambiguous
“[e]xtrinsic or parol evidence which tends to contradict, vary, add to, or subtract from the terms
of a written contract” may be considered. Abdelrhman, 76 A.3d at 888 (internal quotation marks
omitted) (quoting Segal Wholesale v. United Drug Serv., 933 A.2d 780, 783 (D.C. 2007)); see
also M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 935 (2015) (“[A] court may look to
known customs or usages in a particular industry to determine the meaning of [the] contract.”);
id. at 937–38 (Ginsburg, J., concurring) (“[A] court must examine the entire agreement in light
of relevant industry-specific ‘customs, practices, usages, and terminology.’” (quoting 11
RICHARD A. LORD, WILLISTON ON CONTRACTS § 30:4, at 55–58 (4th ed. 2012)); Bennett Enters.,
Inc. v. Domino’s Pizza, Inc., 45 F.3d 493, 497 (D.C. Cir. 1995) (“The admissibility of extrinsic
evidence” under D.C. law “depend[s] upon the existence of an ambiguity in the contract.”).
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In determining the admissibility of expert testimony, including testimony intended to aid
the jury to understand the meaning of an ambiguous, disputed contractual term, a district court
must “determine whether the proffered expert testimony ‘is sufficiently tied to the facts of the
case that it will aid the jury in resolving a factual dispute.’” Ambrosini, 101 F.3d at 134 (quoting
Daubert, 509 U.S. at 591). The relevance of proposed expert testimony does not depend on
whether the testimony “satisfies the plaintiff’s burden on the ultimate issue at trial,” but whether
the testimony “could aid the jury’s resolution of the [parties’] claims.” Id. at 135–36. Expert
testimony that provides “specialized, technical matter concerning which a lay jury may benefit
from a qualified expert’s tutelage” is relevant. U.S. ex rel. Miller v. Bill Harbert Int’l Constr.,
Inc., 608 F.3d 871, 895 (internal quotation marks omitted) (D.C. Cir. 2010); see also FED. R.
EVID. 702 advisory committee’s note to 2000 amendment (explaining that expert testimony that
seeks “to educate the factfinder about general principles, without ever attempting to apply these
principles to the specific facts of the case,” is relevant if “the testimony ‘fit’ the facts of the
case.”).
“Expert testimony which does not relate to any issue in the case,” however, “is not
relevant and, ergo, non-helpful.” Daubert, 509 U.S. at 591 (internal quotation marks omitted).
“Rule 702’s ‘helpfulness’ standard requires” at a minimum “a valid . . . connection to the
pertinent inquiry as a precondition to admissibility.” Id. at 591–92. “[W]here the jury is just as
competent to consider and weigh the evidence as is an expert witness and just as well qualified to
draw the necessary conclusions therefrom, it is improper to use [expert] evidence for the
purpose.” Gilmore v. Palestinian Interim Self-Gov’t Auth., 843 F.3d 958, 973 (D.C. Cir. 2016)
(quoting Henkel v. Varner, 138 F.2d 934, 935 (D.C. Cir. 1943)); see also Salem v. U.S. Lines
Co., 370 U.S. 31, 35 (1962) (“[E]xpert testimony not only is unnecessary but indeed may
16
properly be excluded in the discretion of the trial judge ‘if all the primary facts can be accurately
and intelligibly described to the jury, and if they, as men of common understanding, are as
capable of comprehending the primary facts and of drawing correct conclusions from them as are
witnesses possessed of special or peculiar training, experience, or observation in respect of the
subject under investigation.’” (quoting U.S. Smelting Co. v. Parry, 166 F. 407, 411, 415 (10th
Cir. 1909)); Ancho v. Pentek Corp., 157 F.3d 512, 519 (7th Cir. 1998) (“[A]n expert . . . must
testify to something more than what is obvious to the layperson in order to be of any particular
assistance to the jury.” (internal quotation marks omitted)); Hibiscus Assocs. Ltd. v. Bd. of Trs. of
Policemen & Firemen Ret. Sys. of City of Detroit, 50 F.3d 908, 917 (11th Cir. 1995) (“Expert
testimony is properly excluded when it is not needed to clarify facts and issues of common
understanding which jurors are able to comprehend for themselves.”).
“Recognizing th[e] fact” that “some expert opinions are more helpful or more valid than
others,” Bill Harbert Int’l Constr., Inc., 608 F.3d at 894, “the Rules of Evidence—especially
Rule 702—assign to the trial judge the task of ensuring that an expert’s testimony both rests on a
reliable foundation and is relevant to the task at hand.” Daubert, 509 U.S. at 597. District
judges thus play “a gatekeeping role” in determining whether proffered expert testimony will aid
“the particularized resolution of legal disputes.” Id. This “‘gatekeeping’ obligation,” moreover,
“applies not only to testimony based on ‘scientific’ knowledge, but also to testimony based on
‘technical’ and ‘other specialized’ knowledge.” Kumho Tire Co., 526 U.S. at 141. “[A] district
court has broad discretion regarding the admission or exclusion of expert testimony.” United
States v. Day, 524 F.3d 1361, 1367 (D.C. Cir. 2008) (quoting Joy v. Bell Helicopter Textron,
Inc., 999 F.2d 549, 567 (D.C. Cir. 1993)); see also SeaWorld of Fla., LLC v. Perez, 748 F.3d
1202, 1214 (D.C. Cir. 2014) (“Finders of fact are normally accorded wide latitude in determining
17
whether proffered expert testimony would be helpful.” (internal alterations and quotation marks
omitted)). “The proponent of the expert testimony bears the burden to establish the admissibility
of the testimony and the qualifications of the expert.” United States v. McGill, 815 F.3d 846,
903 (D.C. Cir. 2016).
Clover’s Report enumerates eleven supposedly distinct categories of testimony that
Clover proposes to offer to the jury. Each category of proposed testimony is set off in a separate
paragraph or paragraphs of Clover’s Report. See Clover’s Rpt. ¶¶ 4.1–4.11. The admissibility of
each category of proposed testimony is addressed in turn.
2. Whether a Two-Percent Debt Fee is the Industry Standard
The first matter on which Clover proposes to opine is “whether a 2% debt fee, like that
found in the Agreement at issue in this case, is standard in the industry for investment banking
contracts like the one at issue in this case.” Clover’s Rpt. ¶ 4.1. The Agreement entitles the
plaintiff, “[u]pon settlement of binding loan and/or guarantee commitments for the Project
obtained directly or indirectly by Bazarian International,” to a “debt fee will be based on a flat
two-percent (2%) of the gross amount of the debt financing provided to the Project,” net of
certain amounts not at issue here. Agreement § 2.C. Clover asserts that “a 2% fee is lower than
the industry standard internationally, especially if it includes structuring and the creative funding
process,” and that he, if “asked to undertake such an assignment,” would require a fee of “3% of
the actual amounts funded,” as well as “a retainer, and an agreement stating that all fees due
would be paid from closing proceeds at closing by the closing attorney.” Clover’s Rpt. ¶ 4.1.
Clover concludes that “[t]he fee for this transaction is certainly not excessive in this business”
and “if anything, somewhat lower than the industry standard.” Id. Clover elaborates on this
testimony in his rebuttal report. See, e.g., Defs.’ Mot., Ex. B, Rebuttal Expert Report of
18
Williston H. Clover (“Clover’s Rebuttal Rpt.”) ¶ 2.3, ECF No. 65-2 (“My firm typically charges
a 3% fee for placing debt and a 5% fee for placing equity.”); see also id. ¶¶ 2.1–2.4.
The plaintiff fails entirely to explain how the reasonableness of the fee amount to which
the plaintiff claims entitlement is relevant to whether the plaintiff is in fact due such fee. The
issue here is not whether the fee amount is reasonable but rather whether the plaintiff satisfied
the contract’s terms so as to be entitled to the fee. The contract at issue is the product of
negotiation between the parties and clearly provides that the debt fee is to “be based on a flat
two-percent (2%) of the gross amount of the debt financing to the Project.” Agreement § 2.C.
Any testimony as to what fee amount is industry standard thus is irrelevant. See, e.g.,
Radiologix, Inc. v. Radiology & Nuclear Med., LLC, No. 15-4927-DDC-KGS, 2018 U.S. Dist.
LEXIS 29934, at *21 (D. Kan. Feb. 26, 2018) (excluding proposed expert testimony “about the
Agreement’s Service Fee—i.e., it was higher than the fees usually established in practice
management agreements,” as “not relevant to defendant’s damages claim” and as “irrelevant to
the issues that the trier of fact must decide here—i.e., whether the parties satisfied their
obligations that they specifically agreed to perform when they entered the Agreement.”).
The plaintiff’s vague and conclusory assertion that Clover’s testimony “regarding
common understandings and practices in the industry” would “provid[e] necessary background
to help the jury understand the issues in this case and the testimony of fact witnesses,” Pl.’s
Opp’n at 20, does not adequately explain how testimony on the reasonableness of the fee to
which the parties agreed “relate[s] to any issue in the case” or has a “a valid . . . connection to the
pertinent inquiry,” which is “a precondition to admissibility.” Daubert, 509 U.S. at 591–92. The
plaintiff also asserted, at the Pre-Trial Conference, that the reasonableness of a two-percent fee
would be relevant to a quantum meruit claim, see Hr’g Tr., but this claim has been dismissed, see
19
Bazarian, 168 F. Supp. 3d at 24–25, and the plaintiff failed to move timely for reconsideration.2
The testimony Clover proposes to offer in Paragraph 4.1 of his report and the associated portions
of his rebuttal report thus are inadmissible as irrelevant.3
3. Whether a Debt Commission Typically is Calculated Based on the Full Amount
Loaned or Only the Amount the Lead Arranger Lends
The second matter on which Clover proposes to opine is “whether it is commonly
understood in the industry that a commission for arranging debt” such as the commission to
which the plaintiff claims he is entitled “is calculated based on the full amount lent by a lending
consortium or whether the fee is calculated based only on the amount actually lent by the lead
arranger for the consortium.” Clover’s Rpt. ¶ 4.2. The Agreement provides that the debt fee is
to be calculated “based on a flat two percent (2%) of the gross amount of the debt financing
provided to the Project.” Agreement § 2.C (emphasis added). Clover asserts that “it is
commonly understood in the industry that the brokerage/consulting fee is charged to and paid by
the borrower based on the full amount of the loan syndicated and committed to by the
syndicating manager,” that “the lead arranger/syndicator/manager” commonly “act[s] as
managing partner in the consortium, . . . spread[ing] risk and charges among participating
lenders, much like the insurance business,” that “[t]he fee or commission is usually paid by the
borrower,” and that “[t]he broker and borrower depend on the lender [the] submit[] the
transaction to, and often do[] not know of other participants as the commitment generally is
issued in the lead lender/syndicator/manager’s name.” Clover’s Rpt. ¶ 4.2.
2
All citations to the Pre-Trial Conference transcript refer to an unofficial version of the transcript available
to the Court. An official version of the transcript will be placed on the public docket in this case.
3
The plaintiff has informed the Court that it withdraws from paragraph 2.4 of Clover’s Rebuttal Report the
reference to the plaintiff’s “well-earned reputation and track record of success in hotel financing placements in the
Caribbean” and assertion that “Bazarian has had more successful placements for hotel and resort financing in the
Caribbean than any other firm and Bazarian’s resulting reputation was important to its efforts and success in this
case.” See Pl.’s Not. at 2.
20
As with testimony regarding the industry standard fee amount, the plaintiff has failed to
explain how the basis on which fees of the sort at issue here typically are calculated is relevant in
any way to whether the plaintiff is entitled to the fee. The Agreement unambiguously specifies
that the debt fee is to be calculated based on “the gross amount of the debt financing provided to
the Project,” Agreement § 2.C, not any particular lender’s contribution to the project. Whether
fees such as that at issue here typically are calculated based on the full amount that a lending
consortium loans or only the amount that the consortium’s lead arranger loans is irrelevant to the
amount of the fee the plaintiff asserts it is due under the Agreement. Once again, to the extent
this issue would be relevant to a quantum meruit claim, no quantum meruit claim remains in this
case. The plaintiff thus has not met its burden to show that Clover’s testimony “relate[s] to any
issue in the case” or has a “a valid . . . connection to the pertinent inquiry.” Daubert, 509 U.S. at
591–92. The testimony Clover proposes in Paragraph 4.2 thus is inadmissible.
4. Whether the Proposal Included All Information That an Industry-Standard
Confidential Information Memorandum Would Contain
The third matter on which Clover proposes to opine is “whether the Proposal prepared by
Bazarian and submitted to the Government of Aruba included all of the financial information that
would typically be covered in an industry standard, self-contained Confidential Information
Memorandum, including: (i) total project costs; (ii) proper debt/equity ratios; and (iii) projected
investor returns.” Clover’s Rpt. ¶ 4.4. The “Confidential Information Memorandum” of which
Clover speaks refers to Section 1.C of the Agreement, which required the plaintiff to, among
other things, “prepare a[] self-contained Information Memorandum, including total project costs,
proper debt/equity ratios, and projected investor returns.” Agreement § 1.C. Defendant
Desarrollos Aerohotelco, C.A.’s third affirmative defense to the plaintiff’s breach of contract
claim, titled “Failure of Condition Precedent – Structure Financial Package/Information Memo,”
21
is that the plaintiff “failed to adequately and timely” perform the requirements of Section 1.C.
See Desarrollos Aerohotelco, C.A.’s Answer at 7. The other defendants adopt this affirmative
defense as well. See Defs.’ Answer at 8. Thus, whether the Proposal, though “not designated
as” an Information Memorandum, nonetheless contained “all of the financial information that
would typically be covered in” and “serve[d] the same purpose and function as a Confidential
Information Memorandum for potential lenders,” Clover’s Rpt. ¶ 4.4, is relevant “to determine a
fact in issue,” Daubert, 509 U.S. at 591—namely, whether the plaintiff performed Section 1.C’s
requirements.
Clover asserts that “the Proposal did cover all of the components that would normally be
seen in a Confidential Information Memorandum,” and that “[w]hile the Proposal was not
designated as such, it could thus serve the same purpose and function as a Confidential
Information Memorandum for potential lenders (and appeared to do so with respect to AIB
Bank’s submission of its indicative term sheet).” Clover’s Rpt. ¶ 4.4. “In practice,” Clover says,
“if the recipient of such information requires any additional information, they specifically
request it; otherwise, the information received is deemed complete and satisfactory.” Id.; see
also Clover’s Rebuttal Rpt. ¶ 4.3 (“[I]t is common not to dictate every element in order to give a
lender flexibility in revising the structure of the transaction to meet their own internal
guidelines.”). Moreover, what an Information Memorandum typically contains and the function
it serves are not “issues of common understanding which jurors” reasonably may be expected “to
comprehend for themselves,” Hibiscus Assocs. Ltd., 50 F.3d at 917, but rather are “specialized,
technical matter concerning which a lay jury may benefit from a qualified expert’s tutelage.”
Bill Harbert Int'l Constr., Inc., 608 F.3d at 895 (internal quotation marks omitted). The
22
testimony Clover proposes in Paragraph 4.4 to offer and related portions of Clover’s rebuttal
report thus are relevant and admissible.
5. Whether the Plaintiff Satisfied the Requirement for Financial Structuring
The fourth matter on which Clover proposes to opine is “what ‘structuring’ the financial
package (as that term is used in section l.C. of the Agreement) means within the industry.”
Clover’s Rpt. ¶ 4.5. The Agreement provided that “Bazarian International will structure the
financial package for the Project.” Agreement § 1.C. Defendant Desarrollos Aerohotelco,
C.A.’s third affirmative defense to the plaintiff’s breach of contract claim, entitled “Failure of
Condition Precedent – Structure Financial Package/Information Memo,” is that the plaintiff
“failed to adequately and timely” perform the requirements of Section 1.C. See Desarrollos
Aerohotelco, C.A.’s Answer at 7. The other defendants adopt this affirmative defense as well.
See Defs.’ Answer at 8.
What “‘structuring’ [a] financial package . . . means within the industry,” as well as
whether the plaintiff “satisfied the requirement for financial structuring,” Clover’s Rpt. ¶¶ 4.5–
4.5.1, are not “issues of common understanding which jurors” reasonably may be expected “to
comprehend for themselves,” Hibiscus Assocs. Ltd., 50 F.3d at 917, but rather are “specialized,
technical matter concerning which a lay jury may benefit from a qualified expert’s tutelage.”
Bill Harbert Int’l Constr., Inc., 608 F.3d at 895 (internal quotation marks omitted).
Clover asserts that “[s]tructur[ing]” a financial package “requires a deep knowledge of
the tools available to finance an effort,” and that those “tools involve a common first mortgage,
subordinated debt, mezzanine debt, a wraparound mortgage, third party guarantees, take out
commitments, and some 22 different identified tools and sources that can be combined in order
to accomplish the client's purpose,” as well as “a deep knowledge of w[ha]t investors will
23
accept.” Clover’s Rpt. ¶ 4.5. Clover further asserts that structuring a financial package “call[s]
into play” a broker’s “creativity . . . so that the objectives of the borrower are met.” Id. “The
key to success in most financial placements,” Clover says, “has to do with the structure of the
loan and how it is offered structurally, together with the flexibility of the offeror under such a
structure.” Id.
Clover further opines that the plaintiff “satisfied the requirement for financial structuring
and was creative in such structuring to the benefit of all concerned.” Id. ¶ 4.5.1. The plaintiff
did so, Clover opines, by “br[inging] AIB Bank to the table and emphasiz[ing] to Mr. Stipa that
it would be advantageous for AIB Bank to serve not only as a participant in a lending syndicate,
but as the lead arranger of senior debt.” Id. Finally, Clover opines that “the custom in the
industry and implicit understanding behind this type of agreement is that if a developer/borrower
ultimately elects to do some or all of the negotiations”—even such negotiations “that the
agreement states the investment banker or broker will undertake”—“the developer will pay the
called-for fee in any event to the broker, as the introduction was made by the broker.” Id. ¶
4.5.2. Clover’s proposed testimony goes to whether the plaintiff performed the requirements of
Section 1.C, and thus is relevant “to determine a fact in issue.” Daubert, 509 U.S. at 591. As
such, Clover’s proffered testimony in Paragraphs 4.5 through 4.5.2 is relevant and admissible.4
6. Whether Exclusion From a Transaction of an Investment Banker or Broker
After an Introduction to a Financing Source is Made is Common in the Industry
The fifth opinion Clover proposes to offer is that although “[t]he value of the investment
banker/broker is to stay in the process through the closing process to consult with both parties
and act as an advisor, . . . there are borrowers who consider themselves capable of carrying the
4
The plaintiff has informed the Court that it withdraws the language “and it would not be appropriate to hold
this against Bazarian” in paragraph 4.5.1 of Clover’s Report. See Not. Withdrawal at 1.
24
transaction forward through closing, but the impetus is to avoid paying fees that have been
earned.” Clover’s Rpt. ¶ 4.6. Typically, according to Clover, “[t]he broker earns his agreed
upon commission at the time he exposes the borrower and the transaction to the valuable
industry contacts that the broker has built up over years of providing a specialized service.” Id.
Clover also opines that “[t]he effort to establish confidence in the borrower with the lender is a
part of the broker’s role.” Id.5
Clover also asserts that “[b]ased on my review of the evidence, it seems that Mr. Stipa
and Desarrollos Hotelco relied on Mr. Bazarian’s well-developed relationship with AIB Bank
and Willem Broekaart to secure financing, as Mr. Bazarian had worked extensively with Mr.
Broekaart on the projects for several years and was well known to AIB Bank because of previous
projects in Aruba that they had worked on together.” Id. ¶ 4.6.1. “It is clear to me,” Clover says,
“that Bazarian was able to get AIB Bank as deeply involved as quickly as it did because of the
reserve of goodwill from Bazarian’s long established relationship with AIB Bank and Willem
Broekaart.” Id. Finally, Clover asserts that “Desarrollos then cut Bazarian out of the financing
process in July and August 2008” and that Stipa “never coordinated any further discussion with
AlB Bank with Bazarian.” Id. ¶ 4.6.2.
The defendants are correct that Clover’s testimony amounts to a recitation of what
occurred in the relationship among the plaintiff, Dessarollos and AIB Bank, as a factual matter,
relying largely on the plaintiff’s version of the facts, rather than offering much in the way of
expert testimony about the function of banking relationships within the industry. Further, Clover
5
The plaintiff has informed the Court that it withdraws the following language from paragraph 4.6 of
Clover’s Report: “I have been asked to opine on whether it is common in the industry for a client to exclude from a
transaction an investment banker or broker after a valuable introduction to a financing source has been made. My
opinion is that, while it is not common, I have over the years seen a few attempts to exclude an investment banker or
broker from a relationship to avoid paying fees.” See Pl.’s Not. at 1.
25
appears to be offering speculative views about the motivation of Dessarollos “to avoid paying
fees that have been earned.” Clover’s Rpt. ¶ 4.6. This proposed testimony essentially usurps,
rather than aids, the jury’s role in weighing the evidence and finding the facts. Clover’s opinions
go to matters that “can be accurately and intelligibly described to the jury,” who, as persons “of
common understanding, are” perfectly “capable of comprehending the primary facts and of
drawing correct conclusions from them.” Salem, 370 U.S. at 35. As such, the testimony Clover
proffers in Paragraphs 4.6 through 4.6.2 is inadmissible.
7. Whether the Plaintiff “Introduced” AIB Bank to the Project and to the
Defendants as that Term is Used in the Industry
The sixth matter on which Clover proposes to opine is “whether Bazarian made an
‘introduction’ of AIB Bank to the project and to Desarrollos Hotelco as that term is commonly
understood in the industry.” Clover’s Rpt. ¶ 4.7. Section 3 of the Agreement entitles the
plaintiff to fees “if the financing for the Project is concluded . . . from sources introduced to the
Project by Bazarian International. Agreement § 3 (emphasis added). Clover opines that the
plaintiff did make such an introduction, “as that term is commonly understood in the industry.”
Clover’s Rpt. ¶ 4.7. The plaintiff did so, according to Clover, in four ways. First, Clover opines,
the plaintiff “provided a copy of the indicative term sheet for mezzanine financing submitted by
AIB Bank while Mr. Bazarian held the option to Mr. Stipa,” thus “clearly indicat[ing] to
Desarrollos Hotelco that AIB Bank was a lender interested in financing the project.” Id.
Second, Clover opines, the plaintiff “made AIB Bank and Mr. Broekaart aware of Walter Stipa’s
and Desarrollos Hotelco’s potential involvement with the project.” Id. Third, Clover opines, the
plaintiff “arranged for and participated in the first face-to-face meeting between the AIB Bank
executives and Walter Stipa.” Id. Fourth, Clover opines, the plaintiff, and not the defendants,
“provided AIB Bank the information that [the bank] needed and was requesting to [(1)] consider
26
[the bank’s] participation in financing the project and [(2)] prepare the March 26, 2007 indicative
term sheet, including a financial model prepared by Bazarian.” Id. Clover opines that “each of
the above points satisfies me that Bazarian created and facilitated the introduction of AIB Bank
to the project and to Desarrollos Hotelco within the usual and customary meaning of that term in
the industry,” notwithstanding whether “AIB Bank and Desarrollos Hotelco previously had a
single telephone conference call or not.” Id.
These four specific actions taken by the plaintiff, as described by Clover, constituted an
“introduction” of the bank and the defendants, Clover’s Rpt. ¶ 4.7, but Clover does not opine
that any of these actions standing alone or only in some combination, are necessary to constitute
an “introduction” as that term is used in the industry. While Clover opines that the term
“introduction” has a “usual and customary meaning . . . in the industry,” id., he explains neither
what such meaning is nor whether or how that meaning diverges in any way from the term’s
ordinary meaning. The plaintiff thus identifies no grounds to conclude that the term
“introduced,” as used in Section 3 of the Agreement, is ambiguous. At most, Clover opines as to
the manner in which the plaintiff introduced the defendants to the bank, not that the specific
actions the plaintiff took were elements of an industry-standard introduction.
To testify merely that the plaintiff’s conduct satisfied the definition of an “introduction,”
without explaining that term’s meaning, would invade the trier of fact’s province. See, e.g., Red
Rock Commodities v. Standard Chtd. Bank, 140 F.3d 420, 423–24 (2d Cir. 1998) (affirming
exclusion of expert testimony designed “to put the agreement in a different perspective favorable
to [plaintiff] as a matter of banking practice” absent “any agreement ambiguity”); Hogan
Logistics, Inc. v. Davis Transfer Co., No. 4:16-cv-1541 CAS, 2018 U.S. Dist. LEXIS 3600, at *8
(E.D. Mo. Jan. 9, 2018) (excluding proposed expert testimony regarding definitions of terms in
27
contested agreement as applied “to the facts of the case to interpret the meaning of the
Agreement,” as “opinions invade the province of the jury because they interpret the Agreement
and offer precisely the conclusions [plaintiff] asks the jury to reach, essentially opining on the
Agreement’s legal effect.”). The term “introduced” thus is unambiguous, making expert
testimony unnecessary to elucidate the term’s meaning. See Segar, 508 F.3d at 22. As such, the
testimony Clover proffers in Paragraph 4.7 is inadmissible as irrelevant.
8. Whether the Plaintiff Received a Financial “Commitment” as that Term is Used
in the Industry
The seventh matter on which Clover proposes to testify is whether the Agreement
required the plaintiff to secure “final, binding [financial] commitment[s]” or “something other
than” that. Clover’s Rpt. ¶ 4.8. Section 2.B of the Agreement provided that “Bazarian
International proposes to receive the financial commitments within eight weeks from date of this
Agreement with cooperation of the Company.” Agreement § 2.B. Clover opines that “this
language—to the extent it is even legally binding . . . must have been referring to something
other than a final, binding commitment.” Clover’s Rpt. ¶ 4.8. “‘[C]ommitment’ has various
potential applications in the industry,” Clover opines,” including “both binding commitments
and other, lesser types of commitments, including conditional commitments and indicative term
sheets.” Id. Clover asserts that “[h]ere, it seems clear . . . that the indicative term sheet provided
by AIB Bank was the type of ‘commitment’ to which paragraph 2.B. was referring.” Id. “[N]o
lender would possibly issue a binding commitment or even a conditional commitment to the
project when Desarrollos Hotelco had not yet been awarded the option,” Clover says, “much less
signed the long-term land lease with the Government of Aruba.” Id.; see also Clover’s Rebuttal
Rpt. ¶ 5.2 (“In my experience, the first question that a lender asks is if the proposed borrower
owns or controls the property in question, this being because the bank does not want to spend
28
great sums of money on its staff to analyze any transaction before they know the borrower is
serious and has the land under control.”); id. ¶ 5.3 (“In any event, I don’t see how Bazarian could
have possibly obtained credit committee approval in a period of eight weeks from the date of the
Agreement in this situation.”).
The Court already has concluded that the term “commitments” is ambiguous, and that the
term’s meaning is relevant to the parties’ dispute. See Bazarian, 168 F. Supp. 3d at 20–22. This
determination is the law of the case. See TNA Merch. Projects, Inc. v. FERC, 857 F.3d 354, 363
(D.C. Cir. 2017). What that terms means in the industry context, moreover, is not an “issue[] of
common understanding which jurors” reasonably may be expected to understand for themselves,
Hibiscus Assocs. Ltd., 50 F.3d at 917, but rather is a “specialized, technical matter concerning
which a lay jury may benefit from a qualified expert’s tutelage.” Bill Harbert Int’l Constr., Inc.,
608 F.3d at 895 (internal quotation marks omitted). The testimony Clover proposes to offer in
Paragraph 4.8 and related portions of Clover’s rebuttal report thus are admissible.
9. Whether Investment Bankers Usually Require an Exclusive Agreement
The eighth matter on which Clover proposes to testify is “whether and why investment
bankers seek an ‘exclusive’ agreement to arrange for financing and whether the July 21, 2008
Syndicate Manager Agreement (Exhibit 28) between Desarrollos Hotelco and AIB Bank would
violate what is commonly understood by an ‘exclusive’ investment banking relationship in the
industry.” Clover’s Rpt. ¶ 4.9. Clover opines that the Syndicate Manager Agreement between
Desarrollos and AIB Bank “contravenes the exclusive agreement that the parties entered into and
29
makes it clear that the parties were trying to exclude Bazarian from the transaction as his name
was not even mentioned.” Id. ¶ 4.9.2.6
The Agreement unambiguously provides that the plaintiff shall “perform exclusive
investment banking services” in connection with the project. Agreement § 1; see also id. § 1.D
(“Bazarian International will act as the Company’s exclusive advisor and investment banker in
working with financial institutions, investors, and funding sources to raise the debt financing for
the Company.”). Clover’s proposed testimony is not the type from which a “lay jury may benefit
from a qualified expert’s tutelage,” Bill Harbert Int’l Constr., Inc., 608 F.3d at 895 (internal
quotation marks omitted), because there is no dispute here either that (1) investment bankers
typically seek exclusive agreements or, more significantly, that (2) the Agreement is an exclusive
agreement, since the language makes this amply clear. Clover’s testimony thus “relate[s] to [no]
issue in the case” and has no “valid . . . connection to the pertinent inquiry.” Daubert, 509 U.S.
at 591–92. Moreover, Clover bases his assertion that “the parties were trying to exclude” the
plaintiff solely on his observation that the plaintiff’s “name was not even mentioned,” Clover’s
Rpt. ¶ 4.9.2, evidence that “the jury is just as competent to consider and weigh . . . as is an expert
witness and just as well qualified to draw the necessary conclusions therefrom.” Gilmore, 843
F.3d at 973 (quoting Henkel, 138 F.3d at 935). The testimony Clover proposes to offer in
Paragraphs 4.9 through 4.9.2, thus, is neither relevant nor admissible.
10. Proffered Testimony by Clover Withdrawn By the Plaintiff
As noted the plaintiff has withdrawn three opinions originally offered by Clover. For
clarity of the record and for trial, these withdrawn opinions are described below.
6
The plaintiff has informed the Court that Clover’s proposed testimony as to the reasons investment bankers
and brokers require an exclusive arrangement is withdrawn from paragraph 4.9.1 of Clover’s Report. See Pl.’s Not.
at 2.
30
a. Whether An Industry-Standard Definition of the Term “Best Efforts Basis”
Exists and, If So, What Such Language Requires
Clover proposed to opine “whether there is a commonly understood definition in the
industry of language referring to securing financing on a ‘best efforts basis,’ such as that found
in Section 1.D. of the Agreement and, if so, what that language requires.” Clover’s Rpt. ¶ 4.3
(citing Agreement § 1.D, which required the plaintiff to, among other things “conduct
negotiations with” three categories of entities—“financial institutions, investors, and funding
sources”—in order “to secure, on a best efforts basis, financing for the Project.”). Clover posited
that the term “best efforts basis” “is usually included in any brokerage agreement of this sort, and
is designed to put the buyer on notice that the broker is not guaranteeing the placement of debt,
but will use his ‘best efforts’ to place the debt.” Clover’s Rpt. ¶ 4.3; see also Clover’s Rebuttal
Rpt. ¶ 3.1 (opining that “best efforts” terms are typically included in financing placement
contracts to make clear to the potential borrower that the intermediary is not guaranteeing
placement of debt or equity financing and is not acting as a lender.”); id. ¶¶ 3.1–3.6.7
The plaintiff wisely withdrew Clover’s testimony as to the term “best efforts basis,” Pl.’s
Not. at 1, since the plaintiff has failed to show that testimony as to the term’s meaning is “needed
to clarify facts and issues,” Hibiscus Assocs. Ltd., 50 F.3d at 917, beyond “what is obvious to the
layperson,” Ancho, 157 F.3d at 519 (internal quotation marks omitted), making Clover’s
proposed testimony irrelevant. Indeed, Clover admitted that “any professional dictionary of
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The plaintiff has informed the Court that it withdraws from paragraph 3.1 of Clover’s rebuttal report the
following sentence: “In my report, I simply explained that ‘best efforts’ terms are typically included in financing
placement contracts to make clear to the potential borrower that the intermediary is not guaranteeing placement of
debt or equity financing and is not acting as a lender.” See Pl.’s Not. at 2. The plaintiff has also informed the Court
that it withdraws from paragraph 3.2 of Clover’s rebuttal report the following sentence: “While I believe the
ramifications of this are more of a legal question than one for me to opine on as an expert, it would strike me as
grossly unfair that Mr. Stipa and Desarrollos Hotelco would be able to engage in this circumvention, prevent
Bazarian from completing the task it was hired to do, and then defend themselves on the basis that Bazarian failed to
complete the task.” Id.
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terms” would express the same meaning of the “best efforts basis” term, Clover’s Rpt. ¶ 4.3,
rendering the jury “just as competent to consider and weigh” a dictionary definition as is Clover.
Gilmore, 843 F.3d at 973 (quoting Henkel, 138 F.3d at 935). Thus, the meaning of “best efforts
basis” does not require expert testimony for a reasonable jury to understand, and expert
testimony as proposed would thus invade the trier of fact’s province by essentially testifying as
to the Agreement’s legal effect and that the plaintiff satisfied the “best efforts” term’s
requirements. See, e.g., Elorac, Inc. v. Sanofi-Aventis Can., Inc., No. 14 C 1859, 2017 U.S. Dist.
LEXIS 133449, at *78-80 (N.D. Ill. Aug. 21, 2017) (excluding proposed expert testimony on
meaning of contract term “commercially reasonable efforts” as used in disputed contract because
“proposed testimony cross[es] the line between helpful opinion testimony and testimony that
invades the province of the court by instructing the jury as to the meaning of a contract”).
b. Whether Including A Clause Incorporating By Reference All Lending
Agreements and Documents is Standard Industry Practice and if so, Why
Clover also proposed to testify “whether it is standard practice in the industry to include a
clause such as that found in Section 3 of the Agreement requiring the Agreement to be
incorporated by reference in all lending agreements and documents and, if so, why this is the
case.” Clover’s Rpt. ¶ 4.10 (citing Agreement § 3, which provides: “The Agreement will
immediately become part of the relevant loan documents, management agreements, joint-venture
agreements, guaranty agreements, bridge loan facilities and Memorandum of Association for this
Project amongst and between the equity shareholders and lenders.”). Clover opined that “[i]t is
common practice to agree that the agreement be included by reference or attachment to all
lending agreements and documents . . . in order to assure that the broker will not be eliminated
from such agreement during the exclusive period” and to “put[] any lender on notice that the fee
to a broker, in this case Bazarian, will be paid as agreed.” Clover’s Rpt. ¶ 4.10; see also Clover’s
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Rebuttal Rpt. ¶ 6.1. The plaintiff wisely has withdrawn Clover’s proposed testimony on this
subject, see Pl.’s Not. at 2, since whether including an incorporation clause such as that found in
Section 3 of the agreement is standard industry practice, the parties do not dispute that Section 3
itself contains such a clause or the meaning of such clause. As such, the plaintiff failed to show
the relevance of what other industry participants typically include in contracts, making Clover’s
testimony on this subject without any “valid . . . connection to the pertinent inquiry.” Daubert,
509 U.S. at 591–92.
c. Whether Forming Related or Successor Entities to Serve as a Mortgagor or
Borrower is Common Industry Practice
Finally, Clover proposed to opine on “whether it is common in the industry for related or
successor entities to be formed to serve as the mortgagor/borrower, especially where the client is
a foreign entity and the local government for the project in question requires a local entity to be
formed,” that “common practice [is] to have separate entities or corporations formed to hold
single assets,” and that “[o]n occasion a country will insist that the ownership be through a
corporation domiciled in the host country.” Clover’s Rpt. ¶ 4.11. Again, the plaintiff has
withdrawn Clover’s proposed testimony on this subject. See Not. at 2. This was a smart move.
Clover’s proposed testimony is not the type from which a “lay jury may benefit from a qualified
expert’s tutelage,” Bill Harbert Int’l Constr., Inc., 608 F.3d at 895 (internal quotation marks
omitted), because the parties simply do not dispute whether “hav[ing] separate entities or
corporations formed to hold single assets” and/or “a corporation domiciled in the host country”
own the assets in question are or are not common industry practices, Clover’s Rpt. ¶ 4.11,
meaning that Clover’s testimony “does not relate to any issue in the case” or have “a valid . . .
connection to the pertinent inquiry.” Daubert, 509 U.S. at 591–92.
***
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To summarize, Clover’s testimony is relevant and helpful to the trier of fact only as to (1)
whether the Proposal constituted an Information Memorandum, Clover’s Rpt. ¶ 4.4; Clover’s
Rebuttal Rpt. ¶¶ 4.1–4.4, (2) the industry requirements of “financial structuring, Clover’s Rpt. ¶
4.5–4.5.2, and (3) the industry meaning of the term “commitments,” id. ¶ 4.8 ; Clover’s Rebuttal
Rpt. ¶ 5.1–5.3.8
D. Whether Clover’s Report and Testimony are Unduly Prejudicial In Light of
Their Probative Value.
The defendants argue that Clover’s Report and proposed testimony are unduly prejudicial
in light of their probative value under Rule 403 because “[m]uch of Clover’s testimony . . .
serve[s] more as a character witness for Plaintiff than any expert testimony.” Defs.’ Mot. at 25.
“Here, due to his mere title as an expert witness,” the defendants argue, “Clover’s obviously
biased testimony, given his long relationship with Mr. Bazarian, will be afforded a greater
weight, despite the lack of any expert analysis being applied to his opinions.” Id.
“The court may exclude relevant evidence if its probative value is substantially
outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues,
8
The defendants argue that Clover’s proposed testimony on these three topics amounts to legal conclusions
rather than factual testimony based on expertise. Defs.’ Mot. at 23. While “[e]xpert testimony that consists
of legal conclusions cannot properly assist the trier of fact” and thus is inadmissible, “the line between an
inadmissible legal conclusion and admissible assistance to the trier of fact in understanding the evidence or in
determining a fact in issue is not always bright.” Burkhart v. Wash. Metro. Area Transit Auth., 112 F.3d 1207, 1212
(D.C. Cir. 1997). Whether expert testimony consists of impermissible legal conclusions turns on “whether the terms
used by the witness have a separate, distinct and specialized meaning in the law different from that present in the
vernacular. If they do, exclusion is appropriate.” Id. (internal quotation marks omitted). “In other words, an expert
may offer his opinion as to facts that, if found, would support a conclusion that the legal standard at issue was
satisfied, but he may not testify as to whether the legal standard has been satisfied.” Id. at 1212–13. Here, Clover’s
testimony as to whether the Proposal constituted an Information Memorandum, the requirements of financial
“structuring,” and the meaning of the term “commitments” would, if believed by the trier of fact, “support a
conclusion” that the plaintiff is legally entitled to a debt fee, but Clover does not opine directly as to “whether the
legal standard has been satisfied,” id. at 1213—i.e., whether the plaintiff has proven by a preponderance of the
evidence its breach of contract claim and is legally due the fee to which the plaintiff claims entitlement. As such,
the testimony Clover proposes to offer in paragraphs 4.4, 4.5–4.5.2, and 4.8 of his Report and paragraphs 4.1
through 5.3 of his Rebuttal Report thus does not constitute impermissible legal conclusions, but rather factual
testimony based on Clover’s expertise.
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misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”
FED. R. EVID. 403. “[W]eighing any factors counseling against admissibility is a matter first for
the district court’s sound judgment.” Sprint/United Mgmt. Co. v. Mendelsohn, 552 U.S. 379, 384
(2008) (quoting United States v. Abel, 469 U.S. 45, 54 (1984)). “This is particularly true with
respect to Rule 403.” Id.
Clover’s testimony on the three subjects where he may provide expert testimony—(1) the
requirements of an Information Memorandum and whether the plaintiff’s Proposal satisfies those
requirements, (2) the meaning of financial structuring within the industry and whether the
plaintiff satisfied those requirements, and (3) the meaning of a “commitment” within the industry
and whether the plaintiff procured one—do not address the character of the plaintiff’s business or
business practices, but merely explain unfamiliar industry terms of art to a lay audience that
cannot be expected to be familiar with such terms. Any statements by Clover that the plaintiff’ is
a specialized or successful business, has a strong reputation and track record with respect to
success in hotel financing placement, or provides skilled brokerage services are, when viewed in
the context of the reports or deposition testimony in which Clover uttered them, trivial, passing
or incidental comments made in the course of providing background on the nature of the
transaction at issue. See, e.g., Clover’s Rebuttal Rpt. ¶¶ 1.3, 2.4. Any quantum of “unfair
prejudice” such stray remarks may cause do not “substantially outweigh[]” the “probative value”
of Clover’s testimony. FED. R. EVID. 403.
III. CONCLUSION
For the reasons explained above, the defendants’ motion in limine is denied as to the
testimony Clover proposes to provide in paragraphs 4.4, 4.5–4.5.2, and 4.8 in his report—
specifically, testimony as to (1) the requirements of an industry-standard Information
35
Memorandum and whether the plaintiff’s Proposal satisfies that standard, Clover’s Rpt. ¶ 4.4; (2)
the meaning of the term “structuring” as used in the industry, id. ¶ 4.5; and (3) the meaning of
the term “commitments” as used in the industry, id. ¶ 4.8—and the related testimony in
paragraphs 4.1 through 5.3 of Clover’s Rebuttal Report, and granted in all other respects. An
appropriate Order accompanies this Memorandum Opinion.
Date: April 25, 2018
__________________________
BERYL A. HOWELL
Chief Judge
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