In an interesting twist to what’s becoming the standard Daubert challenge, the party opposing the financial expert in this case not only attacked the reliability of his opinions but also moved to exclude the mortgage pricing data on which he based his calculations, claiming that the provider should have been disclosed as a separate expert under the federal rules. The case raises an important distinction: the fine line between an expert offering a qualified opinion and his impermissible conclusion of law or fact.
Taylor, Bean & Whitaker Mortg. Corp. v. GMAC Mortg. Corp., 2008 U.S. Dist. LEXIS 59900 (M.D. Fla. Aug. 6, 2008)
In this suit between two mortgage companies, the plaintiff challenged the defendant’s financial expert in a pre-trial, Daubert-based motion. To determine this preliminary matter, the court did not recite the facts of the case but it did summarize the expert’s findings in his report, including 1) that the defendant overpaid the plaintiff for certain mortgage servicing rights (MSRs); and 2) that the overpayment totaled $20 million. To calculate the $20 million damages, the expert relied on data provided by the Mortgage Industry Advisory Corporation (MIAC)—in particular, its price indices for mortgage servicing rights.
The plaintiff argued that the MIAC data constituted such an “essential” aspect of the expert’s opinion that the provider qualified as an additional expert, requiring disclosure under Rules 26 of the Federal Rules of Civil Procedure (FRCP). Because the defendant had failed to disclose MIAC, the plaintiff argued, its “opinions” should be excluded from the expert’s report pursuant to Rule 37 FRCP.
The court found the defendant had disclosed its expert’s use of the MIAC data. “Moreover, there is no suggestion that MIAC created its indices or generated any other data based upon the specific details of this case,” it said. Rather, the expert relied on the compilation of data that MIAC routinely provides the public. An MIAC representative did give the expert “general guidance” on using the data, the court said, but that “does not, in and of itself, make MIAC an expert in this case.” Instead, MIAC was a source of data, comparable to the federal Bureau of Labor Statistics, and the defendant’s expert did not rely on anyone else’s analysis or calculations but his own.
Further, the court found that even though the expert did not “understand every detail” of how MIAC calculated its data, the pricing indices were the type on which experts in the mortgage servicing industry reasonably relied. The expert’s timely disclosures permitted the plaintiff sufficient opportunity to conduct its own research and analysis regarding the reliability of the MIAC data, the court held, and denied the motion based on any failure to disclose.