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In re Brown Medical Centre

United States District Court, S.D. Texas, Houston Division

June 19, 2017

DICK DEGUERIN, Defendants. ELIZABETH M. GUFFY, Plan Agent, Plaintiff, Bankruptcy Adversary No. 15-3228



         Elizabeth Guffy, the Plan Agent under the confirmed Chapter 11 Plan of Liquidation in the Brown Medical Center, Inc. bankruptcy, filed this adversary proceeding seeking to avoid certain attorney's fee and related litigation expense payments as fraudulent transfers. The case is now before the Court on the Plan Agent's Motion to Exclude the Opinions and Testimony of James M. McCormack (“Motion to Exclude”) [Doc. # 90], to which Defendant Dick DeGuerin filed a Response [Doc. # 131], and the Plan Agent filed a Reply [Doc. # 133]. The Court has reviewed the record and the applicable legal authorities. Based on this review, the Court denies the Motion to Exclude.[1]

         I. BACKGROUND

         Michael Brown, the owner of 100% of the shares of Debtor Brown Medical Center, Inc. (“BMC”), was represented by attorneys DeGuerin and others in connection with criminal cases against him, including prosecutions for assault and for having a marijuana field on his property. Plaintiff alleges that BMC transferred funds to DeGuerin after it became insolvent. Plaintiff alleges that BMC had no independent legal obligation to make the transfers, which were for Brown's sole benefit.

         In January 2013, Brown filed a voluntary Chapter 11 bankruptcy petition. On October 15, 2013, Brown's Chapter 11 Trustee filed a voluntary Chapter 11 bankruptcy petition on behalf of BMC. The Bankruptcy Court appointed Plaintiff Elizabeth Guffy as the Chapter 11 Trustee for BMC. On October 1, 2014, the Bankruptcy Court confirmed a plan of liquidation in BMC's bankruptcy case and appointed Guffy as the Plan Agent.

         Plaintiff filed this Adversary Proceeding, asserting fraudulent transfer claims under 11 U.S.C. § 548(a)(1)(B) and under TUFTA. See First Amended Complaint [Doc. # 16]. By Memorandum and Order [Doc. # 15] entered February 3, 2016, this Court withdrew the reference of this Adversary Proceeding and retained the case on its own docket.

         DeGuerin has designated James M. McCormack as an expert witness in this case. McCormack has issued a written report, a rebuttal report, and he has been deposed. McCormack opines that there was an attorney-client relationship between DeGuerin and BMC, and that funds provided to DeGuerin and maintained in DeGuerin's IOLTA[2] Trust Account remained the property of BMC. The Plan Agent filed her Motion to Exclude, which has been fully briefed and is now ripe for decision.


         Witnesses who are qualified by “knowledge, skill, experience, training or education” may present opinion testimony to the jury. Fed.R.Evid. 702; see, e.g., Whole Woman's Health v. Hellerstedt, __ U.S. __, 136 S.Ct. 2292, 2316 (2016); Moore v. Ashland Chem., Inc., 151 F.3d 269, 276 (5th Cir. 1998) (en banc); Huss v. Gayden, 571 F.3d 442, 452 (5th Cir. 2009). To be admissible, an expert's proffered testimony must be both relevant and reliable. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 591-92 (1993); Carlson v. Bioremedi Therapeutic Sys., Inc., 822 F.3d 194, 199 (5th Cir. 2016).

         The expert testimony must be relevant and the expert's proposed opinion must be one that would assist the trier of fact to understand or decide a fact in issue. See Weiser-Brown Operating Co. v. St. Paul Surplus Lines Ins. Co., 801 F.3d 512, 529 (5th Cir. 2015); Bocanegra v. Vicar Servs., Inc., 320 F.3d 581, 584 (5th Cir. 2003) (citing Daubert, 509 U.S. at 591-92). “A party seeking to introduce expert testimony must show (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.” Huss, 571 F.3d at 452 (citing Smith v. Goodyear Tire & Rubber Co., 495 F.3d 224, 227 (5th Cir. 2007)); see also Carlson, 822 F.3d at 199.

         “Reliability” requires that the proponent of the expert testimony must present some objective, independent validation of the expert's methodology. See Brown v. Illinois Cent. R. Co., 705 F.3d 531, 536 (5th Cir. 2013). The objective of the Court's gatekeeper role is to ensure that an expert “employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999); Hodges v. Mack Trucks Inc., 474 F.3d 188, 194 (5th Cir. 2006).

         The Court's gatekeeping role is no substitute, however, for the adversarial process. See Pipitone v. Biomatrix, Inc., 288 F.3d 239, 250 (5th Cir. 2002). “Vigorous 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.” Daubert, 509 U.S. at 596; MM Steel, L.P. v. JSW Steel (USA) Inc., 806 F.3d 835, 852 (5th Cir. 2015).

         III. ANALYSIS

         A. ...

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