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BVR offers free resources in wake of disasters

For business valuation experts grappling with business interruption (BI) and damages matters in the wake of this year’s natural disasters, BVR is offering some free resources.

Appellate court rejects valuation date in damages case

In a 2023 Florida case, a jury awarded rapper Flo Rida more than $82 million in a breach of contract case.

A Dozen Tips From the VSCPA Forensic and Valuation Services Conference

Business Valuation Update attends a great many conferences and webinars, but we never fail to learn something new. Yes, the topics can be the same, but, no matter how many times you hear about something, a different presenter will offer some new information or give a different perspective on it, which is very valuable. Such was the case at the recent two-day Forensic and Valuation Conference held by the Virginia Society of CPAs (VSCPA), which had an excellent mix of topics and speakers.

Free Resources to Help Valuers With Business Interruption Claims

For business valuation experts grappling with business interruption (BI) and damages matters in the wake of this year’s natural disasters and tech outages, BVR is offering some free resources. You can download two full chapters from The Comprehensive Guide to Economic Damages, 7th edition, that deal with BI, lost profits, and damages claims. Plus, we provide some tips on uncovering misrepresentations in claims.

Court KO’s AI-assisted damages analysis

The featured case in the January issue of Business Valuation Update is a New York matter in which a damages expert used an artificial intelligence tool to help with his analysis.

Endless River Techs., LLC v. TransUnion, LLC (II)

The U.S district court denied the defendant’s motion to exclude the testimony of Dr. Malec, who had used an unreliable valuation, during the trial. The jury awarded the plaintiff $18.3 million in damages. Post-trial, the defendants filed a motion for judgment as a matter of law, challenging Endless River’s recovery on multiple grounds. The district court granted the motion and vacated the award. In so doing, it pointed out that the report and testimony of Dr. Malec was speculative and based on projections of management that Malec had not vetted and were unreliable. The appellate court affirmed the vacatur of the jury award. Once again, this pointed out that projections from management cannot be taken at face without some vetting as to reliability. The trial court also determined, among other things, that Dr. Malec’s testimony was not relevant to the damages nor was it reliable and his testimony was therefore stricken under Rule 702.

U.S. Appellate Court Affirms Vacatur of Jury Award—Witness Should Not Have Been Allowed to Testify

The U.S district court denied the defendant’s motion to exclude the testimony of Dr. Malec, who had used an unreliable valuation, during the trial. The jury awarded the plaintiff $18.3 million in damages. Post-trial, the defendants filed a motion for judgment as a matter of law, challenging Endless River’s recovery on multiple grounds. The district court granted the motion and vacated the award. In so doing, it pointed out that the report and testimony of Dr. Malec was speculative and based on projections of management that Malec had not vetted and were unreliable. The appellate court affirmed the vacatur of the jury award. Once again, this pointed out that projections from management cannot be taken at face without some vetting as to reliability. The trial court also determined, among other things, that Dr. Malec’s testimony was not relevant to the damages nor was it reliable and his testimony was therefore stricken under Rule 702.

Celsius Holdings, Inc. v. Strong Arm Productions USA, Inc.

In determining the amount of damages in this contract dispute, the Florida Appellate Court dealt with the appropriate date of value of stock of the defendant in determining the appropriate amount of damages. The date of value was an issue that arose in a number of cases. The court rejected the use of the date of trial but remanded for the court to determine whether to use the date of the breach of contract or the date at which restrictions on the sale of stock lapsed. While the court touched on the restriction issue, no evidence that a value at the date of breach, which included the impact of the restrictions on value, was presented.

Florida Appellate Court Remands for Determination of the Proper Date of Value in a Damages Case

In determining the amount of damages in this contract dispute, the Florida Appellate Court dealt with the appropriate date of value of stock of the defendant in determining the appropriate amount of damages. The date of value was an issue that arose in a number of cases. The court rejected the use of the date of trial but remanded for the court to determine whether to use the date of the breach of contract or the date at which restrictions on the sale of stock lapsed. While the court touched on the restriction issue, no evidence that a value at the date of breach, which included the impact of the restrictions on value, was presented.

Headwater Rsch. LLC v. Samsung Elecs. Co.

Multiple factors in this decision on motions to exclude expert witnesses have importance in determining infringement damages. First, the court allowed the use and reliance of other experts in the case to be appropriate. Second, the court noted that documents one of the experts used are ones experts normally rely on. Additionally, the court did deny the use by a witness of a trailing royalties based on post-trial sales.

U.S. District Court (Texas) Allows Damages Based on Acceptable Data Relied on but Denies Expert Testimony on Running Royalty Analysis on Post-Trial Sales

Multiple factors in this decision on motions to exclude expert witnesses have importance in determining infringement damages. First, the court allowed the use and reliance of other experts in the case to be appropriate. Second, the court noted that documents one of the experts used are ones experts normally rely on. Additionally, the court did deny the use by a witness of a trailing royalties based on post-trial sales.

MAXISIQ, Inc. v. Hurysh

This was a contract case where the court determined that the member had a right to examine books and records as a litigant (as opposed to as a member). The problem, however, was that the plaintiff ignored the terms of the contract that required a “good faith” determination of value, which necessarily established a basis for challenge. An appraisal allegedly made in “good faith” could still be shot through with error, suggesting dubious good faith. That would obviously be intolerable. In a contract case, the court was often called upon to determine whether the terms were followed as opposed to deciding a particular issue of law.

U.S. District Court Denies Summary Judgment as to the Value of a Member’s Interest

This was a contract case where the court determined that the member had a right to examine books and records as a litigant (as opposed to as a member). The problem, however, was that the plaintiff ignored the terms of the contract that required a “good faith” determination of value, which necessarily established a basis for challenge. An appraisal allegedly made in “good faith” could still be shot through with error, suggesting dubious good faith. That would obviously be intolerable. In a contract case, the court was often called upon to determine whether the terms were followed as opposed to deciding a particular issue of law.

BV News and Trends October 2024

A monthly roundup of key developments of interest to business valuation experts.

BVR lends a helping hand in wake of disasters

For business valuation experts grappling with business interruption (BI) and damages matters in the wake of this year’s natural disasters and tech outages, BVR is offering some free resources.

Optimistic projections not necessarily unreliable under Daubert

In a federal district court in Washington, a liquor distributor sued the supplier of Four Roses bourbon for damages for improperly terminating its distribution agreement.

Matter of Weber

The Surrogate Court of New York (i.e., essentially a probate court), in a case of first impression, determined the testimony of an expert witness to be unreliable and set standards for admission of testimony and reports based in part on the use of AI, including disclosure of the use of AI and the conduct of a Frye (similar to Daubert) hearing.

New York Surrogate Court Finds Testimony Based on AI as Unreliable and Sets Standards for Admission of AI-Based Testimony

The Surrogate Court of New York (i.e., essentially a probate court), in a case of first impression, determined the testimony of an expert witness to be unreliable and set standards for admission of testimony and reports based in part on the use of AI, including disclosure of the use of AI and the conduct of a Frye (similar to Daubert) hearing.

Expert accused of cherry-picking comps

In a New York case, a shareholder accused his partner of freezing him out, and he sued for damages.

Unraveling Financial Deception: Divorce Case Study for Experts

This case study will be an in-depth examination of a high-net-worth divorce case in which financial deception was prevalent. This case involved unreported income, lifestyle discrepancies, and an undervalued family business. Throughout this case study, you will learn forensic techniques to uncover hidden assets, reconcile unreported income with lifestyle expenses to detect discrepancies and learn how to navigate other complex financial challenges. It will discuss the challenges of valuing the family business and expose fraud ...

TAKTL, LLC v. IWR, N. Am., LLC

This case, a breach of construction contract case, again provided a tutorial on the application of FRE 702 and the Daubert rules as to whether a witness qualified to testify. This case was post-Dec. 1, 2023, so the rule application was subject to the clarification of FRE 702 that became effective on that date. The court went in depth into the “fit” requirement, which was: Did the expert adequately apply testimony and a report that “fit” the case at hand, a requirement clarified by the Dec. 1, 2023, changes?

Court Decides on Motions to Exclude Under Post-Dec. 1, 2023, FRE 702

This case, a breach of construction contract case, again provided a tutorial on the application of FRE 702 and the Daubert rules as to whether a witness qualified to testify. This case was post-Dec. 1, 2023, so the rule application was subject to the clarification of FRE 702 that became effective on that date. The court went in depth into the “fit” requirement, which was: Did the expert adequately apply testimony and a report that “fit” the case at hand, a requirement clarified by the Dec. 1, 2023, changes?

BV News and Trends September 2024

A monthly roundup of key developments of interest to business valuation experts.

Hetrick v. iink

The FRE 702 rules were modified in December 2023 to strengthen the qualifications for admittance of expert testimony. In this case, the Virginia U.S. District Court allowed the expert to testify and denied the Daubert motion to exclude the testimony. Among other things, the court found that the testimony was relevant to the case at hand.

U.S. District Court (Virginia) Denies Daubert Motion to Exclude Under New (2023) FRE 702

The FRE 702 rules were modified in December 2023 to strengthen the qualifications for admittance of expert testimony. In this case, the Virginia U.S. District Court allowed the expert to testify and denied the Daubert motion to exclude the testimony. Among other things, the court found that the testimony was relevant to the case at hand.

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