Judge Adams Rules on Admissibility of Expert Testimony, Evidence, and Argument in Years-Long Quantum Meruit Damages Action as Case Proceeds to Trial

February 21, 2023

Publication| Commercial Litigation

In LCT Capital, LLC v. NGL Energy Partners LP and NGL Energy Holdings LLC, C.A. No. N15C-08-109 MAA CCLD, plaintiff LCT Capital originally asserted claims for breach of contract, quantum meruit/unjust enrichment, and fraudulent misrepresentation against NGL arising out of NGL’s failure to pay LTC for services performed in connection with its acquisition of a company called TransMontaigne.  In the first trial in this case, the Superior Court dismissed the plaintiff’s breach of contract claim.  On appeal, the Supreme Court struck the jury verdict on fraud in favor of the plaintiff, leaving quantum meruit damages as the sole remaining issue for trial on remand.

As the case moved towards trial, Judge Adams was presented with two Daubert motions to exclude certain expert opinions and five motions in limine to exclude or admit various evidence, testimony, and arguments at trial.

Motion to Exclude Opinions and Testimony of Defendants’ Rebuttal Expert, Lori A. Lancaster.  In this motion, the plaintiff argued that Lancaster, the defendants’ rebuttal expert, should be excluded from testifying because she exceeded her scope as a rebuttal expert, her opinion was unreliable, and she made an impermissible credibility determination of NGL’s CEO Mike Krimbill.  Judge Adams disagreed on all counts.  First, the plaintiff argued that Lancaster exceeded her scope because her opinion rebutted the plaintiff’s rebuttal expert, rehabilitated the defendants’ affirmative expert, and presented new opinions and data.  Judge Adams held that rebuttal evidence that also tends to corroborate a party’s affirmative case does not need to be excluded, and that a rebuttal expert is permitted to use new methodologies for the purpose of rebutting or critiquing the opinions of the opposing expert.  Next, the plaintiff argued that Lancaster’s opinions were unreliable because she mainly considered free run data and focused less on the parties’ fee negotiations and Krimbill’s testimony from the first trial.  Judge Adams ruled that Lancaster was not required to base her opinions on the negotiations or prior testimony and that experts on quantum meruit damages are “obligated to base their analysis on an objective valuation of the services provided by reference to data as well as their own specialized knowledge and experience in the field.”  Finally, Judge Adams ruled that while Lancaster disagreed with some of Krimbill’s assertions, her opinion was not an impermissible credibility determination.

Defendants’ Daubert Motion to Exclude the Opinions of Kevin D. McQuilkin.  The defendants argued that McQuilkin’s expert testimony should be excluded because he impermissibly engaged in ipse dixit, his opinions violated the law of the case, and he impermissibly relied on the previously rejected “value creation” theory of damages.  While Judge Adams agreed that certain of McQuilkin’s opinions amounted to ipse dixit (“he himself said it”), she denied the motion to exclude with regard to the opinions she did not consider ipse dixit.  Judge Adams also agreed that, in violation of the law of the case and case law, certain portions of McQuillkin’s opinions made reference to issues that should not factor into the sole issue of this action (quantum meruit damages) and should be excluded.  Finally, Judge Adams concluded that McQuilkin should be precluded from testifying to his calculations of damages that are based on value creation theory because this methodology is contrary to the law of the case and applicable law.

Motion in Limine to Preclude Evidence or Argument Regarding Value Creation.  The defendants argued that the plaintiff was not permitted to introduce evidence or testimony based on a value creation theory of quantum meruit damages.  Judge Adams agreed, both because the Court already ruled that no expert would be allowed to testify to calculations of quantum meruit damages based on value created to the defendants by the transaction, and because Delaware case law holds that recovery under quantum meruit damages is the value of the services provided, not the value of the benefit received.

Plaintiff’s Motion in Limine to Hold NGL to Judicial Admissions and Exclude Evidence Suggesting the Value of LCT’s Services Was Less than $29 Million.  At the first trial, the defendants’ CEO, Krimbill, testified that $29 million was an accurate estimate of fair compensation for the plaintiff’s work in connection with the TransMontaigne acquisition.  In this motion in limine, the plaintiff argued that Krimbill’s testimony was a judicial admission and therefore the asserted value of $29 million should be treated as the floor for quantum meruit damages.  The plaintiff further argued that, due to this alleged judicial admission, the defendants should be precluded from submitting evidence or eliciting testimony that anything less than $29 million would be an appropriate measure of damages.  Judge Adams disagreed, ruling that Krimbill’s statements were expressions of his “beliefs and opinions,” as opposed to “voluntary and knowing concessions of fact” as required for a judicial admission.  Judge Adams also found that qualifying Krimbill’s statements as judicial admissions would directly conflict with the Supreme Court’s prior holding in this case, because “[i]f the Supreme Court intended to anchor the jury to a floor of $29 million,” it would have ruled accordingly.

Plaintiff’s Motion in Limine to Exclude Evidence of “Typical” Investment Banker Fees as Irrelevant to Quantum Meruit Damages.  The plaintiff argued that evidence of a typical fee should be excluded because the parties never discussed typical investment banker fees during their negotiations of the plaintiff’s compensation.  Judge Adams disagreed.  Pointing to the low evidentiary threshold for relevance and the potential relevance of expert testimony on typical investment banker fees, as well as the fact that case law does not require exclusion, Judge Adams ruled that evidence of a typical fee should not be excluded.

Defendants’ Motion in Limine to Preclude Evidence or Argument Regarding Any Alleged Agreement Between the Parties.  The defendants argued that all evidence and testimony concerning an alleged agreement or contract between the parties regarding compensation for the plaintiff’s services in connection with the TransMontaigne acquisition should be precluded.  Judge Adams agreed.  Consistent with the first trial court’s ruling that there was no contract, Judge Adams held that, absent a contract, there was no basis to submit evidence of compensation to which the parties allegedly agreed.  But Judge Adams cautioned that this was not to be interpreted as barring the parties from submitting evidence or eliciting testimony of fee negotiations to the extent that they make no reference to value created by the transaction.

Defendants’ Motion in Limine to Preclude Evidence or Argument Regarding Alleged Fraud and/or Fraudulent Statements.  The defendants argued that, because the plaintiff’s fraud claim failed and quantum meruit damages were the sole issue, any evidence or argument of fraud was not probative and should be precluded.  Judge Adams agreed, holding that there was no evidentiary basis to submit evidence of fraud.

Analysis:  This case highlights the evidentiary issues arising in a quantum meruit damages action.  Unlike in the Court of Chancery, jury trials are common in the CCLD, and parties seeking a jury on damages issues frequently choose the CCLD over other alternatives.  Accordingly, CCLD judges are frequently called upon to address motions inlimine and other pre-trial motions to ensure that only the appropriate evidence comes before the jury.

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