United States District Court, D. Kansas
RANDALL A. SCHNEIDER, et al, Plaintiffs,
CITIMORTGAGE, INC., et al, Defendants.
MEMORANDUM AND ORDER
L. TEETER, UNITED STATES DISTRICT JUDGE
action arises from a refinance loan between Plaintiffs
Randall and Amy Schneider and Defendants CitiMortgage, Inc.
and Citibank, N.A. In the instant motion, Defendants move to
exclude all testimony by Plaintiffs' retained expert,
A.W. Pickel, arguing that his testimony is irrelevant,
unreliable, and not helpful to the jury. Doc. 600. The Court
agrees that Mr. Pickel's testimony on the impropriety of
prepayment penalties under Kansas law and usurious interest
rates is irrelevant to the claims remaining for trial and,
therefore, excludes those opinions. The Court denies the rest
of the motion.
2007, Plaintiffs refinanced a residential mortgage loan with
Defendants. The relationship soured, and Plaintiffs
subsequently brought this lawsuit asserting claims for breach
of contract, fraud, conversion, and failure to refinance as
well as claims under the Kansas Consumer Protection Act, the
Real Estate Settlement Procedures Act, and the Equal Credit
Opportunity Act. During discovery Plaintiffs disclosed Mr.
Pickel's expert report. In this report, Mr. Pickel
discusses the fees applied to Plaintiffs' loan, Kansas
law on prepayment penalties, the Payment Waiver Protection
(“PWP”) program, the interest rate and Kansas
usury law, the Equity Builder Program, the application of
payments, payoffs, and denial of the 2010 refinance loan.
See Doc. 601-1.
parties subsequently filed cross motions for summary
judgment, and the Court's summary judgment order
significantly narrowed the claims and issues for
trial. The Court noted that Plaintiffs had
withdrawn their claims under the Equal Credit Opportunity Act
and the Real Estate Settlement Procedures Act and reiterated
that it had already dismissed Plaintiffs' claims for
conversion, fraud, and breach of contract events before May
24, 2008. Doc. 586 at 5. The Court held that Plaintiffs had
abandoned their usury claim, that Defendants are not
suppliers under the KCPA, and that Delaware law governed the
breach of contract claims. Id. at 7, 20, and 22.
Ultimately, the Court found that the issues remaining for
trial are limited to whether Defendants breached the terms of
the finance documents and, if so, what damages
Plaintiffs' sustained because of “overcharging
interest rates and fees, in not crediting payments, and in
assessing penalties.” Id. at 32-33. Based
generally on this narrowing, Defendants move to exclude Mr.
Pickel's opinions under the standard in Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589
Rule of Evidence 702 governs the admissibility of expert
testimony and imposes upon the district court a
“gatekeeping obligation” to ensure that expert
testimony is both relevant and reliable. Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993);
Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
147 (1999). A court's gatekeeping function, however, does
not replace the traditional adversary system and the role of
the jury. Cohen v. Lockwood, 2004 WL 763961, at *2
(D. Kan. 2004). Where there are questions related to the
bases and sources of an expert's opinion, these issues go
to the weight to be assigned to that opinion-rather than
admissibility-and are for the trier of fact to determine.
Id. The burden is on the party offering the expert
testimony to prove its admissibility. United States v.
Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).
move to exclude all of Mr. Pickel's testimony on the
bases that it: (1) is irrelevant to Plaintiffs' remaining
breach of contract claims, (2) is unreliable, and (3) is
unhelpful to the jury. On the first issue, the Court notes
that evidence is relevant if “(a) it has any tendency
to make a fact more or less probable than it would be without
the evidence; and (b) the fact is of consequence in
determining the action.” Fed.R.Evid. 401. Applying this
definition, the Court agrees that Mr. Pickel's opinion
that the “interest rate was predatory” because it
exceeded the usury rate is irrelevant because Plaintiffs
abandoned their usury claim. The Court also agrees that Mr.
Pickel's opinion that the prepayment penalty was improper
under Kansas law (and other opinions on Kansas law) is
irrelevant because Delaware law governs the contract. Even if
the opinions had some relevance, the probative value is
substantially outweighed by the danger of unfair prejudice
and confusion of issues. Fed.R.Evid. 403. The Court excludes
these opinions. But the Court disagrees with Defendants'
remaining relevancy arguments. Mr. Pickel's opinions
regarding the PWP payments and how the interest rate violated
the note's terms remain relevant to liability despite his
concessions. These concessions are issues that go to weight
and not admissibility.
second issue, the Court finds that Mr. Pickel's remaining
opinions are reliable. See Dodge v. Cotter Corp.,
328 F.3d 1212, 1222 (10th Cir. 2003) (explaining that an
expert's opinion is reliable so long as it is
“based on facts which enable the expert to express a
reasonably accurate conclusion as opposed to conjecture or
speculations”). Defendants argue that Mr. Pickel's
opinions on the PWP program are not reliable because he does
not offer programs like the PWP in his own business. Although
Mr. Pickel has not offered PWP programs, it is a product that
relates to the servicing process. Mr. Pickel did not testify
to the substance or merits of the PWP program-just that, in
his opinion, Plaintiffs were overcharged. Once again, this is
an issue that goes to weight not admissibility, and
Defendants remain free to cross-examine Mr. Pickel based his
also contend that Mr. Pickel's opinions are unreliable
because he fails to specify the interest rate impact of
various overcharges and credits payments. This is a central
issue throughout the motion. They argue that “Mr.
Pickel cannot, on one hand, state that he could not reconcile
how interest and fees were calculated and applied and, on the
other hand, provide expert testimony regarding how
Plaintiffs' were allegedly damaged by application of the
same interest and fees.” Doc. 601 at 7. Finally, they
point out several concessions Mr. Pickel made at his
deposition regarding various overcharges.
Court agrees that Mr. Pickel did not give a specific figure
on this issue because of his inability to comprehend the full
servicing history based on the information that was given.
And, therefore, any specific damage calculation on this issue
(even an estimate) appears to be beyond the scope of his
report. But he has relevant, reliable, and helpful
information on the issue of liability. This information is
properly disclosed, and liability is an issue to be proven
wholly aside from damages. Specifically, Mr. Pickel opines
that Defendants overcharged Plaintiffs, which would
constitute breach of contract. He explains how he reached
this opinion in his report and provides examples. The jury
may evaluate the weight to be accorded this opinion given Mr.
Pickel's method and his resulting uncertainty on damages.
third and final issue, Defendants contend Mr. Pickel's
opinions are not helpful because he does not reach a
conclusion on Plaintiffs' damages. An expert's
testimony must be “sufficiently tied to the facts of
the case that it will aid the jury in resolving a factual
dispute.” United States v. Garcia, 635 F.3d
472, 476 (10th Cir. 2011) (quoting Daubert, 509 U.S.
at 591). As discussed above, liability and damages are
separate issues. Mr. Pickel opines on several liability
issues and, although more limited, on some damages issues.
The Court finds that Mr. Pickel's opinions are helpful to
the jury on these issues and, more generally, because
servicing records, the crediting of payments to principal and
interest, and the impact of delayed credit for payments are
all not likely within the “common knowledge and
experience” of the average juror. Garcia, 635
F.3d at 476 (quoting United States v.
Rodriguez-Felix, 450 F.3d 1117, 1123 (10th Cir. 2006)).
For the foregoing reasons, the Court grants in part and
denies in part Defendants' motion.