Plaintiff sued defendant related to a transfer of funds to an attorney’s trust account. The defendant hired a legal ethics expert witness to assist in his case. The plaintiff filed a motion to exclude, which was denied by the court.
Facts: This case (Guffy v. DeGuerin et al – United States District Court – Southern District of Texas – June 19th, 2017) involves an adversary proceeding and alleged fraudulent transfers. The plaintiff (Guffy) is the Chapter 11 trustee for Brown Medical Center (BMC), owned by Michael Brown. Brown was represented by DeGuerin, attorneys, in various criminal matters. Guffy alleges that BMC transferred funds to DeGuerin after BMC became insolvent, but it had no legal obligation to do so. DeGuerin has hired James M. McCormack as a legal ethics expert witness. Guffy filed a motion to exclude the testimony of McCormack.
Discussion: McCormack opined regarding 1) whether funds from BMC that were held in a Interest on Lawyers Trust Account (IOLTA) were considered “transfers” or if they remained property of the client and 2) whether there was an attorney-client relationship between DeGuerin and BMC. Guffy maintains that McCormack is not qualified to offer expert testimony in this case because he does not have expertise in the area of “fraudulent transfers” The court disagreed by stating that McCormack is not offering an opinion on fraudulent transfers. In addition, the court opined that McCormack is clearly qualified to testify on the two factual issues described above.
Regarding the issue of funds in the IOLTA trust account, McCormack opines that the money held the account is the property of BMC until they were earned or disbursed. He cites Rule 1.14 of the Texas Disciplinary Rules of Professional Conduct and based his opinion on his review of evidence in light of his knowledge and experience.
Guffy argues that expert testimony is not needed because the funds were paid as a flat fee retainer. The challenge is to the accuracy of McCormack’s opinion that the funds were not “owned” by DeGuerin. The court opined that this argument goes to the weight of the evidence and not the admissibility. The court goes on to say that McCormack’s expert opinion is based on his review of the evidence, his experience, and the Texas Rules of Professional Conduct. The court concludes by stating that his testimony is reliable, relevant and will help the trier of fact.
Guffy also argues that McCormack’s testimony about the attorney-client relationship is not based on reliable methodology. Again, the court disagreed, stating that McCormack’s opinion is based on his experience and well as a review of the evidence in the record. Last, the court maintains that any arguments on this issue again go to the weight of the evidence.
Conclusion: The motion to exclude the expert witness testimony of James M. McCormack is denied.