Free Reply to Response to Motion - District Court of Federal Claims - federal

Case 1:95-cv-00829-TCW

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS STERLING SAVINGS ASSOCIATION, a state chartered savings association, STERLING FINANCIAL CORPORATION, a Washington corporation, Plaintiffs, v. UNITED STATES OF AMERICA, Defendant. ) ) ) ) ) ) ) ) ) ) ) )

No. 95-829C (Judge Wheeler)

DEFENDANT'S REPLY TO STERLING'S RESPONSE TO OUR MOTION TO STRIKE THE DECLARATION OF DR. PAUL M. HORVITZ Defendant, the United States, respectfully files this reply to Sterling's response to our motion to strike Dr. Paul M. Horvitz's March 28, 2007 declaration. Sterling alleges that this expert declaration was proper because: (1) RCFC 56(e) required Sterling to set forth specific facts to defeat summary judgment, and (2) the expert declaration does not contain new opinions. The Court, however, should strike this declaration because it is not proper under Rule 56(e) and because Dr. Horvitz does, in fact, set forth new opinions not disclosed in his prior expert reports or his depositions. In the alternative, we respectfully request the opportunity to depose Dr. Horvitz regarding these new opinions before he testifies at trial. ARGUMENT I. Dr. Horvitz's Declaration Is Not Proper Under Rule 56(e) Sterling alleges that Dr. Horvitz's declaration was submitted pursuant to RCFC 56(e) to set forth specific facts demonstrating genuine issues for trial. Pl.'s Resp. at 2. Rule 56(e) requires that affidavits "shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to

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the matters stated therein." Dr. Horvitz's declaration is not proper under Rule 56(e) because it is essentially an "argumentative brief" in response to our motion for summary judgment. See C&L Constr. Co. v. United States, 6 Cl. Ct. 791, 803 (1984) (striking expert affidavit as improper under Rule 56(e) because it essentially does nothing more than rebut the points made in defendant's motion for summary judgment). Furthermore, Dr. Horvitz admitted at his deposition that he was not an expert in accounting. Ex. A (Jan. 25, 2007 Horvitz Deposition Tr. at 15-16). Therefore, he is not competent for purposes of Rule 56(e) to rebut Mr. Bankhead's opinion, rendered as an expert in accounting, regarding the calculation of Sterling's core capital absent the breach. For these reasons, the Court should strike the declaration as improper under Rule 56(e).1 II. Dr. Horvitz's Declaration Contains New Opinions Sterling also contends that Dr. Horvitz's declaration does not contain new opinions, but is a "verified consolidation" of previously disclosed opinions that "summarizes the reports he has issued, and the testimony he gave at his depositions and will give at trial." Pl.'s Resp. at 2-3. Dr. Horvitz's declaration belies this argument. Dr. Horvitz's new declaration states: "The purpose of this Declaration is not to supplant my Reports but to expand on them and to comment on the opinions and statements of the government's expert witnesses proffered in conjunction with the government's Motion for Summary Judgment Regarding Damages." Horvitz Decl. at ¶ 10.2 Dr.

Despite Sterling's contention, Dr. Horvitz's declaration is expert testimony and therefore cannot create a genuine issue of material fact sufficient to defeat summary judgment. Therefore, even assuming the Court did not strike the declaration, the declaration does nothing to preclude summary judgment in the Government's favor. Sterling also contends that we allege that only Dr. Horvitz's discussion of Mr. Bankhead is new. Pl.'s Resp. at 3. This is incorrect. Dr. Horvitz's declaration also includes new justifications of his own prior expert opinions, and new responses to the opinions of our other experts. See e.g., Horvitz Decl. at ¶¶ 36-39, 42-45, 52, 54, 57. 2
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Horvitz's declaration expands on his prior expert reports and deposition testimony to include responses to Mr. Bankhead's report. Sterling does not and cannot deny that these responses are new.3 Instead, Sterling argues only that these responses serve to rebut Mr. Bankhead's previously undisclosed opinions, which "unfairly surprised" Sterling. Pl.'s Resp. at 3. The fact that Dr. Horvitz's declaration rebuts Mr. Bankhead's report does not change the fact that it is untimely and improper under the Court's rules and the Winstar procedural orders. See RCFC 26(a)(2)(C); Procedural Order No. 2: Discovery Plan at § V(A)(2). Therefore, the Court should strike the declaration. If the Court does not grant our motion to strike, we request, in the alternative, that it grant our request to depose Dr. Horvitz regarding the new opinions disclosed in his declaration in preparation for the upcoming trial. Sterling argues that we are not entitled to a deposition because we did not move for discovery under Rule 56(f). Pl.'s Resp. at 3. This is incorrect. Rule 56(f) entitles a Court to allow discovery where a party cannot present sufficient facts by affidavit to oppose a motion for summary judgment. Here, we do not need this discovery to prevail upon our motion for summary judgment. Instead, we only seek this deposition if our motion for summary judgment is denied and Dr. Horvitz intends to present these new opinions at trial. Sterling also argues that being denied a deposition of Dr. Horvitz would not prejudice the Government. Pl.'s Resp. at 3. Under the Court's Rules and the Winstar procedural orders, we
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In his report, Mr. Bankhead, an expert in regulatory accounting, (1) demonstrates that the core capital calculation in Dr. Horvitz's expert report is incorrect, and (2) calculates the impact of the error on Dr. Horvitz's damage calculation. At paragraphs 71-87 of his declaration, Dr. Horvitz attempts to explain why Mr. Bankhead's criticism is unfounded. These are new opinions, not merely a summary of his prior reports. 3

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are entitled to a deposition because Dr. Horvitz's new opinions are untimely and should have been filed as a report, regardless of whether we can show prejudice. See RCFC 26(a)(2)(B); RCFC 26(a)(4)(A); Procedural Order No. 2: Discovery Plan at § V(A)(3). Nevertheless, we will be prejudiced by not being allowed proper discovery of Dr. Horvitz's new opinions before he presents them at trial, should one prove necessary. CONCLUSION For the reasons set forth above and in our initial filing, we respectfully request that the Court strike Dr. Horvitz's declaration, or in the alternative, allow us to depose Dr. Horvitz regarding the new expert opinions included in his declaration.

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Respectfully submitted, MICHAEL F. HERTZ Deputy Assistant Attorney General

JEANNE E. DAVIDSON Director

/s/ Kenneth M. Dintzer KENNETH M. DINTZER Assistant Director

Of counsel: TAREK SAWI Senior Trial Counsel MELINDA HART DELISA SANCHEZ TIMOTHY ABRAHAM WILLIAM KANELLIS ELIZABETH A. HOLT May 8, 2007

/s/ Elizabeth M. Hosford ELIZABETH M. HOSFORD Trial Attorney Commercial Litigation Branch Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 616-0332 Attorneys for Defendant

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CERTIFICATE OF FILING I hereby certify that on May 8, 2007, a copy of foregoing "DEFENDANT'S REPLY TO STERLING'S RESPONSE TO OUR MOTION TO STRIKE THE DECLARATION OF DR. PAUL M. HORVITZ" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

/s/ Elizabeth M. Hosford Elizabeth M. Hosford