Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Freesen, Inc. v. Boart Longyear Co.

December 8, 2009

FREESEN, INC., A NEVADA CORPORATION, PLAINTIFF,
v.
BOART LONGYEAR COMPANY, A UTAH CORPORATION, AND DIAMOND PRODUCTS LIMITED, AN OHIO LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter is before the Court on Defendant Boart Longyear Company's Motion to Bar the Testimony of Edmund Cikanek (d/e 64). The instant case arises out of Plaintiff Freesen Inc.'s purchase of a highway grinder. Freesen's three-count Amended Complaint (d/e 22) alleges breach of contract (Count I), breach of express warranty (Count II), and breach of the implied warranty of merchantability (Count III) claims against both Defendants arising out of the grinder purchase. Boart asks the Court to bar Plaintiff's expert witness, Edmund Cikanek, from testifying at trial.

According to Boart, Cikanek is not qualified to render the opinions at issue, and furthermore, the opinions are based on pure speculation and contain no analysis. For the reasons set forth below, Boart's Motion is denied.

BACKGROUND

The following facts are taken from the allegations of Freesen's Amended Complaint. On February 2, 2005, Freesen and Boart entered into an agreement for Freesen's purchase of a highway grinder from Boart for a net price of $553,000.00 with delivery on August 15, 2005, or sooner. On or about April 29, 2005, Boart sold its grinding division to Defendant Diamond Products Limited. Freesen received a final invoice dated July 25, 2005, for the grinder from Diamond. Amended Complaint, Ex. C. Freesen paid the balance due prior to the grinder being delivered to Freesen's Joplin, Missouri, field office on July 30, 2005. According to Freesen, shortly after delivery, Freesen began experiencing a number of mechanical problems with the grinder. Freesen notified Diamond of these defects, and Diamond agreed to repair the grinder to a functional level for temporary use and to manufacture a new grinder for delivery to Freesen. Freesen received the repaired grinder on March 6, 2006, to use pending manufacture and delivery of a new grinder. Freesen continued to experience defective performance and slowed production levels with the repaired grinder. On September 18, 2006, Diamond delivered a new grinder to Freesen as a replacement for the allegedly defective grinder.

While the first grinder was experiencing mechanical problems, prior to the delivery of the new grinder, Freesen bid on ten Missouri Department of Transportation (MODOT) jobs. Freesen was awarded two of these contracts. Freesen claims that, as a result of the grinder's mechanical problems, it modified its historic markup percentages when bidding on the MODOT jobs. According to Freesen, this markup caused it to lose out on three of the jobs, specifically MODOT job numbers 505, 802, and 803.

To support this claim, Freesen hired Edmund Cikanek, a certified public accountant (CPA). Cikanek described the scope of his retention as follows: to review the lost opportunity damages prepared by Freesen, Inc. and to offer [his] opinion as to whether these calculations are reasonable and consistent with construction industry accounting and estimating practices as they relate to the lost opportunity damages suffered by Freesen Inc. resulting from a defective grinding machine which resulted in Freesen losing three grinding projects.

Memorandum of Law in Support of Motion to Bar Edmund Cikanek (d/e 65) (Boart's Memorandum), Ex. B, Supplemental Lost Opportunity Damages Report, dated July 24, 2009, p. 4. Cikanek issued an initial report in February 2009, opining that Freesen suffered $1,255,886.00 in lost opportunity damages due to the problems with the grinder and that this amount was consistent with construction industry accounting and estimating practices. Id., Ex. A, Lost Opportunity Damages Report, dated February 6, 2009, p. 7. On July 24, 2009, Cikanek issued a supplemental report, stating a revised opinion that Freesen suffered $1,073,310.00 in lost opportunity damages due to the problems with the grinder and that this amount was consistent with construction industry accounting and estimating practices. Id., Ex. B, Supplemental Lost Opportunity Damages Report, dated July 24, 2009, p. 9. Cikanek explained that, subsequent to his February 2009 report, he discovered an error in Freesen's calculation of overhead relating to damages which resulted in an overstatement in his previous lost opportunity damages summary. Cikanek was deposed in connection with the instant matter on July 30, 2009. Id., Ex. D, Deposition of Edmund Cikanek (Cikanek Dep.).

Defendants retained Lee Gould, a CPA and attorney, to rebut Cikanek's report. Gould issued his rebuttal report on August 24, 2009. Boart Memorandum, Ex. E, Rebuttal Report of Lee A. Gould on Damages Suffered by Freesen, Inc. Gould opined that Cikanek overstated his revised total lost opportunity cost by at least $526,452.00 because he erroneously included lost equipment utilization/functional utility in the calculation. Gould further noted that Cikanek did not independently analyze the elements of lost opportunity costs claimed by Freesen and the underlying information provided to him by Freesen. According to Gould, Cikanek's decision to utilize a $.35 per hour rate for calculating overhead is unsupported because Cikanek did not analyze Freesen's total overhead absorption rate for 2005 and compare it to Freesen's actual annual overhead incurred. Gould also opined that Freesen did not have consistent historical and customary mark-ups that could be used as a benchmark. Gould further opined that Cikanek's opinion was faulty because it failed to consider other inefficiencies and mitigation and erroneously included damages relating to a grinder not at issue in the instant litigation. Finally, Gould opined that there is no historical support for the profitability of the MODOT jobs and that the lowest bidder is not guaranteed to be awarded each MODOT job.

ANALYSIS

Boart seeks to exclude Cikanek's testimony under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., challenging both Cikanek's qualifications and his methodology. Daubert, 509 U.S. 579 (1993). Rule 702 provides as follows:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

Fed. R. Evid. 702. The Court must determine whether a party's proposed expert is qualified, whether his opinions are grounded in a proper basis, and whether his testimony will assist the jury. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999); Daubert, 509 U.S. at 593. Freesen, as the proponent of the expert, bears the burden of demonstrating that Cikanek's testimony would satisfy this standard. See Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 705 (7th Cir. 2009) (citing Fed. R. Evid. 702 advisory committee's note (2000 Amends.)).

Boart first asserts that the opinions at issue are outside the scope of Cikanek's expertise, i.e., that Cikanek lacks sufficient knowledge and experience because he has no experience calculating lost opportunity damages and he has not written about, taught, or testified regarding lost opportunity damages. In its argument, Boart contrasts Cikanek's background to Gould's background. Boart characterizes Gould as having "vast experience in lost profits and damages analyses." Boart Memorandum, p. 8. However, it is for the jury to weigh the strength of the competing experts' qualifications. Rule 702 requires that an expert be qualified as such "by knowledge, skill, experience, training, or education." The Court functions as a "gatekeeper" whose role is "to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.