Robson v. Duckpond LTD.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

MICHAEL T. ROBSON, )

)

Plaintiff(s), )

)

vs. ) Case No. 4:19-cv-01862-SRC

)

DUCKPOND LTD., et al., )

)

Defendant(s). )

Memorandum and Order

The former co-owners and business partners of Duckpond Ltd. accuse each other of foul

play in connection with the June 2017 stock buyout of Plaintiff Michael T. Robson. Docs. 1, 25.

Duckpond is a holding company that invests in other companies, and it has a veritable skein of

subsidiaries. Doc. 88 at ¶ 2. Robson, along with Defendants ICC Global Investments Ltd. and

Tharros Emporium Ltd., each owned a third of Duckpond’s shares. Doc. 88 at ¶ 1. Robson

served as Duckpond’s treasurer since 2012. Doc. 88 at ¶ 48. He sat on Duckpond’s financial

steering committee alongside his fellow corporate officers, Anders Hummer and Alex

Alexandrov, who represented ICC Global and Tharros respectively. Doc. 88 at ¶ 4. In mid-

2017, Robson sold his Duckpond shares to his co-owners for $3,170,000. Doc. 88 at ¶ 3. But

two years later, Robson filed suit against Duckpond, ICC Global, and Tharros, claiming that

Defendants failed to pay their bill. Doc. 1. Defendants counterclaimed, alleging that Robson

misrepresented the basis for his stock purchase price, resulting in a bloated value of his

Duckpond stock. Doc. 25. With a raft of unresolved fact issues swirling around, the parties’

competing summary-judgment motions are dead in the water.

I. Background

ICC Global and Tharros purchased Robson’s Duckpond stock and signed a promissory

note for $3,170,000. Doc. 88 at ¶ 3. But less than two years later, ICC Global and Tharros

halted payments on the note, claiming that the valuation the parties used to calculate Robson’s

buyout price violated the Duckpond shareholders’ agreement. Doc. 44 at ¶¶ 11–12; Doc. 80.

Robson now seeks to enforce the note. Doc. 1.

Defendants assert numerous affirmative defenses, as well as three counterclaims,

including fraud (fraudulent inducement), breach of fiduciary duty, and breach of duty of loyalty.

Doc. 25. Defendants allege that Robson, acting as Duckpond’s treasurer, fraudulently

misrepresented Duckpond’s valuation and his stock purchase price as complying with a pricing

formula in the Duckpond shareholders’ agreement. Id. According to Defendants, they already

paid Robson more than enough for his shares, based on the value set by the shareholders’

agreement, which was at most $1,064,648. Id.

Before the Court are Robson’s motions for summary judgment and partial summary

judgment, Docs. 39 and 74, as well as Defendants’ Motion for Partial Summary Judgment, Doc.

79. The Court also considers Robson’s Motions to Exclude Expert Testimony of H. Brian

Callahan and Brett Abelson, Docs. 72 and 77, as well as Defendants’ Motion to Exclude Expert

Testimony of Thomas Hilton, Doc. 69. The Court denies the parties’ motions for summary

judgment, Docs. 39, 74, and 79, because genuine issues of material fact exist regarding

fraudulent inducement.

II. Facts

A. Undisputed facts

Pursuant to Rule 56(g) of the Federal Rules of Civil Procedure, the Court finds the

following facts not genuinely in dispute and treats them as established in the case.

1. Robson’s stock buyout

Robson, through his Trust, is a former co-owner of Duckpond, along with ICC Global

and Tharros, which each owning a one-third interest in Duckpond. Doc. 88 at ¶ 1. Duckpond is

a holding company with various subsidiaries, including ICC, Inc. (not to be confused with the

similarly-named defendant ICC Global). Id. at ¶ 2. Robson decided to sell his Duckpond shares

in equal parts to ICC Global and Tharros in 2017. Id. at ¶ 3. For purposes of the stock buyout,

Anders Hummer and Alex Alexandrov acted as representatives of ICC Global and Tharros. Id.

at ¶ 4.

On June 8, 2017, ICC Global and Tharros executed a promissory note for $3,170,000 in

exchange for Robson’s Duckpond stock. Id. at ¶¶ 7–8; Doc. 44 at ¶¶ 1–3. The promissory note

provided that Duckpond had to pay the Robson Trust the principal amount of $3,170,000, plus

4% per annum simple interest accruing from June 8, 2017 to maturity (May 12, 2022), via

monthly payments of $58,380.37 beginning on June 12, 2017. Doc. 88 at ¶ 10; Doc. 44 at ¶ 3.

Soon after, the parties executed a Share Sale and Purchase Agreement for Robson’s Duckpond

stock, giving ICC Global and Tharros each 50% ownership of Duckpond. Doc. 88 at ¶¶ 5–6;

Doc. 44 at ¶¶ 4–6. Section 2.3 of the Purchase Agreement stated the following:

The Parties hereby waive any and all restrictions and conditions in the

Shareholders Agreement and the Articles or any other document, on the transfer

of shares in respect of Transfers, and they further waive any and all of their

respective rights of pre-emption, first refusal or similar or related rights with respect

to the Transfer Shares and the Transfers, of which they avail themselves in

accordance with Article V of the Shareholders Agreement, Article 5 of the Articles

or any other provision of the Shareholders Agreement or the Articles or however

so arising, and hereby consent to the Transfers and all of their terms, including

but not limited to the Purchase Price. For the avoidance of doubt, the Parties

agree that the Transfers are in compliance with the Shareholders Agreement and

the Articles. If there is a conflict between the terms of this Agreement and any

other agreement between the same parties, the terms of this Agreement shall

prevail.

Doc. 44 at ¶ 7 (emphasis added). In connection with his stock buyout, Robson negotiated

an employment agreement with ICC, Inc., guaranteeing him a position at ICC, Inc. until

the end of 2022. Id. at ¶¶ 18–19.

2. Duckpond shareholders’ agreement

In 2014, Robson, Hummer, and Alexandrov negotiated an Amended and Restated

Shareholders’ Agreement for Duckpond Ltd. Id. at ¶¶ 11–12, 15. Article VI of the

Shareholders’ Agreement, titled “Purchase Price,” contains the following language regarding

share transfers in the case of a shareholder’s death, disability, or retirement:

The Purchase Price per Share is hereby agreed to be the total Value of the Company,

divided by the total number of outstanding Shares in the capital of the Company.

For the purpose of this Article VI, Section 1, for Shares transferred pursuant

to Article IV (Death), Article V Section 1 (Disability) or Article V Section 2

(Retirement), “Value” shall mean 3.5 times EBITDA for the Group over the

twelve-month period immediately preceding the date on which the Value is

determined, PLUS the Group’s consolidated net balance of all cash, short term

investments and current assets, less liabilities (as assessed under US GAAP)

(“Consolidated Net Current Assets”).

. . .

The Shareholders may review the Purchase Price and either decide that there is to

be no change or determine a new Purchase Price.

Doc. 88 at ¶¶ 13–14 (emphasis added); Doc. 44 at ¶ 24. When the parties negotiated the

Shareholders’ Agreement, Hummer expressed to Robson and Alexandrov that he wanted to

include a GAAP requirement in the Article VI Purchase Price formula, to ensure the financials

underlying the Purchase Price calculation would be materially accurate. Doc. 88 at ¶ 18.

3. Robson’s Duckpond valuation

Until 2017, Robson served as Duckpond’s treasurer, in charge of the company’s finances

and bookkeeping, while Hummer and Alexandrov were in charge of sales and operations. Doc.

at ¶¶ 48–49. In the months leading up to his stock buyout, Robson prepared several “Duckpond

valuation” spreadsheets, which he sent to both Hummer and Alexandrov. Id. at ¶¶ 22–23.

Robson labeled all of his valuation spreadsheets with the title: “Duckpond Purchase Price per

Article VI of the Amended and Restated Shareholders Agreement for Duckpond Ltd.” Id. at ¶

26. The Duckpond valuation spreadsheets use all of the definitions and terminology of Article

VI’s purchase price formula for share sales upon retirement (i.e., 3.5 times annualized EBITDA

plus Consolidated Net Current Assets), with the exception of any mention of GAAP compliance.

Id. at ¶ 27. The spreadsheets have line items and calculations for: “EBITDA(Consolidated Net

Ordinary Income for the previous 12 months),” “CONSOLIDATED NET CURRENT ASSETS,”

and “STOCK VALUE(3.5xannualized EBITDA+Net Current Assets).” Id. at ¶ 28. Robson

never communicated any other Duckpond valuation to Hummer and Alexandrov aside from that

contained in the valuation spreadsheets. Robson Dep. 101:22–102:7, 118:4–14.

On April 10, 2017, Robson circulated a Duckpond valuation spreadsheet for the first

quarter of 2017. Id. at ¶ 31. That spreadsheet announced that Duckpond’s “STOCK

VALUE(3.5xannualized EBITDA+Net Current Assets)” totaled $9,515,504. Id. at ¶ 32. The

parties used the figures in Robson’s valuation spreadsheet to determine his buyout price, setting

the price for Robson’s Duckpond shares at a third of Duckpond’s purported $9,515,504 value:

$3,170,000. Doc. 88 at ¶¶ 33–34. Robson admits that he knew the valuation was not GAAP-

compliant and that he knew Hummer and Alexandrov relied on the valuation to determine his

buyout price, but he did not inform them that the valuation was not GAAP-compliant. Robson

Dep. 72:22–23, 75:24–76:1, 77:1–3, 81:3–9, 84:4–8.

4. Post-buyout

Defendants halted their payments to Robson in March 2019. Doc. 44 at ¶¶ 11–12; Doc.

80. Robson sent Defendants a notice of default in May 2019, followed by an acceleration notice

in June 2019. Id. at ¶¶ 11–12, 14. Robson demanded payment of the remaining balance of

$2,094,148.82. Id. at ¶¶ 14–15. When Defendants did not pay, Robson filed this suit to recover

the amount under the promissory note. Id. at ¶¶ 16–17; Doc. 1.

B. Disputed facts

The parties’ primary dispute is whether Robson actually represented to Hummer and

Alexandrov that the Duckpond valuation came from Article VI’s Purchase Price formula, which

requires GAAP compliance. Doc. 88 at ¶ 35. Defendants claim that the valuation spreadsheets’

reference to Article VI of the Shareholders’ Agreement falsely represents that the $3,170,000

purchase price followed the price formula for retirement in Article VI. Id. at ¶¶ 35–37.

Defendants assert that they would not have entered into the promissory note and Purchase

Agreement if they had known that the $3,170,000 purchase price was not based on a GAAP-

compliant valuation. Doc. 88 at ¶ 39. Defendants state that they believed at the time that

Robson had been preparing and using GAAP-compliant financials for some time before his

buyout. Id. at ¶ 51. As evidence that they reasonably relied on Robson’s representations, they

point to Robson’s switch to “accrual” accounting and other significant revisions to Duckpond’s

financial statements, as well as Duckpond’s retention of an outside accounting firm to confirm

that their financials were GAAP-compliant . Id. at ¶¶ 51–54. Defendants claim that they learned

for the first time in late 2018 that the $3,170,000 purchase price was based on financials that did

not comply with GAAP. Id. at ¶ 46.

Robson claims that he never actually said that the valuation spreadsheets complied with

GAAP and that Hummer and Alexandrov already knew that Duckpond’s corporate financial

statements were not prepared in accordance with GAAP. Id. at ¶¶ 35–37. Robson points to

previous financial meetings with Hummer and Alexandrov, where the parties discussed

switching to GAAP-compliant accounting in the future, as well as a November 2, 2016 email

where Alexandrov expressed that a new change in Duckpond’s accounting system would “get

closer to GAAP.” Id. at ¶¶ 37, 51. Robson further argues that the switch to “accrual” accounting

and the retention of an outside accounting firm were merely steps towards making Duckpond’s

financial statements GAAP-compliant and that Duckpond did not retain the outside accounting

firm until long after Robson’s stock buyout. Id. at ¶¶ 52–54.

Robson insists that he pressed for a different buyout price in an email to Hummer and

Alexandrov on April 24, 2017. Id. at ¶ 58; Doc. 88-10. He stated in this email that the valuation

in Article VI of the Shareholders’ Agreement is only for purposes of death, disability, or

retirement, and none of those applied, so the purchase price was freely negotiable under the

Shareholders’ Agreement. Id. But notably, Robson’s email did not mention that the valuation

spreadsheet did not comply with Article VI and GAAP. Id.

The parties also dispute whether Robson retired in 2017 after selling his shares, as this

may affect whether Article VI of the Shareholders’ Agreement actually applied to Robson’s

stock buyout. When he signed the promissory note, Robson entered into a separate employment

agreement with Duckpond subsidiary ICC, Inc., which lasts until 2022 or until Robson decides to

terminate the agreement, whichever is earlier. Doc. 44 at ¶¶ 18–19. Robson contends that the

employment agreement is sufficient evidence that he continued to be an “employee” of

Duckpond’s group of companies, so he did not “retire” within the meaning of the Shareholders’

Agreement. Docs. 45, 44 at ¶ 20. Defendants counter with Hummer’s and Alexandrov’s sworn

testimony that Robson told them he was retiring and selling his shares according to the

retirement provision in the Shareholders’ Agreement, and that Robson only entered his

employment agreement with ICC, Inc. to keep his health insurance and other benefits. Doc. 42-1

at ¶¶ 6, 20; Doc. 42-2 at ¶¶ 5, 19. Defendants further claim that Robson is not an employee of

ICC, Inc. under Missouri law because he has not provided services to ICC, Inc. on a regular

basis, regularly attended work, submitted timesheets, or worked in excess of 25 hours, so ICC,

Inc. does not exercise control over the method or manner of Robson’s work. Doc. 42-1 at ¶¶ 14–

19; Doc. 42-2 at ¶¶ 13–18.

II. Standard

Summary judgment is proper if the evidence, viewed in the light most favorable to the

nonmoving party, demonstrates no genuine issue of material fact exists and the moving party is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Cordry v. Vanderbilt Mortg. &

Fin., Inc., 445 F.3d 1106, 1109 (8th Cir. 2006) (quoting Bockelman v. MCI Worldcom, Inc., 403

F.3d 528, 531 (8th Cir. 2005)). In ruling on a motion for summary judgment, the Court must

give the non-moving party the benefit of all reasonable inferences to be drawn from the

underlying facts. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir. 1987). The proponent

of the motion for summary judgment “bears the initial responsibility of informing the district

court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it

believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)).

In response to the proponent’s showing, the opponent’s burden is to “come forward with

‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)). A “genuine”

dispute of material fact is more than “some metaphysical doubt as to the material facts.” Id. at

586. “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving

party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

249 (1986). A party attempting to avoid summary judgment through an affirmative defense must

demonstrate genuine issues of material fact specifically supporting the affirmative defense.

United States v. Farmers Co-op Co., 708 F.2d 352, 353 (8th Cir. 1983). Rule 56(c) “mandates

the entry of summary judgment, after adequate time for discovery and upon motion, against a

party who fails to make a showing sufficient to establish the existence of an element essential to

that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp.,

477 U.S. at 322.

III. Discussion

A. Motions for summary judgment

1. Robson’s motion for summary judgment

Robson claims that he is entitled to summary judgment because the uncontroverted facts

establish that Defendants breached their obligations under the promissory note. Doc. 39, 40.

Robson further argues that each of Defendants’ affirmative defenses and counterclaims fail

because Defendants knowingly consented to all of the terms in the Purchase Agreement,

including the purchase price. Id.

Under Missouri law, “[t]he elements for breach of promissory note are: (1) the existence

of a valid promissory note signed by the maker; (2) a balance due on the note; and (3) a demand

on the maker for payment which has been refused, leaving the maker in default.” Smithville,

LLC v. Citizens Bank & Trust Co., 2013 WL 434020, at *4 (W.D. Mo. 2013) (citing Bus. Bank of

St. Louis v. Apollo Invs., Inc., 366 S.W.3d 76, 80 (Mo. App. E.D. 2012)). Defendants have

admitted that: (1) they executed a promissory note worth $3,170,000, (2) they stopped paying

the balance in March 2019 without paying the full amount, and (3) they refused to pay anything

more after Robson demanded the remaining balance of $2,094,148.92 in May 2019. Doc. 44 at

¶¶ 1, 3, 11–12, 14–16. Thus, as an initial matter, Robson has established the elements for breach

of a promissory note.

Defendants raise several affirmative defenses and counterclaims, arguing that they

lawfully terminated their performance of the promissory note because Robson’s

misrepresentations induced them to purchase his shares for an inflated price. Docs. 42, 25; see

also Rodgers v. Czamanske, 862 S.W.2d 453, 459 (Mo. App. 1993) (“An affirmative defense

declares that even if the allegations in the plaintiff’s petition are established, the plaintiff cannot

prevail because additional facts exist which avoid the legal responsibility of the defendant.”).

Defendants allege that Robson fraudulently induced Defendants to enter into the Purchase

Agreement and breached his fiduciary duties to Duckpond by presenting a non-GAAP-compliant

share price in his valuation spreadsheets while purporting to follow the pricing formula in Article

VI of the Shareholders’ Agreement. Docs. 42, 25. Robson did not inform his co-owners that the

Duckpond valuation he presented was not GAAP-compliant, despite knowing that they relied on

it for determining the price of his shares. Id.

To state a claim for fraudulent inducement under Missouri law, a party must prove: “(1)

a false material representation; (2) the speaker’s knowledge of its falsity or his ignorance of its

truth; (3) the speaker’s intent that it should be acted upon by the hearer in the manner reasonably

contemplated; (4) the hearer’s ignorance of the falsity of the statement; (5) the hearer’s reliance

on its truth, and the right to rely thereon; and (6) proximate injury.” Gast v. Ebert, 739 S.W.2d

545, 547 (Mo. 1987). Defendants must meet a heavy burden to establish a case for fraudulent

inducement. Cantrell v. Superior Loan Corp., 603 S.W.2d 627, 634 (Mo. App. E.D. 1980)

(“Fraud of course is never to be presumed; and before evidence may be taken as reasonably

supporting an inference of fraud, it must rise above mere suspicion and point logically and

convincingly to that conclusion.” (citing Hunter v. Roberts, 267 S.W.2d 368, 372 (Mo. App.

1954)). Defendants may present even circumstantial evidence of fraud, however: “Fraud is

rarely susceptible of positive proof . . . fraud may be established by a showing of facts and

circumstances from which it reasonably and fairly may be inferred.” Id. at 634–35 (internal

quotations omitted) (quoting Glaze v. Glaze, 311 S.W.2d 575, 578–579 (Mo. App. 1958). The

Court finds that Defendants have presented sufficient evidence to create a genuine issue of fact

under each of the elements for fraudulent inducement.

After drawing all reasonable inferences in favor of Defendants, the Court finds that

factual disputes exist over whether Robson misrepresented that the Duckpond valuation

spreadsheets were GAAP-compliant to induce them into entering the Purchase Agreement. A

reasonable jury could find that Robson represented, through the valuation spreadsheets, that the

purchase price was GAAP-compliant because Robson labeled the spreadsheets “Duckpond

Purchase Price per Article VI of the Amended and Restated Shareholders Agreement for

Duckpond Ltd.” Doc. 88 at ¶ 26. Defendants also present evidence that Robson’s representation

was material because it caused them to accept Robson’s purchase price and enter into the

Purchase Agreement and promissory note. Schoen v. Lange, 256 S.W.2d 277, 281 (Mo. App.

1953) (“[A] representation is material if it relates directly to the matter in controversy and is of

such a nature that the ultimate result would not have followed if there had been no

representation, or if the one who acted upon it had been aware of its falsity.”). Defendants have

presented sufficient evidence of Robson’s knowledge and intent because Robson admitted in his

deposition that he knew Hummer and Alexandrov relied on the Duckpond valuation spreadsheet

to determine his buyout price but he failed to inform them that the valuation was not GAAP

compliant. Robson Dep. 72:22–23, 75:24–76:1, 77:1–3, 81:3–9, 84:4–8; see also Constance v.

B.B.C. Development Co., 25 S.W.3d 571, 588 (Mo. App. W.D. 2000) (questions of intent in a

fraud action “often present witness credibility issues, that lie within the peculiar province of the

jury.”).

Defendants have also established genuine issues of fact over whether they knew

Robson’s statements were false and had a right to rely on his representations. Defendants state

that they did not know until late 2018 that Robson’s Duckpond valuation contained non-GAAP-

compliant financials and that they took Robson’s calculations at face value because they believed

that he calculated the purchase price under Article VI of the Shareholders’ Agreement. Doc. 88

at ¶¶ 45–46. Despite the Defendants’ equal footing with Robson and access to information

regarding the buyout price, “if the seller makes a distinct and specific representation, the buyer

has the right to rely thereon.” Colgan v. Washington Realty Co., 879 S.W.2d 686, 691 (Mo.App.

E.D. 1994). Additionally, “[t]he right to rely on a representation is ordinarily a question of fact

for the trier of fact.” Kratky v. Musil, 969 S.W.2d 371, 376 (Mo. App. W.D. 1998). Finally,

Defendants put forth evidence that Robson’s representations proximately caused them damages,

due to their overpayment on the promissory note as well as other expenses stemming from

Duckpond’s non-GAAP-compliant financials. Doc. 88 at ¶55–56.

Robson counters that Defendants’ affirmative defenses and counterclaims fail as a matter

of law: Defendants consented to the terms in the Purchase Agreement and waived the

restrictions in the Shareholders’ Agreement (including the GAAP-compliance provision in

Article VI), therefore, Defendants cannot bring a claim for fraud. Doc. 40. Robson contends

that Defendants waived the basis for their affirmative defenses and counterclaims through

Section 2.3 of the Purchase Agreement:

“[t]he Parties hereby waive any and all restrictions and conditions in the

Shareholders Agreement and the Articles or any other document, on the transfer of

shares in respect of Transfers . . . and hereby consent to the Transfers and all of

their terms, including but not limited to the Purchase Price. For the avoidance of

doubt, the Parties agree that the Transfers are in compliance with the Shareholders

Agreement and the Articles.”

Docs. 40, 44 at ¶ 7. Robson argues that the Purchase Agreement and promissory note supersede

all prior agreements between the parties, including the Shareholders’ Agreement, so the purchase

price did not have to satisfy the price formula in Article VI or come from a GAAP-compliant

Duckpond valuation. Doc. 40. Robson also observes that even if the Shareholders’ Agreement

was still in effect, Article VI’s price formula for death, disability, and retirement still did not

apply because Robson never retired from the Duckpond group of companies; he became an

employee of ICC, Inc. after selling his shares. Id. In sum, Robson asserts that his alleged

misrepresentations about GAAP compliance are not actionable or relevant because Defendants

waived the restrictions in the Shareholders’ Agreement and because the purchase price did not

have to comply with Article VI since he never retired. Id.

Robson fundamentally misinterprets the basis for Defendants’ counterclaims and

affirmative defenses. Defendants claim that the Purchase Agreement and promissory note are

voidable because Robson misrepresented whether the valuation spreadsheets were GAAP-

compliant under Article VI of the Shareholders’ Agreement. Doc. 25. Parties cannot waive

claims of fraudulent inducement by agreement: “Missouri law . . . holds that a party may not, by

disclaimer or otherwise, contractually exclude liability for fraud in inducing that contract.” Hess

v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 767 (Mo. 2007); see also Wagner v.

Uffman, 885 S.W.2d 783, 786 (Mo. App. 1994) (“A party may not contractually exclude oneself

from fraud through the use of general disclaimers.”).

Robson’s misrepresentations about GAAP compliance are actionable so long as

Defendants rightfully relied upon them in determining the price for Robson’s stock and entering

the Purchase Agreement. Defendants have testified and presented evidence that that they never

would have bought Robson’s shares for $3,170,000 if they had known that the valuation

spreadsheet was not GAAP-compliant. Doc. 88 at ¶ 39. Even assuming that Defendants waived

the restrictions in Shareholders’ Agreement by signing the Purchase Agreement, Defendants may

still bring a claim for fraudulent inducement of the Purchase Agreement based on Robson’s

misrepresentations about GAAP compliance. See Hess, 220 S.W.3d at 767.

Because Defendants present genuine issues of fact over whether Robson fraudulently

induced them to enter the Purchase Agreement and promissory note, the Court denies Robson’s

Motion for Summary Judgment, Doc. 39. The Court need not address at this time whether

Defendants waived the restrictions in the Shareholders’ Agreement by entering the Purchase

Agreement or whether Robson retired for purposes of Article VI of the Shareholders’

Agreement.

2. Defendants’ partial motion for summary judgment

Defendants also move for summary judgment based on their affirmative defenses and

counterclaim for fraud, urging that Robson fraudulently induced the Purchase Agreement and

promissory note by representing that the purchase price was based on GAAP-compliant

financials in accordance with Article VI of the Shareholders’ Agreement. Docs. 79, 80.

Defendants assert that Robson has not presented sufficient evidence to create a genuine dispute

of material fact as to any of these issues, so they are entitled to summary judgment on their fraud

affirmative defenses and fraud counterclaim against Robson. Id.

The Court disagrees. As discussed above, fraudulent inducement requires a party to

prove: “(1) a false material representation; (2) the speaker’s knowledge of its falsity or his

ignorance of its truth; (3) the speaker’s intent that it should be acted upon by the hearer in the

manner reasonably contemplated; (4) the hearer’s ignorance of the falsity of the statement; (5)

the hearer’s reliance on its truth, and the right to rely thereon; and (6) proximate injury.” Gast,

739 S.W.2d at 547.

The Court finds that Robson has presented sufficient evidence to create a genuine dispute

of fact on whether he committed fraud. See id. Robson presents evidence that he never actually

told Defendants that the stock price was calculated based on GAAP-compliant financials and that

Defendants already knew that Duckpond’s financials were not GAAP compliant. Doc. 88 at ¶¶

35–37, 51. Robson also presents evidence that he did not intend for Defendants to act upon his

representations in the valuation spreadsheets and that he did not prepare the spreadsheets for the

purpose of determining his buyout price. Id. at ¶¶ 29, 58. Resolving these factual disputes over

fraudulent misrepresentation will involve witness credibility determinations and the weighing of

contrary evidence, both of which “lie within the peculiar province of the jury.” Constance v.

B.B.C. Development Co., 25 S.W.3d 571, 588 (Mo. App. Ct. 2000). The Court therefore denies

Defendants’ Partial Motion for Summary Judgment [79].

3. Robson’s partial motion for summary judgment

Robson also moves for partial summary judgment on several of Defendants’ damage

claims, claiming that Defendants are either not the proper parties to claim the damages or that

they present insufficient evidence to support recovery. Doc. 74. First, Robson argues that

Defendants are not the proper parties to claim damages related to the forgiveness of a promissory

note owed by Ryan Coates to Stichting Duckpond Foundation, because Stichting Duckpond

Foundation is not a party to this lawsuit.1 Id. Second, Robson argues that various employee

compensation, recruitment, and bonus damages claimed by Defendants were all paid by ICC,

Inc., which is also not a party to this lawsuit. Id. Third, Robson argues that Defendants cannot

prevail on their damage claims for the RubinBrown review costs and excessive employee

bonuses and other expenses from 2018 because Defendants present insufficient evidence to show

that the damages were a proximate cause of Robson’s actions. Id.

Awarding partial summary judgment for Robson on Defendants’ damage claims would

constitute an improper advisory opinion. See, e.g., Flast v. Cohen, 392 U.S. 83, 88 (1968) (“The

oldest and most consistent thread in the federal law of justiciability is that federal courts will not

give advisory opinions.”). For a federal court to render judgment, the issue before it must be:

definite and concrete, touching the legal relations of parties having adverse legal

interests. It must be a real and substantial controversy admitting of specific relief

through a decree of a conclusive character, as distinguished from an opinion

advising what the law would be upon a hypothetical state of facts.

1 Both Ryan Coates and Stichting Duckpond Foundation are non-parties in this action. Doc. 44 at ¶¶ 12–13; Doc.

95 at 3–4. Ryan Coates bought 10% of Duckpond’s shares in April 2018, and ICC Global and Tharros loaned

Coates $555,366 to finance the purchase. Id. ICC Global and Tharros loaned the money through a corporate

intermediary, Stichting Duckpond Foundation, but they forgave the loan after discovering that Duckpond’s

financials were not GAAP compliant. Id.

North Carolina v. Rice, 404 U.S. 244, 246 (1971) (citing Aetna Life Ins. Co. v. Haworth, 300

U.S. 227, 240–241 (1937)). Robson seeks a ruling from the Court on the extent of Defendants’

damages, should Defendants succeed in proving Robson’s liability for fraud and breach of

fiduciary duties. Doc. 74. But as discussed above, genuine issues of material fact exist on the

question of whether Robson fraudulently induced Defendants to enter the Purchase Agreement.

Awarding partial summary judgment on damages issues “which depend upon the

resolution of controverted matters would be tantamount to advisory opinions.” Marshall

Contractors, Inc. v. Peerless Ins. Co., 827 F. Supp. 91, 93 (D.R.I. 1993); see also Coy v. No

Limits Education, 2016 WL 7911333, at *3 (D. Minn. 2016) (“The Court will not offer an

advisory opinion on the applicability of various damages theories that might apply in the

alternative.”). Liability for Defendants’ fraud and breach of fiduciary duty counterclaims is an

unresolved threshold issue that the factfinder must resolve before the Court can address the

question of Defendants’ damage claims. Robson seeks a ruling on damages issues that the Court

may never need to resolve, placing the Court “in the untenable position of being asked to render

an advisory opinion on a hypothetical determination of critical facts.” Borup v. CJS Solutions

Group, LLC, 2019 WL 4820732, at *1 (D. Minn. 2019) (quoting Boden v. St. Elizabeth Med.

Ctr., Inc., 2018 WL 4855210, at *4 (E.D. Ky. 2018)). The Court therefore denies Robson’s

Motion for Partial Summary Judgment. Doc. 74.

B. Motions to exclude expert testimony

Robson filed motions to exclude the expert testimony of H. Bryan Callahan and Brett

Abelson, Docs. 72 and 77. Defendants filed a motion to exclude the expert testimony of Thomas

Hilton, Doc. 69. The Court will address each motion in turn.

To be admissible, Federal Rule of Evidence 702 requires that expert testimony: (1) help

the trier of fact determine facts at issue; (2) be based on sufficient facts or data; and (3) be the

product of reliable principles and methods. In addition, the expert must have reliably applied

those principles and methods to facts of the case. Id. The Court must act as a “gatekeeper” in

determining the admissibility of expert testimony and “determine whether the testimony has ‘a

reliable basis in the knowledge and experience of [the relevant] discipline.’” Kumho Tire Co.,

Ltd. v. Carmichael, 526 U.S. 137, 149 (1999) (quoting Daubert v. Merrell Dow

Pharmaceuticals, Inc., 509 U.S. 579, 592 (1993)).

1. Defendants’ expert H. Bryan Callahan

Defendants’ expert H. Bryan Callahan is a CPA and a partner in the Forensics and

Valuation Services practice of BKD, LLP, a large CPA and advisory firm. Doc. 78-1 at 4.

Defendants retained Callahan “to assess Robson’s calculation of damages and determine

applicable adjustments required to recalculate Robson’s valuation of Duckpond and its

subsidiaries as defined in Article VI of the Shareholders’ Agreement.” Id. at 5. Callahan opined

that the proper valuation for Robson’s buyout under Article VI of the Shareholders’ Agreement

was “no more than $1,146,106.16, but the value is likely lower due to other forgone revenue

recognition adjustments and the Duckpond Consolidated balance sheets as updated with

[RubinBrown’s adjusting journal entries] . . .” Id. at 10. Callahan based his Duckpond valuation

on GAAP adjustments related to: “(1) the proper consolidation of a Duckpond subsidiary, 301

Memorial LLC; and (2) proper revenue recognition for certain projects, for which sufficient

information remained available.” Id. at 7–10.

Robson does not challenge Callahan’s qualifications. Instead, Robson argues that the

Court should exclude certain opinions Callahan expressed because he did not rely on reliable

principles or methods. Doc. 78. First, Robson seeks to exclude Callahan’s opinion that the

foregone revenue-recognition adjustments might have reduced the value of Robson’s interest in

Duckpond to less than $1,146,106.16. Id. Second, Robson seeks to exclude Callahan’s opinion

on the consolidation of 301 Memorial. Id.

a. Foregone revenue-recognition adjustments

Callahan’s valuation opinion includes revenue-recognition adjustments that he argues

should have been included in the Duckpond valuation as of March 31, 2017. Doc. 78-1 at 9–10.

Callahan reviewed a combination of forecasted numbers, budgets, contract/purchase orders, job

cost detail/invoice registers, and other data for eight projects. Id. Callahan reviewed similar

adjustments to balance sheets for several other projects, but Callahan did not have enough

detailed information on these projects to include those “foregone revenue recognition

adjustments” in his valuation opinion. Id. at 10. After considering Duckpond’s adjusted balance

sheet and project information, as well as RubinBrown’s adjusting journal entries, Callahan stated

that the value of Robson’s shares was “no more than $1,146,106.16,” but he also claimed that

this valuation was “conservative” and that Robson’s actual buyout value was “likely lower.” Id.

Callahan did not include the foregone revenue-recognition adjustments in his official valuation,

but he went on to calculate the possible effect of those adjustments on the valuation anyway,

suggesting that Robson’s stock value could have been as little as $733,915.82 due to those

adjustments. Id.

Robson seeks to exclude Callahan’s opinion on the foregone revenue-recognition

adjustments as speculative and unreliable. Doc. 78-1 at 10. Callahan admitted in his report that

he “was unable to calculate reliable revenue recognition adjustments for the other Fixed Fee

projects.” Id. But he explained that his opinions on the foregone revenue-recognition

adjustments were based on estimated forecasted costs only because Duckpond’s accounting

system no longer contained the actual-cost data. Doc. 78-1 at 10.

Callahan also opined that his $1,146,106.16 valuation was “conservative” and that the

value was “likely lower” than $1,146,106.16. Doc. 78-1 at 10. Callahan stated that “the value is

likely lower due to other forgone revenue recognition adjustments and the Duckpond

Consolidated balance sheets as updated with RB’s AJEs.” Doc. 78-1 at 10. These comments

were based on his review of Duckpond’s financial statements and project data as well as

RubinBrown’s adjusted journal entries. Id.

Callahan’s opinions on the foregone revenue-recognition adjustments are not “so

fundamentally unsupported that [they] can offer no assistance to the jury.” Synergetics, Inc. v.

Hurst, 477 F.3d 949, 956 (8th Cir. 2007). “As a general rule, the factual basis of an expert

opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing

party to examine the factual basis for the opinion in cross-examination.” Bonner v. ISP Tech.,

Inc., 259 F.3d 924, 929 (8th Cir. 2001). The Court will not exclude Callahan’s opinions on the

foregone revenue-recognition adjustments.

b. 301 Memorial consolidation

Callahan also opined that under GAAP consolidation guidance, the Duckpond valuation

should have consolidated 301 Memorial due to ICC, Inc.’s 99% interest in 301 Memorial. Doc.

78-1 at 8–9. Callahan cited Financial Accounting Standards Board (“FASB”) Codification ASC

810-10-15-8, a general consolidation rule based on an entity’s majority voting-interest in another

corporation (“voting-interest model”). Id. Robson seeks to exclude Callahan’s opinion on the

consolidation of 301 Memorial for failing to consider an exception to the voting-interest model

that Robson’s rebuttal expert, Hilton, claimed would apply in this circumstance. Doc. 78. The

Court observes that Callahan supplemented his report to analyze the applicability of this

exception to the voting-interest model in the context of the 301 Memorial consolidation. Doc.

110; 66-4.

Callahan opined in his supplemental report that the exception to the voting-interest model

does not apply here, because three out of four of the non-controlling-members of 301 Memorial

were the three shareholders in Duckpond: Robson, ICC Global, and Tharros. Doc. 66-4 at 6–7.

Callahan concluded that Duckpond “directly or indirectly” held 99.75% of the voting rights in

301 Memorial, so the Duckpond financial statements should have consolidated 301 Memorial.

Id. at 7. The Court finds that Callahan’s supplemental opinion meets the relevance and

reliability requirements of Rule 702 because Defendants have shown by a preponderance of

evidence that Callahan’s reasoning and methodology “[was] applied properly to the facts in

issue” and that Callahan was “qualified to render the opinion and that the methodology

underlying his conclusions [was] scientifically valid.” See Marmo v. Tyson Fresh Meats, Inc.,

457 F.3d 748, 757–58 (8th Cir. 2006) (“Courts should resolve doubts regarding the usefulness of

an expert's testimony in favor of admissibility.”). Therefore, the Court will not exclude

Callahan’s opinion on the 301 Memorial consolidation. The Court denies Robson’s motion,

Doc. 77.

2. Defendants’ expert Brett Abelson

Defendants’ expert Brett Abelson is a CPA and the CFO of ICC, Inc. since 2018. Doc.

73-1 at 2. Defendants present Abelson as a non-retained expert to opine that Robson based his

Duckpond valuation on non-GAAP-compliant financials and to testify about the financial

statements and valuation documents that Duckpond used for Robson’s buyout in 2017. Id.

Defendants further state that Abelson will opine that Duckpond’s consolidated financials

contained material misstatements, resulting in an inflated price for Robson’s stock. Id. Robson

argues that the Court should prevent Abelson from offering opinion testimony as a non-retained

expert because he has no personal knowledge of the facts surrounding the sale of Robson’s

interest in Duckpond and because Abelson’s opinions will be needlessly cumulative of

Callahan’s expert testimony. Doc. 73. While the Court observes that Abelson’s ability to

determine the alleged inflated value undercuts Defendants’ argument that they could not have

discovered the true value of the stock earlier, the Court will allow Abelson to testify as set forth

below.

a. Personal knowledge as a non-retained expert

Robson argues that because Abelson started working at ICC, Inc. in 2018, a year after

Robson’s buyout, Abelson does not have personal knowledge of the facts at issue. Doc. 73.

Robson correctly asserts that non-retained experts may only testify to facts within their personal

knowledge. See InfoDeli, LLC v. Western Robidoux, Inc., 2018 WL 10638455, at *2 (W.D. Mo.

2018) (prohibiting a non-retained expert “from testifying about any information learned or

compiled during the discovery process in this case since that testimony would not be based on

percipient knowledge of the underlying dispute.”). According to Robson, Abelson’s testimony

would simply summarize facts taken from the discovery record. The Court disagrees with

Robson’s characterization of Abelson’s testimony. Abelson’s testimony is not based on an after-

the-fact review of discovery documents; Abelson personally assisted Defendants in conducting

an internal audit of Robson’s Duckpond valuation and stock buyout price in 2018. Doc. 86.

Abelson also worked with Duckpond’s independent auditor, RubinBrown, to identify the GAAP-

compliance issues in Duckpond’s overall financials. Id. And although Abelson may rely on

documents created before his employment at ICC, Inc., he can still testify regarding his

knowledge of Duckpond’s financial reports, files, and data gained through his experience as ICC

Inc.’s CFO. Id.

The Court further explains that the issue of the extent of a non-retained expert’s personal

knowledge goes to the weight of the expert’s testimony rather than its admissibility. Smith v.

Curators of the Univ. of Missouri, 2018 WL 6729653, at *2 (W.D. Mo. 2018) (“Plaintiff also

contends [the non-retained expert] should be precluded from testifying to particular time periods

or facts due to a lack of personal knowledge. However, that issue is suited for cross-examination

and does not warrant the exclusion of an expert witness.” (emphasis added)) (citing Synergetics,

Inc., 477 F.3d at 955–56 (denying a plaintiff’s motion to exclude a non-retained expert from

testifying, explaining that the factual basis of expert’s testimony went to weight rather than

admissibility)).

b. Cumulative testimony

Robson also contends that the Court should exclude Abelson’s opinions as needlessly

cumulative under Federal Rule of Evidence 403, because both Abelson and Callahan will opine

on the GAAP-compliance issues with Robson’s 2017 Duckpond valuation. See Fed. R. Evid.

403; Sellers v. Bayer HealthCare Pharm. Inc., 2016 WL 9049600, at *2 (W.D. Mo. 2016) (“Rule

403 of the Federal Rules of Evidence…provides expert testimony should be excluded ‘if its

probative value is substantially outweighed by a’ risk of ‘unfair prejudice, confusing the issues,

misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.’”).

Robson claims that Abelson and Callahan’s opinions are nearly identical and that they testify

from the same professional perspective as CPAs, so the Court should exclude any of Abelson’s

opinion testimony that contains a “substantial overlap” with Callahan’s testimony. See C.C. v.

Suzuki Manufacturing of Am. Corp., 2018 WL 3861354, at *13 (E.D. Mo. 2018) (“Expert

testimony is unnecessarily cumulative when ‘there is ‘substantial overlap’ between the areas on

which two experts will testify.’ However, ‘testimony on the same topic by different experts...is

not needlessly cumulative where the experts will testify from different perspectives.’ Generally

speaking, experts testify from different professional perspectives when they work in different

professions.” (internal citations and quotations omitted)).

In response, Defendants state that even when expert testimony overlaps, the testimony is

not overly cumulative when it addresses the very “root of the matter in controversy” between the

parties. See J.B. by & through Bullock v. Missouri Baptist Hosp. of Sullivan, 2018 WL 746302,

at *6 (E.D. Mo. 2018) (denying plaintiff’s motion to exclude cumulative expert testimony from

five experts on the same two opinions and deferring decision to limit cumulative evidence until

trial). Defendants admit that courts need not permit limitless expert testimony on the central

issue, but they claim that exclusion is unwarranted absent a showing that the prejudicial effect of

expert testimony substantially outweighs its probative value. See id.

The Court finds that the probative value of Abelson’s testimony is not “substantially

outweighed” by a danger of “needlessly presenting cumulative evidence.” See Fed. R. Evid.

403. When weighing the probative value of evidence against the considerations in Rule 403,

courts generally strike the balance in favor of admission. Miller v. Bayer HealthCare

Pharmaceuticals Inc., 2016 WL 9049604, at *1 (W.D. Mo. 2016) (citing United States v.

Dennis, 625 F.2d 782, 797 (8th Cir. 1980)). The GAAP-compliance issues with Robson’s 2017

Duckpond valuation lie at the root of the controversy between the parties, so Abelson’s

testimony has a significant probative value. See Missouri Baptist Hosp. of Sullivan, 2018 WL

746302, at *6. And the danger of cumulative evidence is not high. Abelson’s testimony comes

from a different perspective than Callahan’s. See id. (refusing to exclude expert testimony when

“each expert’s background and analysis is unique, and the testimony is complimentary, rather

than cumulative.”). Both experts have the same professional background as CPAs, but

Defendants offer Abelson’s testimony as a non-retained expert with personal knowledge of the

facts at issue. While Callahan will opine as to a GAAP-compliant Duckpond valuation based on

forensic accounting principles, Abelson will recount the GAAP-compliance issues uncovered by

Defendants in 2018 and will provide his perspective into Duckpond’s financials as ICC, Inc.’s

CFO.

c. Conclusion on Abelson

The Court holds that Abelson can testify as Defendants’ non-retained expert to the extent

that his opinions stem from facts within his personal knowledge. And the Court will not exclude

Abelson’s testimony on the basis of Rule 403, although it may limit Abelson’s testimony should

his opinions become unnecessarily cumulative during trial. The Court denies Robson’s motion

to exclude, Doc. 72.

3. Plaintiffs’ rebuttal expert Thomas Hilton

Plaintiff’s expert Thomas Hilton is a CPA and a partner at Anders Minkler Huber &

Helm, LLP. Doc. 70-2 at 1. Plaintiffs retained Hilton “to review and rebut certain opinions of

the Defendants’ expert witness contained in the expert report of H. Bryan Callahan.” Id. at 2.

Hilton expressed that Callahan’s opinion regarding the 301 Memorial consolidation was

incorrect because of an exception to the voting-interest model (FASB ASC 810-10-15-10(a)) that

Callahan did not address. Id. at 4. According to Hilton, even though ICC, Inc. had a 99%

ownership interest in 301 Memorial, the non-controlling-member rights in the 301 Memorial

Operating Agreement were so restrictive as to call into question ICC, Inc.’s control over 301

Memorial. Id. at 5–6. Hilton concluded that GAAP did not require the consolidation of 301

Memorial in Duckpond’s financial statements and that Callahan’s opinion on the value of

Robson’s Duckpond shares was incorrect. Id. at 6.

Defendants argue that Hilton’s testimony is: (1) ill-supported, because Hilton did not

consider alternative rationales for consolidation, and (2) unreliable, because Hilton did not

conduct an adequate analysis to support his conclusion. Doc. 70. First, Defendants argue that

Hilton’s opinion on the 301 Memorial consolidation is ill-supported because Hilton narrowly

considered one possible exception to the voting-interest model but did not analyze consolidation

under an alternative rationale, such as the variable-interest model (a/k/a, economic-influence

model). Id. Second, Defendants argue that Hilton’s attack on Callahan’s valuation opinion is

unreliable because Hilton did not address other possible rationales for consolidation that would

support Callahan’s valuation opinion. Id.

a. 301 Memorial consolidation

Hilton opined that Callahan did not need to consolidate 301 Memorial under GAAP

consolidation guidance because of an exception to the voting-interest model. Doc. 70-2 at 5–6.

Hilton admitted that “ASC 810 considers consolidation under one of two models: an economic-

influence model or a voting-interest model,” but as a rebuttal witness, Hilton explained that

“[f]or purposes of this report, I am addressing the voting-interest model utilized by Mr. Callahan

in his calculations and report.” Id. at 3. Defendants seek to exclude Hilton’s rebuttal opinion on

the consolidation of 301 Memorial for failing to analyze alternative rationales for consolidation,

like the variable-interest model. Doc. 70.

The Court observes, as an initial matter, that Defendants seek to exclude Hilton’s

testimony for not addressing the variable-interest model, despite Callahan’s not raising this

rationale in his original report. Doc. 78-1. On the very last day of discovery, Defendants filed a

supplemental report for Callahan with a new analysis of the variable-interest model. Doc. 66-4.

The Court struck this portion of Callahan’s supplemental report, holding that it constituted a

“new opinion” on consolidation that could not enter the record for the first time through a

supplemental report. Doc. 110. As the rebuttal expert for Callahan, Hilton could not possibly

have predicted or responded to Callahan’s untimely disclosure.

Additionally, Hilton need not address every possible rationale for the 301 Memorial

consolidation. Hilton is a rebuttal expert, and “[t]he function of rebuttal testimony is to explain,

repel, counteract or disprove evidence of the adverse party.” Marmo v. Tyson Fresh Meats, Inc.,

457 F.3d 748, 759 (8th Cir. 2006) (“[R]ebuttal evidence may be used to challenge the evidence

or theory of an opponent—and not to establish a case-in-chief.”); see also Aviva Sports, Inc. v.

Fingerhut Direct Marketing, Inc., 829 F.Supp.2d 802, 835 (D. Minn. 2011) (collecting cases)

(rebuttal expert witnesses may criticize other experts’ theories without offering their own

alternative analysis, and “[c]ontrary to plaintiffs’ suggestion, a rebuttal expert who critiques

another expert’s theories or conclusions need not offer his own independent theories or

conclusions.”).

The Court finds that Hilton’s failure to address alternative rationales for the 301

Memorial consolidation is not a basis for excluding his testimony, rather, this argument goes to

the weight of Hilton’s testimony. See Sphere Drake Ins. PLC v. Trisko, 226 F.3d 951, 955 (8th

Cir. 2000) (“Attacks on the foundation for an expert’s opinion, as well as the expert’s

conclusions, go to the weight rather than the admissibility of the expert’s testimony.”). The

Court will not exclude Hilton’s rebuttal opinion on this basis.

b. Valuation

Hilton concluded in his report that Callahan’s recalculation of Robson’s stock buyout

price was “incorrect” because it relied on the 301 Memorial consolidation and because Callahan

had ignored the exception to the voting-interest model. Doc. 70-2 at 6 (“[P]ursuant to the

exception of ASC 810-10-15-10-(a)(1)(iv), Memorial should not be consolidated with Duckpond

. . . Callahan’s recalculation of the purchase price of the shares . . . which was based upon the

consolidation of Memorial with Duckpond, Ltd. and Subsidiaries, is incorrect.”). Defendants

urge that Hilton’s overarching conclusion is unreliable because of the “analytical gap” between

Hilton’s opinion on the voting-interest model and Hilton’s conclusion that 301 Memorial should

not have been consolidated at all. Doc. 70; 87. Defendants challenge the foundation for Hilton’s

opinion that 301 Memorial should not have been consolidated, because that conclusion does not

necessarily flow from the rest of Hilton’s opinion. Id. To reach that conclusion, Defendants

contend, Hilton would have had to analyze both the voting-interest model and the variable-

interest model for consolidation. Id.

Usually, “the factual basis of an expert opinion goes to the credibility of the testimony,

not the admissibility, and it is up to the opposing party to examine the factual basis for the

opinion in cross-examination.” Arkwright Mut. Ins. Co. v. Gwinner Oil, Inc., 125 F.3d 1176,

1183 (8th Cir. 1997) (quoting Hose v. Chicago Northwestern Transportation Co., 70 F.3d 968,

974 (8th Cir.1995)). The Court will exclude an expert’s opinion, however, if it “is so

fundamentally unsupported that it can offer no assistance to the jury.” Nebraska Plastics, Inc. v.

Holland Colors Americas, Inc., 408 F.3d 410, 416–17 (8th Cir. 2005) (affirming exclusion of

expert’s damages calculation testimony because it “failed to take into account a plethora of

specific facts”).

The Court will not exclude Hilton’s conclusion, because Hilton’s failure to address the

variable-interest model does not make it “fundamentally unsupported” by the relevant facts. See

Nebraska Plastics, Inc., 408 F.3d at 416. Hilton’s conclusion that “Memorial should not be

consolidated with Duckpond” is based on his rebuttal of Callahan’s opinion, rather than his own

analysis of the consolidation guidelines. Doc. 70-2 at 6. But Defendants may address the

limited basis for Hilton’s opinion on cross examination. See Bonner v. ISP Techs., Inc., 259 F.3d

924, 929–30 (8th Cir. 2001) (“As a general rule, the factual basis of an expert opinion goes to the

credibility of the testimony, not the admissibility, and it is up to the opposing party to examine

the factual basis for the opinion in cross-examination. Only if the expert’s opinion is so

fundamentally unsupported that it can offer no assistance to the jury must such testimony be

excluded.”); see also Trisko, 226 F.3d at 955. Accordingly, the Court denies Defendants’ motion

to exclude [69].

IV. Conclusion

Genuine disputes of material fact exist as to whether Robson misrepresented that the

Duckpond valuation was GAAP-compliant and fraudulently induced Defendants to enter the

Purchase Agreement for Robson’s shares. Accordingly, the Court denies Robson’s [39] Motion

for Summary Judgment and Defendants’ [79] Partial Motion for Summary Judgment. The Court

also denies Robson’s [74] Motion for Partial Summary Judgment, as it seeks an advisory

opinion.

The Court denies Robson’s [77] Motion to Exclude Callahan’s Expert Testimony,

Robson’s [72] Motion to Exclude Abelson’s Expert Testimony, and Defendants’ [69] Motion to

Exclude Hilton’s Expert Testimony.

So Ordered this 31st day of March 2021.

su le. CK

EPHEN R. CLARK

UNITED STATES DISTRICT JUDGE

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