SE Property Holdings, LLC v. Stewart

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The following is ORDERED: wo

ONY BAEZ

Janice D. Loyd

U.S. Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

In re: )

)

David A. Stewart and Terry P. Stewart, ) Case No. 15-12215-JDL

) Chapter 7

Debtors. )

) (Jointly Administered)

)

SE Property Holdings, LLC, )

)

Plaintiff, )

V. ) Adv. No. 16-1087-JDL

)

David A. Stewart and Terry P. Stewart, )

)

Defendants. )

ORDER ON MOTION TO STRIKE EXPERT REPORT AND MOTION FOR LEAVE TO

SUPPLEMENT THE SUMMARY JUDGMENT RECORD

Introduction

Debtors have moved the Court for an order striking the appraisal of jewelry made

by Plaintiff's expert witness submitted by Plaintiff in support of both its motion for partial

summary judgment and in opposition to the Debtors’ motions for summary judgment.

Debtors argue that the appraisal was not authenticated by an affidavit or sworn testimony

so that the appraisal constitutes inadmissible hearsay evidence which cannot be

considered on the pending cross-motions for summary judgment. Before the Court for

consideration are:

1. Defendant Terry P. Stewart’s Motion to Strike Plaintiff’s Exhibit 1 to Plaintiff’s

Reply to Terry Stewart’s Response to Motion for Partial Summary Judgment (“Motion to

Strike”). [Doc. 168];

2. SEPH’s Response to Defendant Terry P. Stewart’s Motion to Strike Plaintiff’s

Exhibit 1 to Plaintiff’s Reply to Terry Stewart’s Response to Motion for Partial Summary

Judgment. [Doc. 175];

3. SEPH’s Motion for Leave to Supplement the Summary Judgment Record. [Doc.

177]; and

4. Defendants David A. Stewart and Terry P. Stewart’s Response and Objection to

SEPH’s Motion for Leave to Supplement the Summary Judgment Record. [Doc. 178].

Background

One of the myriad issues, though an important one, in this case has been whether

the Debtors provided false testimony in their Schedules and depositions as to the amount

and value of their jewelry so as to bar their discharge under 11 U.S.C. § 727(a)(4).1 In their

defense, Debtors have been relying, in part, upon the appraisal of the jewelry by their

expert, Kannard Jewelers. SE Property Holdings, LLC (“SEPH”) had retained an expert,

but he was unwilling to examine the jewelry with Mr. Stewart present, and Mr. Stewart

refused to allow the expert to examine the jewelry without him being present. After several

requests for Debtors to permit an inspection of the jewelry, on April 30, 2021, SEPH filed

1 Unless otherwise noted, all statutory references are to sections of the United States

Bankruptcy Code, 11 U.S.C. § 101 et seq.

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a motion to compel the same. [Doc. 108]. At the hearing on the motion to compel held on

June 3, 2021, the parties agreed for SEPH’s new expert to examine the jewelry with Mr.

Stewart present on June 24, 2021. [Doc. 191, pgs. 31-35, 46-47, 49-50].

Prior to the jewelry examination, on May 28, 2021, both SEPH and the Debtors filed

their respective motions for summary judgment. On June 11, 2021, all the parties filed

their responses to the opposing party’s motion for summary judgment. The examination

of the jewelry by SEPH’s expert took place on June 24, 2021. The following day, SEPH

filed its application to file Exhibit 1 (the expert’s appraisal) to Plaintiff’s response under

seal. [Doc. 155]. Three days later, on June 28, 2021, SEPH withdrew its application to file

the expert report under seal and filed Seph’s Amended Reply to Terry Stewart’s Response

to SEPH’s Motion for Partial Summary Judgment (“Amended Reply”) [Doc. 164], to which

it attached the jewelry appraisal by its expert witness, J. Miles Dowd (the “Dowd Report”).

[Doc. 164-1].

Debtor Terry Stewart filed her Motion to Strike the Dowd Report because it was

unauthenticated, not accompanied by an affidavit and thus inadmissible hearsay which

could not be considered by the Court in ruling upon the § 727(a)(4) false oath issues in

both SEPH’s and the Debtors’ motions for summary judgment. SEPH responded to the

Motion to Strike by arguing that summary judgment law did not require it to have the

expert’s appraisal supported by an affidavit. Three days after filing its Amended Reply,

SEPH “hedged its bets” by filing Seph’s Motion for Leave to Supplement the Summary

Judgment Record [Doc. 177], by which it attached an Affidavit executed by its expert, J.

Miles Dowd, attesting to his preparation of the appraisal. [Doc. 177-1].

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Discussion

To support her Motion to Strike, Terry Stewart cites the long-existing rule of law that

“only admissible evidence may be considered by a court with a motion for summary

judgment,” and therefore, unauthenticated documents were inappropriate for consideration.

See, e.g., Gross v. Burggraf Construction Co., 53 F.3d 1531, 1541 (10th Cir. 1995). More

precisely, the issue presented by the present case is whether the court can consider an

“unsworn” expert report at the summary judgment stage. Many cases have answered the

question in the negative. See, e.g., Rainforest Café, Inc. v. Amazon, Inc., 86 F.Supp.2d

886, 904 (D. Minn. 1999) (While it might be true the courts routinely consider expert reports

when deciding motions for summary judgment, courts do not do so where the reports are

“unsworn or unverified.”); Provident Life and Accident Insurance Co. v. Goel, 274 F.3d 984,

1000 (5th Cir. 2001) (“Unsworn expert reports... do not qualify as affidavits or otherwise

admissible evidence for [the] purpose of Rule 56, and may be disregarded by the court

when ruling on a motion for summary judgment.”) (quoting 11 Moore, Moore’s Federal

Practice,¶ 56.14[2][c] (3rd ed. 1997)); United States v. One TRW, Model M14, 7.62 Caliber

Rifle, 441 F.3d 416, 426 (6th Cir. 2006); Carr v. Tatangelo, 338 F.3d 1259, 1273 n. 26 (11th

Cir. 2003) (an unsworn expert report cannot be considered on summary judgment).

Unfortunately for the Debtors, that is no longer the majority view of the law.2

2 Counsel for Terry Stewart points out that this Court, in fact in this bankruptcy case, has

held that “[i]t is well settled that unauthenticated documents cannot be considered on a motion for

summary judgment. In order to be considered by the court, ‘documents must be authenticated by

and attached to an affidavit that meets the requirements of [Fed. R. Civ. P. 56(e)].” In re Stewart,

2017 WL 5565227 (Bankr. W.D. Okla. 2017)(quoting In re Harris, 209 B.R. 990, 996 (10th Cir. BAP

1997). As will be discussed, in the present case and henceforth, the Court elects to follow the

majority line of cases recognizing the changes brought about by the 2010 amendments to Rule 56.

4

As stated by the cases above, prior to its amendment in 2010, Rule 56 of the Fed.

R. Civ. P. required that a sworn or certified copy of any document referred to in an affidavit

be attached to the affidavit. It was generally recognized an exhibit could be used on a

summary judgment motion only if it were properly made part of an affidavit. Further, to be

admissible, documents had to be authenticated by an attached affidavit that met the

requirements of Rule 56, and the affiant had to be a person through whom the exhibit could

be admitted into evidence.

Rule 56(c)(4) states that, when supporting a factual position for summary judgment

purposes “[a]n affidavit or declaration used to support or oppose a motion must be made

on personal knowledge, set out facts that would be admissible in evidence, and show that

the affiant or declarant is competent to testify on the matters stated.” After the 2010

revisions to the Rule, parties are no longer required to prepare a formal affidavit, as 28

U.S.C. § 1746 “allows a written unsworn declaration, certificate, verification, or statement

subscribed in proper form as true under penalty of perjury to substitute for an affidavit.”

Fed. R. Civ. P. 56 Advisory Committee’s Note to 2010 amendment. The 2010

amendments to Rule 56 have been summarized by Wright and Miller, Federal Practice and

Procedure, § 2722 as follows:

However, when the rule was amended in 2010, the rulemakers

omitted these specific requirements, and simply added to the

list of appropriate materials “documents.” As explained in the

Committee Notes, the requirements were viewed “as

unnecessary given the requirement in subdivision (c)(1)(A) that

a statement of disputed fact be supported by materials in the

record.” Thus, although the substance or content of the

evidence submitted to support or dispute a fact on summary

judgment must be admissible, the material may be presented

in the form that would not, in itself be admissible at trial. Under

the amended rule, however, a party desiring to use a

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document must cite to the particular part of the document that

supports its assertions.

****

It is also worth noting that although affidavits remain an

available type of summary-judgment evidence, a formal

affidavit no longer is required. Section 1746 of Title 28

specifically authorizes a written “unsworn declaration,

certificate, verification, or statement” signed by the person

under penalty of perjury to substitute for an affidavit. Thus, all

these changes reduce the need to utilize affidavits on

summary judgment today. (citations omitted).

Since 2010 courts, including some within the same district, have reached varying

conclusions as to whether an expert report need be sworn to be considered on a motion

for summary judgment. However, the majority of post-2010 cases hold that the report need

not be sworn or authenticated.

In Sanchez v. Hartley, 299 F.Supp.3rd 1166,1181 n.11 (D. Colo. 2017), the court

forcefully rejected the argument made herein by the Debtors:

Dickson objects that Dr. Honts's expert report is incompetent

summary judgment evidence because it is “unsworn” (i.e., not

in the form of an affidavit or declaration). The Court is frankly

tired of addressing this utterly formalistic and baseless (yet

surprisingly common) objection. See Pertile v. Gen. Motors,

LLC, 2017 WL 4237870, at *2 (D. Colo. Sept. 22, 2017). The

cases Dickson cites in support of his position—Adickes v. S. H.

Kress & Co., 398 U.S. 144, 158 n.17, 90 S.Ct. 1598, 26

L.Ed.2d 142 (1970), and Sofford v. Schindler Elevator Corp.,

954 F.Supp. 1459, 1462–63 (D. Colo. 1997)—have been

abrogated on this point by the 2010 amendments to Federal

Rule of Civil Procedure 56. See Pertile, 2017 WL 4237870, at

*2 & n.3. The proper question at summary judgment is whether

the proffering party “is incapable of presenting its experts'

intended testimony ‘in a form that would be admissible in

evidence [at trial].’” Gunn v. Carter, 2016 WL 7899902, at *2

(D. Colo. June 13, 2016) (quoting Fed. R. Civ. P. 56(c)(2)).

Dickson does not attempt to show that Sanchez cannot bring

Dr. Honts to testify at trial, or that Dr. Honts's opinions have not

been adequately disclosed. Dickson's objection is therefore

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overruled.

Similarly, in Foreward Magazine, Inc. v. OverDrive, Inc., 2011 WL 5169384, at *1-2

(W.D. Mich. 2011) the court stated:

Newly revised Rule 56 of the Federal Rules of Civil Procedure

governs the procedure by which the court must review

objections to the admissibility of evidence presented in

connection with a motion for summary judgment. In some

respects, the 2010 amendment Rule 56 works a sea change

in summary judgment procedure and introduces flexibility (and

consequent uncertainty) in place of the bright-line rules that

are obtained previously. Former Rule 56(e) contained an

unequivocal direction that documents presented in connection

with a summary judgment motion must be authenticated.

****

These authorities must be read carefully, however, in light of

the 2010 amendments to Rule 56, which eliminated the

unequivocal requirement that documents submitted in support

of a summary judgment motion must be authenticated.

Rather, the amended Rule allows a party making or opposing

a summary judgment motion to cite to materials in the record

including, among other things, “depositions, documents,

electronically stored information, affidavits or declarations” and

the like. FED. R. CIV. P. 56(c)(1)(A). If the opposing party

believes that such materials “cannot be presented in a form

that would be admissible in evidence,” that party must file an

objection. FED. R. CIV. P. 56(c)(2). Significantly, the objection

contemplated by the amended Rule is not that the material

“has not” been submitted in admissible form, but that it

“cannot” be. The comments to the 2010 amendments make

it clear that the drafters intended to make summary judgment

practice conform to procedure at trial. “The objection functions

much as an objection at trial, adjusted for the pretrial setting.

The burden is on the proponent to show that the material is

admissible as presented or to explain the admissible form that

is anticipated. There is no need to make a separate motion to

strike.” FED. R. CIV. P. 56 (2010 Advisory Committee

comments). The revised Rule therefore clearly contemplates

that the proponent of evidence will have the ability to address

the opponent's objections, and the Rule allows the court to

give the proponent “an opportunity to properly support or

address the fact,” if the court finds the objection meritorious.

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FED. R. CIV. P. 56(e)(1). Thus, the amendment replaces a

clear, bright-line rule (“all documents must be authenticated”)

with a multi-step process by which a proponent may submit

evidence, subject to objection by the opponent and an

opportunity for the proponent to either authenticate the

document or propose a method to doing so at trial.

See also DeYoung v. Dillon Logistics, Inc., 2021 WL 414536, at *4 (E.D. Tex. 2021) (“In

the Fifth Circuit a district court may consider unsworn expert reports if the proponents

provide a method for presenting them as admissible evidence. Here, the plaintiffs have

satisfied their burden by proposing that the experts will testify at trial to their reports. The

court is satisfied that the expert reports can be presented in a form that would be

admissible.”); Lee v. Offshore Logistical and Transport, L.L.C., 859 F.3d 353, 355 (5th Cir.

2017) (“Although the substance or content of the evidence submitted to support or dispute

a fact on summary judgment must be admissible..., the material may be presented in a

form that would not in itself, be admissible at trial.”); Fraternal Order of Police, Lodge 1 v.

City of Camden, 842 F.3d 231, 238 (3rd Cir. 2016) (holding that a “proponent need only

‘explain the admissible form that is anticipated’”); Humphreys & Partners Architects, L.P.

v. Lessard Design, Inc., 790 F.3d 532, 538 (4th Cir. 2015) (recognizing that a “court may

consider... the content or substance of otherwise inadmissible materials when ‘the party

submitting the evidence show[s] that it will be possible to put the information... into

admissible form.’”); Jones v. UPS Ground Freight, 683 F.3d 1283, 1293-94 (11th Cir. 2012

(determining that a district court may consider the statement “if the statement could be

reduced to admissible evidence at trial or reduced to admissible form.”).

The only two post-2010 cases cited by Terry Stewart in support of her argument that

the appraisal is inadmissible are inapposite. In In re Jaramillo, 2020 WL 1867891 (Bankr.

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D. N.M. 2020), the court excluded appraisals where “[n]one of the parties who prepared

the reports testified at the hearing.” The pre-2010 case cited by the Jaramillo Court

excluded an appraisal “as improper hearsay evidence where the appraiser was not

available for cross-examination.” See Waddell v. Comm’r of Internal Revenue, 841 F.2d

264, 267(9th Cir.1988) (per curiam). In Green v. United States, 2016 WL 5876030 (W.D.

Okla. 2016) the court actually denied the Defendant’s motion to strike an appraisal which

had been done by a deceased individual who had prepared an appraisal report, not as an

expert witness but to comply with Internal Revenue Service requirements. The Court

admitted the report under both the “business records” and a document relied upon by a

testifying expert exceptions to the hearsay rule.

There are cases within the Tenth Circuit which, even following the 2010

Amendments to Rule 56, hold that an expert witness report must be authenticated before

being considered on a motion for summary judgment. See, e.g., Pruitt v. Alamosa County

Sheriff’s Office, 2020 WL 3971651 (D. Colo. 2020) (finding that “even assuming the reports

were not required to be sworn, ‘[t]he burden is on the proponent to show that the material

is admissible as presented or to explain the admissible form that is anticipated.’”). The only

Tenth Circuit case, albeit in an unpublished opinion,3 has stated that “unsworn expert

reports are not competent evidence on summary judgment.” Peak ex rel. Peak v. Central

Tank Coatings, Inc., 606 Fed.Appx. 891, 895 (10th Cir. 2015).4

3 Under 10th Cir. R. 32.1, “[u]npublished cases are not precedential, but may be cited for

their persuasive value.”

4 That statement, however, must be placed in context. The Tenth Circuit in Peak recognized

that the Advisory Committee’s notes on the 2010 Amendments to Rule 56(c)(4) stated that

although “[a] formal affidavit is no longer required,” Rule 56(c)(4) still requires that “a written

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Even in the absence of an oath affirming in an affidavit, Federal law recognizes

certain unsworn declarations as competent evidence to oppose a motion for summary

judgment. 28 U.S.C. § 1746. Section 1746 directs that whenever a rule requires “any

matter” be supported by a “sworn declaration...oath, or affidavit” such matter may be

supported, “with like force and effect,” by an unsworn declaration. Such unsworn

declaration must be “subscribed by [the declarant], as true under penalty of perjury, and

dated in substantially the following form:”

****

(2) If executed within the United States, its territories,

possessions, or commonwealths: “I declare (or certify, verify,

or state) under penalty of perjury that the foregoing is true and

correct. Executed on (date) (Signature).

Id. Strict compliance with § 1746 is not required as long as the unsworn declaration

“substantially” satisfies the statute. Rogers v. City of Selma, 178 F.Supp.3d 1222, 1232

(S.D. Ala. 2016); See also United States v. Roberts, 308 F.3d 1147, 1154–55 (11th Cir.

2002), cert. denied, 538 U.S. 1064, 123 S.Ct. 2232, 155 L.Ed.2d 1119 (2003) (finding §

1746 met when the unsworn declaration included the disclaimer “to the best of [the

declarant's] knowledge, information or belief”); Schroeder v. McDonald, 55 F.3d 454, 460

n. 10 (9th Cir.1995) (finding § 1746 met where it stated that “the facts stated in ... the

complaint [are] true and correct as known to me”).

In the present case, the Dowd Report, even without an accompanying affidavit, is

unsworn declaration, certificate, verification, or statement [be] subscribed in proper form as true

under penalty of perjury [under 28 U.S.C. § 1746] to substitute for an affidavit.” The Court went

on to note that “because neither report contains proper subscriptions, they cannot be considered

on summary judgment.” As discussed below and contrary to the facts in Peak, in the present case

the expert report is signed, dated and recites that the “statements of fact stated in this report are

true and correct.”

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dated, states that “[t]he statements of fact contained in this report are true and correct” and

is signed by Mr. Dowd. [Doc. 164-1, pg. 3 ¶ 13]. Furthermore, SEPH has stated Mr. Dowd

will testify at trial as to his report. There is no question in the Court’s mind that SEPH has

met its burden of showing that the Dowd Report can be presented in an admissible form

at trial and/or that the Dowd Report itself meets the requirements of Rule 56(c)(1) and (4)

and § 1746.

As to Terry Stewart’s argument that the appraisal conducted on June 24, 2021 has

no relevance to the value of the jewelry at the time of the bankruptcy petition filed in 2014,

the Court finds that to be an issue of fact to be presented and argued at the time of the trial

on the matter. Debtors also assert that the Dowd Report fails to establish that he is a

qualified expert in the field of jewelry appraisal. The Dowd Report indicates that his

company “is an independent jewelry appraisal company;” that he is a member of the

National Association of Jewelry Appraisers; that he has a diploma as a Graduate

Gemologist; that he has been in the business for approximately 35 years; and cites the

“certification of appraisal practices” underlying the Dowd Report. At least on the face of

the Dowd Report, at this stage of the proceeding, Mr. Dowd appears to qualify as an expert

which SEPH is entitled to present at trial. Debtors will have their opportunity to challenge

his expert status at trial.

Lastly, although probably the most expeditious way of resolving the present issue,

is that even if a party initially submits an unsworn affidavit or declaration to substantiate a

claim under Rule 56, if the party attaches an unsworn expert report along with the expert’s

sworn declaration or deposition affirming the report, the unsworn report’s deficiencies are

cured. Rawers v. United States, 488 F.Supp.3d 1059, 1105 (D. N.M. 2020). See, e.g.,

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Wright & Miller, Affidavits in Support of or in Opposition to Summary Judgment, 10B

Federal Practice & Procedure, § 2738 (4th ed. July, 2020) (“Subsequent verification or

reaffirmation of an unsworn expert’s report, either by affidavit or deposition, allows the

court to consider the unsworn expert’s report on a motion for summary judgment.”) (citing

DG & G, Inc. v. FlexSol Packaging Corp. of Pompano Beach, 576 F.3d 820, 826 (8th Cir.

2009); Humphreys v. Partners Architects, L.P. v. Lessard Design, Inc., 790 F.3d 532, 539

(4th Cir. 2015) (stating that a court can consider an unsworn expert's report on a summary

judgment motion if a party subsequently affirms or verifies it with an expert's affidavit or

deposition); Cornell Research Found., Inc. v. Hewlett–Packard Co., 2007 WL 4349135, at

*19 (N.D. N.Y. 2007) (“Despite the potential inappropriateness of submitting the unsworn

report of a party's own expert to support or oppose a summary judgment motion, such a

defect is, as plaintiffs argue, curable through the submission of an affidavit or a declaration

verifying the report's contents.”). Thus, even if the Dowd Report standing alone was not

sufficient for consideration in opposition to the Debtors’ motions for summary judgment

(which the Court finds it was sufficient), after the Debtors objected to the Dowd Report

because it was not supported by an affidavit, SEPH corrected any alleged deficiency by

subsequently filing Dowd’s Affidavit.

Based on the above,

IT IS ORDERED that Defendant Terry P. Stewart’s Motion to Strike Plaintiff’s Exhibit

1 to Plaintiff’s Reply to Terry Stewart’s Response to Motion for Partial Summary Judgment

[Doc. 168] is Denied.

IT IS FURTHER ORDERED that SEPH’s Motion for Leave to Supplement the

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Summary Judgment Record [Doc. 177] is Granted. 5

# # #

5 Since the Court has denied the Debtor’s Motion to Strike and permitted consideration of

the expert report without an affidavit, it would appear to render moot a ruling on SEPH’s Motion to

Supplement the Summary Judgment Record. At the same time, granting SEPH’s Motion to

Supplement Record would also render moot Debtor’s Motion to Strike. A ruling in favor of SEPH

on either motion gets the Dowd Report before the Court for consideration on both parties motions

for summary judgment. In this case, however, to make the record clear the Court prefers to

dispose of all motions on their merit.

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