The Expert's Examiner


Adams v. Topolewski, No. B.278395 (Calif. Ct. App. 3 Dec. 30, 2019) (unpublished), reh’g denied (Jan. 28, 2020).
May 3, 2020

The Arbitrator erred in accepting the testimony of an unqualified expert, who happened to be a party!

This is one of those nice Opinions that succinctly convey the core holding and basis for it. First, the basic facts in this private investment dispute: “Adams did not call an expert to testify about the value of the New Companies. Instead, over Topolewski and Mu’s objections, Adams testified that he had personally valued the New Companies in excess of $300 million, using two different methodologies …. Adams testified that the value of his 19.7 percent interest therefore was $60,282,000.” And the result? The large award was vacated.

Party Can’t Be the Expert

Says the Court: “We address just one issue: the sufficiency of the evidence to support the $62 million damages award. As we discuss, the award is not supported by substantial evidence because Adams was not qualified to opine on the value of the New Companies, his valuation opinion was not based on competent evidence, and he did not employ an accepted valuation methodology…. We conclude that the trial court abused its discretion in finding Adams qualified to give expert testimony on the value of closely held corporations because Adams did not establish that he had the requisite knowledge, skill, experience, training, or education to qualify as a valuation expert. It is undisputed that Adams does not have a college degree, worked for much of his career as a salesperson and later as a managing director, and at the time of trial was running a small biotech firm.”

(ed: This is not a plug for experts, but you would think with that much money at stake an independent, a qualified expert would have been retained! Full disclosure: SAC’s Messrs. Ryder and Friedman are active members of the Securities Experts Roundtable.)

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