              Case: 16-16140     Date Filed: 10/02/2018     Page: 1 of 23




                                                                            [PUBLISH]
                IN THE UNITED STATES COURT OF APPEALS
                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                                 No. 16-16140
                           ________________________
                       D.C. Docket No. 8:15-cv-02788-CEH,
                         Bkcy No. 8:11-bkc-12150-KRM

In re: TELTRONICS, INC.,
                                              Debtor.




KEVIN T. O’HALLORAN,
as Trustee of the Liquidating Trust of Teltronics, Inc.,
                                                 Plaintiff - Appellant - Cross Appellee,

                                        versus

HARRIS CORPORATION,
RPX CORPORATION,
                                          Defendants - Appellees - Cross-Appellants.
                          __________________________
                   Appeals from the United States District Court
                        for the Middle District of Florida
                        __________________________
                                  (October 2, 2018)
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Before TJOFLAT and JULIE CARNES, Circuit Judges, and KAPLAN, * District
Judge.

KAPLAN, District Judge:

      This is an appeal from a judgment that affirmed an order of the Bankruptcy

Court dismissing a fraudulent conveyance claim by the trustee of the liquidating

trust of Teltronics, Inc. (“Teltronics”) against Harris Corporation (“Harris”) and

RPX Corporation (“RPX”). The trustee claims principally that the bankruptcy

judge erred in (a) concluding that the trustee had not sustained his burden of proof

on the issue of whether Teltronics received reasonably equivalent value in

exchange for the transfer and (b) receiving certain expert testimony offered by

defendants, ostensibly on the issue of whether Teltronics was insolvent at the time

the transfer was made. We affirm on the basis that (1) the Bankruptcy Court made

no material error in ruling on the admissibility of evidence and (2) there was no

error in the conclusion that the trustee failed to prove that Teltronics was insolvent

at the time of the transfer. We therefore do not reach the lower courts’ decisions as

to reasonably equivalent value.



             I. FACTS

*
 Honorable Lewis A. Kaplan, United States District Judge for the Southern District of New
York, sitting by designation.
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      Teltronics was in the telecommunications business until its assets were sold

in bankruptcy. Harris is an international communications technology company that

provides communications products, systems and services. RPX is a defensive

patent aggregator the business of which is acquiring patents to protect operating

companies from frivolous enforcement litigation.

      In 2000, Teltronics purchased a portfolio of patents from Harris in exchange

for a promissory note to Harris in the amount of approximately $6.8 million. The

obligations were restructured in 2002, with the amount due on the promissory note

increased to roughly $9.2 million.

      Teltronics defaulted on the promissory note in 2004. In an effort to reduce

its debt, it entered into a patent transfer agreement (the “Transfer Agreement”)

pursuant to which it transferred the patent portfolio back to Harris in exchange for

(1) a credit of approximately $1.275 million on the amount that Teltronics owed

Harris, and (2) a non-exclusive license to use the patent portfolio to make and sell

digital telephone switch products. Under the Transfer Agreement, Teltronics

retained certain other rights as to the patents, including a limit until July 31, 2010

on Harris’ ability to transfer the patents (the “Blocking Right”) and a right of first

refusal that gave Teltronics an ability to reacquire the patent portfolio in the event

that Harris intended to sell it after July 31, 2010 (the “Teltronics ROFR”).

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      In 2008, Harris began discussions with RPX about selling the patent

portfolio. On December 19, 2008, the companies agreed in principle to a price of

$12 million.

      While reviewing documents to be sent to RPX for purposes of its due

diligence, Harris realized that it needed to address Teltronics’ Blocking Right,

which remained in effect until July 31, 2010, in order to close the sale to RPX. On

January 7, 2009, Harris contacted Teltronics with a request that Teltronics modify

its rights. Harris did not then disclose that it had any specific plans to sell the

patents.

      After some back and forth, Harris and Teltronics executed an amendment to

the Transfer Agreement (the “Amendment”) on January 21, 2009. Pursuant to the

Amendment, Harris, in exchange for $5,000, acquired the right to transfer the

patents until April 16, 2009 unencumbered, except to a Teltronics competitor. The

Amendment provided also that the Teltronics ROFR would become effective on

April 16, 2009, rather than on July 10, 2010. Five days later, on January 26, 2009,

Harris transferred the patents to RPX (the “Assignment”).

      Teltronics filed a Chapter 11 petition on June 27, 2011 in the United States

Bankruptcy Court for the Middle District of Florida.        As part of Teltronics’




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confirmed reorganization plan, a liquidating trust was established for the benefit of

certain Teltronics creditors and Kevin O’Halloran was appointed trustee.



              II. PROCEEDINGS BELOW

      The trustee filed this adversary proceeding against Harris and RPX on June

25, 2013. He claimed that the transfer of the Blocking Right and the Teltronics

ROFR were constructively fraudulent and sought to (1) avoid both the

modification of the Blocking Right and the Teltronics ROFR and the transfer of the

patents pursuant to the Assignment, and (2) recover, pursuant to Sections 544 and

550 of the Bankruptcy Code and Florida Statutes 726.105(1)(b) and 726.106(1),

the value of those transfers.

              A.    Competing Experts at Trial in Bankruptcy Court

      The adversary proceeding was tried before Bankruptcy Judge Michael

Williamson.    In order to prevail on his claims that the Blocking Right and

Teltronics ROFR had been subjects of constructively fraudulent transfers, the

trustee had to establish that the modifications of the rights constituted transfers by

Teltronics.   Assuming that they were indeed transfers, he had to prove two

additional elements in order to prevail. First, he had to establish that Teltronics




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received less than reasonably equivalent value in the transfers. Second, he had to

establish that Teltronics was insolvent at the time of the transfers.

      At trial, the parties called competing experts as to Teltronics’ solvency at the

time of the transfers. This appeal turns on the trial court’s denial of the trustee’s

motions to strike certain of the testimony of Harris and RPX’s expert, Steven

Oscher.

      In order best to present the questions raised on appeal, it is useful first to

describe the expert testimony on both sides. To that end, we summarize the

competing expert testimony and then, against that background, move on to the

trustee’s motions to strike.

                    1. Mr. Mukamal’s Testimony

      Barry Mukamal, who testified for the trustee, had undertaken a solvency

analysis as to Teltronics. He opined that the company was insolvent – in other

words, that the adjusted value of the company’s liabilities exceeded the adjusted

value of its assets – as of December 31, 2008, in his view by approximately $5.6

million.

                    2. Mr. Oscher’s Testimony

      The competing expert, Mr. Oscher opined that (1) Mr. Mukamal’s solvency

opinion was flawed because it improperly failed to account separately for the value

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of three longstanding maintenance contracts to which Teltronics was a party, (2)

the value of the assets on Teltronics’ balance sheet should have been increased by

the aggregate value of those three contracts, and (3) Teltronics was solvent at the

time of the transfer. Mr. Oscher did not give an opinion as to the extent by which

Teltronics’ assets exceeded its liabilities.          But his opinion as to solvency

necessarily implied that the value of the three contracts, in Mr. Oscher’s view, was

more than $5.6 million, even if only slightly. 1

      In considering Mr. Oscher’s testimony, it is critical to understand that the

burden of proof was on the trustee to show that Teltronics was insolvent at the time

of the transfer. See Kardash v. Comm’r of IRS, 866 F.3d 1249, 1256 (11th Cir.

2017) (“In order to establish the insolvency element of constructive fraud under

[Florida fraudulent conveyance law], a claimant must show either that the debtor

was insolvent at the time of the transfer or became insolvent as the result of the

transfer.”). Perhaps in consequence of the fact that the burden was on the trustee,


1

      The reasoning is this: First, Mr. Mukamal testified that Teltronics was insolvent by $5.6
      million without separately reflecting the value of the three contracts as assets on the
      balance sheet. Second, essentially the only aspect of Mr. Mukamal’s opinion with which
      Mr. Oscher took issue was Mr. Mukamal’s failure to reflect those assets on the balance
      sheet. Accordingly, it follows that Mr. Oscher’s opinion that Teltronics was solvent
      necessarily depended on the premise that the addition of the value of the contracts to Mr.
      Mukamal’s otherwise materially undisputed balance sheet would have rendered
      Teltronics solvent. In order for that premise to be true, the contracts in Mr. Oscher’s
      view must have been worth at least somewhat more than $5.6 million.
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Mr. Oscher did not offer any opinion as to the specific value of the three

maintenance contracts aside from the necessary implication that they were worth at

least $5.6 million.   At one point, however, he did illustrate the impact that

increasing the value of Teltronics’ assets by the value of the contracts could have

had on Teltronics’ balance sheet. In doing so, he testified that if the fair market

value of the contracts had been $8.5 million, a figure that he took from a valuation

conducted by a third-party that Mr. Oscher used for “demonstrative purposes,” the

value of Teltronics’ assets would have been sufficient to render the company

solvent on the date that the Amendment was executed.

                   3. Mr. Mukamal’s Rebuttal Testimony

      In rebuttal, Mr. Mukamal did not dispute that the contracts, if accounted for

separately, might be worth at least $5.6 million. To be sure, he identified issues

that might have led a factfinder to question the accuracy of the $8.5 million figure

that Mr. Oscher used for “demonstrative purposes,” but he set forth no alternative

value for the contracts. Rather, his principal dispute with Mr. Oscher was over

whether the value of the contracts should have been included as a separate item on

Teltronics’ balance sheet. He therefore focused his rebuttal not on the precise

value of the contracts, but on what he claimed would have been the impropriety of




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increasing the value of Teltronics’ assets by the value of the contracts, whatever

that may have been.

             B.      Daubert Motions

      In sum, then, Mr. Oscher’s testimony set forth the following:

             1. His opinion that the value of Teltronics’ assets on its balance sheet

                  should have been increased by the value of the three maintenance

                  contracts,

             2. His opinion that Teltronics was solvent at the time of the transfers,

                  which necessarily implied that the value of the contracts, in his

                  view, was at least somewhat greater than $5.6 million, and

             3. No opinion as to the precise value of the three contracts; although

                  to illustrate his point, he testified that if the contracts had been

                  worth $8.5 million, a borrowed figure that he used for

                  “demonstrative purposes,” then Teltronics would have been

                  comfortably solvent at the time of the transfers.

      At the close of Mr. Oscher’s direct examination, the trustee moved, pursuant

to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), to strike

Mr. Oscher’s opinion that Teltronics had been solvent at the time of the transfer.

      The motion was brief and specific:

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             “[W]ith respect to the solvency opinion that Mr. Oscher is rendering,
             he did not perform any valuation analysis of his own. What he said is,
             ‘I looked at three other valuations and came to a conclusion.’
                    ....
                    . . . [H]e has done nothing in the way of his own analysis to
             present an expert opinion. He has merely adopted the analyses and
             valuations that have been prepared by others.” (Emphasis added). 2

      The trustee briefly renewed his Daubert motion at the close of Mr. Oscher’s

testimony, saying, “[N]ot only did [Mr. Oscher] rely upon the analysis of others, he

doesn’t know anything about the reliability of those underlying analyses.” Indeed,

Mr. Oscher acknowledged during cross-examination that he had not conducted an

independent analysis of the validity of the assumptions and projections underlying

the reports that he reviewed in preparing his expert report. Nor had Mr. Oscher

independently analyzed the discount rate and range of values incorporated into the

Empire valuation of the three maintenance contracts.

      The thrust of both motions thus was essentially the same. The trustee

challenged the admissibility of Mr. Oscher’s opinion that Teltronics had been

solvent at the time of the transfers on the ground that Mr. Oscher did no work to

back that opinion up nor verified the reliability of the materials to which he

referred by way of illustration.        The trustee, however, did not challenge the

2

      Although the trustee did not precisely say so, he apparently was referring to Mr. Oscher’s
      review for demonstrative purposes of various analyses conducted by third parties and of
      valuations conducted by Wells Fargo and Empire Valuation Consultants, LLC
      (“Empire”).
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admissibility of Mr. Oscher’s opinion that the value of the three maintenance

contracts should have been included on the list of assets on Teltronics’ balance

sheet.

         The Bankruptcy Court denied the motions from the bench.              Judge

Williamson concluded that these issues did not reach the threshold of excluding the

testimony, but went to the weight that it should be given in considering the

evidence. Although the Bankruptcy Court ruled without prejudice to the trustee’s

renewing his Daubert motion after trial, the trustee did not renew the motion to

strike Mr. Oscher’s testimony.

               C.    Bankruptcy Court’s Opinion

         In a written opinion following trial, the Bankruptcy Court concluded that

Teltronics in fact had transferred the Blocking Right under the Amendment, but

nonetheless entered judgment in favor of Harris and RPX because the trustee had

failed to prove by a preponderance of the evidence that Teltronics was insolvent at

the time of the transfer. O’Halloran v. Harris Corp. (In re Teltronics, Inc.), 540

B.R. 481, 484, 487-90 (Bankr. M.D. Fla. 2015).

         The court began by finding that Mr. Oscher was more credible than Mr.

Mukamal on the narrow issue of whether the maintenance contracts ought to have

been valued separately and their value listed as assets on the balance sheet. Id. at

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489. In other words, the court credited Mr. Oscher’s opinion, the admissibility of

which the trustee had not challenged, that the value of Teltronics’ assets should

have been increased by the value of the three contracts.

      Having made this credibility judgment, the court proceeded from the

proposition that the burden of proof was on the trustee to “prove the value of the

maintenance contracts, when added to the other assets, [did] not exceed Teltronics’

liabilities.” Id. at 490. But the trustee had “offered no evidence of the value of the

maintenance contracts.” Id. Consequently, the court concluded, the trustee had

failed to establish that Teltronics was insolvent at the time that it transferred the

Blocking Right. Id.

      Crucially, although the Bankruptcy Court, over the trustee’s challenge, had

admitted into evidence Mr. Oscher’s opinion that Teltronics had been solvent at the

time of the transfer, it neither credited nor relied on that opinion in entering

judgment for defendants. Nor did the court accept or reject the $8.5 million figure

that Mr. Oscher had used for “demonstrative purposes.” Indeed, the court made no

findings at all as to the value of the three maintenance contracts.

      The Bankruptcy Court concluded also that the trustee had failed to prove by

a preponderance of the evidence that Teltronics had received less than reasonably

equivalent value in the transfer. Id. at 485-87.

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      On these two independent, alternative bases, the Bankruptcy Court held that

the transfer was not constructively fraudulent and could not be avoided. The

district court affirmed the Bankruptcy Court’s ruling in full. O’Halloran v. Harris

Corp., No. 8:15-cv-2788-T-36, 2016 WL 4467254, at *3-5 (M.D. Fla. Aug. 24,

2016) (Honeywell, J.).



             III. DISCUSSION

      The trustee here argues that the Bankruptcy Court erred in (1) admitting any

of the testimony of Mr. Oscher, and (2) concluding that the trustee failed to

establish that Teltronics (A) was insolvent at the time of the transfer, and (B)

received less than reasonably equivalent value. The trustee argues also that the

district court erred in affirming.

      We hold that the Bankruptcy Court’s receipt of Mr. Oscher’s opinion that

the value of the maintenance contracts, whatever it was, should have been included

in the assets on Teltronics’ balance sheet in order to determine its solvency – an

opinion that was not objected to at trial – and the court’s decision to credit that

testimony were well within the bounds of its discretion. We find also no error in

its conclusion that the trustee failed to prove that Teltronics was insolvent at the

time of the transfer. We affirm on this basis and decline to reach either the

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question of reasonably equivalent value or the admissibility of Mr. Oscher’s

solvency opinion.

               A.   Legal Framework of Fraudulent Transfers

       Section 544(b) of the Bankruptcy Code authorizes bankruptcy trustees to

avoid certain “transfer[s] of an interest of the debtor in property” that are “voidable

under applicable law by a creditor holding an unsecured claim that is allowable

under section 502 of this title or that is not allowable only under section 502(e) of

this title.”   11 U.S.C. § 544(b).     Section 550 creates additional remedies for

transfers that have been avoided under Section 544, including a right on the part of

the trustee to “recover, for the benefit of the estate, the property transferred, or, if

the court so orders, the value of such property, from . . . the initial transferee of

such transfer or the entity for whose benefit such transfer was made.” 11 U.S.C. §

550(a).

       The trustee alleges constructive fraudulent transfer under Florida Statutes

726.105(1)(b) and 726.106(1).

       Under Section 726.105(1)(b), a transfer made by a debtor is fraudulent as to

a creditor if the debtor (1) made the transfer “[w]ithout receiving a reasonably

equivalent value in exchange for the transfer or obligation,” and (2) either (A)

“[w]as engaged or was about to engage in a business or a transaction for which the

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remaining assets of the debtor were unreasonably small in relation to the business

or transaction” or (B) “[i]ntended to incur, or believed or reasonably should have

believed that he or she would incur, debts beyond his or her ability to pay as they

became due.”

      Similarly, under Section 726.106(1), a transfer made by the debtor is

fraudulent as to a creditor if (1) “the debtor made the transfer or incurred the

obligation without receiving a reasonably equivalent value in exchange for the

transfer or obligation;” and (2) “the debtor was insolvent at that time or . . . became

insolvent as a result of the transfer or obligation.”

             B.      Daubert Motions

      We begin with a discussion of the trustee’s motions to strike under Daubert.

                     1. Deferential review of evidentiary decisions

      A trial court’s decisions regarding the admissibility and reliability of expert

testimony are reviewed for abuse of discretion. United States v. Frazier, 387 F.3d

1244, 1258 (11th Cir. 2004) (en banc) (citing Gen. Elec. Co. v. Joiner, 522

U.S.136, 141-43 (1997)). 3 This Court will “not reverse an evidentiary decision of

a district court ‘unless the ruling is manifestly erroneous.’” Id. (quoting Joiner,
3

      “In a bankruptcy case, this Court sits as a second court of review and thus examines
      independently the factual and legal determinations of the bankruptcy court and employs
      the same standards of review as the district court.” In re Fisher Island Investments, Inc.,
      778 F.3d 1172, 1189 (11th Cir. 2015) (citation omitted).
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522 U.S. at 142). This is so because, by virtue of the trial court’s role in presiding

over trial proceedings, it is in the best position to decide such matters. See United

States v. Brown, 415 F.3d 1257, 1264-65 (11th Cir. 2005); see also Frazier, 387

F.3d at 1259. Accordingly, lower courts “enjoy[] ‘considerable leeway’ in making

these determinations.” Frazier, 387 F.3d at 1258-59 (quoting Kumho Tire Co. v.

Carmichael, 526 U.S. 137, 152 (1999)); accord Winn-Dixie Stores, Inc. v.

Dolgencorp, LLC, 746 F.3d 1008, 1027 (11th Cir. 2014).

                     2. The trial court’s gatekeeping function

      A trial court is obliged to perform a gatekeeping function in considering the

admissibility of technical expert evidence.           Frazier, 387 F.3d at 1260 (citing

Kumho Tire, 526 U.S. at 147). This duty “inherently require[s] the trial court to

conduct an exacting analysis of the foundations of expert opinions to ensure they

meet the standards for admissibility under Rule 702.” Id. (alteration in original)

(internal quotation marks and citations omitted). 4


4

      Rule 702 provides:
             “A witness who is qualified as an expert by knowledge, skill, experience, training,
             or education may testify in the form of an opinion or otherwise if: (a) the expert’s
             scientific, technical, or other specialized knowledge will help the trier of fact to
             understand the evidence or to determine a fact in issue; (b) the testimony is based
             on sufficient facts or data; (c) the testimony is the product of reliable principles
             and methods; and (d) the expert has reliably applied the principles and methods to
             the facts of the case.”
      Fed. R. Evid. 702.
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      In the context of a Daubert ruling, the district court has considerable

flexibility. As we have stated before:

             “[I]t is difficult to persuade a court of appeals to reverse a district
             court’s judgment on Daubert grounds. The theme that shapes
             appellate review in this area is the limited nature of it. . . .
                     ....
                    What is true about the review of evidentiary issues in
             general applies with equal or even greater force to Daubert
             issues in particular, an area where the abuse of discretion
             standard thrives. Immersed in the case as it unfolds, a district
             court is more familiar with the procedural and factual details
             and is in a better position to decide Daubert issues. The rules
             relating to Daubert issues are not precisely calibrated and must
             be applied in case-specific evidentiary circumstances that often
             defy generalization. And we don’t want to denigrate the
             importance of the trial and encourage appeals of rulings relating
             to the testimony of expert witnesses.”

Brown, 415 F.3d at 1264-66 (citations omitted); see also McCorvey v. Baxter

Healthcare Corp., 298 F.3d 1253, 1257 (11th Cir. 2002) (“[O]ur review of




              “[I]n determining the admissibility of expert testimony under Rule 702, we
              engage in a rigorous three-part inquiry. Trial courts must consider whether: (1)
              the expert is qualified to testify competently regarding the matters he intends to
              address; (2) the methodology by which the expert reaches his conclusions is
              sufficiently reliable as determined by the sort of inquiry mandated in Daubert;
              and (3) the testimony assists the trier of fact, through the application of scientific,
              technical, or specialized expertise, to understand the evidence or to determine a
              fact in issue.”
      Frazier, 387 F.3d at 1260 (quoting City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d
      548, 562 (11th Cir. 1998)). The proponent of the expert testimony bears the burden of
      establishing that each of these criteria is satisfied. Knight through Kerr v. Miami-Dade
      Cnty., 856 F.3d 795, 808 (11th Cir. 2017) (citing Frazier, 387 F.3d at 1260).
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evidentiary rulings by trial courts on the admission of expert testimony is very

limited.” (internal quotation marks and citation omitted)).

      Our review is “even more relaxed in a bench trial situation, where the judge

is serving as a factfinder and we are not concerned about ‘dumping a barrage of

questionable scientific evidence on a jury.’” Brown, 415 F.3d at 1268 (quoting

Allison v. McGhan Med. Corp., 184 F.3d 1300, 1310 (11th Cir. 1999)); see also id.

at 1269 (“There is less need for the gatekeeper to keep the gate when the

gatekeeper is keeping the gate only for himself.”).

                    3. The Daubert Rulings

                           a. Including contracts on Teltronics’ balance sheet

      The trustee contends that Mr. Oscher’s testimony should have been excluded

in its entirety. He fails to note, however, that he did not object below to Mr.

Oscher’s opinion that the contracts should have been included in the assets on

Teltronics’ balance sheet, although he did offer a competing opinion. The sole

question of admissibility he raised was to Mr. Oscher’s opinion that Teltronics had

been solvent at the time of the transfer.

      Rule 103(a) of the Federal Rules of Evidence states, “A party may claim

error in a ruling to admit or exclude evidence only if the error affects a substantial

right of the party and . . . a party, on the record: (A) timely objects or moves to

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strike; and (B) states the specific ground, unless it was apparent from the

context . . . .” Given that the sole focus of the trustee’s Daubert objections to Mr.

Oscher’s testimony was directed to his opinion as to Teltronics’ solvency, he failed

to preserve any objection to the other portions of Mr. Oscher’s testimony. The

omission is aggravated by the trustee’s failure to renew the motion to strike

following trial despite the Bankruptcy Court’s invitation to do so.

      Even if the question were properly before us, the trustee’s argument, insofar

as it is directed to Mr. Oscher’s opinion that the maintenance contracts should have

been included on the balance sheet, would fail. The Bankruptcy Court did not

abuse its discretion in admitting and then crediting this opinion. 5

      Mr. Mukamal, the trustee’s expert, acknowledged that the practice of

including intangible assets as separate items on a company’s balance sheet “may

not be flawed,” but rather that it was a matter of the facts and circumstances of the

5

      “When findings are based on determinations regarding the credibility of witnesses, Rule
      52(a) demands even greater deference to the trial court’s findings; for only the trial judge
      can be aware of the variations in demeanor and tone of voice that bear so heavily on the
      listener’s understanding of and belief in what is said.” Anderson v. City of Bessemer
      City, 470 U.S. 564, 575 (1985); accord Johansen v. Combustion Eng’g, Inc., 170 F.3d
      1320, 1335 (11th Cir. 1999); see also Brown, 415 F.3d at 1267 (“‘The credibility of a
      witness is in the province of the factfinder,’ and we ‘will not ordinarily review the
      factfinder’s determination of credibility.’” (quoting United States v. Copeland, 20 F.3d
      412, 413 (11th Cir. 1994) (per curiam))). Accordingly, “when a trial judge’s finding is
      based on his decision to credit the testimony of one of two or more witnesses, each of
      whom has told a coherent and facially plausible story that is not contradicted by extrinsic
      evidence, that finding, if not internally inconsistent, can virtually never be clear error.”
      Anderson, 470 U.S. at 575.
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case at hand.    Mr. Mukamal argued that the contracts in this case were so

embedded in the overall enterprise, indeed they were “necessary for the overall

operation and value stream in a . . . discounted cash flow model, with respect to the

entire organization,” that they could not be valued distinctly from the enterprise.

Mr. Oscher, on the other hand, maintained that the contracts were “clearly seen as

separate entities or separate assets of Teltronics,” as evidenced by the lending that

was being done against the contracts.

      The testimony presented a classic “battle of the experts.” It was not clear

error, and certainly not an abuse of discretion, for the bankruptcy court to admit

Mr. Oscher’s testimony on this point and then to find him more credible than Mr.

Mukamal on the question of whether to include the contracts as separate assets on

Teltronics’ balance sheet.

                             b. Solvency opinion

      The trustee did preserve his objection to the Bankruptcy Court’s receipt of

Mr. Oscher’s opinion that Teltronics was solvent.          We decline to reach this

objection, however, because it is immaterial on appeal.

      Mr. Oscher’s opinion that Teltronics was solvent at the time of the transfer

necessarily implied his opinion that the value of the contracts was at least $5.6

million. It is true also that Mr. Oscher provided no basis for that view. It may well

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be that there was a valid argument under Daubert to exclude this opinion, but the

judge neither relied upon nor credited this opinion in his ultimate disposition of the

case. Accordingly, the issue is academic.

                          c. Illustration representing value of the contracts as $8.5

                              million

      Finally, the trustee’s argument that the Bankruptcy Court erred in admitting

Mr. Oscher’s use of the borrowed $8.5 million figure for “demonstrative purposes”

is unhelpful and immaterial to his appeal. As the trustee acknowledges in his brief,

Mr. Oscher in fact did not opine that the value of the contracts was $8.5 million –

that figure was used to demonstrate the impact that increasing the value of

Teltronics’ assets by the value of the contracts could have had on Teltronics’

balance sheet.

      The trustee nonetheless criticizes Mr. Oscher’s “methodology” of taking the

midpoint of the value range set forth in the Empire valuation as not generally

accepted in the field of accounting. He points also to the fact that Mr. Oscher “did

no analysis of the state of Teltronics’ remaining balance sheet, or the cost to

liquidate Teltronics’ remaining assets, if the contracts were sold” and to Mr.

Oscher’s assignment of a value to the contracts without considering the costs

involved with administering the contracts. These contentions might present serious

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concerns had Mr. Oscher set forth an opinion that the contracts, in his view, were

worth $8.5 million. But as this testimony was merely used to demonstrate a point,

the trustee’s criticisms miss the mark.

      Moreover, the Bankruptcy Court plainly did not rely on this illustration and

in fact made no findings at all as to the value of the three contracts. The only

portion of Mr. Oscher’s testimony that was credited by the Bankruptcy Court was

his opinion that some value for the three contracts should have been reflected

separately on the balance sheet for purposes of the solvency analysis.                        The

admissibility of the testimony related to Mr. Oscher’s use of the $8.5 figure was

immaterial. 6

                C.   Insolvency

      We now turn to the Bankruptcy Court’s conclusion that the trustee failed to

establish that Teltronics was insolvent at the time of the transfer. We already have

concluded that the Bankruptcy Court was entitled to find that Mr. Oscher was more

credible than Mr. Mukamal on the narrow issue of “whether the maintenance
6

      In any case, we doubt that it was an abuse of discretion for the Bankruptcy Court to
      conclude that the objections to Mr. Oscher’s illustration using the $8.5 million figure
      went to the weight, rather than the admissibility, of the testimony. A movant under
      Daubert “must establish that the district court ‘abdicat[ed]’ its duty, or that it ‘applie[d]
      the wrong law, follow[ed] the wrong procedure, base[d] its decision on clearly erroneous
      facts, or commit[ted] a clear error in judgment.’” United States v. Hollis, 780 F.3d 1064,
      1070 (11th Cir. 2015) (alterations in original) (quoting Brown, 415 F.3d at 1266).
      Although we note that this is a tall order for an appellant, we need not reach this question
      for purposes of this appeal.
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contracts ought to be separately valued and added into the balance sheet.” In re

Teltronics, Inc., 540 B.R. at 489. Nor were the Bankruptcy Court’s subsequent

analytical steps erroneous.

      The trustee had the burden of proving by a preponderance of the evidence

that Teltronics was insolvent at the time of the transfer. Kardash, 866 F.3d at 1256

(“In order to establish the insolvency element of constructive fraud under [Florida

fraudulent conveyance law], a claimant must show either that the debtor was

insolvent at the time of the transfer or became insolvent as the result of the

transfer.”). Having accepted that the value of the assets listed on the balance sheet

as presented by Mr. Mukamal was incomplete without the inclusion of the value of

the three maintenance contracts, the burden was on the trustee to prove that the

value of those contracts was so small as to leave Mr. Mukamal’s opinion as to

insolvency unaffected. But he offered no such evidence. As the Bankruptcy Court

properly found, he therefore failed to establish an essential element of his claim.



             IV. CONCLUSION

      The judgment appealed from is AFFIRMED. Appellees’ cross-appeal is

DISMISSED as moot.




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