12-3522-cv
Buckley v. Deloitte & Touche U.S.A. L.L.P.

                              UNITED STATES COURT OF APPEALS
                                  FOR THE SECOND CIRCUIT

                                             SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
16th day of October, two thousand and thirteen.

Present:
            PIERRE N. LEVAL,
            PETER W. HALL,
            RAYMOND J. LOHIER, JR.,
                        Circuit Judges,
____________________________________________________

Dennis J. Buckley, as trustee of the DVI Liquidating Trust,

                         Plaintiff-Appellant,

                v.                                                          No. 12-3522-cv

Deloitte & Touche USA LLP, Deloitte & Touche LLP,

                  Defendants–Appellees.
____________________________________________________

FOR APPELLANT:                   Finley T. Harckham and Dennis J. Artese, Anderson Kill & Olick,
                                 P.C., New York, NY.


FOR APPELLEES:                   David L. Comerford and Jeffery A. Dailey, Akin Gump Strauss
                                 Hauer & Feld LLP, Philadelphia, PA.

                        Rex S. Heinke and Jessica M. Weisel, Akin Gump Strauss Hauer
                        & Feld LLP, Los Angeles, CA.
____________________________________________________

                                                   1
       Appeal from a judgment of the United States District Court for the Southern District of

New York (Stein, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

       Plaintiff-Appellant Dennis J. Buckley, acting in his capacity as bankruptcy trustee on

behalf of DVI, Inc. (“DVI”), appeals from the district court’s judgment granting the motions of

Deloitte & Touche USA LLP and Deloitte & Touche LLP (collectively, “Deloitte”) for summary

judgment and to exclude the testimony of Buckley’s expert witness, Michael J. Epstein. We

assume the parties’ familiarity with the underlying facts, the procedural history of the case, and

the issues on appeal.

I.     Decision Granting Motion to Exclude Epstein’s Testimony

       We review a district court’s decision to exclude expert testimony for abuse of discretion.

See General Elec. Co. v. Joiner, 522 U.S. 136, 143 (1997). “The exclusion of a proposed expert

witness will not constitute an abuse of discretion unless it is manifestly erroneous.” In re Bd. of

Directors of Telecom Argentina, S.A., 528 F.3d 162, 175 (2d Cir. 2008) (internal quotation marks

omitted).

       As a preliminary matter, we reject Buckley’s argument that, because Epstein had

purportedly resigned as Buckley’s expert witness before Deloitte’s motion to exclude Epstein’s

testimony was decided, the relief requested in that motion was moot and granting it was an abuse

of discretion. Deloitte’s motion can be construed as requesting a viable form of relief, regardless

of whether Epstein had resigned as Buckley’s expert witness. Notwithstanding that Epstein had

resigned, at least in theory he could have later agreed to testify at trial. Deloitte was therefore

entitled to a ruling on whether Epstein’s testimony was inadmissible. See, e.g., Major League

                                                  2
Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290, 311 (2d Cir. 2008) (noting that, under

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), “the district court functions as the

gatekeeper for expert testimony, whether proffered at trial or in connection with a motion for

summary judgment,” and that “[a]n expert’s opinions that are without factual basis and are based

on speculation or conjecture are . . . inappropriate material for consideration on a motion for

summary judgment” (citation and internal quotation marks omitted)); Presbyterian Church of

Sudan v. Talisman Energy, Inc., 582 F.3d 244, 264 (2d Cir. 2009) (“[O]nly admissible evidence

need be considered by the trial court in ruling on a motion for summary judgment.”). And if

Buckley’s point is that the district court should have considered Epstein’s testimony out of the

case, then Buckley could not rely on it to defend against Deloitte’s motion for summary

judgment. To the extent Buckley argues that the district court should have granted him a

continuance or modified the summary judgment schedule so that he could obtain a new expert

witness, he did not request such relief despite having an opportunity to do so, and there is no

basis for concluding that the district court abused its discretion in declining to grant such relief

sua sponte.

       As to the merits, for substantially the same reasons as those stated in its decision, the

district court did not abuse its discretion in excluding Epstein’s report as lacking a sufficient

factual basis. See Buckley v. Deloitte & Touche USA LLP, 888 F. Supp. 2d 404, 412-14

(S.D.N.Y. 2012). Epstein opined that, had Deloitte reported that DVI’s “loan loss reserve” was

materially understated on any of the four alleged “breach dates,” DVI’s Board of Directors

would have successfully restructured DVI or liquidated DVI. Epstein further opined that, with

respect to the first three of those dates, the Board would have adopted particular restructuring

plans and DVI’s lenders would have supported those plans. The district court acted well within



                                                  3
its discretion in excluding these opinions as unduly speculative, as “there is simply too great an

analytical gap,” General Elec. Co., 522 U.S. at 146, between the principal bases for the

opinions—Epstein’s experience as a restructuring expert and DVI’s financial statements—and

the opinions themselves. While Buckley argues that the district court’s decision “sets an

impermissible hurdle that no plaintiff asserting claims of auditor liability . . . ever could surpass,”

Appellant’s Br. at 34-35, this argument overlooks the fact that the district court identified several

specific examples of types of evidence that Epstein could have incorporated into his report to

lend factual support to his opinions. See Buckley, 888 F. Supp. 2d at 413-14. These examples

included the views of DVI’s former Board members and lenders regarding the restructuring or

liquidation plans that they purportedly would have adopted or supported. Id.

II.    Decision Granting Summary Judgment

       Additionally, for substantially the same reasons as those stated in its decision, the district

court properly granted Deloitte’s summary judgment motion, which the parties have stipulated is

governed by Pennsylvania law. Id. at 415-20. In short, absent Epstein’s opinions, there is

insufficient evidence in the record to permit a reasonable juror to find that (1) but for Deloitte

allegedly failing to disclose that DVI’s loan loss reserve was materially understated on the

alleged breach dates at issue, the Board would have restructured or liquidated DVI; or (2) but for

Deloitte allegedly failing to disclose that DVI’s loan loss reserve was materially understated on

the first three breach dates, the Board would have adopted the particular restructuring plans

described by Epstein, and DVI’s lenders would have supported those plans. A different

conclusion is not warranted by the sporadic deposition testimony of former DVI Board members

and management that Buckley relies on in his brief. As the district court recognized, none of that

testimony suggests that the Board would have restructured DVI in the manner described by



                                                  4
Epstein or would have liquidated DVI in response to discovering that DVI’s loan loss reserve

was understated. See id. at 417-18. In any event, for the reasons stated in its decision, the

district court correctly determined that Buckley’s evidence failed to show that what was alleged

to have been Deloitte’s tortious conduct was a proximate cause of DVI’s injury as a matter of

law. See id. at 419-20.

       Finally, given that Buckley “must show a causal connection between the breach and the

loss” in order to establish his breach of contract claim, Logan v. Mirror Printing Co., 600 A.2d

225, 226 (Pa. Super. 1991), the district court properly dismissed that claim for the same reasons.

III.   Conclusion

       We have considered Buckley’s arguments relevant to the causation issues discussed

above and find them to be without merit. Because our ruling on causation justifies affirmance of

the district court’s summary judgment decision, we have no need to address the other issues

Buckley raises. Accordingly, the district court’s judgment is AFFIRMED. Additionally,

Buckley’s motion to modify the record pursuant to Fed. R. App. 10(e) is DENIED, as he has not

identified a valid basis for modifying the record under that Rule. Finally, Deloitte’s motion to

strike the portions of Buckley’s reply brief that rely on the affidavit of Dennis J. Artese, counsel

for Buckley, is GRANTED. Because Artese’s affidavit is not part of the record, Buckley may

not rely on it in support of the merits of his appeal. See Loria v. Gorman, 306 F.3d 1271, 1280

n.2 (2d Cir. 2002) (“Ordinarily, material not included in the record on appeal will not be

considered.”).

                                                      FOR THE COURT:
                                                      Catherine O’Hagan Wolfe, Clerk




                                                  5
