Does quantity equal quality? What appraisers should know about successfully serving as an expert witness.

A study was conducted during World War II of bombers returning from missions. The idea was to reinforce the bombers' sections damaged by bullets. However, statistician Abraham Wald considered what is called "survivorship bias" and recommended instead that it was the bombers that did not survive that needed to be considered. Thus, it was logical to reinforce the areas not marred by bullet holes. The government followed his advice. This led to more bombers returning from combat missions.¹

Some appraisers who provide expert testimony will often state how many times they have testified. "I have testified in 50 trials" is an actual example of such a braggart assertion. This serves to intimidate unseasoned appraisers. But are we overlooking the obvious?

        Discovery Goals

Our legal system was developed to avoid trial by ambush. All parties in litigation are obligated to exchange evidence before trial.

The legal system embraces a process called discovery. Discovery is defined as, "The pre-trial devices that can be used by one party to obtain facts and information about the case from the other party in order to assist the party's preparation for trial."²

Not only can we assume that evidence will be exchanged, but also there may be interrogatories between the parties. Expect a list of witnesses to be created. And, of course, an exchange of expert witnesses. As an expert witness, the possibility of being required to testify in a deposition is highly likely. Your work notes and the appraisal report as well as other paperwork will be presented. The opposition wants you to testify in detail. This is discovery.

Your testimony at deposition can be used to impeach you if the litigation goes to trial. But, more likely, your testimony may lead to settlement.

Depending on the jurisdiction - federal or state and which - the expert will be required to formally state all previous hearings in which he or she testified under oath.

Disclosure of Expert Testimony in Civil Cases
(d) The qualifications of the witness, including a list of all publications authored by the witness within the preceding 10 years;
(e) The compensation to be paid for the study and testimony; and
(f) A listing of any other cases in which the witness has testified as an expert at trial or by deposition within the preceding four years.³

Note: This is where the truth may be discovered as to how many trials in which an expert gun slinger has testified.

Using the example state code cited above, included in the discovery will be a list of publications for the last 10 years. In today's internet-based world, that would likely include online postings. Start and maintain a list of all publications. To have the opposition point out missing publications will be unnerving at deposition. This publication requirement varies among states and in some may not be a requirement.

        Settlement Odds

If the goal of discovery is to settle, and if more than 95% of cases settle,⁴ then the above-mentioned braggart is not performing diligently as an expert witness and is most likely embellishing his reputation. To calculate testimony in 50 trials and the odds of trials settling, the result will be nearly 5,000 trials in a 20-year period. That would be almost more trials than workdays! The more diligent the expert, the more likely settlement will be achieved, thus the number of trials will be lower.

Antique ivory framed portrait owned by author.

One does not have to have a wall full of diplomas or specific professional designations to be qualified to testify as an expert witness. Here is a list of qualifications, with most jurisdictions using the same criteria.

Testimony by experts. - If scientific, technical, or other specialized knowledge will assist the trier of fact in understanding the evidence or in determining a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify about it in the form of an opinion or otherwise, if:
(1) The testimony is based upon sufficient facts or data;
(2) The testimony is the product of reliable principles and methods; and
(3) The witness has applied the principles and methods reliably to the facts of the case.⁵

If there is a question as to whether the expert is qualified, the trier of fact (the judge) has the final word.

        Where and When

In discovery, the parties want to discover if the appraisal or appraiser's testimony has the correct parameters. Does the report comply with the rules for the jurisdiction where the case is filed? For example, you may be retained to appraise property in your office in Texas for a dissolution of marriage case. But that may not be where the litigation is lodged. Where the litigation is filed sets the rules for effective date and value definition. In a dissolution of marriage case, there are five possible effective dates depending on the state of jurisdiction. And, yes, there are varying value definitions required. The rule: there is not one value definition that applies to all appraisal assignments!

        Broad Market Value Rule⁶

Criminal and civil lawsuits have what is called a "cause of action." If a store sells a diamond and states that it is not a lab-grown diamond, and it is discovered that it is, the cause of action is fraud. However, fraud only applies if the store knew that the diamond was lab-grown, called intent. If they did not know and there was no intent, then the cause of action would be misrepresentation. Of course, the store can also be sued for a breach of contract. The lawsuit will likely have all three options listed. If one cause of action fails, then there are others with which to continue.

Each cause of action will have a required effective date as well as a value definition. Hence, a court case can have multiple effective dates and value definitions. And, depending on jurisdiction, the effective dates and value definitions can also be different. The appraiser is obligated to render a report that details all the values based on the required legal definitions and effective dates.

        Deep Pockets

Phere is punitive damage and compensatory damage. Punitive damages are determined by the court as additional punishment. If fraud is proven, then a punitive damage can be added.

As an appraiser, only compensatory damages are a concern. For example, out-of-pocket compensatory damages are based on the amount paid and the worth of the item. If one paid $1,000 for the diamond and it is worth only $200, then compensatory damages would be the difference.

Benefit of the bargain compensatory damages consider the difference between what the item is worth and what it would be worth if it was as represented. If one paid $1,000 for the item, and it is worth only $200, but would have been worth $2,000 if the representations were proper, benefit of the bargain would fetch $1,800.

Some jurisdictions allow benefit of the bargain, and some do not. As a result, the appraiser must know the requirements of the lawsuit's jurisdiction. Or the appraiser can report the worth of the lab-grown diamond and a natural diamond.

        Conclusion

Always request a copy of the complaint (lawsuit). Therein will be the reasons for suing (cause of action). Request that you be put in touch with the paralegal or attorney who can research the value definitions as well as effective dates. Be compliant and exercise due diligence.

Written by Bill Hoefer