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[U] Davies v. Veenis

Superior Court of Pennsylvania

December 5, 2013

LORRAINE C. DAVIES, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF H. BRUCE DAVIES, DECEASED, Appellant
v.
J. MARK VEENIS, DAVIES-VEENIS & ASSOCIATES, INC., AND THREE RIVERS EQUITY MANAGEMENT, INC. LORRAINE C. DAVIES, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF H. BRUCE DAVIES, DECEASED
v.
J. MARK VEENIS, DAVIES VEENIS & ASSOCIATES, INC., AND THREE RIVERS EQUITY MANAGEMENT, INC. Appellants

NON-PRECEDENTIAL DECISION

Appeal from the Judgment Entered November 3, 2011, in the Court of Common Pleas of Allegheny County Civil Division at G.D. No. 08-003019

BEFORE: FORD ELLIOTT, P.J.E., ALLEN AND COLVILLE, [*] JJ.

MEMORANDUM

FORD ELLIOTT, P.J.E.

The above-captioned appeals arise from a jury trial which determined what sums were owed to appellants Lorraine C. Davies and the Estate of her husband, H. Bruce Davies, upon the death of Mr. Davies, by cross-appellants, J. Mark Veenis, Davies Veenis & Associates, Inc., and Three Rivers Equity Management, Inc., (TREM) which entities represented Mr. Davies' former investment business interests. Finding no error, we affirm.

We find no error with the trial court's holding. After a thorough review of the record, the briefs of the parties, the applicable law, and the well-reasoned opinion of the trial court, it is our determination that there is no merit to the questions raised on appeal. The trial court's meticulous, 44-page opinion, filed on September 7, 2012, comprehensively discusses and properly disposes of the questions presented. We will adopt it as our own and affirm on that basis.

In addition to the trial court's rationale pertaining to its reasons for not allowing discovery of the February 7, 2008 Kaplan report, we add the following analysis. Appellants' basis for seeking the 2008 Kaplan report is an alleged contradiction between it and the expert report that Kaplan submitted for trial. According to appellants, the 2008 report did not include the TREM GP (BD) accounts as assets of TREM in its valuation, while the trial report did. Appellants' reason for this belief is an alleged admission by David Kaplan, during his deposition, that his 2008 report did not include these TREM GP (BD) accounts as assets of TREM. Simply stated, Kaplan did not state at his deposition that the TREM GP (BD) accounts were not included as assets of TREM in the 2008 report. Rather, he stated that the accounts were not fully included because their values were based upon inaccurate tax returns. Upon review, we find that Kaplan testified consistently at his deposition and at trial.

Kaplan testified at his deposition as follows:

Q. Do you recall whether or not in connection with the valuation report that you did that you took into account as an asset of TREM or assets of TREM the limited partnership accounts in the names Three Rivers Equity Management GP (BD) and Three Rivers Equity Management GP (MV) as assets of the company?
MR. WYCOFF: You can answer that.
A. It did not or at least did not fully take those into account.
Q. Why?
A. At the time that we were given information, those assets were not fully reflected on the balance sheets of TREM.
Frankly, I think that issue was missed by all three of the firms that originally looked at appraising the interest in TREM, those firms being Mr. McGinty, Mark Gleason's firm and my firm, all for the same reason, because the assets were not fully reflected on the balance sheets due to a bookkeeping mistake that had occurred with the tax returns.
Q. Who told you it was a bookkeeping mistake?
MR. WYCOFF: Excuse me. Object to the form of the question in that there is no basis for assuming that someone told him that. That could have been his own analysis.
BY MR. STEIN:
Q. How did you come to the conclusion that it was a mistake?
A. Later on I came to the conclusion it was a mistake through a combination of looking at the amended tax returns that were prepared and reading the deposition testimony of Mr. Hockman and Mr. Clark.

Videotaped deposition of David Kaplan, 8/12/10 at 18-19.

Thus, in his deposition Kaplan essentially testified that the TREM GP (BD) accounts were included to some extent, albeit not fully, as assets of TREM, but that there was a problem with their valuation because of incorrect amounts on certain tax returns. This precisely mirrors Kaplan's explanation at trial:

Q. And you -- at the time that you did your valuation, of course, February 7, 2008, you did not -- you did not identify the TREM G.P. (BD) accounts as assets of the corporation; did you?
A. Sure we did.
Q. And how did you do that?
A. They were on the balance sheet as of December 31, 2006, admittedly at a wrong number. I don't think any of the appraisers knew at that time or realized that the dollar amount on TREM's balance sheet was wrong. What I mean by that is that $725, 000 figure was not correct. But they're on the balance sheets in the combined settlement report, and then there's a discussion of the nonoperating assets in that report as well.
Q. And do you recall when I asked you at your deposition at page 18, "Do you recall whether or not in connection with the valuation report that you did, that you took into account as an asset of TREM or assets of TREM the limited partnership accounts in the same Three Rivers Equity Management G.P. (BD) and Three Rivers Equity Management (MV) as assets of the corporation?"
And you say, "I did not or at least not fully take those into account."
A. Right.
Q. And then I asked you, "Why not?" And you said, "At the time we were given information those assets were not fully reflected on the balance sheets."
Do you recall testifying to that?
A. Would you read that last part:
Q. "At the time we were given that information those assets were not fully reflected on the balance sheets of TREM."
A. Were not fully reflected on the balance sheets?
Q. That's what you say. At the time --
A. I'm not sure --
Q. "At the time we were given information, those assets were not fully reflected on the balance sheets of TREM."
A. I'm not sure what time that is actually, listening to your question. I don't know if there's a timeframe on that or not, but my understanding of what happened is they were on the balance sheet --
Q. Did you testify to what I asked you that you testified?
A. I'm assuming you're reading that part. You asked me this question three different times in my deposition.
Q. Of course I did, because your 2008 report is inconsistent with your testimony that the G.P. -- the G.P. accounts are assets of the corporation. So you would expect me to do that; wouldn't you?
A. I don't think it's inconsistent. I think it's right on there actually.
Q. Then you say, "Frankly, I think that issue was missed by all three of the firms that originally looked at appraising the interest in TREM, those firms being Mr. McGinty, Mark Gleason's firm and my firm, all for the same reason, because the assets were not fully reflected on the balance sheets due to a bookkeeping mistake that had occurred with the tax returns."
Do you recall testifying to that?
A. Right. I think that's what I said a few moments ago. I don't think any of us realized that the numbers on the tax return were wrong at that time.

Notes of testimony, 3/14-16 at 961-963.

We find that appellants' "contradiction" between Kaplan's deposition and his trial testimony is wholly illusory. At trial, Kaplan again explained that the TREM GP (BD) accounts were included in his 2008 report. In both the deposition and at trial, Kaplan explained that the values for the TREM GP (BD) accounts were simply faulty because they were based upon inaccurate tax returns. We see no real conflict and no indication that Kaplan's 2008 report conflicted with his trial report as to the inclusion of the TREM GP (BD) accounts as assets of TREM. Thus, the 2008 report offered no impeachment value and appellants were not harmed by the trial court's decision not to allow discovery of the 2008 Kaplan report.

Finally, we do not adopt those parts of the trial court's opinion that address the issues raised by the cross-appellants. Cross-appellants specifically conditioned review of their issues upon the granting of a new trial or a disturbing of the judgment below in any way. As the judgment below will remain wholly intact, we need not address the issues raised on cross-appeal.

Judgment affirmed.

Judgment Entered.

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