Is Pre-Trial Disclosure Required for Expert Witness Opinions?

As discussed in the recent California appellate decision in Jogani v. Jogani, approximately 50 years ago, brothers Haresh, Shailesh, Rajesh, and Chetan Jogani orally agreed to partner together in what would become a global diamond business.

In 1995, the four brothers orally agreed to team up with a fifth brother, Shashikant Jogani (Shashi), to invest in and grow Shashi’s existing real estate portfolio, thereby forming a separate real estate partnership.

Haresh later denied that either partnership existed and claimed all partnership assets were his alone.

In 2003, Shashi sued his brothers and related partnership entities for his rightful share of the real estate partnership and for related damages. Rajesh and Chetan later cross-complained against their brothers and related partnership entities for their respective partnership shares in both the diamond and real estate partnerships.

In 2024, following a five-month jury trial and verdicts in favor of Shashi, Rajesh, and Chetan, the court entered judgment awarding declaratory relief (including a determination of each brother’s partnership shares), and compensatory and punitive damages along with prejudgment interest that totaled approximately $6.85 billion payable by Haresh and the partnership entities (hereinafter Defendants). 

Defendants raised seven discrete issues on appeal, the majority of which relate to evidentiary rulings during trial.

Defendants argued the trial court erred in admitting an opinion from Shashi’s damages expert that the expert had not disclosed prior to trial.

The appellate court agreed with Defendants that the court abused its discretion in not excluding testimony about an opinion from Shashi’s damages expert that was not disclosed prior to trial.

That opinion concerned alleged lost profits from investments that the real estate partnership sold during the 2008 housing/financial crisis.

Shashi’s expert testified those investments (the nature of which are unknown) would have appreciated to $1.98 billion if the partnership had continued to hold them instead of Haresh having imprudently “panicked” in 2008 and sold them at a $445 million loss.

The appellate court thus conditionally affirmed the judgment and ordered through remittitur a reduction of economic damages relating to the real estate partnership for this purported $1.98 billion in lost investment profit in amounts proportionate to Shashi, Rajesh, and Chetan’s respective shares of that partnership.

If any of them did not agree to the reduction, the judgment was reversed and remanded for a new trial as to that individual regarding his economic damages arising out of the real estate partnership and his punitive damages.

Shashi chose not to be part of the diamond partnership, and in 1969, he moved to Los Angeles. In the mid-to-late 1970s, he began investing in residential apartment properties in Southern California.

Within 10 years, his portfolio had a fair market value of $375 million, with equity of approximately $100 million. However, the double blow of a steep downturn in the real estate market and the 1994 Northridge earthquake caused Shashi to face financial difficulties.

The earthquake damaged several of Shashi’s properties, including causing a 164-unit apartment building, Northridge Meadows, to collapse. Tenants and creditors sued Shashi  and the equity in his real property holdings became negative.

Shashi’s attorney handling Northridge Meadows-related litigation, Seymour Fagan and the firm Tyre Kamins Katz & Granof (Tyre Kamins), advised Shashi to keep and grow his real estate holdings by partnering with an investor.

Shashi spoke with several real estate investors, including Richard Julian, and with his brothers about forming such a partnership.

Written proposals between Shashi and Julian described that Shashi would place the properties he owned into a partnership, Julian would loan money to Shashi to purchase additional properties and improve and operate them, and, once Shashi had paid back the loan with interest of between 10 to 15 percent, he and Julian would be 50/50 owners.

Julian testified that he had signed the proposed agreement but later learned Shashi had chosen instead to enter a deal with his brothers.

In April 1995, they entered into an oral agreement that mirrored the proposed partnership with Julian except that Shashi would pay 12 percent interest on the loan. Shashi asked his attorney Steven Glass to come to Shashi’s house, and in Haresh’s and Rajesh’s presence, described the terms of their agreement to Glass. Haresh did not object to anything Shashi said.

Glass, and later, Fagan, advised Shashi to put the partnership agreement in writing. Shashi declined, believing that insisting upon a written agreement would convey a lack of trust.

There was a cultural practice and family business custom not to write agreements down.

Writings were created only when necessary to obtain Indian government approvals.

After the five brothers entered the real estate partnership, Haresh formed two British Virgin Islands holding entities, defendants and cross-defendants Mooreport Holdings Limited (Mooreport) and Gilu Investments Limited (Gilu). Shashi formed California-based entities, defendants and cross-defendants J.K. Properties, Inc. (JK), H.K. Realty, Inc. (HK), Commonwealth Investments, Inc. (Commonwealth), and Hansa Investments, Inc. (Hansa), and transferred title of his properties into the California entities without compensation.

Because Shashi would not be a partner until he repaid the loan, Tyre Kamins drafted a consulting agreement naming Shashi as a consultant for JK to demonstrate to third parties that Shashi had authority to negotiate on the partnership’s behalf.

By 2001, Shashi acquired approximately 170 apartment buildings worth about $1 billion for the partnership.

The first phase of the trial underlying the appeal began on September 18, 2023, and concluded just over five months later, on February 26, 2024.

The jury unanimously returned a special verdict finding Shashi proved all elements of his breach of contract, breach of fiduciary duty, and intentional misrepresentation claims.

Also 11-to-one, the jury awarded Shashi economic damages of $1,798,846,000 and unanimously found Haresh acted with malice, oppression, and/or fraud.

The jury awarded economic damages to Chetan and Rajesh in the amount of $233,849,980 and $359,769,200, respectively, for their real estate partnership claims and $65,000,000 and $100,000,000, respectively, for their diamond partnership claims.

On March 7, 2024, the jury awarded the following brothers punitive damages: Shashi, $1,500,000,000; Chetan, $1,050,000,000; and Rajesh, $450,000,000.

On May 9, 2024, the court entered judgment against Haresh totaling approximately $6.85 billion, which included the amounts awarded by the jury as well as prejudgment interest.

On June 28, 2024, the court issued a 50- page (without exhibits) second amended statement of decision (the statement of decision). The key dispute between the parties—whether there were oral agreements forming partnerships—depended in great part on the parties’ credibility, and the court set forth in detail its credibility findings.

It found, “Shashi was an extremely credible witness” who “was cross- examined for more than 26 hours,” testified in “meticulous detail,” and “was never contradicted.”

In contrast, “Haresh’s denial of any partnership was simply not believable and contradicted at every turn of the evidence.” The court noted Haresh’s lack of knowledge about the real estate business’s operation and experience in commercial real estate.

Further, “Haresh never offered a plausible or logical explanation as to how he was able to obtain Shashi’s properties and interests in his real property without paying Shashi the reasonable value of those rights if there wasn’t a partnership.” It also found Haresh lacked credibility because of his “firm resistance to answering questions posed directly to him,” which included “refusing to answer questions of the [c]ourt.”

Defendants argued the trial court should have excluded the testimony of Shashi’s damages expert, William Ackerman, that Shashi (and by extension Chetan and Rajesh) was entitled to compensatory damages from Haresh’s mismanagement of real estate partnership investments during the 2008 financial crisis.

More specifically, Defendants argued that Ackerman improperly testified that Haresh should not have sold investments held by the real estate partnership in 2008 (which resulted in a $445 million capital loss), and that if Haresh had held the investments they would now be worth $1.98 billion by using the S&P 500 index as proxy for investment performance.

The jury thereafter awarded Shashi, Chetan, and Rajesh their respective partnership shares of that $1.98 billion.

Defendants argued that Ackerman did not disclose this opinion prior to trial, that Ackerman was not qualified to provide such an opinion, and that the opinion was based on both speculation and an erroneous assumption that Haresh had invested in the S&P 500 or something akin to it.

Following a demand for the exchange of expert witness information, each party must provide an expert witness declaration for witnesses such as Ackerman. (Code Civ. Proc., § 2034.210, subd. (b).)

The declaration must include certain information, including a brief narrative statement of the general substance of the testimony that the expert is expected to give.

A trial court should exclude an expert opinion based on a party’s right to rely on the other party’s expert’s express representation that the opinions expressed during an expert deposition are the only ones that need be met at trial, because in such circumstances it would be grossly unfair and prejudicial to permit the expert to offer additional opinions at trial.

A party’s expert may not offer testimony at trial that exceeds the scope of his deposition testimony if the opposing party has no notice or expectation that the expert will offer the new testimony, or if notice of the new testimony comes at a time when deposing the expert is unreasonably difficult.

Defendants argued that Ackerman did not put them on notice that he would testify that Shashi’s damages included $990 million in unrealized investment gains based on the performance of the S&P 500 (in other words, his 50 percent partnership share of $1.98 billion).

Both in the trial court and on appeal, Defendants sought a new trial or a remittitur of damages based on their timely objection to the testimony at issue during trial.

LESSONS:

1.         Partnership agreements and other agreements regarding real property should be in writing signed by the parties.

2.         The outcome of trials are often determined by the evaluation of the respective credibility of the parties and witnesses.

3.         Following a demand for the exchange of expert witness information, each party must provide an expert witness declaration for expert witnesses each party intends to present at trial.

4.         A party’s expert may not offer testimony at trial that exceeds the scope of his deposition testimony if the opposing party has no notice or expectation that the expert will offer the new testimony, or if notice of the new testimony comes at a time when deposing the expert is unreasonably difficult.

5.        A trial court should exclude an expert opinion based on a party’s right to rely on the other party’s expert’s express representation that the opinions expressed during an expert deposition.