A new lawsuit filed in federal court by Miami real estate company American Residential Equities LLC alleges a well-known accountant who has testified in numerous cases held himself out to be expert in the loan-servicing field but instead racked up the hours learning about the topic.
“Pretending to have the knowledge or trying to get up to speed after being retained is a disservice to the judicial system,” said Alan Kluger, a partner at Kluger, Kaplan, Silverman, Katzen & Levine in Miami. “The guy just wasn’t who he said he was.”
ARE filed the lawsuit in Miami-Dade Circuit Court on Sept. 25 against Kansas City, Missouri, accountant Lawrence D. Morriss Jr., a managing director for CBIZ MHM. It was removed to Miami federal court and assigned to U.S. District Judge Patricia Seitz on Oct. 16.
ARE hired Morriss as an expert to give a damage assessment for losses on its loan portfolio with Ally Financial subsidiary GMAC Mortgage Corp. ARE makes its money by buying and liquidating pools of nonperforming residential mortgages. It filed suit in 2010 against GMAC, alleging it failed to properly service the mortgages and properties owned by ARE.
ARE also alleged it was pressured by GMAC into offering a loan modification to Georgia state Representative Joe Heckstall’s brother, Cornelius Heckstall.
Morriss ended up charging ARE more than $1 million for work that literally made no sense, Kluger said. The company is looking for reimbursement plus attorney fees for time spent defending the expert report when GMAC moved to have it thrown out.
The accounting firm and Morriss “represented themselves as highly qualified to provide expert witness testimony in litigation such as the GMAC case and were uniquely qualified in two areas: loan services and e-discovery,” Kluger said.
Morriss didn’t return a call for comment by deadline. His attorney, Juan C. Enjamio, Miami managing partner at Hunton & Williams, said he didn’t comment on pending litigation.
Kluger said investigations have shown Morriss and his staff did not have the expertise needed for the GMAC. The CBiz website lists Morriss’ service specialties as commercial litigation, forensic investigation, valuation and bankruptcy. He said CBIZ’s goal was to use GMAC as a learning curve for the accounting firm.
The CBiz website lists Morriss’ service specialties as commercial litigation, forensic investigation, valuation and bankruptcy.
“Pretending to have the knowledge or trying to get up to speed after being retained is a disservice to the judicial system,” Kluger said.
GMAC immediately pounced to get Morriss’ report thrown out, saying it did not meet the Daubert standard set by the U.S. Supreme Court for the admissibility of expert testimony, which requires reliability.
Kluger said Morriss’ testimony was well on its way to being thrown out when GMAC sought bankruptcy protection, rendering the suit essentially moot.
“If that didn’t happened, ARE might have had its expert stricken and go to trial without an expert,” Kluger said.
He said ARE was represented by the Miami firm of Coffey Burlington in the GMAC case. Morriss was picked by ARE but was immediately dismayed by his work and sent some assistance to Kansas City to get the report completed, said attorney David A. Freedman, a partner at Coffey Burlington.
“In the client’s view, the work was not getting done,” Freedman said. “And certainly from the other side, they were attacking his credentials.”
Kluger said the GMAC case wasn’t the first time Morriss’ work has been called into question.
In ATA Airlines v. FedEx, the U.S. Court of Appeals for the Seventh District in Chicago wrote how Morriss’ subjective analysis on behalf of ATA was erroneously accepted on faith by a district judge.
“There were, as we’re about to see, grave questions concerning the reliability of Morriss’ application of regression analysis to the facts,” the appellate opinion read.
The court said not even the plaintiffs attorneys could understand Morriss’ report.
“If a party’s lawyer cannot understand the testimony of the party’s own expert, the testimony should be withheld from the jury,” the Dec. 27 opinion read. “Evidence unintelligible to the trier or triers of fact has no place in a trial.”
Kluger said it’s important there be candor among experts offering their skills to the legal world.
“Experts should maintain professionalism and integrity at all times, which includes knowing when to admit that they lack sufficient expertise to do the work involved,” he said.
“When an expert allows himself or herself to be retained under false pretenses, they threaten the integrity of the judicial process because there is the overwhelming possibility that they will speak untruths in order to sustain the falsehoods they have used to obtain the initial retention.”