Preview
FILED
5/2/2022 12:00 AM
FELICIA PITRE
DISTRICT CLERK
DALLAS 00., TEXAS
Kellie Juricek DEPUTY
CAUSE NO. DC-20-07067
LUCKY DIAMOND PRODUCTIONS, § IN THE DISTRICT COURT
INC. and WENDY DIAMOND, §
§
Plaintiffs, §
§
V. § OF DALLAS COUNTY, TEXAS
§
IPWE, INC. and ERICH §
SPANGENBERG, §
§
Defendants. § 95TH JUDICIAL DISTRICT
DEFENDANTS’ MOTION TO LIMIT AND EXCLUDE EXPERT TESTIMONY
COMES NOW, Defendants IPwe, Inc. (“IPwe”) and Erich Spangenberg (“Spangenberg”)
(collectively, “Defendants”) and file this Motion to Limit and Exclude Expert Testimony (the
“Motion”). In support, Defendants respectfully shows the following:
l. Plaintiffs Lucky Diamond Production and Wendy Diamond (collectively, “Plaintiffs”)
have indicated that they seek to attempt to recover attorneys’ fees in connection with certain claims
in this case. Plaintiffs have designated Jeff Tillotson (“Tillotson”) as a testifying expert on the subject
of attorneys’ fees. For the reasons set forth below, Tillotson’s testimony should be excluded entirely
under Tex. R. EVid. 402 and 403. Alternatively, Tillotson’s testimony should be limited based on (l)
Plaintiffs’ disclosures and (2) the Court’s Order in limine.
2. First, Tillotson’s testimony is not relevant in this proceeding because (1) Plaintiffs are
not entitled to recovery attorneys’ fees under Tex. Civ. Prac. & Rem. Code § 38.001 , et seq. or Tex.
Bus. & Com. Code § 27.01 because none of Plaintiffs’ claims are governed by Texas law; and (2)
Plaintiffs are not entitled to recover attorneys’ fees under Tex. Civ. Prac. & Rem. Code § 37.009
because Defendants’ claim under the Declaratory Judgment Act (which has been non-suited) was
subsumed by Plaintiffs’ counterclaims for breach of contract. Plaintiffs themselves have argued that
DEFENDANTS’ MOTION To LIMIT AND EXCLUDE EXPERT TESTIMONY 1
“Texas law does not ‘permit courts to grant declaratory relief when the real issue is determining
whether a party breached an agreement.” Accordingly, once Plaintiffs filed their counterclaims for
breach of contract, Defendants’ original claims under the Declaratory Judgment Act were subsumed
by those counterclaims because the request for declaratory relief “merely denies [Plaintiffs’] First,
Second, Third, and Fourth Counterclaims.”2 The result is that neither party is entitled to recover
attorneys’ fees under the Declaratory Judgment Act.3 Because Plaintiffs are not entitled to recover
attorneys’ fees under Tex. Civ. Prac. & Rem. Code § 38.001, Tex. Civ. Prac. & Rem. Code § 37.009,
or Tex. Bus. & Com. § 27.01, Tillotson’s testimony on the reasonableness and necessity of attorneys’
fees is not relevant.4 Any theoretical relevance would be substantially outweighed by the risk of
confusing the issues, misleading the jury, or undue prejudice—particularly because Plaintiffs have
indicated that they may claim attorneys’ fees are somehow “damages” and because attorneys’ fees
evidence would serve no purpose other than to attempt to elicit sympathy from the jury based on
Plaintiffs’ argument that they were forced to incur fees defending or prosecuting this lawsuit.
3. If Tillotson is allowed to testify at all, he should be precluded from testifying
concerning any attempted recoverability of fees under either Delaware or New York law. Tillotson
has only been disclosed as a testifying expert under Texas law, and any attempted testimony
concerning recoverability of fees under other states’ laws would therefore exceed the scope of his
designation and Plaintiffs’ disclosures. Moreover, under Delaware law, the Court, not the jury, makes
the determination as to (1) whether any fees should be shifted and (2) the amount of fees to be shifted
1
Motion to Open and Close at 3 (citing Severs v. Mira Vista Homeowner Ass ’n, 559 S.W.3d 684, 700 (Tex. App—Fort
Worth 2018, pet. denied)).
2
Id. at 3.
3
Kenneth Leventhal & C0. v. Reeves, 978 S.W.2d 253, 260 (Tex. App—Houston [14th Dist] 1998, no pet.) (where
there is no basis to award fees to a party who brings a claim under the Declaratory Judgment Act, “we likewise find no
basis for awarding such fees” to the party who defended the claim).
4
Tex. R. Evid. 401, 402.
5
Notably, while attorneys’ fees are not properly considered damages under Texas law, Plaintiffs have also never
disclosed that they may seek attorneys’ fees as part of their economic damages in this case.
DEFENDANTS’ MOTION To LIMIT AND EXCLUDE EXPERT TESTIMONY 2
based on the bad faith exception to the American Rule. Tillotson’s testimony concerning any alleged
bad faith would therefore be improper before the jury. This is particularly true because the bad faith
exception to the American Rule under Delaware law primarily concerns conduct in the litigationfi
Injecting allegations concerning a party’s conduct during the litigation would be improper and would
amount to an attempt to prejudice the jury against Defendants based on issues that are properly
considered by the Court, not the jury.
4. Finally, Tillotson’s testimony should be limited—if it is allowed at all—to the amount
of fees actually incurred by Plaintiffs in this case. Plaintiffs have produced fee statements from
Tillotson’s law firm as well as one flat-fee invoice from the law firm of Reid Collins & Tsai (“Reid
Collins”). Plaintiffs have not disclosed any information concerning the hourly rate of any attorneys
with Reid Collins or the amount of time such attorneys spent on any tasks in this case. For those
reasons, Tillotson should not be permitted to testify as to the hourly rate of any attorneys associated
with Reid Collins, the total attorneys’ fees that would have been incurred if those attorneys had billed
Plaintiffs at their hourly rate, or whether the attorneys’ fees charged by Reid Collins represents a
discount from their standard fee. Because none of this information has been disclosed, such testimony
would operate as an unfair surprise to Defendants and would unduly prejudice them. Additionally,
any statement that Plaintiffs’ attorneys discounted their normal rates due to Plaintiffs’ alleged
inability to afford legal fees would be an impermissible reference to the relative wealth of the parties,
be an attempt to elicit sympathy, and would Violate the Court’s Order on Defendants’ Motion in
Limine prohibiting any comparison of attorneys’ fees “to show that one party has more resources
than the other”7 or any reference to the assets the parties had for preparation of this case for trials
6
Cont'l Fin. C0., LLCV v. ICS Corp, 2020 Del Super. LEXIS 95, at *11-12 (Super. Ct. 2020) (explaining that bad faith
involves an analysis of whether parties have unnecessarily prolonged or delayed litigation, falsified records, or
knowingly asserted frivolous claims).
7
See Motion in Limine at 16, Request No. 33; see also id. at 3, Request No. 3 (barring statements attempting to invoke
sympathy or bias); see also id. at 4, Request No. 5.
8
Id. at 3, Request No. 4.
DEFENDANTS’ MOTION To LIMIT AND EXCLUDE EXPERT TESTIMONY 3
WHEREFORE, PREMISES CONSIDERED, for the reasons above, Defendants request that
the Court grant this Motion in its entirety and prohibit Plaintiffs from offering irrelevant evidence of
attorneys’ fees incurred in this case. Alternatively, if Plaintiffs are permitted to offer expert testimony
concerning attorneys’ fees, such testimony should be limited as requested herein. Defendants further
pray for any other further relief to which they may be entitled, both in law or in equity.
Respectfully submitted,
/s/ E. Steve Smith
Mark L. J ohansen
State Bar No. 10670240
Steve Smith
State Bar No. 24095623
REED SMITH LLP
2850 N. Harwood St., Suite 1500
Dallas, Texas 75201
Phone: 469-680-4214
Facsimile: 469-680-4299
Email: miohansen@reedsmith.com
stevesmith@reedsmith.com
Julie A. Hardin
jhardin@reedsmith.com
Texas Bar No. 24013613
R. Alan York
ayork@reedsmith.com
Texas Bar No. 22167500
REED SMITH LLP
811 Main St., Suite 1700
Houston, Texas 77002
713-469-3800
713-469-3899 (fax)
ATTORNEYS FOR DEFENDAN TS IPWE, INC.
AND ERICH SPAN GENBERG
DEFENDANTS’ MOTION To LIMIT AND EXCLUDE EXPERT TESTIMONY 4
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above and foregoing
has been served on all counsel of record Via email on this lst day of May 2022.
/s/ E. Steve Smith
Steve Smith
DEFENDANTS’ MOTION T0 LIMIT AND EXCLUDE EXPERT TESTIMONY 5
Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.
Shikendra Rhea on behalf of Steve Smith
Bar No. 24095623
Srhea@ReedSmith.com
Envelope ID: 64071166
Status as of 5/2/2022 2:54 PM CST
Case Contacts
Name BarNumber Email TimestampSubmitted Status
Lisa STsai |tsai@rctlegal.com 5/1/2022 7:52:41 PM SENT
Brandon Lewis 24060165 blewis@rctlegal.com 5/1/2022 7:52:41 PM SENT
Schyler Parker schyler.parker@wickphillips.com 5/1/2022 7:52:41 PM SENT
Susie Wade swade@tillotsonlaw.com 5/1/2022 7:52:41 PM SENT
Kira Lytle klytle@tillotsonlaw.com 5/1/2022 7:52:41 PM SENT
Jeremy Wells jwells@reidcollins.com 5/1/2022 7:52:41 PM SENT
Benjamin Nabors bnabors@tillotsonlaw.com 5/1/2022 7:52:41 PM SENT
Enrique Ramirez eramirez@tillotsonlaw.com 5/1/2022 7:52:41 PM SENT
Jodie Wingerter jwingerter@reidcoliins.com 5/1/2022 7:52:41 PM SENT
Associated Case Party: LUCKY DIAMOND PRODUCTIONS, INC
Name BarNumber Email TimestampSubmitted Status
Jeffrey MTillotson jtillotson@tillotsonlaw.com 5/1/2022 7:52:41 PM SENT
Jonathan RPatton jpatton@tillotsonlaw.com 5/1/2022 7:52:41 PM SENT
Joseph Alrrobali airrobali@ti||otson|aw.com 5/1/2022 7:52:41 PM SENT
Gregory Clift clift@roggedunngroup.com 5/1/2022 7:52:41 PM SENT
EFiling Admin efiling@roggedunngroup.com 5/1/2022 7:52:41 PM SENT
Rashella Widdoes - Paralegal widdoes@RoggeDunnGroup.com 5/1/2022 7:52:41 PM SENT
Associated Case Party: IPWE, INC
Name
Steve Smith
Shikendra Rhea
Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.
Shikendra Rhea on behalf of Steve Smith
Bar No. 24095623
Srhea@ReedSmith.com
Envelope ID: 64071166
Status as of 5/2/2022 2:54 PM CST
Associated Case Party: IPWE, INC
Alicia Nixon anixon@reedsmith.com 5/1/2022 7:52:41 PM SENT
Julie A.Hardin jhardin@reedsmith.com 5/1/2022 7:52:41 PM SENT
Erich Spangenberg erich@ipwe.com 5/1/2022 7:52:41 PM SENT
Mark L.Johansen mjohansen@reedsmith.com 5/1/2022 7:52:41 PM SENT
Associated Case Party: WENDY DIAMOND
Name BarNumber Email TimestampSubmitted Status
EFiling Admin efiling@roggedunngroup.com 5/1/2022 7:52:41 PM SENT
Gregory Clift clift@roggedunngroup.com 5/1/2022 7:52:41 PM SENT
Richard Roth rich@rrothlaw.com 5/1/2022 7:52:41 PM SENT