Value of Coin Collection at the Center of Family Dispute

Value of Coin Collection at the Center of Family Dispute

Claims of fraudulent misrepresentation, negligent misrepresentation, breach of fiduciary duty and conversion in a recent dispute over the value of a coin collection.

01/23/2019     News and Film, Appraisal Services, Trusts and Estates

By Kurt R. Mattson

A Pennsylvania family recently argued in court over the valuation method used for their coin collection in a case where an uncle charged his nephew with stealing his assets.

The uncle brought a lawsuit against his nephew based on the nephew's alleged misconduct in managing the uncle's financial investments. The uncle asserted claims for fraudulent misrepresentation, negligent misrepresentation, breach of fiduciary duty, and conversion. The jury found for the uncle, and the nephew appealed.

Chief Judge D. Brooks Smith of the Third Circuit Court of Appeals wrote in his opinion that the uncle presented enough evidence for a reasonable jury to conclude that he was in a fiduciary relationship with his nephew.

The uncle described himself as a "fiscal idiot" and repeatedly testified that he had complete trust in his nephew based on their close relationship and the nephew's purported financial expertise. Under Pennsylvania law, this testimony provided a sufficient basis for a reasonable jury to conclude that a fiduciary duty existed.

The Chief Judge found that based on the relationship of trust between the uncle and the nephew and the large amount of money taken by the nephew, there was sufficient evidence for a jury to conclude that the nephew had acted outrageously and that punitive damages were warranted on the fraudulent misrepresentation and breach of fiduciary duty claims. The judge next turned to the valuation method for coin collection.

“The nephew argued that the District Court erred in failing to grant a new trial based on the jury's calculations of damages.”

The nephew argued that the District Court erred in failing to grant a new trial based on the jury's calculations of damages. As part of this claim, the nephew argued that he was entitled to a new trial because the jury relied on the valuation method for the coins proffered by the uncle's expert witness. Chief Judge Smith explained that the nephew had an opportunity to cross-examine the expert on his methods and that the expert conceded his weaknesses.

The nephew then introduced an alternative method through his own expert witness, and the uncle in turn highlighted the weaknesses in that valuation method. With this battle of experts at trial, the Chief Judge said that the jury had a basis in the evidence for adopting the uncle's valuation method as the method that best reflected the damages he incurred.

As part of the nephew argument about the value of the coin collection, he claimed that the uncle's coin appraisal expert testimony didn't satisfy the standards for expert witness testimony. However, the District Court held a Daubert hearing on the issue of the admissibility of the expert witness and concluded that the uncle's coin appraisal expert was qualified (albeit "barely qualified") to offer opinion testimony.

The nephew didn't expressly challenge the District Court's ruling on the uncle's coin valuation expert, but rather argued that the inappropriate admission of the expert's testimony inflated the damages award, and therefore, he was entitled to a new trial because of the unfounded award. But the Third Circuit said that his argument failed based on the evidence presented at trial.

Chief Judge Smith found the District Court's ruling was well-reasoned and applied the Third Circuit's policy of "liberal admissibility," where an individual possesses "skill of knowledge greater than the average layman." As a result, the District Court didn't abuse its discretion by admitting the expert appraisal testimony.

The uncle's coin expert testified regarding his experience, including the fact that all of his appraisal training was on-the-job training. The nephew was free to cross-examine him as to the methods he used to appraise the coins and the limited time he spent on the appraisal, and the nephew did so. However, Chief Judge Smith said that it was "entirely within the province of the jury to adopt or reject" the uncle's expert's appraisal and to consider its weaknesses. Thus, the District Court didn't abuse its discretion by declining to grant the nephew a new trial.

The District Court's judgment was affirmed. Kremsky v. Kremsky, 2018 U.S. App. LEXIS 35843 *; __ Fed. Appx. __; 2018 WL 6720528 (3rd Cir. December 20, 2018).

Avoid Valuation Issues and Family Litigation
This Pennsylvania case shows another family fighting in court over the value of their assets. Here, the nephew and uncle could have perhaps come to an agreement on the value of the coins by employing an experienced appraisal company like Freeman's to conduct proper asset valuation and management.

About the Author
Kurt R. Mattson is the President of Union Legal Research. He is the former Director of Library Services and Continuing Education at Lionel Sawyer & Collins in Las Vegas. Prior to this, he worked at BNA and other legal publishers, spending a substantial portion of his career working for Thomson Reuters. He serves as a consultant for several businesses, law firms, and marketing companies.

Kurt received his JD from William Mitchell College of Law and his Masters of Law (LLM) from George Washington University. He received his Masters of Library Information Science (MLIS) from Wayne State University. Kurt is the editor of Lexis' BSA/AML Update, co-author of A.S. Pratt's Mortgage Procedure Guide to Federal and State Compliance, and author of Fair Debt Collection Practices: Federal and State Law and Regulation. He is also a contributing author of Brady on Bank Checks. Kurt is also a contributor to other business and legal publications.

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