Filed: Jul. 11, 2006
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2006 Decisions States Court of Appeals for the Third Circuit 7-11-2006 Cap Funding VI LP v. Chase Manhattan USA Precedential or Non-Precedential: Non-Precedential Docket No. 04-4355 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2006 Recommended Citation "Cap Funding VI LP v. Chase Manhattan USA" (2006). 2006 Decisions. Paper 762. http://digitalcommons.law.villanova.edu/thirdcircuit_2006/762 This decision is brought to you for fre
Summary: Opinions of the United 2006 Decisions States Court of Appeals for the Third Circuit 7-11-2006 Cap Funding VI LP v. Chase Manhattan USA Precedential or Non-Precedential: Non-Precedential Docket No. 04-4355 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2006 Recommended Citation "Cap Funding VI LP v. Chase Manhattan USA" (2006). 2006 Decisions. Paper 762. http://digitalcommons.law.villanova.edu/thirdcircuit_2006/762 This decision is brought to you for free..
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Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
7-11-2006
Cap Funding VI LP v. Chase Manhattan USA
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-4355
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2006
Recommended Citation
"Cap Funding VI LP v. Chase Manhattan USA" (2006). 2006 Decisions. Paper 762.
http://digitalcommons.law.villanova.edu/thirdcircuit_2006/762
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2006 Decisions by an authorized administrator of Villanova
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No: 04-4355
CAPITAL FUNDING, VI, LP,
Appellant
v.
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Civ. No. 01- 6093)
District Judge: Hon. Legrome D. Davis
Submitted Pursuant to Third Circuit LAR 34.1(a)
February 2, 2006
Before: MCKEE, SMITH and VAN ANTWERPEN, Circuit Judges
(Opinion filed: July 11, 2006)
OPINION
McKEE, Circuit Judge.
Capital Funding appeals several rulings the District Court made in granting
summary judgment to Chase Manhattan Bank. For the reasons stated below, we will
affirm.
1
We will consider each of Capital Funding’s claims of error separately. Because
we write primarily for the parties, it is not necessary to reiterate the facts or background
of this case except insofar as may be helpful to our brief discussion.
I. MOTION TO COMPEL
Capital Funding purchased a portfolio of charged-off credit card accounts from
Chase Manhattan Bank pursuant to a Credit Card Purchase Agreement. (J.A. 028.)
Capital Funding subsequently sued Chase, contending that accounts in the portfolio were
not as represented in the Agreement.
On appeal, Capital Funding challenges the District Court’s order rejecting Capital
Funding’s January 15, 2004, motion to compel the production of five years of account
histories for 150 sample accounts selected by the court. (Order, Feb. 3, 2004 at J.A.
117a.) We review the challenged discovery ruling for an abuse of discretion. See
Camiolo v. State Farm Fire & Cas. Co., 334 F.3d 345, 354 (3d Cir. 2003).
After a lengthy and bitter dispute as to the number and dates of account histories
that would be provided, the District Court issued an order by which it selected 1501
accounts at random and directed Chase to provide “billing statements for the selected
accounts for the five previous years.” (Order, July 22, 2003 at J.A. 083.) Chase
interpreted the phrase to mean five years prior to the order, and accordingly provided
Capital Funding with account histories dating to July 1998. Capital Funding, however,
1
Capital Funding chose this number, agreeing in a conference call that 150
sample accounts would be “sufficient and acceptable.” (Appellant’s Br. 13.)
2
interpreted “the five previous years” to mean the five years prior to December 1999, the
charge-off date in the purchase agreement.
Capital Funding wrote to the court on September 9, 2003, and again on September
17, 2003, asking for a confirmation of its interpretation of the order. (See Mot. for
Reconsideration and Clarification 7, Oct. 3, 2003.) The proposed order attached to the
second letter directed Chase to produce complete account histories for each of the 150
accounts.2 In response, the District Court issued a scheduling order that did not mention
the dates of account histories to be produced, and thus implicitly denied Capital
Funding’s requests. (Order, Sept. 23, 2003.) Capital Funding filed a Motion for
Reconsideration and Clarification, asking the court to clarify the September order “to
specifically reflect the five year period of time for which . . . histories must be produced
by [Chase].” (Mot. for Reconsideration and Clarification 4.) The District Court denied
the motion, stating that the September 22, 2003 order was “abundantly clear on its face
and in no need of clarification” and noting that “[Capital Funding] merely appears to
disagree with the Court’s rulings, which alone is not a proper basis for granting Plaintiff’s
Motion.” (Mem. Order. 2, Jan. 5, 2004.) Undeterred, Capital Funding filed a motion to
compel the production of the 150 account histories going back to December 1994. (Mot.
to Compel, Jan. 15, 2004 at 104a.) The court denied that motion. (J.A. 117a.)
2
Capital Funding did not provide this document with the appendix and the
electronically available docket entry Chase claims contains this document, see Appellee’s
Br. 53, actually contains an unrelated and likely incorrect attachment. Appellant does not
dispute Chase’s characterization of the order, however.
3
On appeal, Capital Funding argues that the account histories were necessary to
show that Chase sold Capital Funding accounts that had experienced delinquencies other
than the delinquency that lead to the charge-off. Chase, however, conceded that the
accounts included such prior delinquencies, eliminating the need for discovery on this
issue.
Capital Funding further argues that the histories were required to prove that
accounts were charged off earlier than Chase represented in the Agreement. However,
Capital Funding received histories for 150 accounts dating back to July 1998, 17 months
prior to the charge-off date in the Agreement. These histories would have reflected any
early charge-off, yet Capital Funding did not use them to show that Chase charged off
accounts earlier than it represented.
The District Court thus evaluated and denied numerous motions Capital Funding
had filed to obtain the same information it sought in the motion to compel. Not only did
the District Court not abuse its discretion in denying the motion to compel, it showed
commendable patience in continuing to field repetitive requests for the same documents
despite numerous refusals to order additional account histories. We can find nothing in
this record to suggest that the District Court’s failure to grant a motion to compel, which
the court clearly concluded was untimely, burdensome, and repetitive, could constitute an
abuse of discretion under the circumstances here.
II. MOTION TO DEPOSE
4
Capital Funding claims that the District Court abused its discretion in disallowing
the deposition of TransUnion employee Sharon Sarna-Paulikaitis while allowing Chase to
rely upon her affidavit. However, Chase argues (without contradiction from Capital
Funding in the latter’s Reply Brief) that Capital Funding is only telling part of the story.
Capital Funding subpoenaed TransUnion on September 12, 2003, “the day discovery
closed.” (Appellee’s Br. 56.) Capital Funding did nothing to enforce that subpoena when
TransUnion objected. Thereafter, TransUnion provided Chase with an affidavit, “which
Chase promptly provided to [Capital Funding].” (Appellee’s Br. 56.) That affidavit
stated, in pertinent part, that “TransUnion currently does not have a field representing a
charge off date.” (TransUnion Aff. ¶ 9 at J.A. 109.) TransUnion’s credit reports are
squarely implicated by Capital Funding’s breach of contract suit and its allegations about
the extent of the prior delinquencies and credit history of the accounts purchased from
Chase. Capital Funding’s expert on this issue, Louise Epstein, relied on the TransUnion
reports to argue that the accounts had been charged-off prior to December 1999. Capital
Funding does not deny that it “issued (and then abandoned)” (Appellee’s Br. 57) a
subpoena to TransUnion before discovery closed. Chase immediately disclosed the
TransUnion affidavit to Capital Funding, and there is no suggestion of bad faith. Given
that background, the argument that the District Court somehow abused its discretion in
denying Capital Funding’s belated motion to compel the deposition of a TransUnion
representative is frivolous.
Capital Funding also attempts to challenge to the District Court’s ruling on the
5
TransUnion affidavit under Fed. R. Civ. P. 26(a)(2)(b). Capital Funding raises this
argument for the first time on appeal. As a “general rule,” absent exceptional
circumstances, we do not review issues raised for the first time on appeal. See Gardiner
v. Virgin Islands Water & Power Auth., 145 F.3d 635, 646-47 (3d Cir. 1998). We can
find no exceptional circumstances here, and we therefore need not address this claim.
Capital Funding argues that even if the affidavit is not deemed expert testimony, it
is still inadmissible under Fed. R. Civ. P. 37(c)(1). That Rule prohibits using evidence at
trial that has not been disclosed pursuant to Fed. R. Civ. P. 26, unless the failure to
disclose is harmless. However, “the exclusion of critical evidence is an 'extreme'
sanction, not normally . . . imposed absent a showing of willful deception or 'flagrant
disregard' of a court order by the proponent of the evidence.” In re Paoli R.R. Yard PCB
Litig., 35 F.3d 717, 791-92 (3d Cir. 1994) (quoting Meyers v. Pennypack Woods Home
Ownership Ass'n,
559 F.2d 894 (3d Cir. 1977)). We see nothing here that would suggest
that Chase’s behavior rose to this level, and Capital Funding does not point us to anything
that would. Similarly, Capital Funding cannot establish that it was prejudiced by the non-
disclosure. Capital Funding was well aware of the possible importance of testimony from
TransUnion and had ample opportunity to depose appropriate employees or officers of
that company. In fact, as noted above, it served a timely subpoena for a deposition on
TransUnion and then did nothing to follow up.
III. EXCLUSION OF EXPERT TESTIMONY
6
Capital Funding appeals the exclusion of the testimony of its proposed experts,
Louise Epstein and Glenn Newman. We also review that claim for an abuse of discretion.
In re Paoli R.R. Yard PCB Litig., 35 F.3d at 749. In its thorough and comprehensive
opinion, the District Court explained why it was excluding this evidence, and we need
only briefly address Capital Funding’s claim that the District Court abused its discretion
in doing so.
Capital Funding contends that it was improper for the District Court to evaluate the
methods and information Newman relied on in forming his opinion. According to Capital
Funding, any such concerns were only relevant to issues of credibility or probative weight
and should therefore have been resolved by a jury. That argument ignores the District
Court’s “gatekeeping” obligation in evaluating expert testimony. See Kumho Tire v.
Carmichael, 526 U.S. 137,141 (1999). The District Court possesses “the same broad
latitude when it decides how to determine reliability as it enjoys in respect to its ultimate
reliability determination.” Id. at 142 (emphasis in original). The District Court’s
concerns here amply support the exercise of its discretion in the performance of its
gatekeeper function.
IV. SUMMARY JUDGEMENT
1. Eligibility of Accounts
Capital Funding relied exclusively on unauthenticated TransUnion credit reports in
attempting to show that accounts in the Portfolio were charged off prior to December
7
1999, in violation of the Agreement. As the District Court explained in excluding the
reports, Fed. R. Evid. 901(a) requires documents to be authenticated in order for them to
be admissible at trial, and only evidence admissible at trial may be considered in ruling on
a motion for summary judgement. See Philbin v. Trans Union Corp., 101 F.3d 957, 961
n.1 (3d Cir. 1996).
Capital Funding argues that because Anthony Carabello could have authenticated
the credit reports at trial, the District Court should have considered them. However,
Carabello’s affidavit was not offered with Capital Funding’s Opposition for Summary
Judgement. Rather, it was only tendered with the Motion for Reconsideration. Yet, it
clearly was not “newly discovered evidence,” and it was therefore properly excluded
from consideration. See Harsco Corp. V. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985).
Moreover, the District Court realized that Capital Funding failed to show that Carabello
could authenticate the credit reports. Finally, in its affidavit, TransUnion clearly states
that it “does not currently have a field representing charge off date.” (J.A. 108-09.)
Thus, as the District Court pointed out, “even if the credit reports had been admissible,
they do not state what Capital Funding suggests.”3 (J.A. 021.)
3
Capital Funding further argues that because it was denied the additional account
histories, it was deprived of the evidence it could have used to show an earlier charge-off
date. As noted above, Capital Funding received seventeen months of histories for 150
accounts, but did not use a single one of these histories. Accordingly, we do not think the
the District Court abused its discretion in concluding that additional histories would not
have changed the outcome.
8
2. Defining “Delinquency”
Capital Funding defines “delinquency” under the Agreement as “any delinquency,
whether it was the one that led to the charge-off or not.” Chase defines it as “the
delinquency that led to the charge-off.” The term is not defined in the Agreement.
Accordingly, “the rules of contract construction require that the term be given the
meaning commonly understood in the credit card industry, as established by the record.”
FleetBoston Fin. Corp. Fleet Nat’l Bank v. Advanta Corp., 2003 Del. Ch. LEXIS 8, * 71
(Del. Ch. 2003). See also Restatement (Second) of Contracts § 222. Here, Epstein,
Capital Funding’s own industry expert, explained in a deposition that the term
“delinquency” refers to the delinquency that lead to charge-off. (J.A. 646-47.) Capital
Funding offered no evidence that others in the industry use that term to refer to something
other than the delinquency that lead to the charge off in this context. Moreover, Capital
Funding did not challenge Chase’s assertion that neither Chase nor any other bank in the
industry sells portfolios of accounts with a history of only one delinquency.
3. Damages
The District Court was also correct in concluding that Capital Funding failed to
present “evidence from which damages may be calculated to a reasonable certainty.”
Ware v. Rodale Press, Inc., 322 F.3d 218, 225-26 (3d Cir. 2003). In its motion opposing
summary judgment, Capital Funding relied entirely on the affidavit of Glenn Newman.
The District Court determined that his testimony was unreliable, and excluded it. On
9
appeal, Capital Funding relies on the Carabello affidavit that was submitted with its
motion for reconsideration. However, as we have already noted, Carabello’s testimony
was not offered until after the District Court granted summary judgment and it was not
considered. Ironically, Capital Funding had insisted that Carabello was not competent to
testify about damages, and had objected to Chase questioning him about damages during
his deposition. (J.A. 559.)
V. CONCLUSION
For the reasons listed above, the District Court’s grant of summary judgment
against Capital Funding and in favor of Chase will be affirmed.
10
