Even At A Default Hearing, An Expert Report Is Inadmissable Hearsay If The Expert Doesn’t Testify

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Very often, uncertified expert reports are attached to certifications and courts are asked to accept them though there is no ability to cross examine the expert, etc.  Sometimes, that even happens at a default or other hearing.  That is, a party tries to put the report into evidence without any testimony – direct or cross-examination of the expert.  A default hearing occurs for a few reasons.  Sometimes, the defendant never actually answers the Complaint. Other times, a party is defaulted because they fail to answer discovery or cure discovery deficiencies.  Other times, a default can occur if they don’t show up for trial.

This is what happened in the recent unreported (non-precedential) opinion in the case of A.T.M. v. S.M. decided on November 10, 2020.  While this is quite a long opinion (36 pages) for an unreported decision, for purposes of this post, most of the facts are not important.  That said, in this case, the plaintiff was defaulted because she did not appear at trial, claiming that she was both ill and out of the country.  At the default hearing, the value of defendant’s medical practice was a substantial issue.  During the case, the parties had a joint forensic accountant who issued a report valuing the practice at $506,000.  He also traced certain marital funds that were at issue.

At the trial, without conducting voir dire (that is, questioned the expert regarding his credentials), the court qualified the accountant as an expert in forensic accounting and admitted his report into evidence without requiring him to testify.  In the court’s decision, the accountant’s opinions were accepted.  Plaintiff appealed arguing that the trial court erred by admitting the forensic accountant’s valuation report into
evidence at the default hearing without the accountant testifying and being subject to cross-examination.   The Appellate Division agreed and reversed the trial court’s decision.  In so deciding, the Appellate Division went back to basics regarding hearsay and held:

“Hearsay is ‘a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.'” State v. Branch, 182 N.J. 338, 357 (2005) (quoting N.J.R.E. 801(c)). “Hearsay is inadmissible unless it falls within one or more of the exceptions enumerated in our evidence rules.” State ex rel. J.A., 195 N.J. 324, 336 (2008) (citing Branch, 182 N.J. at 357).

Expert reports “are hearsay and generally are not admissible.” Corcoran v. Sears Roebuck & Co., 312 N.J. Super. 117, 126 (App. Div. 1998) (citing Hill v. Cochran, 175 N.J. Super. 542, 546-47 (App. Div. 1980)). A nontestifying expert’s opinion constitutes inadmissible hearsay. Brun v. Cardoso, 390 N.J. Super. 409, 422 (App. Div. 2006). Admission of a non-testifying expert’s report deprives the opposing party “of the ability to cross-examine the author of the report on [a] central issue of the case.” Ibid. 

The Appellate Division noted that if the expert had testified and substantiated his findings, his report may have been admissible to assist the trial court. That said, that isn’t what happened.  Rather, the judge said that he did not see a reason for the expert to testify “without anybody here to cross examine him…”  The judge also said that …” I have looked at [the report] and there is nothing that jumps out at me” and “there is nobody here to challenge his findings.”  Moreover, the plaintiff objected to the report being entered into evidence.

The Appellate Division then went into basics regarding trial practice, noting:

“Our legal system has long recognized that cross-examination is the ‘greatest legal engine ever invented for the discovery of truth.'” State v. Basil, 202 N.J. 570, 591 (2010) (quoting California v. Green, 399 U.S. 149, 158 (1970)). Cross-examination of an expert is often a crucial element in determining the accuracy, reliability, and probative value of the expert’s findings and opinions. See State v. Martini, 131 N.J. 176, 264 (1993) (“To determine the credibility, weight and probative value of an expert’s opinion, one must question the facts and reasoning on which it is based.” (citing Johnson v. Salem Corp., 97 N.J. 78, 91 (1984))).

The Appellate Division concluded that by admitting the expert’s report in evidence without requiring him to testify and be subjected to cross-examination, the trial court effectively prevented plaintiff from questioning him regarding the facts relied upon by the expert, his method of valuation, and the accuracy of his conclusions both as to the valuation issue and the dissipation issue.  By relying on the findings and opinions expressed in the report, the court decided major issues in the case based solely on inadmissible hearsay and that this error was “clearly capable of producing an unjust result.”  Accordingly, the decision was reversed.

Separately, the court was critical of the entry of default given that plaintiff said that she had medical issues.  Moreover, when default is entered, the proceeding party is supposed to file a Notice of Proposed Final Judgment 20 days in advance which didn’t happen here because the default was entered on the first day of trial.  Accordingly, the default was reversed, as well.

Bottom line, while it was seemingly appealing to proceed without the testimony of the joint expert, had he simply been called to testify, the result in this case may have been different... 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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