1. What breach of duty did Mr. Barker commit?

2. How did the Sumralls establish that breach of duty and their damages?

3. What lessons should accountants learn from this case?

We can’t say exactly when the trouble started for Larry and Patricia Sumrall, but it had to be by the time they hired Dale K. Barker, Jr., and his accounting firm. The Sumralls needed professional help with past-due tax returns and other amounts they owed the IRS, and they turned to Mr. Barker. At the end of the day, though, the Sumralls found themselves having to pay the IRS over $222,000 in taxes, penalties, and interest.

Mr. Barker then filed suit against the Sumralls for failure to pay their bills in full. By this time, however, the Sumralls were convinced that Mr. Barker had contributed to their problems with the IRS. So they replied with counterclaims of their own—for breach of contract, negligence, and breach of fiduciary duty, among other things. The district court concluded that Mr. Barker’s services had been deficient and cost the Sumralls dearly. The court held that Mr. Barker’s bills were unjustified; that he was entitled to no fees beyond those he’d already been paid; and that the Sumralls were entitled to compensation from Mr. Barker for their counterclaims.

Mr. Barker appealed.

JUDICIAL OPINION

GORSUCH, Circuit Judge … Mr. Barker challenges the

district court’s calculation of damages on the Sumralls’ negligence and breach of fiduciary duty claims. The district court awarded $70,296.91, and Mr. Barker says this award was speculative. In fact, however, the Sumralls ultimately paid the IRS $222,001.27 in taxes, interest, and penalties. Relying on the Sumralls’ expert’s testimony, the district court found that, but for Mr. Barker’s misconduct, the Sumralls could have settled the claim with the IRS for $151,704.36, meaning they needlessly incurred $70,296.91. Mr. Barker replies that there’s no proof that the Sumralls’ tax liability could have been settled, and no proof showing the Sumralls incurred additional interest and penalties because of him. But one of the Sumralls’ experts testified that Mr. Barker owed the Sumralls a duty to complete their civil matter “promptly after 1996,” and that a resolution at that time “should have been vigorously pursued ... and [the matter] settled fairly quickly.” The Sumralls’ experts also provided at least two estimates they believed were reasonable “starting point[s]” for use as a “frame of reference” in calculating the cost to the Sumralls of not settling earlier.

Although Mr. Barker disputes the best method of estimating damages, there is no question that evidence exists in the record to support the positions the district court took. It is settled, too, that a “precise” amount of damages need not be proven; a district court may estimate damages “based upon approximations, ... reasonable assumptions[,] or projections.” In our view, that’s what happened here.

Mr. Barker next pursues various complaints about the exclusion and admission of expert testimony. To begin, Mr. Barker says the district court shouldn’t have struck his expert report and excluded him from testifying as an expert. But Mr. Barker’s report did not disclose a single expert opinion, as required by Rule 26, and the district court acted within its discretion to prohibit him from testifying as an expert as a result. Mr. Barker replies that he didn’t need to file an expert report in the first place because he wasn’t an expert “retained or specially employed to provide expert testimony.” But even experts who aren’t required to file reports still need to disclose “a summary of the facts and opinions to which [they are] expected to testify”—something Mr. Barker failed to do.

Mr. Barker says the district court also erred in excluding his (other) expert, Michael Kaplan. When Mr. Kaplan had produced only a “preliminary” report by the expert filing deadline, Mr. Barker sought an extension of time. The district court denied the request and effectively excluded Mr. Kaplan from the case after concluding that Mr. Barker had failed to show good cause for an extension of time because he hadn’t identified when he had retained Mr. Kaplan, what (if any) work Mr. Kaplan had done up to that point, or even what Mr. Kaplan’s opinions would be. Extending the filing deadline, the court also found, would require postponing the trial. On these essentially undisputed facts we fail to see any abuse of discretion in the district court’s chosen course.

Mr. Barker says the district court abused its discretion in permitting various aspects of Mr. Prescott’s and Mr. Oveson’s testimony [the Sumrall experts] under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and due process principles. After carefully reviewing these claims, we can report that none warrants reversal. By way of example, Mr. Barker says the experts were allowed to testify about “a number of [professional] standards purportedly violated,” despite having listed only one such standard in their report. But the testimony Mr. Barker points us to includes each expert’s statement that they reviewed multiple accounting standards in preparing their report—not that, in their expert opinion, Mr. Barker violated all those standards.. And it is not our role to hunt through the record for testimony Mr. Barker doesn’t himself identify. “[R]eading a record should not be like a game of Where’s Waldo?”. …………………….