In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 07-1996

COMPANIA ADMINISTRADORA

DE RECUPERACION DE ACTIVOS

ADMINISTRADORA DE FONDOS

DE INVERSION SOCIEDAD ANONIMA,

Plaintiff-Appellee,

v.

TITAN INTERNATIONAL, 

INCORPORATED,

Defendant-Appellant.

____________

Appeal from the United States District Court

for the Central District of Illinois.

No. 05 C 3071—Jeanne E. Scott, Judge.

____________

ARGUED JANUARY 17, 2008—DECIDED JULY 10, 2008

____________

Before RIPPLE, ROVNER and TINDER, Circuit Judges.

RIPPLE, Circuit Judge. Compania Administradora de

Recuperacion de Activos Administradora de Fondos de

Inversion Sociedad Anonima (“Compania”) sued Titan

International, Inc. (“Titan”) for breach of a guaranty

contract. As an affirmative defense, Titan asserted that

Compania had impaired the collateral that secured the

guaranteed debt. After discovery, Compania moved
2 No. 07-1996

1 The district court had jurisdiction in this case under 28 U.S.C.

§ 1332. The plaintiff is a Uruguayan corporation with its

principal place of business in Uruguay. The defendant is an

Illinois corporation with its principal place of business in

Illinois. The amount of controversy exceeds $75,000. We

have jurisdiction pursuant to 28 U.S.C. § 1291.

for summary judgment. The district court granted summary judgment in favor of Compania; it concluded that

Titan had failed to present any credible evidence of the

value of the collateral.1

 Titan timely appealed. For the

reasons set forth in this opinion, we affirm the judgment

of the district court.

I

BACKGROUND

Titan is an international tire manufacturer based in

Illinois. In June 1998, Titan purchased a controlling interest in Fabrica Uruguaya de Neumaticos S.A. (“FUNSA”),

a tire manufacturer based in Uruguay. At that time,

FUNSA had an existing line of credit in the amount of

$5 million from Banco de la Republica Oriental del Uruguay (“the bank”). The line of credit was secured by

FUNSA property and equipment.

In April 1999, Titan requested additional credit from the

bank to fund FUNSA’s operations. The bank agreed to

increase FUNSA’s line of credit by $1 million if Titan

would guarantee the increase. On April 19, 1999, Titan

executed a document entitled “Garantia Solidaria” (“the

guaranty”). Titan agreed to serve as a surety for any

debt owed to the bank by FUNSA, up to $1 million. The

bank, accordingly, increased FUNSA’s line of credit, and
No. 07-1996 3

2 The full name of this company at the time of the events in

question was Compania Administradora de Recuperacion de

Activos Administradora de Fondos de Inversion Sociedad

Anonima (“Compania”). Compania since has changed its

name to Republica Administradora de Fondos de Inversion

Sociedad Anonima (“RAFISA”). Both the district court opinion

and the appellant’s brief refer to the entity as “Compania,” and

we follow this convention.

this new debt was secured by a pledge of FUNSA’s plant

and equipment (“the collateral”), as well as by Titan’s

guarantee.

On March 4, 2002, FUNSA declared bankruptcy under

Uruguayan law. As of the date of the bankruptcy filing,

FUNSA owed more than $4 million to the bank. On December 31, 2003, the bank transferred its FUNSA indebtedness, including all of its rights in the collateral and all of

its rights against Titan under the guaranty, to Compania.2

Buyers were sought for the collateral both before and

after it was transferred from the bank to Compania, but an

agreement was never reached on a sale. In March 2004,

Compania obtained a third-party appraisal of the collateral.

The appraiser valued the collateral at between $1.5 million

and $2.3 million. On May 6, 2004, Compania sold its

interests in the collateral, along with a number of other

outstanding notes, to a third party for $2 million.

Compania, however, failed to notify Titan in advance of

the sale. The third party subsequently foreclosed on the

collateral, which was sold at public auction pursuant to

Uruguayan bankruptcy law for $1 million.

With approximately $2 million of FUNSA’s debt left

unpaid, Compania then pursued other avenues of collection. It demanded that Titan pay it $1 million, the amount
4 No. 07-1996

of FUNSA’s debt that Titan had guaranteed. Titan, however, refused to pay under the guaranty. It contended,

among other things, that Compania’s failure to provide

notice prior to the sale had impaired Titan’s rights in

the collateral that secured the debt. Consequently,

Compania initiated this action to enforce the guaranty

agreement.

During discovery, the district court issued a scheduling order that required the parties to disclose all of

their expert witnesses by February 3, 2006. Titan did not

disclose any expert witnesses prior to that date.

On February 21, however, nearly three weeks after the

expert witness disclosure deadline and days before fact

discovery was set to conclude, Titan served Compania

with two expert declarations. In one of these declarations, Ricardo Olivera offered an opinion on the interpretation of Uruguayan law. In the other declaration,

Mark Haron offered an opinion on the value of the

FUNSA collateral based on his experience buying and

selling tires and equipment on the worldwide tire market.

Titan did not disclose any other experts at this time.

Compania moved to strike both experts’ declarations as

being untimely disclosed. On April 21, 2006, the district

court granted Compania’s motion to strike Titan’s proffered expert declarations on the ground that the delay in

disclosure was neither justified nor harmless. 

On June 2, 2006, Compania moved for summary judgment. It contended that Titan had presented no credible

evidence that the value of the collateral was, in fact,

greater than the price for which it had been sold; accordingly, urged Compania, Titan could not show that its

interests in the collateral had been impaired.
No. 07-1996 5

3 Titan also included a second affidavit from Ricardo Olivera.

Olivera’s second affidavit was substantially the same as his

original proffered expert testimony, which already had been

stricken once by the district court because it was not timely

disclosed. Compania again moved to strike Olivera’s affidavit,

and the district court granted the motion. Titan does not

challenge this order on appeal.

Titan also attached to its opposition motion the working paper

of Dannys Correa, an auditor with PricewaterhouseCoopers

Ltda., Uruguay. The working paper included a February 2000

appraisal of the collateral performed by another auditor,

Mario Duran Lasala. Lasala had estimated the final replacement

cost of the collateral as approximately $14.9 million and the

“final selling price” as $9 million. The district court, however, concluded that this paper was both unreliable and

inadmissable hearsay and refused to consider it. Titan also

does not challenge this conclusion on appeal.

On June 27, 2006, Titan filed its opposition to Compania’s

motion for summary judgment. As evidence of the value

of the collateral, it attached an affidavit from Maurice

Taylor.3

 Mr. Taylor was the President and CEO of Titan

from 1990 to 2005, and he was employed as Titan’s CEO

and chairman at the time that his affidavit was filed.

Although the majority of Taylor’s testimony described

the extent of his involvement in the decision to guarantee

FUNSA’s debt, paragraphs 8 and 9 of his affidavit also

asserted his belief that the value of the FUNSA collateral

exceeded $10 million. Specifically, the affidavit noted:

In connection with my duties at Titan International,

Inc., I have extensive experience purchasing and

selling used Tire and Wheel manufacturing equipment on the world market, and, accordingly, I have

specific and up-to-date knowledge of the value of used
6 No. 07-1996

equipment of the sort on the FUNSA premises at the

time of the bankruptcy of FUNSA. Based on this

knowledge and a review of the list of equipment at

FUNSA, and based further upon my investigation of

equipment at FUNSA at the time of the bankruptcy,

including my knowledge of equipment sent to

FUNSA by Titan during the period of Titan’s ownership interest in FUNSA, the value of the equipment

at FUNSA at the time of its bankruptcy exceeded

US$ 10 million.

R.58, Ex. A at ¶ 8. Compania moved to strike paragraphs

8 and 9 of this affidavit as undisclosed expert testimony,

and the district court granted its motion.

On October 19, 2006, the district court granted

Compania’s motion for summary judgment. It held that

Titan had presented no competent evidence that either

the bank or Compania had impaired the value of the

collateral or otherwise increased the risk to Titan under

the guaranty. Titan timely appealed.

II

DISCUSSION

A.

Titan first challenges the district court’s decision not

to consider the testimony of Maurice Taylor regarding

the estimated value of the collateral. The court determined

that Taylor’s opinion, although styled as lay opinion

testimony, was actually expert testimony. The district

court excluded this testimony because Titan never disclosed Taylor as an expert according to the procedures
No. 07-1996 7

4 Notably, Titan also never disclosed Taylor as a potential lay

witness on the question of valuation, despite an interrogatory

requesting such disclosures.

required by Federal Rule of Civil Procedure 26(a)(2).4

We generally review for an abuse of discretion the

district court’s decision to exclude expert testimony.

Mannoia v. Farrow, 476 F.3d 453, 456 (7th Cir. 2007). When

this decision is based on an interpretation of the Federal Rules of Evidence, however, we review de novo the

court’s interpretation of the law. The district court’s

classification of a witness as lay or expert is a legal interpretation that we review de novo. See United States v.

Davis, 471 F.3d 783, 788 (7th Cir. 2006) (“Legal conclusions made by the trial court in reaching the decision to

admit expert testimony are reviewed de novo.”); United

States v. Gray, 410 F.3d 338, 347 (7th Cir. 2005) (“[O]ur

review of whether [the witness] was properly qualified

as an expert is de novo and our review of the decision to

admit the testimony is for an abuse of discretion.”).

Here, the district court classified Maurice Taylor’s

affidavit as expert testimony under Federal Rule of Evidence 702, and therefore it was inadmissible because Titan

had not disclosed Taylor as an expert witness. Titan

contends that Taylor’s testimony should have been characterized as lay opinion testimony under Rule 701, not as

expert testimony under Rule 702, and, therefore, it was

not required to disclose Taylor as an expert witness

prior to the scheduled date. Rule 701 provides:

If the witness is not testifying as an expert, the witness’

testimony in the form of opinions or inferences is

limited to those opinions or inferences which are
8 No. 07-1996

(a) rationally based on the perception of the witness,

(b) helpful to a clear understanding of the witness’

testimony or the determination of a fact in issue, and

(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

Fed. R. Evid. 701 (2000).

Titan contends that Taylor’s testimony was based on

his “extensive experience purchasing and selling used

Tire and Wheel manufacturing equipment on the world

market,” R.58, Ex. A at ¶ 8, but not on any specialized or

scientific techniques or processes of reasoning that can

be mastered only by specialists in the field. In Titan’s

view, therefore, Taylor’s opinion was based on his own

perceptions of, and experience in, buying and selling

the equipment in question. According to Titan, Taylor’s

testimony was “quintessential Rule 701 testimony” regarding “the value of his property.” United States v.

Conn, 297 F.3d 548, 554 n.2 (7th Cir. 2002) (quoting

Asplundh Mfg. Div. v. Benton Harbor Eng’g, 57 F.3d 1190,

1198 (3d Cir. 1995)).

In support of its position, Titan relies on a number of

cases from other circuits that permit business owners or

officers to testify without being qualified as experts. See

Asplundh, 57 F.3d at 1198 (noting that a maintenance

supervisor was competent to testify as to the cause of an

accident when he had personally inspected the damaged

parts); Lightning Lube v. Witco, 4 F.3d 1153, 1174 (3d

Cir. 1993) (holding that the owner of a small business

may testify as a lay witness regarding the projected

future profits of his business); State v. Brown, 836 S.W.2d

530, 549-50 (Tenn. 1992) (holding that a nurse may testify

as a lay witness about the nature of injuries she personally observed).
No. 07-1996 9

The advisory committee notes to Rule 701 explain,

however, that a business owner or officer is allowed to

testify without being qualified as an expert only because

that testimony is tied to his or her personal knowledge:

[M]ost courts have permitted the owner or officer of a

business to testify to the value or projected profits of

the business, without the necessity of qualifying the

witness as an accountant, appraiser, or similar

expert. See, e.g., Lightning Lube, Inc. v. Witco Corp. 4

F.3d 1153 (3d Cir. 1993) (no abuse of discretion in

permitting the plaintiff’s owner to give lay opinion

testimony as to damages, as it was based on his knowledge and participation in the day-to-day affairs of the

business). Such opinion testimony is admitted not

because of experience, training or specialized knowledge within the realm of an expert, but because of the

particularized knowledge that the witness has by

virtue of his or her position in the business. The

amendment does not purport to change this analysis.

Fed. R. Evid. 701 (advisory committee notes).

This case does not present such a circumstance. Taylor

purported to value the collateral by applying his generalized knowledge of the worldwide tire market, gained

through his experience in the worldwide tire business, to

a proffered list of specific items owned by a third party.

Taylor’s only connection to the items in question is the

fact that he is an officer of a company that, at one time, held

a controlling interest in a company that, at one time, owned

the collateral. Titan, however, had no ownership interest in

FUNSA at the time that Taylor made his purported valuation. Furthermore, Titan identifies no evidence that Taylor

participated in FUNSA’s initial purchase of the particular

items in question, and his affidavit belies any contention
10 No. 07-1996

that he based his valuation opinion on personal knowledge

of the collateral. Indeed, in his deposition, Taylor specifically disclaimed any personal knowledge of the particular

items that were included in the sale.

Taylor’s position therefore was not akin to the owner

of a small business testifying to the value of that business. His attempt at valuation was not based on any

knowledge obtained through his special relationship

with the items in question; instead, he simply looked at

a list of items provided by Compania, and he estimated

their value based on his extensive experience purchasing

and selling the type of goods at issue. This is the kind

of testimony traditionally provided by an expert: “[I]t

could have been offered by any individual with specialized knowledge of the [tire] market.” Conn, 297 F.3d at

555. In fact, Taylor’s testimony on this issue was essentially the same as that of Titan’s originally retained valuation expert, Haron, whose statements already had been

excluded by the district court because they were

untimely disclosed.

Rule 701 recently was amended “to emphasize that

lay opinion testimony is limited to those observations of a

lay witness that are ‘not based on scientific, technical, or

other specialized knowledge within the scope of Rule

702.’ ” Conn, 297 F.3d at 553 (quoting Fed. R. Evid. 701). The

amendment was designed to avoid this very situation—to

prevent parties from “proffering an expert in lay witness clothing.” Fed. R. Evid. 701 (advisory committee

notes). We have noted:

Before the 2000 amendment to Rule 701, some courts

had become more lenient in the admission of lay

opinion on subjects appropriate for expert testimony.

The amendment was designed to make clear that
No. 07-1996 11

courts must scrutinize witness testimony to ensure

that all testimony based on scientific, technical or

other specialized knowledge is subjected to the reliability standard of Rule 702.

Conn, 297 F.3d at 553 (internal citations omitted).

Testimony based solely on a person’s special training

or experience is properly classified as expert testimony,

and therefore it is not admissible under Rule 701. Id. at 554-

55. Taylor’s valuation attempt was based on his

special experience in the tire industry, not on his personal knowledge of the goods in question; therefore, it

falls within the purview of Rule 702. Accordingly, we

conclude that the district court properly classified paragraphs 8 and 9 of Taylor’s affidavit as expert testimony.

Because Titan failed to disclose Taylor as an expert

witness prior to the disclosure deadline, the district court

did not abuse its discretion when it excluded his

testimony. See Salgado v. Gen. Motors Corp., 150 F.3d 735,

743 (7th Cir. 1998) (holding that “the district court acted

well within its discretion when it imposed the sanction of

excluding the testimony of the expert witness” because

the party had failed to comply with the court’s scheduling order); Hill v. Porter Mem. Hosp., 90 F.3d 220, 224

(7th Cir. 1996) (noting that “[w]hen one party fails to

comply with a court’s pre-hearing order without justifiable

excuse, thus frustrating the purposes of the pre-hearing

order, the court is certainly within its authority to prohibit that party from introducing witnesses or evidence

as a sanction”).

B.

Finally, Titan submits that an affidavit from former

FUNSA employee Cesar Villar should have been con-
12 No. 07-1996

5 Specifically, Villar’s affidavit stated:

Approximately two years ago, after the termination of my

employment relationship with FUNSA, I represented a

foreign company which was interested in the acquisition

of FUNSA. . . . The foreign company which I represented in

the said negotiations, would have paid (and its offer

involved) an amount higher than USD 2,000,000 in case

the abovementioned strict terms by [the bank] had not been

required.

. . . I was contacted by another foreign company

which was interested in the acquisition of part of the

equipment and collaterals of FUNSA. The abovementioned

company could not make its offer since the decision of [the

bank] was to sell the collateral as a whole and not in parts

. . . .

R.58, Ex. C.

sidered by the district court as evidence of the value of

the collateral. Villar’s affidavit recounted statements,

allegedly made to him by unidentified representatives of

unidentified foreign companies, regarding a possible

purchase of the collateral. He speculated that unidentified

foreign companies would have paid more than $2 million

for the collateral under certain conditions, although he

did not specify a particular dollar figure.5

 The district

court did not specifically mention Villar’s affidavit when

it discussed the issue of valuation in its opinion. Accordingly, Titan contends that the district court improperly

“ignored” Villar’s affidavit when it determined that no

credible evidence supported Titan’s assertion that the

collateral was valued at significantly more than $2 million.

Titan’s contention is without merit. Titan never pointed

to Villar’s affidavit as evidence of valuation in its brief

in opposition to Compania’s summary judgment motion.
No. 07-1996 13

Instead, it referenced the affidavit only for the assertion

that “difficult political issues” were involved in the

FUNSA bankruptcy. R.57 at 4, 7-8. The district court

cannot be expected to search through the entire record

for evidence that may support a party’s contentions; a

party must point to specific evidence that creates a genuine issue of material fact for trial. See Fed. R. Civ. P. 56(e)(2)

(requiring an adverse party to “set out specific facts”).

Furthermore, Federal Rule of Civil Procedure 56(e)(1)

states that affidavits opposing summary judgment “must

be made on personal knowledge, set out facts that

would be admissible in evidence, and show that the

affiant is competent to testify on the matters stated.”

Villar’s proffered statements—that two unidentified

foreign companies would have purchased the collateral

for more than $2 million had certain conditions been

met—are entirely without foundation. He claimed no

personal knowledge of the value of the collateral, and

his assertions are based entirely on speculation and

hearsay. The district court correctly gave no credence in

its opinion to such conclusory and unsupported assertions.

See Abioye v. Sundstrand Corp., 164 F.3d 364, 368 (7th Cir.

1998).

The district court did not err when it concluded that

Titan had failed to present evidence of valuation sufficient to create a genuine issue of material fact for trial.

Conclusion

For the foregoing reasons, we affirm the judgment of

the district court.

AFFIRMED

USCA-02-C-0072—7-10-08