Reversed and Rendered and Majority and Dissenting Opinions filed May 9, 

2013.

In The

Fourteenth Court of Appeals

NO. 14-11-00644-CV

CITRIN HOLDINGS, LLC AND JACOB CITRIN, Appellants

V.

MATTHEW MINNIS AND CULLEN 130, LLC, Appellees

On Appeal from the 133rd District County 

Harris County, Texas

Trial Court Cause No. 2006-78939

D I S S E N T I N G O P I N I O N

I respectfully dissent.

In their second issue, appellants assert the trial court erred in overruling 

appellants‘ reliability challenge to the testimony of appellees‘ damage expert. 

Appellants filed a motion to exclude appellees‘ expert witness, and the trial court 
2

conducted a Daubert1hearing, after which the trial court overruled appellants‘ 

motion to exclude and allowed the expert to testify. The issue before us is whether 

the trial court—based on the motion, response, Daubert hearing evidence, and 

argument of counsel—abused its discretion when it overruled appellants‘ motion to 

exclude. See Whirlpool Corp. v. Camacho, 298 S.W. 3d 631, 638 (Tex. 2009).

At the time of the trial court‘s ruling on the motion to exclude, the trial court 

did not have the benefit of the full trial testimony or the post-trial arguments of 

counsel. In my opinion, based on the record before the trial court at the time of its 

ruling, the trial court did not abuse its discretion when it overruled appellants‘ 

motion to exclude appellees‘ expert. Therefore, I would overrule appellants‘ issue 

two.

It is important to keep in mind that, in issue two, appellants are not raising a 

―no evidence‖ challenge; rather, they are complaining that the trial court abused its 

discretion in making an evidentiary ruling.

Appellants do not complain on appeal that appellees‘ expert is not qualified, 

or that his testimony is irrelevant, or that the ―direct capitalization‖ methodology 

he relied upon is unreliable. The six non-exclusive Robinson2factors that courts 

may consider when determining whether expert testimony is reliable, all of which 

deal with the theory or methodology utilized by the expert, are supported and 

unchallenged in this case. See Robinson, 923 S.W.2d at 557.

The Majority Opinion concludes that the trial court abused its discretion in 

allowing appellees‘ expert witness to testify at trial because the expert witness‘s 

 

1 Daubert v. Merrell Dow Parms., Inc., 509 U.S. 578 (1993).

2

E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995).
3

application of the direct capitalization method was based on unreliable 

foundational data.

Importantly, nowhere—in the motion to exclude the expert, the response, or 

the Daubert hearing—did anyone, from either side, ever argue that the internal 

projections or investor summary schedules prepared by appellants‘ employees 

were incorrect or unreliable. The only arguments presented to the trial court dealt 

with whether the projections and schedules reflected the present value, as of March 

2007, of the stabilized values. 

Appellants‘ own expert, who testified at the Daubert hearing, relied on

appellants‘ internal projections and investor summary schedules as being accurate; 

his testimony was that, taking the company‘s financial data as true, it did not 

reflect March 2007 values, but rather reflected values as of 2009 or 2010. 

Appellants‘ expert conceded at the Daubert hearing that he had never before 

valued income producing real estate properties like those involved in this case as 

an expert, and this was the first time he had testified as an expert witness with 

respect to any commercial real estate valuation. Further, he testified that he had 

never done a ―direct capitalization method of valuation for a real estate project.‖

Appellees‘ expert, whose curriculum vitae is 18 pages long and reflects his 

extensive experience as an expert in the valuation of income producing real estate 

ventures, testified, in part, as follows:

Q. . . . You heard Dr. Flores testify yesterday. You were 

here for that?

A. Yes.

Q. Okay. Dr. Flores, one of the things he said was that you 

just took the values in the Millennium Investment Committee and you 
4

used those as your present value or your current value in March 2007. 

Is that exactly an accurate statement?

A. No, it‘s not.

Q. What‘s inaccurate about that?

A. Well, I think it‘s a lack of understanding of what I did. I 

started with the stabilized values and then adjusted the stabilized 

values. As is provided, as is used throughout the profession, I 

adjusted the stabilized values for those costs that would be incurred to 

reach stabilization.

 So we start with stabilized values, deduct those costs 

that I was referring to and the result is the as-is value, the value in its 

current state if it‘s -- it hasn‘t reached stabilization yet.

Q. And by doing that, is it your opinion that you calculated 

the value of those properties as of March 2007?

A. Yes.

Q. And another thing Mr. Flores criticized you for was, he 

said you didn‘t take into account time value of money. Do you agree 

with that criticism?

A. I do not.

Q. Why not?

A. Because -- well, first of all, the stabilized values are – it‘s 

the present value of the stabilized value. So when those stabilized 

values are prepared, those are prepared as if the property were 

stabilized in the first quarter of 2007. That‘s what those values

represent.

 Now, it‘s recognized that they‘re not stabilized. So then 

we go through this adjustment process that I‘ve described and so we 

calculate these costs that are incurred, be it a one-year period or a twoyear period and discount those costs to present value. So we‘re 
5

starting with a present value of a stabilized value, assuming it‘s 

stabilized and in making those adjustments taking into account the 

time value of money, discounting those costs to present value,

subtracting the present value of those costs from the present value of 

the stabilized value which gives you the as-is value for the first 

quarter of 2007.

Q. And is the time value of money component, then, in part, 

at least, implicit in the capitalization rate itself?

A. It is.

Q. And then in the other pieces you‘ve talked about in 

making those deductions, is that how you took into account the issue 

of time value of money?

A. It is.

Q. Another criticism that we heard from Mr. Flores was that 

you didn‘t take into account the time it would take these properties to 

reach stabilization. Do you agree with that?

A. I do not.

Q. And what‘s -- what do you disagree with on that?

A. I specifically identified based on the information that I 

had available to me what Cargo Ventures thought or if -- I didn‘t have 

it from Cargo Ventures directly, what the appraisers had in their

appraisals about how much time was expected to reach stabilization. 

So in some cases it was a year or two years or three years. And so I 

took that time period into account, which was used for the discounting

purposes, discounting those costs to present value.

Q. Now, another criticism from Dr. Flores is that his opinion 

is the discount rate should be then applied on top of -- or in addition to 

the analysis that you did. Do you agree that you need to add a 

discount rate into your analysis?

A. I disagree completely with that.
6

Q. And why?

A. Well, first of all, that is to imply that -- which is an 

incorrect implication that the values that have been prepared are a 

future value. They‘re not a future value which is then discounted.

Q. So even though the stabilized net operating income is 

going to be achieved at some point in the future, is it your testimony 

because of the way you did the analysis, the value you arrived at is not 

a future value? Is that what you‘re saying?

A. That‘s right. The value I arrived at is the present value. 

And it‘s incorrect to believe that the stabilized value is a value in the 

future. It‘s a stabilized value as of the current time frame as if it was 

stabilized and then making the adjustments as I‘ve described.

Q. And is the income potential of properties like this that 

goes into the net operating income calculation and the direct 

capitalization analysis, is that the kind of thing that buyers and sellers 

out there in the marketplace are interested in with these type of

properties?

A. It is.

* * *

Q. Now you‘re aware that Mr. Citrin‘s employee, Ms. 

Aboulhosn now has testified in her deposition in this case that those 

series of portfolio valuations she prepared back in 2007 were not 

actually values back in 2007. Are you aware of that testimony?

A. I am.

Q And does that change your analysis or your opinion as to 

the value in March of 2007 at all?

A. No, sir.

Q. And why not?
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A. Because the values that were being computed were the 

stabilized values as of 2007. And the difference between those 

stabilized values and the fair value at that time would be adjustments 

that I have made.

* * *

Q. Anything that you‘ve heard from Ms. Aboulhosn or from 

Mr. Flores change any of your opinions in this case or make you think 

that your analysis is flawed or needs to be adjusted in any way?

A. No.

* * *

CROSS-EXAMINATION

Q. (BY MR. VESELKA) All right. On what information 

in the record, in the sheets, portfolio value calculations, cash flow 

calculations, do you rely for basing your assumption that the portfolio 

values of Ms. Aboulhosn‘s modeling represent stabilized values as of 

March of  ̳07?

A. Well, a number of things, including the fact -- I mean, 

primarily the fact that -- first of all, I understand that Ms. Aboulhosn 

was provided with the capitalization rate by Mr. Citrin. That is a 

current capitalization rate. It is understood that if you use the current 

capitalization rate you can only derive a current value. 

 We don‘t know what the cap rates are going to be in the 

future. We don‘t know what market conditions are going to be in the 

future. So we can only determine what the present value is. In this 

case the stabilized value can only be determined by using the current 

cap rate, the 6.5 percent that was provided by Mr. Citrin to Ms. 

Aboulhosn.

* * *

Q. On what piece of evidence that you reviewed do you rely 

for rejecting Ms. Aboulhosn‘s statement, the author of those 
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projections, that the stabilized values are not the present value of those 

projects that have not yet reached stabilization? . . . You‘re rejecting 

her statement of fact that her calculations do not provide a present 

value for those -- for the stabilized values she uses in those schedules 

for projects that have not yet been stabilized. You‘re rejecting that, 

correct?

A. Well, I think that -- I think she probably is a little 

confused in her answer. She is saying that this is a future value 

because she recognizes that it‘s not stabilized, just as I recognize that 

it‘s not currently stabilized. So she wants to say this is some value in

the future when it reaches stabilization. But you can't get there by 

using a current cap rate. We can‘t – we can‘t project what the value is 

going to be in the future based on the application. So although she 

might think what she is doing is a future value, I think the most

charitable way to describe is she might be a little confused about what 

she‘s doing, because you can‘t project a value in the future by using a 

current cap rate.

The trial court‘s ultimate task is not to determine whether the expert‘s 

conclusions are correct, but rather whether the analysis the expert used to reach 

those conclusions is reliable and therefore admissible. TXI Transp. Co. v. Hughes, 

306 S.W.3d 230, 239 (Tex. 2010). It is clear from the record that the trial court 

carefully considered all the evidence and arguments of counsel in connection with 

the motion to exclude. There was ample evidence to support a reasonable 

conclusion that the projections and schedules, relied on by both sides, reflected the 

March 2007 value of the stabilized values, from which the ―as is‖ or ―present‖ 

value could be determined, and that appellees‘ expert therefore had a valid 

foundation for his opinion. In light of the evidence presented, I cannot say the trial 

court abused its discretion in overruling appellants‘ motion to exclude appellees‘ 

expert in this case.3 Accordingly, I would overrule appellants‘ issue two.

 

3

I note that the Majority Opinion addresses additional arguments raised by appellants on 

appeal, but not raised by appellants in their motion to exclude or the Daubert hearing (valuation 
9

We should address the remainder of appellants‘ issues attacking the 

judgment against appellants for breach of fiduciary duty.4

/s/ Margaret Garner Mirabal

Senior Justice

Panel consists of Justices Boyce, McCally, and Mirabal.5(McCally, J., Majority)

 

of MMT project; accrual of Millennium‘s preferred return after March 2007). We cannot fault a 

trial judge for not considering matters that were not raised for consideration in the trial court. 

Additionally, I note the Majority Opinion discusses evidence ―independent of Bayley‘s analysis‖ 

(Morgan Stanley letter of intent, Opus‘s valuation); while this additional evidence introduced at 

trial may be relevant to the sufficiency of the evidence to support the damage finding, appellants‘ 

issue two does not raise a sufficiency of the evidence complaint, but rather an evidentiary ruling 

complaint. 

4

I do not express an opinion regarding the Majority Opinion‘s analysis under ―IV. 

Fraud‖; the alternative judgment for fraud does not come into play unless and until we reverse 

the judgment for breach of fiduciary duty, which we have not properly done at this point. 

5

Senior Justice Margaret Garner Mirabal sitting by assignment.