Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case No. 03-cv-2669-MSK-PAC LEPRINO FOODS COMPANY, Plaintiff, v. BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation; BIG-D CONSTRUCTION CORP., a Utah corporation; BIG-D CORPORATION, a Utah corporation; BIG-D CAPITAL CORP., a Wyoming corporation; and Does 1-100, inclusive, Defendants/Counterclaimants, BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation; BIG-D CONSTRUCTION CORP., a Utah corporation; and Does 1-100, inclusive, Third Party Plaintiffs, v. MARELICH MECHANICAL CO., INC. dba UNIVERSITY MARELICH MECHANICAL, a California corporation, Third Party Defendant. MARELICH MECHANICAL CO., INC. dba UNIVERSITY MARELICH MECHANICAL, a California corporation, Third Party Plaintiff/Counterclaimant, v. BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation; FEDERAL INSURANCE COMPANY, an Indiana corporation; and Roes 20 through 80, inclusive, Counterdefendant/Third Party Defendants.

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PLAINTIFF' REPLY TO "DEFENDANT BIG-D CONSTRUCTION CORPS CALIFORNIA, BIG-D CONSTRUCTION, BIG-D CORP., AND BIG-D CAPITAL CORP.' OPPOSITION TO LEPRINO FOOD COMPANY' MOTION IN LIMINE S S NO. 6 TO PRECLUDE EVIDENCE REGARDING CONTRACT ABANDONMENT" (DOCUMENT 275) Plaintiff Leprino Foods Company ("LFC") states as follows for its reply in support of its Motion in Limine No. 6: to Preclude Evidence Regarding Contract Abandonment ("Motion"): I Introduction Big-D concedes that LFC was correct when it anticipated that Big-D intends to present evidence that LFC abandoned the Contract. Each argument Big-D presents in its Opposition to LFC' Motion in Limine No. 6 ("Response") to allow evidence of abandonment fails, as explained s below. II Argument A. LFC' Motion is not premature, misleading or duplicative. s Big-D argues that LFC' Motion is premature, duplicative and misleading because the issue of s Big-D' abandonment argument has been addressed in the briefs submitted on LFC' pending Motion s s for Summary Adjudication. The overlap in issues between the summary judgment motion and this Motion, however, does not render either premature or duplicative. The Court may dispose of Big-D' abandonment theory pursuant to this Motion, the Motion for Summary Adjudication, or s both. Big-D also submits that this Motion is misleading because if fails to acknowledge more than two of Big-D' 24 asserted bases for abandoning the Contract. Regardless of whether or not LFC s

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itemized or discussed each of Big-D' abandonment grounds individually, LFC accounted for all of s them by describing Big-D' grounds for abandonment as changes to the design and project cost that s were not contemplated by the Contract and LFC' failure to provide a schedule. See Motion, at 5. In s fact, even Big-D itself describes its 24 grounds for abandonment with a similar "catch-all," phrased in terms of changes to design and cost: "24 separate ways in which the Project Big-D had to construct and the circumstances under which it was required to construct differed fundamentally from the circumstances envisioned and represented at the time the contract was signed." Response, at 3. B. Big-D fails to establish the availability of the abandonment theory under the facts of this case. Big-D misunderstands LFC' argument that, as a matter of law, the Contract could not have s been abandoned. Big-D refutes LFC' position by citing case law holding that whether a contract s was abandoned is a question of fact. Generally speaking, the issue of abandonment is a factual issue. Here, however, it is a specific fact that the Contract expressly acknowledged that the cost and design of the Project were not yet established and the Project would be designed and costs developed during construction. That fact means, as a matter of law, pursuant to the Scott case, the Contract could not be abandoned through the changes in scope and cost asserted by Big-D.1 The case law cited by Big-D, Buechner v. Rouse, 538 P.2d 117, 119-120 (Colo. App. 1975), did not concern a fast-track construction contract. In fact, that case did not even concern a construction contract. The case addressed a claim for breach of an employment contract. Buechner merely establishes the general rule that abandonment turns on the facts. It does not refute the fact that the Scott case precludes an

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Scott Co. v. MK-Ferguson Co., 832 P.2d 1000 (Colo. App. 1991), cited in the opening Motion.

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abandonment theory on a fast-track construction contract with the terms contained in the LFC Contract. Big-D attempts, to no avail, to distinguish this case from the Scott case. Big-D argues that Scott concerned errors in drawings, acceleration of performance and compensation for additional work, while Big-D' abandonment theory concerns substantive changes to scope after design s documents and cost details had been initially provided, brought on by errors and by calculated decisions to alter the Project, requiring re-work or unanticipated original work. See Response, at 7. These are distinctions without a difference. The changes of which Big-D complains still are changes to scope on a Contract that contemplates changes, which, under Scott, cannot constitute abandonment. Big-D cites three Colorado court cases for the proposition that a finding that a project has experienced numerous, substantive changes is sufficient grounds to determine that the contract has been abandoned.2 Response, at 7. None of those cases, however, concerns a fast-track construction contract contemplating changes to scope and cost. Scott remains the instructive case here. Big-D takes liberties with its description of LFC' position, stating that LFC "does not s disagree that material changes occurred during the Project. . ." See Response, at 5, n. 3. Of course LFC disputes that the changes in scope alleged by Big-D were material. But, the issue of materiality of the changes was not addressed in LFC' opening Motion because it is irrelevant to the Motion. s Materiality of changes will of course be an issue of fact. By the instant Motion, the concern is

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H.T.C. Corp. v. Olds, 486 P.2d 463 (Colo. App. 1971) (unpublished); In Re Marriage of Young, 682 P.2d 1233 (Colo. App. 1984); and Martin v. Montezuma, 809 P.2d 1010 (Colo. App. 1990).

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Big-D' entitlement to argue abandonment based upon scope changes at all, not whether the changes s were material. Whether it realizes it or not, Big-D admits a point that effectively concedes the Motion. Big-D admits that "at most, the provisions [cited by LFC ­ Articles 1.2, 1.3 and 5.4] pertain to a determination of the cost of the work and an agreement that Big-D will perform the work in accordance with the Contract Documents." Response, at 6. Big-D therefore concedes that the Contract expressly acknowledged that the scope and cost of work was yet to be determined. It follows that the changes to scope and cost could not have varied so far from the Contract as to constitute abandonment. Big-D tries to cover its gaffe by arguing that LFC unreasonably interprets the Contract provisions at issue as giving LFC carte blanche to quadruple the size and cost of the Project. Id. Big-D makes it sound as if it were entirely at the mercy of LFC' whim to limit what kind of Project s Big-D would have to build or how big it would be because the Contract left the scope and magnitude completely open. Contrary to Big-D' characterization, however, the Contract did place limitations s on the scope of work and costs in various manners. By way of example only, the Contract provides that the scope of the Project would be a "dairy and related products manufacturing, processing and storage facility." Contract at page 1. The Contract provides as a limitation that the Project would be "approximately 475,000 gross square feet." Id. By the terms of the Contract, Big-D had inspected and familiarized itself with the Project site. Contract, at General Conditions Section 2.1. The Contract limited individual "Components" of the Work to $25,000,000. Contract, Article 2.3. Big-D has presented no evidence, because there is none, that LFC got so carried away with the Project

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scope and cost that Big-D ended up building a Project unreasonably exceeding the anticipated scope stated in the Contract, much less that it built a Project quadruple the size contemplated by the parties. In one last, futile effort to present an abandonment theory that avoids the inevitable fact that Big-D agreed to a Contract that contemplated changes, Big-D argues that LFC "abandoned the actual contract procedures for dealing with the changes in the cost and scope of the work." Response, at 8. Again, even if unwittingly, Big-D' argument effectively concedes the Motion by admitting the s Contract anticipated the changes at issue. Regardless, Big-D' point about contract procedures is s meaningless. Big-D provides no legal authority explaining how it can be possible for one to "abandon a contract procedure." If Big-D' case law establishes anything, it is that the concept of abandonment s applies to contracts only. That is, contracts get abandoned, while specific provisions within contracts get breached. However, Big-D cannot, on the one hand, pursue a breach of contract theory while, on the other hand, it claims there was no Contract to breach because it was abandoned. C. LFC did not waive its res judicata and collateral estoppel arguments. Big-D argues that LFC failed to assert its res judicata and collateral estoppel arguments against Big-D' abandonment theory as affirmative defenses. Big-D is plainly wrong. In fact, LFC s did assert as its Fifteenth Defense the following: Defendants' Amended Counterclaims are barred in whole or in part by virtue of orders entered in other court proceedings including but not limited to dismissal orders. See LFC' reply to Big-D' amended counterclaims filed on June 3, 2005. (Docket No. 75) s s Further, to the extent Big-D desires to play it that way, they never filed counterclaims in a responsive pleading to LFC' Supplemental and Amended Complaint, which was filed on July 1, s 2005. Thus, there would be no need for LFC to assert any defenses to any counterclaims because 6

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none were asserted to the supplemental complaint of LFC, a pleading which supersedes the initial complaint. In any event, the above asserted defense is premised upon principles of res judicata and collateral estoppel which LFC is relying on in support of its motion in limine and such defenses were timely raised. D. Big-D is collaterally estopped from arguing abandonment. Big-D argues that the California court' dismissal of its action does not operate as a collateral s estoppel of its abandonment theory. Big-D asserts that LFC' argument fails because it misconstrues s the court' dismissal as enforcing the "entire contract." Big-D also asserts that it never asked the s court to consider the overall validity and enforceability of the Contract. See Response, at 11. That, however, is not what LFC argued. Rather, the California court enforced the provision of the Contract at issue before it, i.e., the choice of law/forum selection clause. The important point is that, regardless of the specific provision at issue in that proceeding and regardless of how narrowly the Contract was enforced, Big-D should have raised, but failed to raise, its abandonment argument in opposition to any enforcement of the Contract. Big-D' argument that the issues in the California action and this action are not identical s misses the point. The identical issue, for purposes of collateral estoppel, is the enforceability of the Contract, no matter how narrow, that triggered Big-D' obligation to assert abandonment if it really s thought it had a basis for such a defense. Ultimately, Big-D concedes the critical point: While Leprino is technically correct that Big-D did not present evidence of contract abandonment at the California dismissal hearing, this fact merely illustrates that Big-D was not asking the California court to decide whether the contract was abandoned. Response, at 12. Big-D admits it entirely failed to raise the issue when it should have. Consequently, it is estopped from doing so now. 7

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E.

Big-D is judicially estopped from arguing abandonment. LFC' argument for judicial estoppel turns primarily upon Big-D' inconsistent positions. s s

Big-D responds by arguing that it never took the position that the Contract was enforceable in its action in the Eastern District of California. Response, at 13. However, Big-D cannot truthfully state it never took such a position where it asserted a breach of contract claim. Big-D splits hairs to argue repeatedly that it never argued that the Contract should be "strictly enforced." Response, at 14. For purposes of judicial estoppel, there is no meaningful difference between enforcement and "strict" enforcement. Big-D either sought to enforce the Contract or it did not. By asserting a contract claim, Big-D sought to enforce the Contract. That position is inherently contrary to its present argument that the Contract was abandoned. Finally, Big-D' argument that it did not request that the s court require LFC to post a bond in the California action is immaterial. As Big-D concedes, the test is whether Big-D will gain an unfair advantage through its inconsistent position, not whether it specifically asked for an unfair advantage. III Conclusion Big-D is precluded as a matter of law from arguing or trying to prove LFC "abandoned" the Contract. Evidence of the precluded theory and damages should not be allowed, pursuant to Fed. R. of Evid. 401, because it is irrelevant, and pursuant to Fed. R. of Evid. 403, because it is confusing and unfairly prejudicial. Accordingly, the parties and their attorneys and witnesses should be

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ordered to refrain from presenting any evidence or making any reference before the jury to the argument that LFC abandoned the Contract. Respectfully submitted this 30th day of March 2006. LEPRINO FOODS COMPANY

By:

/s/ Michael G. Bohn Michael G. Bohn Bret M. Heidemann Campbell Bohn Killin Brittan & Ray, LLC 270 St. Paul Street, Suite 200 Denver, Colorado 80206 Telephone: (303) 322-3400 Facsimile: (303) 322-5800 [email protected] [email protected] Patrick T. Markham Jacobson & Markham 8880 Cal Center Drive, #100 Sacramento, California 95826 Telephone: (916) 854-5969 Facsimile: (916) 854-5965 [email protected]

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CERTIFICATE OF SERVICE I hereby certify that on the 30th day of March 2006, I electronically filed the foregoing PLAINTIFF' REPLY TO "DEFENDANT BIG-D CONSTRUCTION CORP-CALIFORNIA, S BIG-D CONSTRUCTION, BIG-D CORP., AND BIG-D CAPITAL CORP.' OPPOSITION S TO LEPRINO FOOD (sic) COMPANY' MOTION IN LIMINE NO. 6 TO PRECLUDE S EVIDENCE REGARDING CONTRACT ABANDONMENT" (DOCUMENT 275) with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses: Christopher J. Hersey of [email protected] Francis (Frank) J. Hughes of [email protected] Patrick Quinn Hustead of [email protected] Peter J. Ippolito of [email protected] Richard Carl Kaufman of [email protected] John David Mereness of [email protected] Daniel James Nevis of [email protected] Laurence R. Phillips of [email protected] C. Michael Montgomery of [email protected] N. Kathleen Strickland of [email protected]

/s/ Cori Atteberry Cori Atteberry, Legal Assistant

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