Free Brief in Opposition to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Honorable Marcia S. Krieger Case No. 03-cv-02669-MSK-PAC LEPRINO FOODS COMPANY, Plaintiff, v. BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation, et al. Defendants/Counterclaimants, ________________________________________________________________________ BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation; BIG-D CONSTRUCTION CORP., a Utah corporation; and Does 1 - 1 00, 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, et al. Counterdefendant/Third Party Defendants.

DEFENDANTS BIG-D CONSTRUCTION CORP-CALIFORNIA, BIG-D CONSTRUCTION, BIG-D CORP., AND BIG-D CAPITAL CORP.'S OPPOSITION TO LEPRINO FOOD COMPANY'S MOTION IN LIMINE NO. 7 TO PRECLUDE EVIDENCE RELATED TO BIG-D'S GENERAL CONDITIONS CLAIM

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I.

INTRODUCTION Defendants Big-D Construction Corp-California, Big-D Construction, Big-D

Corp., and Big-D Capital Corp. (collectively, "Big-D") file this Opposition to Plaintiff Leprino Foods Company's ("Leprino") Motion in limine No. 7 to preclude evidence related to Big-D's claim for additional and extended general conditions that Big-D incurred during its work on the Project. In support of its Opposition, Big-D offers the following arguments: (1) Leprino's Motion in Limine is premature, misleading and, in light of the fact that it essentially contains the same arguments as its pending Motion for Summary Adjudication (Doc. No. 183), is duplicative; (2) Contrary to Leprino's contention, the Contract does not limit Big-D to a guaranteed maximum price for its general conditions; (3) The Contract does not require Big-D to submit written notification of its extended general conditions in the form of a PCO, or for that matter, in any particular form; (4) Big-D complied with the Contract's notice provisions with respect to its claim for additional and extended general conditions; (5) Even if Big-D had failed to comply with the Contract's notice provision, Leprino effectively waived said provisions and should therefore be estopped from seeking to enforce them in the current litigation; and (6) The evidence which Leprino is seeking to preclude, i.e., PCO 1390, is otherwise relevant and admissible to demonstrate the nature of the Project's increased scope and duration and the impact such increases had on Big-D's ability to perform its work on the Project. II. ARGUMENT Leprino seeks, by way of a Motion in limine, to preclude Big-D from introducing evidence of damages that Leprino contends are precluded by contract. Specifically,

1.

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Leprino argues that Big-D should not be permitted to present evidence regarding, or in support of, its claim for additional and extended general conditions that Big-D incurred during its work on the Project. In support of its argument, Leprino offers the following incorrect conclusions: 1. Big-D's general conditions were governed by a "guaranteed maximum price"; 2. The Contract's notice provision required Big-D to present a claim for additional compensation in the form of a PCO; 3. The information contained in PCO 1390 was presented to Leprino in an untimely manner; 4. Big-D never presented other forms of written notification to Leprino regarding its claim for extended and additional general conditions; and 5. PCO 1390 contains absolutely no relevant information aside from the date that it was allegedly received by Leprino. Despite asserting these conclusions in this motion, and indeed in its Motion for Summary Adjudication (Docket 183), Leprino has consistently failed to offer any credible evidence to support its position. This is not surprising, however, as the facts of the case clearly demonstrate that: (1) Under the terms of the Contract, Big-D is entitled to its cost of the work (whatever the actual sum may be) plus a fee, and is therefore not bound by a guaranteed maximum price for its increased and extended general conditions costs for any period after twenty-four (24) months; (2) Despite Leprino's singular reliance on the date of PCO 1390, the Contract never required that Big-D's written notification for additional compensation be presented in any particular format; (3) Big-D

2.

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actually provided Leprino with written notification of its claim for additional and extended general conditions at the time that these costs were incurred; (4) Leprino instructed Big-D to hold off on presenting and negotiating its claim for additional and extended general conditions until after the Project was completed and, in so doing, expressly waived the notice requirements under the Contract; and (5) PCO 1390 in fact includes relevant information pertaining to the nature of the Project's extended duration and scope. In addition to failing to acknowledge the above-referenced facts of the case, Leprino's current motion also relies upon an ultimate fact that has clearly not been established; namely that this Court has ruled in Leprino's favor with respect to its Motion for Summary Adjudication. Because the Court has yet determined the outcome of that motion, this Motion in limine is premature and duplicative. A. In Light Of The Fact That This Court Has Not Ruled On Leprino's Motion For Summary Adjudication, The Present Motion Is Premature And Duplicative.

In its Motion for Summary Adjudication and Reply brief in support thereof (Docket Nos. 183 and 215), Leprino lays out its arguments in support of its contention that Big-D is not entitled to the additional and extended general conditions which it is seeking as part of this litigation. (See Docket No. 183, Leprino's Motion for Summary Adjudication, Part II, pp. 7-8 and n. 20); and (See Docket No. 215, Leprino's Reply to Opposition to Motion for Summary Adjudication, Part II, pp. 9-13). In that motion, Leprino argues that Big-D's claim for general conditions is precluded by the terms of the Contract in that (1) The Contract provides that Big-D's general conditions costs contained a guaranteed maximum, applicable under all circumstances; and (2) Big-D's

3.

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claim for additional and extended general conditions failed to comply with the Contract's notice requirements. The present Motion in limine merely reiterates the arguments set forth in Leprino's Motion for Summary Adjudication. As such, the present motion is necessarily contingent upon Leprino receiving a favorable ruling on its underlying Motion for Summary Adjudication, in that, if the Court determines that: (1) The Contract does not preclude Big-D from seeking additional and extended general conditions; and/or (2) That the notice provisions were either complied with or were waived by Leprino, then evidence concerning these costs would be relevant and properly admissible. Thus, this Court should only consider the merits of this Motion in limine if it first decides that Leprino is entitled to summary adjudication on the issue of whether Big-D is entitled to recover its additional and extended general conditions. B. The Contract Does Not Limit Big-D to a "Guaranteed Maximum Price" for General Conditions Incurred Beyond The Initial 24-Month Period.

In both its Motion for Summary Adjudication and in the present motion, Leprino asserts that the Contract included a "guaranteed maximum price" ("GMP") for general conditions of $2,703,792.00. See, Docket No. 183, Leprino's Motion for Summary Adjudication, Part II.B at pp. 7-8 and n.20. This statement is not only disputed, but is blatantly false. The fact of the matter is that the GMP for General Conditions, which is found in paragraph 1.4.28 of the Contract, is not a limitation on General Conditions for the entire duration of the Project; it is only a limit on General Conditions for twenty-four months of work. See Docket No. 191, Big-D's Opposition to Motion for Summary Adjudication, pp. 18-19. Thus, assuming that the 24-month period began in September

4.

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2000, the date the Contract was executed, then the period covered by the GMP would be between September 2000 and September 2002. There is no express limitation in the Contract for General Conditions incurred past the 24-month period. See Docket No. 191, Big-D's Opposition to Motion for Summary Adjudication, pp. 18-19. Thus Big-D is entitled to receive these costs for work it

performed after September 2002. It is important to note that Leprino does not necessarily disagree that Big-D is entitled to additional and extended general conditions beyond the 24-month period provided under the Contract. The 24-month period would extend until September 2002. As Leprino notes in its Reply to Big-D's Opposition to Motion for Summary Adjudication (Docket No. 215), despite the fact that the Contract sets forth specific dates for anticipated substantial and final completion, it also contemplates that delays may occur that would necessarily extend those dates. Docket No. 215, Leprino's Reply to

Opposition to Motion for Summary Adjudication, pp. 18-19. It follows that, in the event the Project was extended beyond the 24-months originally anticipated by Leprino, Big-D would be entitled to additional general conditions. And in fact, the Project was extended, by Leprino, beyond the anticipated completion dates and the 24-month period described in the Contract. Indeed, all that Leprino disputes is whether Big-D complied with the Contract's written notice requirements. Docket No. 215, Leprino's Reply to Opposition to Motion for Summary Adjudication, pp. 18-19. In this regard, Leprino's argument falls into two categories: (1) That Big-D was required to submit a PCO as a condition to receiving additional compensation; and (2) Big-D wholly failed to provide a PCO within 7 days of

5.

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the act or occurrence that gave rise to Big-D's claim for additional general conditions. As explained below, both of Leprino's position are without merit. C. The Contract Does not Require Big-D to Request Additional Compensation in the Form of a PCO

Leprino contends, erroneously, that the Contract requires Big-D to submit requests for additional compensation in the form of a "PCO." See, Docket No. 183, Leprino's Motion for Summary Adjudication at Part II.A p. 6-7 and n16-18. But no such requirement exists. Neither Article 43 nor Article 45 of the Contract requires that the form of any request for additional compensation be a PCO. See, Docket No. 191, BigD's Opposition to Motion for Summary Adjudication, p. 19 [Citing to Contract, General Conditions, Art. 43 and 45.] As set forth below, Big-D did in fact comply with the requirement for providing a written request to Leprino for additional compensation for extended and extra general conditions. D. Big-D Provided and Leprino Admitted Receiving Written Notice of Big-D's Request for Additional and Extra General Conditions Prior to February 2003

Despite failing to establish that Big-D was required to submit written notification in the form of a PCO, Leprino nevertheless rests its remaining argument on the "fact" that PCO 1390 was not submitted until February 2003. See, Docket No. 183, Motion for Summary Adjudication, Part II.B at p. 8. Moreover, they assert in the same summary judgment motion that the 24-month period ended in September 2002. Again, however, the problem with this argument is that the Contract never required, nor even mentions, PCO's. To be sure, PCO 1390 did reflect a reiteration of the extended and additional general conditions which Big-D sought to recover. However, Leprino fails to establish that PCO 1390 was the first or only time Big-D presented written notification to Leprino

6.

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regarding these claims. And indeed, the questions of whether and when Big-D presented written notification to Leprino, as purportedly required under the Contract, are ones of fact to be determined at trial. The evidence will demonstrate that Big-D provided, and Leprino admitted receiving, multiple written requests for additional and extra general conditions prior to February 2003. First, in August 2002 (e.g., prior to the expiration of the 24-month period contemplated in Art. 1.4.28 of the Agreement) Big-D sent detailed correspondence to Leprino requesting compensation for additional and extended general conditions. See, Docket No. 191, Opposition to Motion for Summary Adjudication, p. 19; Docket No. 203, Affidavit of Rob Moore in Support of Opposition at ¶3, [Citing to Docket No. 205-43, Ex. A to Moore Affidavit (letter from Rob Moore to Joel Krein at Leprino dated August 21, 2002, the first sentence of which alerts Leprino to Big-D's request).] Second, Leprino's receipt and consideration of Big-D's request was confirmed in a series of emails between Mr. Moore and Mr. Krein in October 2002, wherein Mr. Krein admitted receiving Big-D's request but informs Mr. Moore that Leprino will not consider the claim until the end of the Project. See, Docket No. 191, Opposition to Motion for Summary Adjudication, p. 19; Docket No. 203, Affidavit of Rob Moore in Support of Opposition at ¶4, [Citing to Docket No. 205-44, Ex. B to Moore Affidavit (emails dated Oct. 9-14, 2002).] And third, as set forth in its Opposition to Motion for Summary Adjudication (Docket No. 191), Big-D submitted, and Leprino approved, written Change Order Nos. 312, 411, and 412, which on their face contained handwritten notes stating Big-D's request for additional conditions costs for the electrical hook-up work. See, Docket No.

7.

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191, Opposition to Motion for Summary Adjudication, p. 19; Docket No. 202, Affidavit of Kerry Arnold in Support of Opposition at ¶¶ 29-31 [Citing to Docket No. 205-25, Ex. Q to Arnold Affidavit. Big-D therefore complied with the requirements of the Contract by submitting written notice to Leprino prior to the time 24-month period contemplated in Art. 1.4.28 expired. E. Leprino Waived and is Estopped from Enforcing the Requirement for Further Written Notice

As extensively briefed in its Opposition to Motion for Summary Adjudication (Docket No. 191) Leprino is estopped from arguing that Big-D failed to provide written notice of its claim for extended and additional general conditions because Leprino specifically and expressly requested that Big-D defer the issue of increased and general conditions until the end of the Project. See, Docket No. 191, Opposition to Motion for Summary Adjudication, p. 19; Docket No. 203, Affidavit of Rob Moore in Support of Opposition at ¶4, [Citing to Docket No. 205-44, Ex. B to Moore Affidavit (emails dated Oct. 9-14, 2002).] Moreover, Jack Towle of Leprino confirmed Leprino's decision not to consider any requests for additional compensation in his November 23, 2002 Progress Report to Leprino management, wherein he wrote, "Big-D is still requesting additional fees to cover cost of extended construction duration. We will review this issue after the project is completed." See, See, Docket No. 191, Opposition to Motion for Summary

Adjudication, p. 20; Docket No. 192, Affidavit of Francis Hughes in Support of Opposition Hughes at ¶9, Ex. 7 (emphasis added). // //

8.

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As Leprino concedes in its Reply, the question of whether the above-mentioned correspondence constitutes Leprino's waiver of the notice requirements is a question of fact: "Big-D's argument is a misrepresentation of the evidence proffered. The proffered evidence is an exchange of emails and a November 23, 2002 progress report to Leprino management. None of the documents contain a request that Big-D defer submission of a claim ..." Clearly, Big-D and Leprino have different interpretations of the meaning and effect of these documents. Because there is a dispute among the parties as to whether Leprino effectively waived the notice provisions through these documents, Big-D should not be precluded from presenting its interpretation to the trier of fact. F. PCO 1390 Contains Otherwise Admissible Evidence Pertaining To The Nature and Extent of Project Delay and the Impact Such Delay Had On Big-D.

Leprino's Motion in limine seeks to preclude Big-D from introducing PCO 1390 for any reason whatsoever, the reason being that a jury may be mislead into viewing the document within the context of Big-D's potential damages. While PCO 1390 does accurately depict the nature and amount of the increased general conditions that Big-D incurred during the course of the Project, it also contains relevant and informative information regarding the nature and extent of delays and impacts caused by Leprino and/or UMM. Thus, regardless of whether the Court agrees that the PCO is "untimely" and may therefore not be introduced in support of Big-D's claim for extended and general conditions, Big-D should, at a minimum, be permitted to introduce the document as part of its defense against Leprino's $27 million claim for delay. //

9.

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III.

CONCLUSION For the aforementioned reasons, Big-D requests that this Court deny Leprino's

Renewed Motion in Limine Number 7: to Preclude Evidence Related to Big-D's General Conditions Claim and permit Big-D to introduce evidence of the extended and additional general condition costs that it actually incurred on the Project. Respectfully submitted this 20th day of March, 2006. s/ Daniel J. Nevis Daniel J. Nevis Miller, Morton, Caillat & Nevis, LLP 25 Metro Drive, 7th Floor San Jose, California 95110 Telephone: (408) 292-1765 FAX: (408) 436-8272 E-mail: [email protected] Attorneys for Defendant Big-D Construction Corp.- California and Big-D Construction Corp.

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10.

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on March 20, 2006, I electronically filed the foregoing named document: DEFENDANTS BIG-D CONSTRUCTION CORP-CALIFORNIA, BIG-D CONSTRUCTION, BIG-D CORP., AND BIG-D CAPITAL CORP.'S OPPOSITION TO LEPRINO FOOD COMPANY'S MOTION IN LIMINE NO. 7 TO PRECLUDE EVIDENCE RELATED TO BIG-D'S GENERAL CONDITIONS CLAIM -ANDCERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1A with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Michael Gerard Bohn [email protected] [email protected] Bret Matthew Heidemann [email protected] [email protected] Francis (Frank) J. Hughes [email protected] [email protected] Patrick Quinn Hustead [email protected] Peter J. Ippolito [email protected] Richard Carl Kaufman [email protected] [email protected] Patrick T. Markham [email protected] [email protected] John David Mereness [email protected] C. Michael Montgomery [email protected] [email protected] [email protected] Daniel James Nevis [email protected] [email protected] N. Kathleen Strickland [email protected] [email protected] Laurence R. Phillips [email protected] [email protected]

And, I hereby certify that I have mailed or served the document or paper to the following non CM/ECF participants in the manner (mail, hand-delivery, etc.) indicated by the non-participant's name: s/ Kathleen Marie Dolce Kathleen Marie Dolce

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