Free Response to Motion - District Court of Colorado - Colorado

Case 1:03-cv-02669-MSK-PAC

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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. PLAINTIFF' RESPONSE IN OPPOSITION TO BIG-D DEFENDANTS'MOTION IN S LIMINE NO. 7 TO PRECLUDE TESTIMONY AND/OR ARGUMENT REGARDING PIERCING THE CORPORATE VEIL

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Plaintiff Leprino Foods Company (" Leprino" or " Plaintiff" through its counsel, ), respectfully submits the following as its Response in opposition to the Motion in Limine No. 7 to Preclude Testimony and/or Argument Regarding Piercing the Corporate Veil (" Motion In Limine No. 7" filed by Big-D Construction Corp.-California, Big-D ) Construction Corp., Big-D Corporation, and Big-D Capital Corp. (collectively, the "Big-D Defendants"). I. INTRODUCTION The Big-D Defendants' Motion in Limine No. 7 must be denied because it is premature given that Plaintiff's Objection to Magistrate Judge's November 1, 2005 Order (preventing discovery on this very issue) is still pending before Judge Krieger; in addition, the Big-D Defendants' motion is factually and legally baseless. II. ARGUMENT A. Alter Ego Liability (or Piercing the Corporate Veil) is an Issue to be Decided by the Trier of Fact, in this Case, the Jury. In its initial Complaint and Jury Demand, Plaintiff asserted claims against Big-D Construction Corp.-California ("Big-D California") and Big-D Construction Corp. - which Leprino believed to be the parent company of Big-D California. Leprino maintains that the parent corporation is responsible for damages in this case pursuant to the alter ego doctrine. It is important to note that Leprino filed its Supplemental and Amended

Complaint and Jury Demand after Big-D Construction provided conflicting information as to the identity of its parent corporation; nevertheless, Plaintiff has properly pleaded the issue of alter ego liability against Big-D Construction Corp., Big-D Corporation, and Big-D Capital Corp.

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After the Big-D Defendants refused to provide information responsive to certain of Leprino's discovery requests, Leprino filed its Second Motion to Compel seeking the production of documents that are critical to Leprino' ability to prove its claims of alter s ego liability against the Big-D Defendants. Following the ruling by Magistrate Judge Coan denying Leprino's Second Motion to Compel, Leprino filed Plaintiff's Objection to Magistrate Judge's November 1, 2005 Order. That Objection is still pending. The alter ego theory of liability, or piercing the corporate veil as it is sometimes called, is the very subject of Leprino's pending Objection. Accordingly, the Big-D Defendants' Motion in Limine No. 7 is premature and must be denied. Notwithstanding the premature nature of the Big-D Defendants' motion, the issue of alter ego liability (or piercing the corporate veil) must be presented to the jury since it is the only proper way for a plaintiff to have the trier of fact disregard the corporate form and hold the corporation's parent entity or the corporation's shareholders liable for the obligations of such corporation. Lowell Staats Mining Co., Inc. v. Pioneer Uravan, Inc., 878 F.2d 1259, 1262 (10th Cir. 1989); Micciche v. Billings, 727 P.2d 367, 372-73 (Colo. 1986). As set forth in Leprino's Objection, establishment of alter ego liability is not a post-trial matter; rather, it is properly brought in a plaintiff' case in chief. s See,

Boughton v. Cotter Corp., 65 F.3d 823 (10th Cir. 1995); Frank v. U.S. West, 3 F.3d 1357 (10th Cir. 1993); Lowell Staats Mining Co., Inc. v. Pioneer Uravan, Inc., 878 F.2d 1259 (10th Cir. 1989); Cherry Creek Card & Party Shop, Inc. v. Hallmark Marketing Corp., 176 F. Supp. 2d 1091 (D. Colo. 2001); Micciche v. Billings, 727 P.2d 367 (Colo. 1986).

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In making the ultimate determination at trial whether the alter ego theory should be applied to a corporation, which is primarily a question of fact, the jury must consider the factors set forth in Fish v. East, 114 F.2d 177, 191 (10th Cir. 1940). Lowell Staats Mining Co., Inc. v. Pioneer Uravan, Inc., 878 F.2d 1259, 1262 (10th Cir. 1989). The Tenth Circuit further held that the Fish v. East criteria must be examined in light of the principles and policies underlying the alter ego doctrine. Boughton v. Cotter Corp., 65 F.3d 823, 837 (10th Cir. 1995). Therefore, in light of Fish, Leprino must be allowed to present evidence to the jury on alter ego liability. Unfortunately, the Magistrate Judge' ruling precluding Leprino' discovery of s s documents related to its alter ego theory of liability has placed Leprino in a procedural quandary. Big-D Construction Corp., Big-D Corporation and Big-D Capital Corp. are all parties to this lawsuit, but now Leprino has been prevented from obtaining the discovery necessary for it to prove the alter ego liability of those various Big-D entities at trial, which is less than two months away. Since the Big-D Defendants seek to exclude the very issue that is the subject of Leprino's pending Objection, the Motion in Limine No. 7 must be denied as premature. B. The Big-D Defendants Fails to Present Any Legal Authority or Factual Basis for Its Request. The Big-D Defendants fail to present any legal or factual authority for the proposition that the issue of alter-ego liability should not be presented to the jury, or that the information would be unduly prejudicial. As detailed above, in Section A, the Big-D Defendants' reliance on the Magistrate Judge's November 1, 2005 Order is misplaced. In actuality, the facts learned during discovery indicate that one or more of the Big-D 4

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entities are likely the alter egos of other Big-D entities. Those indications include the following: (i) Big-D Corporation and Big-D Construction Corp. share the same website; (ii) Big-D Corporation and Big-D Construction Corp. are used interchangeably though out the Big-D Corporation profile; (iii) In the Big-D Corporation profile, Big-D Construction Corp. discusses the Leprino Lemoore West Project as one of their projects; (iv) The Big-D Corporation / Big-D Construction Corp. website lists Leprino as a client; (v) The officers and directors of Big-D Construction Corp. are also the officers and directors of Big-D California; (vi) Big-D Construction Corp. has advertised that it is the " proud builder of Leprino Foods'world-class mozzarella cheese plant in Lemoore, CA" ; (vii) (viii) Big-D California leases its employees from Big-D Corporation; and Big-D California does not retain any of its profits.

The issue of alter ego liability or piercing the corporate veil is properly presented to the jury, and the Court must accordingly deny the Big-D Defendants' Motion in Limine No. 7. III. CONCLUSION For the reasons set forth above, the Big-D Defendants' Motion in Limine No. 7 must be denied.

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Respectfully submitted this 20th day of March 2006. LEPRINO FOODS COMPANY

By:

s/ Michael G. Bohn One of Its Attorneys 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]

CERTIFICATE OF SERVICE I hereby certify that on the 20th day of March 2006, I electronically filed the foregoing PLAINTIFF' RESPONSE IN OPPOSITION TO BIG-D DEFENDANTS' S MOTION IN LIMINE NO. 7: TO PRECLUDE TESTIMONY AND/OR ARGUMENT REGARDING PIERCING THE CORPORATE VEIL 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] C. Michael Montgomery of [email protected] Daniel James Nevis of [email protected]

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Laurence R. Phillips of [email protected] N. Kathleen Strickland of [email protected]

s/ Cori Atteberry Cori Atteberry, Legal Assistant

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