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-02669-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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THIRD PARTY DEFENDANT AND COUNTERCLAIMANT MARELICH MECHANICAL CO., INC. dba UNIVERSITY MARELICH MECHANICAL OPPOSITION TO DEFENDANTS AND THIRD PARTY PLAINTIFFS BIG-D CONSTRUCTION CORP.-CALIFORNIA ETC. MOTION IN LIMINE NO. 12 TO PRECLUDE REFERENCE T U O MM' C A M F RD MA E T A D N T S LI O A G S H T O O MEET THE REQUIREMENTS OF AMELCO Third Party Defendant and Counterclaimant Marelich Mechanical Co., Inc. dba University Marelich Mechanical (" UMM"files the following Opposition to Defendants and ) Third Party Plaintiffs Big-D Construction Corp.-C lon ' e .clcvlr e e t a afri s t ( l t e e r d o s i a , c oe i y f r " Big-D"Motion in Limine No. 12 seeking to prohibit the referring to and/or presenting of ) evidence of damages that does not meet the requirements of Amelco Electric v. City of Thousand Oaks (2002) 27 Cal.4th 220. I. INTRODUCTION Big-D s t n n i i No. 12 appears to make two claims. First, Big-D argues that 'Mo o i Lm n i e oe f MM't oi o dm gsbased on the " n oU sh r s f a ae, e e modified total cost" approach, is in fact an i pr i i e t acs c i .Mo o,.. This contention is provably incorrect. Second, m e s b " t ot lm ( t np3 m sl ol " a i ) Big-D contends that because UMM iui a t acs apoc m t dimust satisfy the s s g " t ot prah e o, n ol " h t four part test of Amelco, supra, before it may introduce evidence of damages based on this methodology. T e v ec dm nt t t tn at MM'eprMark Berry is correctly using the h ei ne e osa sh i f U d re a c s xe t " oie t acs method for calculating an alternative theory of damages and in doing so, m d i o lot fd t " U MM'ei neu y ase t fu prt ton in the Amelco case for the introduction of s v ec fl stf sh or a e fud d l ii e ts " cs and/or " total ot " modified total cost" claims. Because UMM satisfies all conditions necessary for the introduction of this evidence, this motion must be denied. 2

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II. ARGUMENT A. U MM' E prDid Not Use the Total Cost Method S x et UMM retained Mr. Berry to undertake an examination of the damages UMM has suffered as a result of the actions and omissions of Big-D during the course of the project. Mr. Berry prepared an extensive report which outlines in great detail the evidence, assumptions, and m t dl i ue b h tea a U e oo g s sd y i o vl t MM'c i s n dm gs n u i a lt poi h oe m ue s lm ad a ae ad lm tyo rv e a t e d h oi os nhs dm gs MrB r 'r otpc i l poi shtioi o o i p i o t e a ae. . e yse rseic l rv e t h p i n s nn o r p f ay d a s nn damages is based upon two methodologies: (1) forward priced Change Estimates and contract damages,1 and (2) modified total cost based on contract abandonment. U dr . e y neMrB r ' rs analysis, the former method generates damages in the amount of $16,874,108, and the latter produces damages in the amount of $14,918,262. Big-Dcn nsht MM'dm gs rr l cl le ui t " t cs m t d ot d t U e a s a ae a e l a u t s gh t a ot e o e ay c a d n e o l " h nth " oie t acs m t d( t np3 T e aifr ot m d i o lot e o.Mo o,.. h bs o Big-D s e fd t " h i ) s 'misunderstanding of MrB r 'oi os n a ae it c i t te failed to adjust his damages analysis . e y p i o dm gssh lm h h had rs n n e a a fr MM'o n cos Bg further claims, without citation to any documents or evidence, oU s w at n. i i -D that there were in fact UMM bid and cost errors. Big-D argument is without merit. The parties in this case would general ar t th " t csapoc" e o ad l ge h t t a otprah m t d n y e a e ol h t " oie t acsapoc" e os are recognized methodologies for accounting for h m d i o lotprah m t d e fd t h
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MrB r dsr e t s dm gs s cn at a ae bsd pnh cn atm utn fr a priced . e y ec bsh e a ae a "ot cdm gs ae uo t ot ca onad ow r r i e r e r d cag et a sn codne i t cn at rv i s (eot .7. T im t d un f sh dm gs hne sm t iacrac wt h ot cpoio . R pr p13 h e o qati t a ae i e h e r sn" , ) s h ie e UMM is entitles to based on the contract work completed and the estimated value of additional and extra work,

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damages suffered by a party on a project. The total cost approach is used when a claimant simply subtracts estimated costs to perform the project (bid cost) from the actual costs incurred on that project. The overage is the amount of the claim. See, State of California ex rel. Dept. of Transportation v. Guy F. Atkinson Co. (1987) 187 Cal.App.3d 25, 32-34. Under th " oie em di fd t acsapoc"h c i ate om t sm cl li btdioay d s f m t t o lotprah t lm npr r sh a e a u t n uad i l aj t r h t e a f e c ao tn l u s o a resulting amount any bid errors or performance costs that are caused by the claimant. The California Supreme Court in Amelco Electric v. City of Thousand Oaks, supra, found that in a case where a contractor, who had conceded that it had been inefficient in performing its contract and simply reduced its claim by an arbitrary 5 percent to account for such inefficiency, was not entitled to have the jury instructed on the " cost" total measure of damages. The Court found that the contractor must demonstrate that it has met the following four-part test for submission of this theory to the jury: (1) the impracticality of proving actual losses directly; ()h cn at 'b w sesnb ; 2 t ot c r i a r oal e r os d a e ()h cn at 'at lotw rr snb ;n 3 t ot c r c acs e e oal ad e r os u s e a e (4) the contractor was not responsible for the added costs. Amelco, supra, at 243-244. The Amelco court further fudhtipi aaiei ne n this test is established, on t " r f e v ec uder a f m c d the trier of fact then applies the same test to determine the amount of total costs or modified total csdm gso h h h p i i ietl . Id. at 244. ota ae t w i t ln f s n td c e a tf ie "

forward priced using industry accepted estimating guides. (Report, p. 175.)

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In the instant case, despite the fact that one component of MM'c i m t dl ys U s lm e oo g i a h o the use of the modified total cost, Mr. Berry nevertheless clearly understands and conforms his analysis to the total cost four-part test. His report cites the Amelco case and then analyzes each damage component in light of the four-part test. (See, Declaration of Richard C. Kaufman in Support of U MM'Opposition to Big-D'Motion in Limine No. 12, Exhibit A, Report, p. 208s s 209.) Indeed, an examination of the entire 211 page report (not including attachments, indices, etc.) reveals numerous references to facts and evidence which support his analysis of the claim to be in conformance with the test. Further, Big-D s ec p o o t c i a bi bsd n h " t cs m t d 'dsr t n fh lm s e g ae o t t a ot e o ii e a n e ol " h because Mr. Berry allegedly did not adjust for UMM errors - iuspot b bt MrB r ' s nupr d y o e h . e ys r report and his deposition testimony. The Report specifically describes his findings that, despite the fact that the delays, disruptions and need for acceleration were not caused by UMM, it nevertheless made " accounting adjustments"o tc i " rn pol s rdioacs t i lm f ay rb m o ad i lot sa o e tn s ar u b t U ti t l o MM o i sbot c r"(eot .0, section J.3.) tb a e rt ucn at s R pr p29 s r o. , As for the alleged cross-examination testimony generally referred to in this Motion (there is no page and line cite for the 24 page excerpt of the Berry transcript attached in support), the transcript explicitly refutes that contention. The transcript contains the following exchange: Q And the last of the Cushman factors was that the contractor was not responsible for increased estimates, and am I correct that under your Modified Total Cost Analysis, you have reached the conclusion that the contractor itself, UMM, was not responsible for a dollar of its increased costs? A That'not true. We do a ­ s looking at the reasonable increase in expenses, t r so e d s etm d fr r i . h e sm aj t n aeo Ma lh e' um s ec

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(Transcript at page 450:19-451:3; Exhibit B to Affidavit of Francis J. Hughes in Support of Motion, page 18.)

Thus, both the Berry Report and his deposition testimony confirm that to the extent the Amelco four-part test applies to a modified total cost claim, UMM has met any burden it has to establish a prima facie case that it can support each element of the test and this theory is appropriate for submission to the jury. B. UMM Has Made a Prima Facie Showing of Evidence to Support its Damages Theory It is unclear whether Big-D is simply seeking a ruling on the order of proof, or it believes t t MM'E prs eotn dpsi t t oy a t sbt tively support that it has h U a s xe 'R prad eoio e i n f lo us n t t n sm i a satisfied the Amelco 4-part test. Regardless, in the absence of any showing that UMM can not

meet, or has insufficient facts to support, its damage claim based on a modified total cost approach method, this motion must be denie. MM'fl i ed t bs i dm gs lm dU su yn nso aet a ae c i s l t s a atao MrB r 'aa s adt i be consistent with both Mr. Be yseotn h tr ln . e ys nl i n iwl i r ys l r 'r rad i r p s deposition testimony. UMM has made and supported its offer of proof, and made a prima facie showing, of sufficient evidence to proceed with the introduction of the testimony and evidence on this matter. If, on the other hand, Big-D contends that UMM does not have sufficient facts to support the use of the modified total cost approach method, this motion completely fails to support such a claim. As discussed in more detail above, the methodology is both recognized and appropriate when the claimant can make a prima facie showing of the four-part test. UMM has clearly made such a showing when the extremely detailed Berry Report is examined. There are no other

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grounds advanced for precluding the testimony and evidence on this method from being put before the jury other than the contention that UMM did not adjust the total cost figure to account for UMM errors. The evidence clearly does not support this contention, and as a result, the motion must be denied. III. CONCLUSION In light of the foregoing, Big-D s t n n i i N .2 ute ei . 'Mo o i Lm n o1 m sb dn d i e e It is respectfully submitted. Dated: March 17, 2006 McKENNA LONG AND ALDRIDGE LLP Respectfully submitted,

s/ Peter J. Ippolito Peter J. Ippolito Laurence R. Phillips MCKENNA LONG & ALDRIDGE LLP 750 B Street, Suite 3300 San Diego, CA 92101 Telephone: (619) 595-5400 Facsimile: (619) 595-5450 Email: [email protected] Email: [email protected]

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Richard C. Kaufman Lino S. Lipinsky de Orlov John H. Tatlock McKenna Long & Aldridge LLP 1875 Lawrence Street, Suite 200 Denver, CO 80202 Telephone: (303) 634-4000 Facsimile: (303) 634-4400 [email protected] [email protected] [email protected]

Attorneys for Counter-Defendant UNIVERSITY MARELICH MECHANICAL

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CERTIFICATE OF SERVICE I hereby certify that on March 20, 2006, I electronically filed the foregoing THIRD PARTY DEFENDANT AND COUNTERCLAIMANT MARELICH MECHANICAL CO., INC. dba UNIVERSITY MARELICH MECHANICAL OPPOSITION TO DEFENDANTS AND THIRD PARTY PLAINTIFFS BIG-D CONSTRUCTION CORP.-CALIFORNIA E C MO I NI L MI EN .2 O P E L D R F R N ET U T . T O N I N O 1 T R C U E E E E C O MM' C A M S LI FOR DAMAGES THAT DO NOT MEET THE REQUIREMENTS OF AMELCO with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Michael G. Bohn at [email protected] Bret Matthew Heidermann at [email protected] Francis (Frank) J. Hughes at [email protected] Christopher J. Hersey at [email protected] Patrick Q. Hustead at [email protected] Patrick T. Markham at [email protected] John D. Mereness at [email protected] Daniel J. Nevis at [email protected] C. Michael Montgomery at [email protected] N. Kathleen Strickland at [email protected] and I hereby certify that I have mailed or served the document or paper to the following nonCM/ECF participants in the manner indicated by the non-prc at nm : a ipn s a e ti ' Kevin A. Coles (via U S. Mail) Coles Baldwin & Craft, LLC 1261 Post Road P.O. Box 577 Fairfield, CT 06824 s/Richard C. Kaufman Richard C. Kaufman Attorney for Third-Party Defendant Marelich Mechanical Co. MCKENNA LONG & ALDRIDGE LLC 1875 Lawrence Street, Suite 200 Denver, CO 80202 Telephone: (303) 634-4000 Fax: (303) 634-4400 e-mail: [email protected]
SD:22143880.1

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