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.

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

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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. 11 TO PRECLUDE UMM FROM REFERRING TO OR PRESENTING EVIDENCE TO SUPPORT A CLAIM FOR INTEREST Third Party Defendant and Counterclaimant Marelich Mechanical Co., Inc. dba U i rtMa lh cai l" MM"fe t fl wn O psi tD f dn ad n ei v sy r i Mehn a( ec c U )ish o o i poio o e nat n l e l g tn e s 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 " i "Mo o i Lm n N .1 which seeks to preclude UMM from referring to and/or Bg ) t n n i i o1 -D i e presenting of evidence to support a claim for interest. I. INTRODUCTION Big-D s t n n i i No. 11 seeks to preclude the introduction of evidence and 'Mo o i Lm n i e testimony to support UMM claim for pre-judgment interest. The basis of Big-D'm t n sh s o o it i e cnl oy lgt nht MM'c i s are unliquidated and are incapable of being made oc sr aeao t U u l i a s lm a certain by calculation. Big-D s oc s n a i or t unsupported by the deposition 'cnl i s r n r cand uo e c e testimony submitted with its motion. MM'dm gs liquidated, i.e., they relate to labor, U s a ae are equipment and materials that were actually provided at the project. Nevertheless, even if there was some dispute as to when the amounts became liquidated or capable of being made certain by calculation, that is a proper issue for trial. As a result, Big-D s o o sol b dn d 'm t n hu e ei . i d e

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II. FACTUAL BACKGROUND As the Court is aware based on the large volume of exhibits and witnesses that will be presented by the parties during trial, this dispute is extremely factually intensive. What UMM will prove during trial is that, on March 1 2001, UMM submitted a bid based on information contained in Bid Pack 4, which was prepared by Big-D/Leprino and included the mechanical and plumbing work for the shell portion of the project. UMM was pre-selected by Big-D to bid this work. The plans and specifications for this work were prepared by E. A. Bonelli; the designer retained by Leprino to prepare the bid documents. The Information to Bidders, which was provided pre-bid, required UMM to base its bid on the information contained in the bid documents that included questions and answers from pre-bid meetings held a the job site. One of the addendums issued by Big-D attached a schedule referred to as LE12. The Bid Documents required that UMM promise and agree that it would perform its work in accordance with LE12. John Ellis, an experienced estimator and employee of UMM, reviewed the bid

documents, including LE12, and prepared a bid for the mechanical, plumbing and piping portion of Bid Pack 4. Mr. Ellis determined from reviewing the documents that, among other things, that the predecessor activities to be performed by others would be completed in sufficient time for UMM to complete its portion of the work per LE12. Mr. Ellis understood that the project was fast paced and aggressive, but achievable provided predecessor activities were completed by others on time. These activities included: (1) the erection of the Utilador structure; and (2) the design and installation of a pipe rack by others. What the bid documents failed to disclose was: (1) that the pipe rack had neither been designed nor scheduled for installation; (2) that Leprino was making changes to the tilt-up panels; and (3) that Bid Pack 3 had slipped by approximately 55 days. In addition, LE12 contained constraints on the milestone finish dates of February 1, 2002 and June 2002. Once the

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constraints were removed and the LE12 schedule allowed to float, project completion was already 63 days behind schedule at or before UMM bid the project on March 1, 2001. None of the foregoing facts, which were know to Big-D and Lerpino at the time UMM submitted its bid, were disclosed to UMM. In short, the true project status was misrepresented to UMM in the bid documents and both Big-D and Leprino knew that the documents were deceptive and failed to provide UMM with the true information. UMM prepared and submitted its bid based solely on the bid document information provided by Big-D, including LE12. It was not until discovery in this action that UMM was provided with an electronic version of LE12. The electronic version of LE12 showed a negative floa A aoth sm t eht MM w s i i Bd ak , er os rj t t tbu t a ei t U . e m a a b d g i Pc 4L pi 'po c dn n e representative was advising his superiors at Leprino headquarters in Denver, Colorado that the job was anywhere from 12 to 16 weeks behind schedule due to design changes made by Leprino. That information was not communicated to UMM. Instead, UMM was led to believe that it the Project was on track. The manner in which the project was mismanaged from the inception of design to sbt tlo p t n f MM'w r it Flof 2002, was not and could not have been us n acm li o U ai eo s okn h a e l anticipated by UMM when it submitted its bid. In order to continue to perform under these unanticipated conditions, UMM incurred substantial cost overruns which neither Big-D nor Leprino have acknowledged. But for the changed conditions under which UMM had to perform its work, UMM would have been in a position to complete its work for the fixed price amount of its subcontract (barring changes). II. ARGUMENT

As stated by Big-D, pursuant to California Civil Code section 3287, UMM is entitled to " cvr a ae cr i or capable of being made certain by calculation, and the right to r oedm gs e a , e tn

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recover which is vested in him upon that particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of t c d o f mpy gh db "(Italics added.) h r i rr ai t et e et o n e . UMM is seeking pre-judgment interest on the following categories of claims: 1. Interest for Delinquent Payment of Billings. 2. Interest for the Late Payment of Outstanding Change Estimates. 3. Interest for the Late Retention. Big-D s r et o o iold et t im n.,bv,e t go r ug et 'pe n m t n s n i c d o t o2aoer an tpe dm n s i y r e e li j i e sbsd n MM'C n r tae o U te s hange Estimates ( E ) " " C . U MM'dm gs i cy rerml o,qi etn m t is that were actually s a ae d et a s f a reu m nad a r l r l i o b p ea used at the project. The value of the additional labor, equipment and materials that UMM was required to provide due to the substantial cagso MM'soe f ok th po ciw s hne t U scp o w r at rj ts a e e / capable of being ascertained by Big-D by reference to market value. (See Bare v. Richman & Samuals of New York (1943) 60 Cal.App2d 413, 419.) In lieu of or in addition to the requirements of Civil Code section 3287, this Court and the jury have discretion to award pre-judgment interest after based on principles of equity. (See Jones v. Wagner (2001) 90 Cal.App.4th 466, 481.) In that regard, prejudgment interest may be awarded in the discretion of the court by applying equitable principles. (See Jones v. Wagner, supra, 90 Cal.App.4th at 481.) F r e pr ato afriCv C d sco 38,[n n ut r us n t C lon i l oe et n 28" ] a h, u i a i i i action for the breach of an obligation not arising from contract, and in every case of oppression, fraud, or malice, interest may be given, in the discretion of the jury."(ac add I ls de. ti )

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Here, UMM has allegation that Big-D intentionally misled UMM with respect to the status of the project by, among other things, concealing the fact that the project was already far behind schedule at the time UMM submitted its bid. As a result of Big-D s ier eti s 'm s pe n t n, r s ao UMM blindly entered into a contract that Big-D knew UMM could not perform without incurring substantial additional costs. Based on fundamental principles of equity, Big-D should be estopped from asserting any limitations with respect to interest on amounts Big-D knew, or should have know, UMM would incur. (See Jones v. Wagner, supra, 90 Cal.App.4th at 481; see also Cal. Civ. Code § 3288.) The uso o ia w e U qet n ffn hn MM'dm gs e f e o cpb o bi acr i d i s a ae w r i d raal f e g se a e ex e n tn by Big-D is for this Court or the jury to decide during trial. Further, in light of Big-D s lgd 'aee l misrepresentations to UMM during bid time and throughout the project, UMM'etl et to s n tm n ie pre-judgment interest is a discretionary issue to be properly decided by this Court and/or a jury during trial. As such, Big-D s o o sol b dn d 'm t n hu e ei . i d e III. CONCLUSION In light of the foregoing, Big-D s t n n i i N .1 must be denied. 'Mo o i Lm n o1 i e Respectfully submitted,

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Dated: March 20, 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] 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 ETC. MOTION IN LIMINE NO. 11 TO PRECLUDE UMM FROM REFERRING TO OR PRESENTING EVIDENCE TO SUPPORT A CLAIM FOR INTEREST with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email 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:22144221.1

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