Free Motion in Limine - 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 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 1-100, 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, et al., Counterdefendant/Third Party Defendants. DEFENDANTS BIG-D CONSTRUCTION CORP.-CALIFORNIA, BIG-D CONSTRUCTION, BIG-D CORP., AND BIG-D CAPITAL CORP.'S MOTION IN LIMINE NO. 9 TO PRECLUDE "CLAIMS PREPARATION COSTS" -ANDCERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1A ______________________________________________________________________________

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Defendants Big-D Construction Corp­California, Big-D Construction, Big-D Corp., and Big-D Capital Corp. (collectively referred to herein as "Big-D") respectfully move the Court for an Order in limine to preclude the presentation of any argument or exhibits showing costs for UMM's employees involved in the process of claims preparation. This motion is supported by the Declaration of Francis J. Hughes, attached hereto. CERTIFICATE OF COMPLIANCE WITH D.C.COLO.LCivR 7.1A Pursuant to D.C.COLO.LCivR 7.1A, the parties have met and conferred with respect to the contents of this Motion In Limine and, after having met and conferred, it is Big-D's understanding that Plaintiff Leprino Foods Company ("Leprino") and UMM object to the relief requested herein. I. INTRODUCTION This action arises from a series of disputes stemming from the construction of a cheese processing facility located in Lemoore, California (the "Project.") Leprino, as owner, entered into a general contract with Big-D to construct the Project. In turn, Big-D contracted with numerous subcontractors, including UMM, to perform various works on the Project. Leprino contends that Big-D and its subcontractors delayed completion of the Project and seeks damages which it claims to have suffered as a result of the Project delays. Big-D and UMM deny that they are responsible for causing the Project delays. In addition, Big-D seeks its remaining contract balance and its additional and extended general conditions, while UMM seeks additional compensation for its work on the Project. // //

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II.

ARGUMENT A. The Court Has the Authority to Issue Pre-Trial Orders Barring Evidence

Although not expressly authorized by the Federal Rules of Civil Procedure or the Federal Rules of Evidence, "motions in limine are well recognized in practice and by case law." Rutter Group Practice Guide: Federal Civil Trials & Evidence (TRG), section 4.322. As with all rulings on evidence, a ruling on a motion in limine is given wide deference and will typically only be reviewed for an abuse of discretion. Den Hartog v. Wasatch Academy (10th Cir. 1997) 129 F.3d 1076, 1092. B. Under California Law, Which Governs this Issue, UMM Cannot Recover Costs Related to the Claims Preparation Work of Its Employees or Consultants 1. California Law Applies to this Issue

Article 8.7 of the Terms and Conditions of the Subcontract Agreement between Big-D and UMM states: "The Subcontract shall be deemed to have been made in and shall be interpreted under the laws in the jurisdiction which the project is located." It is undisputed that the project was located in California. 2. UMM's Claim Seeks Recovery For Claims Preparation Costs

Attached as Exhibit A to the Declaration of Francis J. Hughes ("FJH Decl.") is a summary of the damages contained on pages 164 through 167 of the Expert Report Narrative prepared by UMM's expert, Mark Berry. As part of its "Contract Damages," Berry identifies One Million Eight Thousand Fifty-Three Dollars ($1,008,053.00) as being "REA Prep" costs //

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(see, page 165 of the Berry Report). Under its "abandonment of contract" theory, it seeks the same amount (id.) A review of the calculation of total costs, however, demonstrates that significantly more dollars are being sought for time that was essentially litigation costs including time spent having depositions taken, preparing to have depositions taken, attending depositions of adverse personnel whose depositions were taken, responding to interrogatories and requests for documents and assisting counsel and the retained expert in preparing the case. Millions of dollars of damages are sought for these efforts 3. Although Every Litigant Would Like to Be Paid Its Professional Hourly Rate for Time Spent In Litigation, Such Cost are Not Recoverable

It is a pipe dream of every litigation that it will truly be "made whole" in litigation. To the litigant, being made whole would mean that it would not only receive compensation paid to its attorney, but to be paid its "billable rate" for its own time and the time of its employees for every moment spent in the litigation. Many professionals who are also litigants have been indignant that they are not entitled to be paid their hourly rate during their depositions as percipient witnesses are being taken. However, while the American Rule regarding attorney's fees is sometimes modified by an attorneys fee clause in a contract or a statute that allows the prevailing party to recovery attorney's fees, there is no such cure for the rule that parties are not entitled to be paid for the time they spend in, or preparing for, litigation. California, whose law is controlling between Big D and UMM, specifically addresses this issue in Civil Code §1033.5. Civil Code §1033.5 (b) reads as follows:

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"The following items are not allowable as costs, except when expressly authorized by law: (1) (2) Fees of experts not ordered by the court. Investigation expenses in preparing the case for trial."

Costs in preparing for trial are expressly precluded. The simple fact that personal injury litigants are not allowed to recover as damages the hours spent in litigation make this rule plain common sense. In the construction arena, some contractors have attempted to recover what are called "claims preparation costs", that is costs, not involved in performing the work on the project, but putting together their claims, and advancing those claims in court or some other forum. These costs are no more recoverable in the construction arena than in any other area of law. The seminal case on the topic is Singer Co., Librascope Div. v. United States, 568 F.2d 695, 215 Ct. Cl. 281, 1977 U.S. Ct. Cl. LEXIS 117, 24 Cont. Cas. Fed. (CCH) P81914 (1977), cited favorably in numerous cases. In Singer, the court succinctly disposed of the argument raised by the contractor: Claim Preparation Costs Including Attorneys' Fees In this claim the contractor seeks recovery, by way of an equitable adjustment in contract price, for the attorneys' fees, technical consultants' fees, and in-house personnel costs that were incurred in connection with the preparation and documentation of the claims for equitable adjustment that it presented to the contracting officer. The Board denied this claim, saying: It is clear from the facts that the costs in question were not incidental to performance of work or alleged changes but were incidental to a claim. That the claim was to the contracting officer for an equitable adjustment rather than to this Board for the same relief is not significant. [73-2 BCA at 48,426.] We agree with the Board's decision.

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The contractor does not dispute the proposition that legal fees associated with the prosecution of a claim before a contract board are not recoverable. Such fees fall within the statutory prohibition of 28 U.S.C. § 2412 (1970). Except as otherwise provided by statute, that section permits costs to be taxed against the United States, "but not including the fees and expenses of attorneys" in any civil action brought by or against the United States or any agency or official of the United States acting in an official capacity. Mindful of this restriction, the contractor contends here that the legal fees and other claim-related fees that it seeks are not litigation-connected but are, instead, expenses incidental to contract performance. In support of this contention, the contractor relies upon the decision in Allied Materials & Equip. Co., ASBCA No. 17318, 75-1 BCA para. 11,150. That case, says Librascope, permitted recovery of legal fees incurred in connection with the preparation and presentation, to the contracting officer, of a request for equitable adjustment. And, in so doing, argues the contractor, the Allied decision implicitly overruled such earlier decisions as Power Equipment Corp., ASBCA No. 5904, 1964 BCA para. 4025, aff'd on reconsideration, 1964 BCA para. 4228, which viewed requests for equitable adjustments (and the attorneys' fees associated therewith) as the equivalent of claims prosecution rather than contract performance. The Singer rules echoes the preclusion of such items as costs under. Civil Code §1033.5 (b) and the experience of every trial judge and counsel ­ the American Rule is not only that parties bear their own attorneys fees, but their own employees involvement with claims and litigation. Singer has been cited by a number of state courts including, most recently, the Florida case of City of Miami v. Tarafa Constr. ( Case Nos. 96-98, 96-2149, 96-2888, Court Of Appeal Of Florida, Third District 1997 Fla. App. LEXIS 7766) 696 So. 2d 1275. The City of Miami court, disallowing "claims preparation costs": We hold that this case must be reversed and remanded in its entirety. . . Second, the "claim preparation damages" sought by the Contractor cannot proceed to trial when this case is remanded because parties involved in a contractual dispute are not entitled to pre-litigation costs. The Contractor concedes that no Florida law supports the claim preparation damage award. In addition, we are unpersuaded that the federal construction cases endorse a damage award for claim preparation costs. In fact, the then United States Claims Court has stated: 5.

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In Singer Co. v. United States, 215 Ct. Cl. 281, 568 F.2d 695 (1977), cited by defendant, Singer attempted to recover claim preparation costs by arguing that these costs were incidental to performance of the contract. The court denied recovery, holding that the "requests for equitable adjustment were not performance-related; they bore no beneficial nexus either to contract production or to contract administration. Accordingly, the [claim preparation costs] are not recoverable." 215 Ct. Cl. at 328, 568 F.2d at 721. The boards of contract appeals regularly reach the same result. E.g., Coastal Dry Dock and Repair Corp., ASBCA No. 36754, 91-1 BCA (CCH) P 23,324, 1990 WL 177496 (costs incurred pursuant to claim preparation unallowable); Yadkin Inc., PBSCA No. 2051, 89-2 BCA (CCH) P 21,709, 1989 WL 27910 (expenses incurred in documenting a claim unrecoverable). Plaintiff's claim for proposal preparation and contract administration must fail. Wilner v. United States, 23 Cl. Ct. 241, 261 (1991)(alteration in original). See also Gulf Contracting, Inc. v. United States, 23 Cl. Ct. 525, 532 (1991)("These expenses [claim preparation costs] were incurred entirely after completion of construction; they bear no relation to production or administration of an ongoing contract and must be disallowed.") (citation omitted), aff'd, 972 F.2d 1353 (Fed. Cir. 1992). Consequently, upon remand to the trial court, the two foregoing claims of the Contractor should be dismissed by the trial court." III. CONCLUSION Although every litigant would like to be paid for its own time and its employees time for every moment spent having its deposition taken, responding to interrogatories, putting together its affirmative case and defending against counterclaims, such time is simply not compensable. The same rule that precludes an accountant who is a personal injury plaintiff from charging his professional hourly rate for the time he spends preparing for his deposition is applicable in the // // // // // 6.

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construction area. Such items are not proper damages, and UMM should not be permitted to show such non-recoverable items to the jury as if they were compensable damages. Respectfully submitted this 1st 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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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on March 1, 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 MOTION IN LIMINE NO. 9 TO PRECLUDE "CLAIMS PREPARATION COSTS" -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]

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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: a) s/ Kathleen Marie Dolce Kathleen Marie Dolce

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