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 - 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 MOTION IN LIMINE NO. 6 TO PRECLUDE INCLUSION OF ATTORNEYS' FEES AS PART OF A PARTY'S CLAIM FOR DAMAGES -ANDCERTIFICATE OF COMPLIANCE WITH LOCAL RULE 7.1A

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

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Defendants Big-D Construction Corp-California, Big-D Construction, Big-D Corp., and Big-D Capital Corp. (collectively, "Big-D") respectfully move the Court for an Order in limine to preclude the parties, their witnesses and their attorneys from referring to and/or presenting evidence of the attorneys' fees they have expended in this case as part of their computation of damages. 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 ThirdParty Defendant Marelich Mechanical Co. ("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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Big-D brings this motion in limine in anticipation of UMM's plan to include in its claim for damages the amount of attorneys' fees expended in this case. Pursuant to California and Colorado law, where the award of attorneys' fees is the consequence of a contractual agreement to shift fees to a prevailing party, consideration of the entitlement to such fees, and the amount of the fees, should occur only after the merits of the case are decided. Thus, Big-D requests that UMM be precluded from referencing or including as part of the computation of damages it intends to present to the jury the amount of attorneys' fees it has expended in this action. 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 Both California and Colorado Law Attorney Fees to be Awarded Under Contract to the "Prevailing Party" Are Considered Costs of Suit and Are Properly Considered Only After the Merits of the Case Have Been Decided

Big-D and UMM entered into a subcontract agreement (the "Subcontract") for UMM to perform various works on the Project. Article 8.7 of the Subcontract states that the Subcontract "shall be deemed to have been made in and shall be interpreted under the laws in the jurisdiction in which the project is located." Because the Project was located

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in Lemoore, California, it is anticipated that both Big-D and UMM understand that the Agreement shall be interpreted under California, as opposed to Colorado, law. Under California law, contractual attorney fees provisions are governed by statute. See California Civil Code section 1717. Pursuant to California Civil Code §1717, in an action to enforce a contract authorizing an award of fees and costs to one party, the party "prevailing of the contract" is entitled to reasonable attorney fees. A "prevailing party" is the party who recovers greater relief in the action on the contract. California Civil Code §1717(b)(1). The term "prevailing party" has been interpreted to mean different things. Obviously, where a party obtains a simple, unqualified victory by completely prevailing on, or defeating, all contract claims and the contract provides for attorney fees, §1717 entitles that party to recover its reasonable attorney fees. Scott Co. of Calif. v. Blount, Inc. (Cal. 1999) 20 Cal.4th 1103, 1109. However, if neither party achieves a complete victory on all the contract claims, it is within the trial court's discretion to determine which party "prevailed" on the contract. Scott Co. of Calif. v. Blount, Inc., 20 Cal.4th at 1109. In deciding this issue, the court must "compare the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements and similar sources." Id. at 1109 [Emphasis added]. However, despite whether a party obtains a complete victory or not, in order to be considered the "prevailing party" under California law and therefore be entitled to contractually-based attorney fees, the party must first obtain some sort of award on the merits of the case. Id. //

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UMM may attempt to disregard the terms of the Agreement that require application of California law, and seek application of Colorado law on the issue of whether it may present evidence of its attorney fees to the jury before it is actually deemed the "prevailing party". However, under Colorado law, the analysis, and ultimate result, remain the same. The Colorado Supreme Court has held that where a party's right to attorney fees stems from contract, it is within the sound discretion of the trial court to defer consideration of the entitlement to such fees, and the amount of such fees, until the merits of the case are decided. Ferrell v. Glenwood Brokers, Ltd, (Colo. 1993) 848 P.2d 936, 941-942. Attorney fees of this nature are not considered "damages" and the party seeking reimbursement of its contract-based attorney fees must first establish itself as the prevailing party. Roa v. Miller (Colo.App. 1989) 784 P.2d 826, 829 ["If the award [of attorney fees] is dependent upon the achievement of a successful result in the litigation in which they are to be awarded and the fees are for services rendered in connection with that litigation, a determination of the propriety of an award of fees need not be made until that litigation is completed and the result is known."] The Ferrell and Roa analysis has been considered and approved by the Tenth Circuit. See Allison v. Bank One-Denver (10th Cir. 2002) 289 F.3d 1233 [Where the Tenth Circuit Court of Appeals addressed the issue of awarding attorney's fees as part of a prevailing party contractual agreement and held, citing to Ferrell, that the attorney's fees should be treated as costs and the amount should be determined after the merits of the case are decided.] // //

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C.

UMM's Claim for Attorney Fees Stems From Contract and, as Such, UMM Must Establish Itself as the Prevailing Party in Order to Recover Its Attorney Fees

UMM's claim for attorney fees is firmly rooted in the terms and conditions of the Subcontract. Pursuant to Article 7.2 of the Subcontract, UMM and Big-D agreed that, in the event of a legal dispute, the prevailing party would be entitled to its reasonable attorney fees: "In the event of a dispute, the prevailing party shall be entitled to recover from the other party all reasonable attorney fees, costs and expenses incurred, including statutory interest." Subcontract, Article 7.2. Thus, UMM's claim for attorney fees is clearly contractually based and would be governed under applicable California or, in the alternative, Colorado law, regarding contract-based attorney fees provisions. Under either interpretation, the result is the same; UMM must first be determined the prevailing party before it would be entitled to recover any of its attorney fees. D. In Light of the Fact that UMM May Not Recover Any of Its Attorney Fees Unless It Is First Determined to be the Prevailing Party, Reference to Any Evidence of Its Alleged Attorneys' Fees During the Substantive Portion of Trial Would be Irrelevant and Highly Prejudicial to Big-D

Pursuant to Federal Rule of Evidence, Rule 401, evidence is relevant only if it has a "tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." A trial court has broad discretion to determine whether evidence is relevant or not, and its decision will not be reversed absent a clear showing of abuse of that discretion. Marshall v. El Paso Natural Gas Co., (10th Cir 1989) 874 F.2d 1373, 1380. If the Court determines that certain evidence is relevant, it must also evaluate

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whether the probative value of the evidence is substantially outweighed by the danger of unfair prejudice to another party under Federal Rule of Evidence, R. 403: "Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." Fed. R. Evid. 403. "Unfair prejudice" within the context of Fed. R. Evid. 403 is defined as "an undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one." Fed. R. Evid. 403, Advisory Committee Notes, 1972 Proposed Rules. Exclusion of evidence based upon its prejudicial effect is a matter determined by the trial court and will only reversed upon a clear showing of abuse of discretion. Marshall v. El Paso Natural Gas Co., (10th Cir 1989) 874 F.2d 1373, 1380. In the case at bar, evidence of UMM's attorney fees is irrelevant to determining the underlying dispute between the parties. As mentioned, UMM claims to have incurred additional and unexpected costs on the Project due to delays and changes to its scope of work. Big-D denies these allegations and, further, requests a determination as to the extent of the Project delays caused by UMM. That UMM has incurred attorney fees, or the particular amount of fees, is irrelevant to determining the dispute at issue. As the law makes clear, UMM will have an opportunity, after the merits of the trial have been decided and assuming it is deemed the prevailing party, to present evidence of its costs and reasonable attorney fees. Not only are UMM's attorney fees irrelevant to the merits of the case, inclusion of the fees in UMM's claim for damages would only serve to confuse the jury to the prejudice of Big-D. If UMM is allowed to include its attorney fees as part of its claim for

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damages, the jury will be led to believe UMM's damages are considerably higher than what they may actually be. Not only could the inflated damages claim confuse the jury, it might influence the jury into believing that UMM's claims are valid in light of the amount of fees it has incurred during the case. E. UMM and Big-D Stipulated Regarding Attorneys' Fees Owed Under the Indemnity Clause of the Subcontract

In addition, Big-D and UMM have entered into a Stipulation that the evidence regarding attorneys' fees owed under the indemnity clause of the Subcontract will not be submitted until after the trial of the remainder of the case. Big-D and UMM, through a series of emails, attached to the Affidavit of Francis J. Hughes as Exhibit A, agreed that fees relating to indemnity would be decided by the Court after the jury decides the remaining issues of the case. III. CONCLUSION Allowing reference to any of the parties' attorney fees before the merits of the case have been decided would contradict both California and Colorado law. Because a party is not entitled to its contract-based attorney fees unless it has been deemed the prevailing party on the merits, introduction of, or reference to, attorney fees during the substantive portion of trial would be premature and irrelevant. As such, Big-D // // // // // //

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respectfully requests that this Court issue an order in limine precluding evidence related to any of the parties' attorney fees prior to a determination of the merits the case. 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. 6 TO PRECLUDE INCLUSION OF ATTORNEYS' FEES AS PART OF A PARTY'S CLAIM FOR DAMAGES -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 nonparticipant's name:

s/ Kathleen Marie Dolce Kathleen Marie Dolce
:NewLitigationLibrary:8218.1

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