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 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.

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PLAINTIFF' RENEWED MOTION IN LIMINE NUMBER 3: S TO PRECLUDE EVIDENCE OF DAMAGES EXPRESSLY PRECLUDED BY CONTRACT, OR, ALTERNATIVELY, TO STRIKE DAMAGES EXPRESSLY PRECLUDED BY CONTRACT Plaintiff Leprino Foods Company ("LFC") moves the Court for an Order in limine precluding Defendants, their witnesses, and their attorneys from referring to, and/or presenting evidence of, damages expressly precluded by contract, or, in the alternative, striking said damages. CERTIFICATE OF COMPLIANCE WITH D.C.COLO.LCivR 7.1A Pursuant to D.C.COLO.LCivR 7.1A., counsel for the parties participated in a conference call on February 28, 2006 wherein counsel for the Big-D Defendants and Third-Party Defendant Marelich Mechanical Co., Inc. objected to the relief requested herein. I INTRODUCTION This action arises from delays in the construction of a cheese manufacturing and dairy storage facility in Lemoore, California ("Project"). LFC, as owner, entered into a general contract on September 1, 2000, with Defendant Big-D Construction Corp.-California, a subsidiary/affiliate of other Big-D entities ("Big-D") to construct the Project ("Contract"). Third-Party Defendant Marelich Mechanical Co., Inc. d/b/a University Marelich Mechanical ("UMM") was a mechanical subcontractor to Big-D on the Project. Big-D might attempt to introduce evidence of certain damages under the pretense that they are "pass-through" claims against LFC ­ claims asserted by UMM against Big-D, which Big-D "passes through" in its claims against LFC ­ even though they are not claims Big-D can properly 2

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assert against LFC under the express terms of the Contract. Because such damages are contractually precluded and such evidence would only confuse the jury without being relevant, Big-D must not be allowed to present such claims to the jury. 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 Prac. Guide: Federal Civil Trials & Evidence (TRG), § 4.322. A district court' grant of a s motion in limine is ordinarily reviewed for an abuse of discretion. U.S. v. Gutierrez-Gonzalez, 184 F.3d 1160, 1164 (10th Cir. 1999). The timing of motions in limine "should be left to the discretion of the trial court with a reminder that advance planning helps both parties and the court." U.S. v. Cook, 608 F.2d 1175, 1186 (9th Cir. 1979), overruled on other grounds, Luce v. U.S., 469 U.S. 38 (1984). B. The contract expressly prohibits Big-D from recovering certain costs of work.

The Contract expressly limits what costs Big-D is permitted to recover from LFC. Article 8 of the Contract describes the Costs of Work that Big-D can recover from LFC. In Article 9 of the Contract, Big-D further agreed to specific categories of costs that it would not be entitled to recover, as follows: ARTICLE 9 COSTS NOT TO BE REIMBURSED 9.1 The term Cost of the Work shall not include any of the items set forth below in Article 9.

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9.1.1 Salaries or other compensation, including any incentive bonus, of the Contractor' personnel, including principal-in-charge or project executive at the s Contractor' principal office and branch offices (except the field office personnel s which shall be reimbursed at a rate approved by Owner when submitted with daily time sheets) and of the Contractor' officers, executive, and directors. s 9.1.2 than the field office. Expenses of the Contractor' principal and branch offices other s

9.1.3 Any part of the Contractor' capital expenses, including s interest on the Contractor' capital employed for the Work. s 9.1.4 Except as specifically provided for in Article 8, rental costs of machinery and equipment. 9.1.5 Overhead or general expenses of any kind, except as may be expressly included in General Conditions Costs. 9.1.6 Costs due to the willful misconduct or negligence of, or breach of the Contract by the Contractor, any Subcontractor, anyone directly or indirectly employed by any of them, or for whose acts any of them may be liable, including but not limited to the correction of defective or nonconforming Work, disposal of materials and equipment wrongly supplied, or making good any damage to property. 9.1.7 Except as set forth herein, costs incurred by reason of the Contractor' membership in, or fees paid by the contractor, to trade or professional s organizations. 9.1.8 Compensation to the Contractor for costs incurred by the Contractor in connection with services performed hereunder by the Contractor prior to the date of issuance by the Owner of the Notice to Proceed, unless otherwise so stated in this Agreement. All pre-construction services performed after September 1, 2000 are a Cost of the Work and are reimbursable as such. 9.1.9 Contractor' federal, state or local income taxes. s

9.1.10 The cost of any item not specifically and expressly included in the items described in Article 8, or otherwise acknowledged in the Contract Attachments as a Cost of the Work. 9.1.11 Costs and expenses of the Contractor in connection with the performance of or the administration of the warranty and guarantee aspects of the work as set forth in the Contract Documents. 4

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9.1.12 Costs incurred in traveling to and from any personal residence and the Site and to and from Contractor' head office and the Site, except as s specifically provided for in Attachment A as a General Conditions Cost. C. Big-D must be precluded from presenting evidence of costs prohibited by the contract.

The contractual limitations on reimbursable Costs of Work must be enforced strictly in order to uphold the parties'right to contract. In Francam Bldg. Corp. v. Fail, 646 P.2d 345 (Colo. 1982), the Colorado Supreme Court quoted the United States Supreme Court to instruct: The right of private contract is no small part of the liberty of the citizen, and . . . the usual and most important function of courts of justice is rather to maintain and enforce contracts, than to enable parties thereto to escape from their obligation . . . Francam, 646 P.2d at 349, quoting Baltimore & Ohio Southwestern Ry. v. Voigt, 176 U.S. 498, 505 (1900). See also, Fox v. I-10, Ltd., 957 P.2d 1018, 1021 (Colo. 1998) ("Our courts have repeatedly recognized the sanctity of contracts and the court's role in enforcing them."). UMM has asserted claims for certain damages against Big-D, which Big-D, in turn, may attempt to assert against LFC as "pass-through" claims. All of Big-D' pass-through claims for s damages of the types listed in Article 9 must be stricken or the evidence of those claims precluded, because, if Big-D is not entitled to recover them, they are irrelevant. Fed. R. Evid. 401. By way of example only, one of Big-D' pass-through claims pertains to UMM' claim for s s unabsorbed home office overhead ($1,267,474), but Big-D specifically agreed by contract that it could not recover "overhead or general expenses of any kind" from LFC. See Article 9.1.2 and 9.1.5. Whether UMM is entitled to recover such costs from Big-D is irrelevant to Big-D' ability to recover s the costs from LFC under the Contract between LFC and Big-D. Further with respect to the example of overhead costs, UMM' unabsorbed overhead claim is presented against Big-D as an "Eichleay" s

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claim, pursuant to Appeals in Eichleay Corp., 60-2 B.C.A. (CCH) ¶ 2688, at 13,568 A.S.B.S.A. July 29, 1960). The Eichleay formula, however, pertains to claims on government contracts and is used to "equitably determine allocation of unabsorbed overhead to allow fair compensation of a contractor for government delay." Nicon, Inc. v. U.S., 331 F.3d 878, 882 (C.A.Fed. 2003), quoting Wickham Contracting Co. v. Fischer, 12 F.3d 1574, 11578 (Fed.Cir. 1994) (emphasis added). Eichleay does not apply here because there is no government contract or government delay at issue. Other examples of damages Big-D seeks to recover even though they are precluded by Article 9 are: "cost of money impacts" ($1,266,638), which is prohibited under Article 9.1.3 (capital expenses, including interest); "loss of productivity" ($209,378), which is prohibited under Article 9.1.10 (items not allowed in Article 8); "labor rate escalation costs" ($249,924), which is premised upon delay and therefore prohibited under Article 45.1 and 45.5 (no damages for delay) and Article 9.1.10 (items not allowed in Article 8). There may be other claims Big-D seeks to pass-through from UMM to LFC that are likewise precluded by the Contract. III CONCLUSION Big-D' contractually precluded pass-through claims should be precluded or stricken in limine s because Big-D cannot satisfy its burden of establishing that its claims are sanctioned under the Contract and because allowing Big-D to present to the jury evidence of damages that are contractually precluded would only confuse the jury with irrelevant evidence in this complex case. Evidence of the precluded damages should not be allowed, pursuant to Fed. R. of Evid. 401, because it is irrelevant, and pursuant to Fed. R. of Evid. 403, because it is confusing and unfairly prejudicial. The confusion of the jury and prejudice to LFC posed by the evidence of contractually precluded

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claims can only be avoided by striking the claims or precluding evidence of the claims at the threshold. Accordingly, Defendants and their attorneys and witnesses should be ordered to refrain from making any reference before the jury to claims by Big-D against LFC for damages that Big-D is precluded by contract from recovering because they were beyond the definition of reimbursable costs, or, in the alternative, such claims by Big-D should be stricken. Respectfully submitted this 1st day of March 2006. LEPRINO FOODS COMPANY

By:

/s/ Michael G. Bohn 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]

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CERTIFICATE OF SERVICE I hereby certify that on the 1st day of March 2006, I electronically filed the foregoing PLAINTIFF' RENEWED MOTION IN LIMINE NUMBER 3: TO PRECLUDE EVIDENCE S OF DAMAGES EXPRESSLY PRECLUDED BY CONTRACT, OR, ALTERNATIVELY, TO STRIKE DAMAGES EXPRESSLY PRECLUDED BY CONTRACT 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] Daniel James Nevis of [email protected] Laurence R. Phillips of [email protected] C. Michael Montgomery of [email protected] N. Kathleen Strickland of [email protected]

/s/ Cori Atteberry Cori Atteberry, Legal Assistant

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