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' MOTION IN LIMINE NUMBER 5: S TO PRECLUDE EVIDENCE OF CLAIMS THAT ARE UNTIMELY UNDER THE TERMS OF THE CONTRACT, OR, ALTERNATIVELY, TO STRIKE UNTIMELY CLAIMS 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, claims that are untimely under the terms of the contract, or, in the alternative, striking said claims. CERTIFICATE OF COMPLIANCE WITH D.C.COLO.LCivR 7.1A Pursuant to D.C.COLO.LCivR 7.1A., in an effort to confer prior to filing this motion, undersigned counsel emailed a copy of this motion to counsel for the Big-D Defendants and ThirdParty Defendant Marelich Mechanical Co., Inc. and requested their position. As of the filing of this motion, undersigned counsel has not received any responses from counsel for the Big-D Defendants and Third-Party Defendant Marelich Mechanical Co. 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. UMM has brought a third party action against Big-D asserting it is entitled to payment over and above its signed subcontract, including changes. UMM has contractual privity with Big-D, the 2

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general contractor, and therefore seeks such additional compensation from Big-D. Big-D seeks by its counter-claim to obtain indemnity from LFC for the additional compensation. There are three potential types of claims: (1) claims for additional work, (2) claims for increased cost due to an act or omission of the Owner, and (3) claims for increased cost due to an act or omission of Big-D. Big-D' s Contract with LFC provides for reimbursement for a defined term "Cost of the Work." Claims due to an act or omission of Big-D are never a Cost of the Work. (Contract Article 9.1.6). Additional subcontractor work is controlled by Contract Article 7. Contract Article 7.2 states, "Additional work or deviation from the Drawings and Specifications performed without written authorization will not be subject to reimbursement." Article 7.1 defines such written authorization as obtaining a signed change order. If the increased cost is due to an act or omission of the Owner, Contract General Condition Section 43.3 governs. In essence, the provision states that within 7 days of observance of the occurrence, the subcontractor must submit a detailed claim for the increased compensation. If Big-D failed to follow the Contract, the failure to timely submit a claim (whether approved or not) is a waiver of the right to pursue such claim and a failure of a condition precedent to payment of the claim. Big-D might attempt to introduce evidence to seek reimbursment for UMM claims for certain amounts that, under the express terms of the Contract, are untimely and waived. UMM left the job on October 15, 2002. All claims for additional costs had to be asserted before the work was done for the cost to be reimbursable. For increases due to Owner "acts or omissions," there can be no facts that would permit a claim after October 22, 2002. Big-D' expert provided a list of Change s Estimates ("CE' for which UMM claims payment, and Big-D has made clear its intent to submit s") evidence and argument to the jury that those costs are reimbursable. 3 Because such claims are

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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 reimbursement for additional subcontractor costs without submitting a timely claim.

The Contract required Big-D to give written notice to LFC for additional reimbursement costs either before the work was undertaken, or at latest, "within seven (7) days after the first observance of the occurrence" upon which it bases such claim.1 By the Contract terms, Big-D also agreed that strict compliance with the contractual requirement for providing timely notice of a claim for additional compensation was a condition precedent to Big-D' right to present a claim for additional s

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The Contract states: If the Contractor shall contend during the performance of the Work, that the Contractor is entitled to payment for an increase in the cost of the Work, damage or loss because of any action or omission of the Owner, or others engaged by the Owner, the Contractor shall not delay its work on account thereof and shall, within seven (7) days after the first observance of the occurrence, notify the Owner, in writing, of the amount of its claim and all details in connection with the contention. General Conditions to the Contract ("Gen. Conds.") at ¶ 43.3.

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compensation and that Big-D will have waived any claim for additional compensation if were to fail to provide the required notice.2 The notice requirements in the Contract are quite common in construction contracts and are routinely enforced by the courts. "An obvious purpose of such a provision is to avoid subsequent disagreement. . . Such a provision is a wise, and not an unusual one, in building contracts, and it is held by the authorities to be obligatory upon the parties, and not to be disregarded." Service Steel Erectors Co. v. SCE, Inc., 573 F. Supp. 177, 178 (D.C. Va. 1983), quoting Atlantic & Danville RY v. Delaware Construction Co., 375 E. 13, 16 (1900). "The notice requirement protects important concerns of the [Owner] by permitting early investigation of the validity of a claim when evidence is still available, by allowing the [Owner] to compile records of the contractor' costs, and by allowing the [Owner] to consider alternate methods s of construction to prevent unnecessary expenditures." Byron' Constr. Co. v. State Highway Dept., s 448 N.W.2d 630, 633 (N.D. 1989). Cases are legion upholding and strictly enforcing such notice requirements. See, e.g., Perini Corp. v. City of New York, 18 F. Supp. 2d 287 (S.D.N.Y. 1998), aff' 182 F. 3d 901 (2nd Cir. 1999) (granting partial summary judgment in favor of owner after d, contractor failed to comply with contract' notice and documentation requirements prior to asserting s claim for $16 million); Westates Constr. Co. v. City of Cheyenne, 775 P.2d 502, 504 (Wyo. 1989) (affirming summary judgment in favor of owner based upon contractor' forfeiture of claim for s additional compensation due to failure to adhere to contractually-mandated claim procedures).

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Section 43.5 provides, in pertinent part: It is a condition precedent to the consideration or prosecution of claims by the Contractor that the foregoing provisions be strictly observed in each instance, and if the Contractor fails to comply, the Contractor shall be deemed to have waived the claim.

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C.

Big-D must be precluded from presenting evidence of claims that were not submitted timely under the Contract terms.

The contractual notice requirements 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."). Many of the UMM-initiated CE' underlying Big-D' claim were submitted more than the s s requisite seven days after discovery of the need to perform the work to which they relate. According to the deposition testimony of UMM' Project Manager, Lou Beck, UMM' work on the Project was s s substantially completed and UMM demobilized by October 15, 2002. It follows, then, that the latest possible date by which Big-D could submit a timely CE based upon work performed by UMM was seven days later ­ October 22, 2002.3 Therefore, any CE' submitted by Big-D after October 22, s 2002 are untimely. According to Mark Berry, UMM' expert, the UMM claim is premised on the costs in certain s CE' The CE' are dated, and the following CE' were submitted to LFC after October 22, 2002, or s. s s

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LFC is not conceding that any CE' submitted by October 22, 2002 are timely. Rather, at the very least, without s reviewing the specific dates on which Big-D discovered the need for additional work and submitted CE' the last s, possible timely CE must have been submitted by seven days after UMM' last work. s

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Big-D is unable to satisfy its burden of proving that the following CE' were submitted by s October 22, 2002:
CE# 44 45 108 113 117 126 139 176 197 238 245 246 247 272 288 318 319 322 344 355 364 365 366 367 368 387 408 411 412 419 421 423 424 433 451 457 458 460 Description Struct / AHU coordination Duct above roof supports Add fire stopping at penetrations Blocked out of utilidor-floor pour Blow down heat recovery skid Enlarge opening by saw cutting Accelerate welding above ceiling Utilidor support frame sequence Support steel conflict To smoke and roofing fumes Site winterization Utilidor clean up Plant clean up Weekend equipment usage Crane right of way Modify ductwork Project acceleration Supports and supplemental steel Tank farm Chlorinate delay costs Utilidor conn 801/809 Utilidor conn 804/805 Utilidor conn 805/806 Utilidor conn 806807 Furnish and install flanges for AH Boilers install and relocate Replace utilidor braces PCI reinsulate damaged insulation Perform additional air balance Reassign work force due to air sampling Replace rupture disk on AHU Add 6' CW POC Area 105 Revise as-built drawings Provide additional ventilation Change SV01 from NO to NC PCR Provide bypass on CHW & HW piping Insulation for personnel protection Amount (Dollars) Date Submitted 11,814 10/24/2002 167,225 03/27/2003 3,768 11/18/2002 141,284 03/27/2003 346 12/11/2002 1,242 504,880 02/21/2003 1,711,017 03/27/2003 23,399 12/02/2002 8,025 12/10/2002 411,434 10,722 12/17/2002 35,789 12/19/2002 17,567 12/10/2002 187,711 11/27/2002 3,550 10/23/2002 3,263,704 12/12/2002 8,454 01/10/2003 4,623 11/25/2002 2,112 11/26/2002 204,977 03/27/2003 239,112 03/27/2003 85,540 03/27/2003 42,916 03/27/2003 3,288 1,756 11/25/2002 71,146 01/06/2003 5,661 12/04/2002 50,038 06/18/2003 1,392 12/04/2002 9,849 11/01/2002 11,467 01/06/2003 8,438 12/10/2002 1,091 10/28/2002 1,073 10/28/2002 7,753 11/13/2002 9,581 11/15/2002 18,573 11/15/2002

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461 462 463 465 468 469 470 471 472

Add 3" CW valve at milk receiving Added condensate support Final inspection delays Additional labor and repair OW leak Others Replace damaged CAL-SIL insulators Insulation of flanges Validation of controls integration Repair damage to EF14 TOTAL

8,414 1,036 13,500 545 593 10,397 5,596 75,276 1,754 $ 7,409,428

11/20/2002 12/09/2002 12/27/2002 12/13/2002 02/14/2003 03/28/2003 04/21/2003 2003 03/25/2003

Most of the CE' relate to work substantially before October 15, 2002. However, this Motion s uses October 15, 2002 as the latest possible work date, the date UMM left the job site. There may be other CE' that were also untimely. However, considering only the untimely CE' listed above, s s Big-D' total claim of $8,260,600.00 for UMM-initiated CE' must be reduced by $7,409,428.00, s s leaving a total maximum that Big-D may potentially recover (if it proves the timeliness and validity of the remaining CE' of $851,172.00. Big-D cannot support the basic condition precedent to s) reimbursement for any claims in excess of the potentially timely CE' All of Big-D' claims for s. s reimbursement damages arising from the untimely CE' listed above must be stricken or the evidence s of those claims precluded, because, if Big-D is not entitled to recover them, they are irrelevant. Fed. R. Evid. 401. Whether UMM is entitled to recover such damages from Big-D is irrelevant to Big-D' s ability to recover the costs from LFC under the Contract between LFC and Big-D. III CONCLUSION Big-D' contractually precluded CE claims should be precluded or stricken in limine because s 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

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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 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 untimely submitted, or, in the alternative, such claims by Big-D should be stricken. Respectfully submitted this 21st day of February 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 21st day of February 2006, I electronically filed the foregoing PLAINTIFF' MOTION IN LIMINE NUMBER 5: TO PRECLUDE EVIDENCE OF S CLAIMS THAT ARE UNTIMELY UNDER THE TERMS OF THE CONTRACT, OR, ALTERNATIVELY, TO STRIKE UNTIMELY CLAIMS 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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