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. PLAINTIFF' MOTION IN LIMINE NUMBER 2: S TO PRECLUDE PAROL EVIDENCE

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Plaintiff Leprino Foods Company ("LFC") moves the Court for an Order in limine to preclude the parties, their witnesses, and their attorneys from referring to, and/or presenting parol evidence of communications or negotiations between LFC and Defendant Big-D Construction Corp.-California in the presence of the jury. 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. Based upon efforts taken by Big-D in discovery, LFC believes that Big-D might attempt to introduce at trial evidence of negotiations and/or communications between LFC and Big-D that occurred prior to the execution of the Contract. Big-D must not be allowed to present evidence of prior or contemporaneous negotiations, stipulations or communications that vary from or contradict

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the written instrument. The Contract is fully integrated and unambiguous, and therefore any testimony offered to explain or add to the Contract is inadmissible parol evidence. 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. Big-D may attempt to introduce evidence that would vary, modify or contradict the terms of the Contract.

Big-D might attempt to introduce evidence of negotiations and/or communications between LFC and Big-D that occurred prior to the execution of the Contract. By way of example only, Big-D might attempt to present evidence that, prior to the Contract, LFC had established and agreed to certain estimated milestone schedules, cost estimates and square footage estimates for the Project. Some of those estimates may have come, for example, from a bid for the Project that a previous bidder (Harris Construction) had provided to LFC. Any such estimates discussed between LFC and Big-D, however, were just that ­ estimates for planning purposes and specifically were not terms of the Contract. Big-D might try to argue that the pre-Contract estimates are somehow binding upon LFC for purposes of establishing that Big-D' claims for additional costs beyond its Contract price s 3

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were valid and accepted by LFC. Any such pre-Contract estimates and negotiations are inadmissible parol evidence because they were merged into the Contract, both as a matter of law and by the express terms of the Contract. C. Parol evidence is not admissible as a matter of law.

Contract law requires that the Court look to the language of the Contract when determining the parties'intent. In the absence of contrary manifestation of intent in the Contract itself, contractual terms that have a generally prevailing meaning will be interpreted according to that meaning. Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1313-14 (Colo. 1984). Only where the terms of the agreement are ambiguous or are used in some technical sense not apparent from the contractual document itself may a court look beyond the four corners of the document to determine the meaning intended by the parties. Id. at 1314; Scott Co. v. MK-Ferguson Co., 832 P.2d 1000, 1003 (Colo. Ct. App. 1992). It is black letter law that "in construing a document courts should not rewrite the provisions of an unambiguous contract, but must enforce an unambiguous contract in accordance with the plain and ordinary meaning of its terms." USI Properties East, Inc. v. Simpson, 938 P.2d 168, 173 (Colo. 1997), citing Wota v. Blue Cross & Blue Shield of Colorado, 831 P.2d 1307, 1309 (Colo. 1992); Griffin v. United Bank of Denver, 198 Colo. 239, 242, 599 P.2d 866, 868 (1979). See also, Heller v. Fire Ins. Exch., 800 P.2d 1006, 1009 (Colo. 1990) (stating where no ambiguity exists agreement will be enforced according to express provisions, giving words their plain and generally accepted meaning.) In the words of the U.S. District Court for the District of Colorado, applying Colorado substantive law, as the Court must do here, "[a]bsent allegations of fraud, accident, or mistake in the 4

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formation of the contract, parole evidence may not be admitted to add to, subtract from, vary, or contradict, change, or modify an unambiguous integrated contract." In re Parsons, 272 B.R. 735, 753 (D. Colo. 2001). "The parol evidence rule is one of substantive law, not merely one of evidence." Therefore, testimony violative of the parol evidence rule is without probative force and "must be ignored by the trial court." Magnetic Copy Services, Inc. v. Seismic Specialists, Inc., 805 P.2d 1161, 1164 (Colo. App. 1990). D. All pre-Contract negotiations and estimates were expressly merged into the Contract.

Article 15.4 of the Contract provides, in pertinent part: All the terms and provisions of the agreement of the parties pertaining to the subject matter hereof are fully set forth in the Contract Documents and no prior understanding or obligation not expressly set forth shall be binding on the parties. No supplement, modification or amendment (including a Change Order) to this Agreement or any assurance, statement or representation shall be binding unless executed in writing by the party to be charged therewith. The application of the parol evidence rule is particularly appropriate here because the parties' intent and understanding when entering into the Contract was that the Project scope and cost was not yet determined. As provided in Article 1.2 of the Contract, in pertinent part: The Contractor [Big-D] recognizes that construction on the Project will commence and will proceed before Drawings, Specification and other Contract Documents are completed and fully developed and that development and completion of such documents in the form of Construction Documents will occur as construction is progressing. Accordingly, the costs of many items shall be established first on the basis of the initial cost projections and Allowances as hereinafter described. Development of the final Construction Documents, further definition of initial cost projections and development of actual costs for Allowance items will be an interactive process where the Contractor, based on Scope Documents provided by the ArchitectEngineer, will solicit Subcontractors' price proposals that will be based on design assumptions by the Subcontractor that are consistent with and further refine elements of the Scope Documents and which cover the labor and materials necessary to execute the same. 5

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The "Allowances" referenced in Article 1.2 are the only "estimates" incorporated into the terms of the Contract. Big-D expressly adopted the Allowances. "Allowances" are defined in Article 5.4, which provides, in pertinent part: The Contractor and the Owner [LFC] agree that the cost of certain portions of the Work are incapable of exact determination at the time of the execution of this Agreement. The Contractor and the Owner have agreed upon reasonable estimates of such costs based upon available information for such portions of the Work. Such estimates are herein called "Allowances" and are shown in the Cost of the Work Budget as Allowances. . . By inclusion of Allowance items in the Schedule of Allowances and the Cost of the Work Budget, Contractor represents and warrants to Owner that each Allowance is a reasonable estimate, using contractor' best skill and s professional judgment, of the cost pertaining to such Allowance item. . . Application of the parol evidence rule is especially critical where a contract contains an express integration or merger clause. Addressing such a contract in Nelson v. Elway, 908 P.2d 102, 107 (Colo. 1995), the Colorado Supreme Court found upheld the exclusion of extrinsic evidence: We agree with the court of appeals that the merger clauses preclude consideration of extrinsic evidence to ascertain the intent of the parties. Integration clauses generally allow contracting parties to limit future contractual disputes to issues relating to the express provisions of the contract. [citation omitted] Therefore the terms of a contract intended to represent a final and complete integration of the agreement between the parties are enforceable, and extrinsic evidence offered to prove the existence of prior agreements is inadmissible. The Elway court found that the merger clauses in the contract unambiguously manifested the intent of the parties that the written contract constitute the entire agreement between them. "Where, as here, sophisticated parties who are represented by counsel have consummated a complex transaction and embodied the terms of that transaction in a detailed written document, it would be improper for this court to rewrite that transaction by looking to evidence outside the four corners of the contract to determine the intent of the parties." Id.

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Here, as in Elway, sophisticated parties in a complex transaction for a multi-million dollar construction project reduced the complete terms of their agreement to comprehensive written document, and it would be improper of the Court to rewrite the transaction. To impose pre-contract estimates as binding terms of the Contract would defeat the express intent of the parties'agreement, with great prejudice to LFC' right to enter and enforce its contracts. s

III CONCLUSION Allowing any reference to pre-Contract negotiations and estimates that were, by contract and by law, merged into the Contract, would be improper and prejudicial to LFC. Accordingly, the parties and their attorneys and witnesses should be ordered to refrain from making any reference before the jury to negotiations and/or communications with LFC regarding the scope and costs of the Contract Work, and estimates thereof, that occurred prior to the date on which LFC and Big-D executed the Contract, September 1, 2000. 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]

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Patrick T. Markham Jacobson & Markham 8880 Cal Center Drive, #100 Sacramento, California 95826 Telephone: (916) 854-5969 Facsimile: (916) 854-5965 [email protected]

CERTIFICATE OF SERVICE I hereby certify that on the 21st day of February 2006, I electronically filed the foregoing PLAINTIFF' MOTION IN LIMINE NUMBER 2: TO PRECLUDE PAROL EVIDENCE S 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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