Case 1:03-cv-01973-PSF-MJW
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Civil Action No. 03-cv-1973-PSF-MJW (Consolidated with 04-cv-02112-PSF-MJW) THE WALKER GROUP, INC. Plaintiff, v. FIRST LAYER COMMUNICATIONS, INC. and J.E.H. KNUTSON Defendants.
WALKER GROUP'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND JURY INSTRUCTION REGARDING ESTOPPEL
Plaintiff Walker Group, Inc. ("Walker Group"), by and through counsel, respectfully moves the Court for an Order excluding evidence or instruction to the jury regarding Defendant's purported affirmative defense of estoppel, and, in support thereof, states the following: FACTS In his Reply to Walker Group's counterclaims, Defendant Knutson asserted the affirmative defense of estoppel. (Reply, Additional Defenses ¶ 9). Defendant, however, did not allege specific facts giving rise to this purported affirmative defense. (See id.) Later, in the Final Pretrial Order, Defendant Knutson again asserted that Walker Group's claims are
Case 1:03-cv-01973-PSF-MJW
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barred by estoppel. (Final Pretrial Order at 2). Defendant did elaborate, indirectly, on the grounds for his purported defense, stating that he "executed his Guaranty pursuant to representations that it would not be called, and was only intended to ensure monies [Walker Group] loaned to First Layer were used for intended business purposes rather than for personal benefit." (Id. at 2). These allegations were included in Defendant's Submission of Jury Instruction on Affirmative Defense of Estoppel as well, in which he proposed an instruction that included as an element whether Walker Group "by their words represented to Mr. Knutson that they would not enforce the Guaranty." (Def.'s Submission, Proposed Instruction ¶ 1 (Oct. 25, 2005)). These alleged representations, however, do not support an affirmative defense of estoppel. JURY INSTRUCTION Defendant significantly altered element one of the CJI Instruction related to Estoppel to Claim Damages for Breach of Contract. The tendered jury instruction element one reads: Walker corporations by their words represented to Mr. Knutson that they would not enforce the Guaranty. (Def.'s Submission, Proposed Instruction ¶ 1). Element one should read: The plaintiff by its words or conduct represented to the defendant that it was (waiving) (excusing) (forgiving) the defendant's breach of contract; Colorado Supreme Court Committee on Civil Jury Instructions, CJI 4th 30:25 (emphasis added).
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Defendant modified the jury instruction because the defense does not apply to the facts of this case. There has been no testimony in the trial (or other sworn testimony) to demonstrate that after the breach (i.e., after October 10, 2002) there was any statement by Walker that it would not enforce the guaranty. Even assuming arguendo that the statements were made as claimed by Defendant, because the statements occurred before any breach, it would have been impossible to waive, excuse, or forgive any breach.1 ARGUMENT Under Colorado law, there is a distinction between the doctrines of equitable estoppel and promissory estoppel. The doctrine of equitable estoppel applies to misstatements of fact, while the doctrine of promissory estoppel applies to promises. SDJ Ins. Agency, L.L.C. v. Am. Natl. Ins. Co., 292 F.3d 689, 692-93 (10th Cir. 2002); Bd. of County Comm'rs of Summit County v. DeLozier, 917 P.2d 714, 716 (Colo. 1996). In order for the doctrine of equitable estoppel to apply, "the misrepresentation must be of a material fact that presently exists or has existed in the past." DeLozier, 917 P.2d at 716. There are two elements to equitable estoppel: "the party to be estopped must know the facts and either intend the conduct to be acted on or so act that the party asserting estoppel must be ignorant of the true facts, and the party asserting estoppel must rely on the other party's conduct with resultant injury." SDJ Ins. Agency, 292 F.3d at 693. Where estoppel is based on promises relating to future events, there is an additional requirement that "the party making the future promise had no present
Furthermore, to the extent that Defendant argues that CJI Instruction 30:23 cures the timing problem (i.e., no breach at the time statements were made), this instruction is also deficient in that there is no evidence that Walker Group caused Mr. Knutson not to perform his obligations required by the contract. Colorado Supreme Court Committee on Civil Jury Instructions, CJI 4th 30:23 (element one).
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intent to fulfill the promise." Id.2 Because Defendant's purported affirmative defense is based on allegations that Walker Group represented it would not enforce the Guaranty in the future, it should be characterized and analyzed as a defense of promissory estoppel. I. DEFENDANT'S ESTOPPEL DEFENSE FAILS AS A MATTER OF LAW In SDJ Insurance, the Tenth Circuit rejected an estoppel argument because the party failed to submit any evidence that the party to be estopped had no intention of keeping their promise of future conduct at the time the promise was made. SDJ Ins. Agency, 292 F.3d at 693. In that case, plaintiffs argued that the defendants should be estopped from exercising their contractual right to terminate the agreement between the parties at will because defendants previously promised that plaintiffs would be given two years to reach defendants' production requirements. Id. at 692. The Tenth Circuit affirmed Judge Babcock's rejection of plaintiffs' argument because plaintiffs "failed to prove, as required by Colorado law, that [defendants] had no intention of keeping their promise to allow [plaintiffs] two years to reach required production levels when that promise was made." Id. at 693 (citing DeLozier). Like the plaintiffs in SDJ Insurance, Defendant Knutson has no evidence that Walker Group had no intention of acting in accordance with its alleged representation that they were not the type to call guaranties when the representation was made. To the contrary, the evidence shows that Walker Group agreed to finance First Layer because it hoped and expected the business would do well, resulting in valuable stock options for Walker Group. Thus, Defendant cannot prove an essential element of his purported estoppel defense, that
The SDJ Insurance court discussed the claim before it in terms of equitable estoppel, despite the fact that it was based on a future promise, because the plaintiffs waived any promissory estoppel argument and chose to proceed under the doctrine of equitable estoppel. 292 F.3d at 692.
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Walker Group had no present intent to abide by its alleged representations, and the defense fails as a matter of law. Furthermore, alleged statements by Mark Walker or Doug Leckie that they were "not the type to call guaranties" do not support a claim of estoppel. (See Knutson Dep. 167-168 (cited portion attached as Exhibit A)). In Price v. Public Service Co. of Colorado, 1 F. Supp. 1216 (D. Colo. 1998), Judge Kane held that statements by a human resources supervisor to a job applicant that the company "did not have layoffs" did not support promissory estoppel. Id. at 1227. The Court further indicated that such statements are simply "general assurances of a secure job" and not promissory in nature. Id. This was so even though the plaintiff allegedly declined a more lucrative job with another company on the basis of these representations. Id. The representation in Price, that the company did not have layoffs, is similar in nature to the alleged representation here, that Walker Group did not call guaranties. Walker
Group's alleged statements are best characterized as general assurances of a good relationship with First Layer's founders, including Defendant, and not promissory in nature. CONCLUSION For the reasons stated herein, Walker Group respectfully requests that the Court enter an Order excluding evidence or instruction to the jury regarding Defendant's purported affirmative defense of estoppel on the grounds that Defendant's purported defense fails as a matter of law.
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Case 1:03-cv-01973-PSF-MJW
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Respectfully submitted, this the 27th day of October, 2005.
/s/ Joshua Maximon Joshua Maximon The Maximon Law Firm, LLC 12202 Airport Way, Suite 170 Broomfield, Colorado 80021 Telephone: (303) 991-3344 Richard S. Gottlieb Laura A. Greer Kilpatrick Stockton LLP 1001 West Fourth Street Winston-Salem, North Carolina 27101-2400 Telephone: (336) 607-7300 Attorneys for Plaintiff Walker Group, Inc.
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on October 27, 2005, I electronically filed the foregoing WALKER GROUP'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND JURY INSTRUCTION REGARDING ESTOPPEL with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses: [email protected] [email protected], and I hereby certify that I have mailed or served the document or paper to the following non CM/ECF participants by first class mail addressed as follows: none.
/s/ Richard S. Gottlieb Richard S. Gottlieb Attorney for Plaintiff Walker Group, Inc. Kilpatrick Stockton LLP 1001 West Fourth Street Winston-Salem, North Carolina 27101-2400 Telephone: (336) 607-7300 [email protected]
02560-207219 9012689.2
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