Free Motion in Limine - District Court of Colorado - Colorado

Case 1:03-cv-01973-PSF-MJW

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Filed 10/17/2005

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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 REGARDING ALLEGED FRAUD IN THE INDUCEMENT OR NEGLIGENT MISREPRESENTATION BY WALKER GROUP

Plaintiff Walker Group, Inc. ("Walker Group"), by and through counsel, respectfully moves the Court for an Order excluding all evidence relating or referring to alleged fraud or negligent misrepresentations by Walker Group and, in support thereof, states the following: 1. On August 12, 2005, this Court entered summary judgment in favor of Walker

Group on J.E.H. Knutson's fraud claim. (Order on Walker Group's Mot. for Partial Summ. J. 10-15 (Aug. 12, 2005) ("Summ. J. Order")). Notwithstanding the Court's Order, Mr. Knutson seeks to introduce evidence relating to the alleged fraud or negligent misrepresentation via an affirmative defense of fraudulent inducement.

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2.

To prevail under either a claim of fraud or an affirmative defense of fraudulent

inducement, a party must establish a false representation of material existing fact (Compare Order on Walker Group's Motion for Partial Summary Judgment at 11 (citing Concord Realty Co. v. Continental Funding Corp., 776 P.2d 1114, 1117-18 (Colo. 1989)) and CJI 19:1 (elements one and two) with CJI 30:18 (elements one and two) and CJI 30:18 Notes on Use paragraph 10 ("[W]hen this instruction is given, those instructions in Chapter 19 as would be appropriate in the light of the evidence in the case should also be given, including Instruction 19:3 [definition of False Representation].")). Accordingly, Colorado courts have held that if there is no evidence regarding an essential element of a claim of fraud, a "claim of fraud based on material misrepresentation, whether in support of or in defense of a claim, must fail." ICE. v. Benedict Nuclear Pharmaceutical, Inc., 797 P.2d 757, 760 (Colo. 1990) (emphasis added). 3. In this case, the Court held that Mr. Knutson's fraud claim failed as a matter of

law because there was no evidence "sufficient to establish the existence of an element essential to his case, namely that the alleged statements were false when made." (Summ. J. Order at 14-15). Because this element is essential to both a fraud claim and a fraud in the inducement defense, the Court already has determined that Defendant's defense of fraudulent inducement fails as a matter of law.1

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The dismissed fraud claim in Defendant's Second Amended Complaint is nearly identical to his fraudulent inducement defense in his Reply to Walker Group's Counterclaim. With the exception of the addition of the phrase "ready to go" in paragraph (a) of his affirmative defense and the substitution of a specific number of 27 sales representatives for "in excess of 20" in paragraph (c), these allegations of fraud are identical to those in the Second Amended Complaint and which the Court held were not supported by competent, objective, admissible evidence and could not form the basis of a fraud claim. (Summ. J. Order at 14-15).

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4.

Exclusion of such evidence is further warranted by the law of the case

doctrine, which "posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages of the litigation." United States v. Moran, 393 F.3d 1, 7 (1st Cir. 2004); see also Hickman v. Thomas C. Thompson Co., 644 F. Supp. 1531, 1533 (D. Colo. 1986) (denying plaintiff's motion to strike defense of misuse under law of the case doctrine where court had previously denied plaintiff's motion for summary judgment on defense of misuse). The doctrine is based on "the principal that where litigants have once battled for the court's decision, they should neither be required, nor without good reason permitted, to battle for it again." Tri-Star Pictures, Inc. v. Leisure Time Productions, B.V., No. 88 Civ. 9127, 1992 WL 296314, *2 (S.D.N.Y. Oct. 6, 1992) (quotation and citation omitted) (unreported opinion, attached as Exhibit A). Under the socalled "second branch" of the law of the case doctrine, "when a court has ruled on an issue, that decision should generally be adhered to . . . in subsequent stages in the same case." Id. (omission in original). The Tri-Star Pictures court further recognized that "the law-of-thecase doctrine is crucial in the context of ongoing litigation because efficient disposition of the case demands that each stage of the litigation build on the last and not afford an opportunity to reargue every previous ruling." Id. (quotation and citation omitted). Because the Court previously ruled that Knutson has not shown the existence of objective, competent, admissible evidence that the alleged representations by Walker Group, which form the basis of both his claim for fraud and the purported affirmative defense, were false at the time they

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were made, any evidence or testimony related to alleged fraud or misrepresentations by Walker Group should be excluded under the law of the case doctrine. 5. Exclusion of any evidence or testimony related to alleged negligent

misrepresentations by Walker Group is warranted for the same reasons. Knutson did not assert a claim for relief for negligent misrepresentation in his Second Amended Complaint, however, he did assert negligent misrepresentation as an affirmative defense to Walker Group's claim for breach of guaranty. (See generally 2d Am. Compl.; Reply, Additional Defenses ¶ 7). Because Plaintiff did not allege the specific representations upon which his defense was based, Walker Group can assume only that the purported defense of negligent misrepresentation is based on the same representations that formed the basis of Knutson's fraud claim. Again, because the Court held that Knutson has not shown the existence of objective, competent, admissible evidence that any alleged representations by Walker Group were false at the time they were made, any evidence or testimony related to alleged negligent misrepresentations by Walker Group should be excluded 6. Furthermore, under Rule 403 of the Federal Rules of Evidence, Knutson

should not be permitted to introduce any evidence regarding alleged fraud or misrepresentations on the part of Walker Group because such evidence is more likely to confuse the issues and mislead the jury than it is to assist the jury in reaching a determination of the claims at issue, namely whether Defendant Knutson breached his guaranty or fraudulently induced Walker Group to loan money to First Layer Communications, Inc. through his own fraud or misrepresentation.

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7.

Finally, to the extent Defendant intends to present evidence or testimony

regarding alleged representations by Walker Group that it would or would not "call" the guaranties, such evidence also should be excluded. At times during this litigation, Defendant Knutson has suggested that after he entered into the Guaranty that Walker Group communicated that it would not "call" it. (See e.g. Knutson's Resps. to Walker Group's 1st Set Interrogs. No. 3 (Mar. 16, 2004) (claiming Mark Walker stated "I am not the type to call guaranties" on or about May 24, 2001 and Sep. 28, 2001) (attached as Exhibit B)). However, even Knutson himself testified in his deposition that no one at Walker Group made any statements about not calling the guaranties before he signed the guaranty in October 2000. (Knutson Dep. at 100, 103-104 (Mar. 25, 2004) (attached as Exhibit C)). Thus, it is

impossible for such alleged representations to form the basis of Defendant's affirmative defense of fraudulent inducement, and any evidence or testimony related to these alleged statements should be excluded under Federal Rules of Evidence 402 and 403 as irrelevant or more likely to confuse or mislead the jury than it is to assist the jury in reaching a determination of the claims at issue. WHEREFORE, Walker Group respectfully requests that the Court exclude all evidence relating or referring to alleged fraud or negligent misrepresentation by Walker Group.

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Respectfully submitted, this the 17th day of October, 2005.

/s/ Richard S. Gottlieb 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. Joshua Maximon, Esq. The Maximon Law Firm, LLC 12202 Airport Way, Suite 170 Broomfield, Colorado 80021 Telephone: (303) 991-3344

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on October 17, 2005, I electronically filed the foregoing WALKER GROUP'S MOTION IN LIMINE TO EXCLUDE EVIDENCE REGARDING ALLEGED FRAUD OR NEGLIGENT MISREPRESENTATION BY WALKER GROUP 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 9001359.4

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