Free Motion in Limine - District Court of Colorado - Colorado

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

Document 167

Filed 10/17/2005

Page 1 of 7

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 03-CV-1973-PSF-MJW (Consolidated with 04-CN-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 REGARDING ACCOUNTS RECEIVABLE OF FIRST LAYER COMMUNICATIONS, INC.

Defendant Walker Group, Inc. ("Walker Group"), by and through counsel, respectfully moves the Court to exclude all evidence relating or referring to the accounts receivable of First Layer Communications, Inc. ("First Layer"), and, in support thereof, states the following: 1. Recent amendments to Defendant Knutson's exhibit list, generally Exhibits 74

through 82 (see Plaintiff's Motion to Amend Trial Exhibit List and exhibits thereto), indicate that he may seek to introduce evidence relating to accounts receivable of First Layer Communications, Inc. ("First Layer"). Walker Group understands that Defendant will attempt to offset the debt of First Layer by suggesting that Walker Group received or should have received these accounts receivable.

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

Document 167

Filed 10/17/2005

Page 2 of 7

2.

No evidence, however, has been produced to show that First Layer had any active

accounts receivable at the time it dissolved or that any accounts receivable were ever received by Walker Group. When asked in his deposition "[d]id Walker take any First Layer accounts receivable," Mr. Knutson answered "I don't know." (Knutson Dep. 184:10-12 (attached as Ex. A)). 3. Mr. Knutson's testimony was that First Layer's accounts receivable were factored

prior to its dissolution in an attempt to keep First Layer's doors open. As Defendant testified in his deposition, he and a business associate, Jeffrey Sauter, formed Factor Partners to factor accounts receivable solely for First Layer. (Knutson's Dep. 113-14 (attached as Ex. B)). Once factored, these accounts were no longer under First Layer's control and could not be considered assets of First Layer. 4. Rule 402 of the Federal Rules of Evidence provides that "[e]vidence which is not

relevant is not admissible." Even if evidence is found relevant, the court may exclude it if "its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury . . . ." Fed. R. Evid. 403. 5. Since Defendant has testified that he does not know if Walker Group received any

of First Layer's accounts receivable and has testified that First Layer's accounts receivable were instead factored (and there has been no testimony to the contrary by any witness in this case), any evidence relating to First Layers' accounts receivable is not relevant to the claims at issue and should be excluded under Rule 402 of the Federal Rules of Evidence.

2

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

Document 167

Filed 10/17/2005

Page 3 of 7

6.

Given its low probative value, this evidence is also 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 and should be excluded under Rule 403 of the Federal Rules of Evidence. 7. Defendant's attempt to raise the possibility that Walker Group either received or

should have received any purported accounts receivable of First Layer is untimely and will prejudice Walker Group. Defendant never asserted in discovery that First Layer was entitled to a credit for accounts receivable allegedly received from First Layer. For example, in response to Interrogatory 6 of Walker Group's First Set of Interrogatories to Knutson responded as follows: Interrogatory No. 6: Describe with particularity the basis for your allegation in paragraph 9 of the Complaint that Walker Group, Inc. obtained "assets" of First Layer Communications, Inc. Response: Defendant obtained assets of First Layer pursuant to the note, including, but not limited to, certifications and contracts which permitted [Walker & Associates] to do business with Qwest, Qwest (sic), AT & T Wireless Services, . . . Eschelon, Southwestern Bell, and others. (Pl.'s Resp. to Walker Group's 1st Set of Interrogs. No. 6 (Mar. 16, 2004), attached as Ex. C). There is no mention of First Layer having accounts receivable or that Walker Group received them. Mr. Knutson subsequently amended his answers to Walker Group's First Set of

Interrogatories but did not amend his answer to raise accounts receivable. 8. Similarly, Defendant never identified in discovery any documents that support

his late raised contention that First Layer was entitled to a credit for accounts receivable allegedly received from First Layer. For example, in response to Interrogatory 7 of Walker Group's First Set of Interrogatories to Knutson responded as follows:

3

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

Document 167

Filed 10/17/2005

Page 4 of 7

Interrogatory No. 7: Identify any documents that support your allegation in paragraph 9 of the Complaint that Walker Group, Inc. obtained "assets" of First Layer Communications, Inc. Response: With the exception of the Guarantee, the note and certifications and contracts which permitted [Walker & Associates] to do business with Qwest, Qwest (sic), AT & T Wireless Services, . . . Eschelon, Southwestern Bell, and others, presently, I am unaware of any such documents. I will supplement my responses to this interrogatory upon learning of any other documents responsive to this interrogatory. (Pl.'s Resp. to Walker Group's 1st Set of Interrogs. No. 7 (Mar. 16, 2004). As above, there is no mention of documents showing First Layer's purported accounts receivable nor did Defendant identify any documents suggesting that any purported accounts receivable were transferred to Walker Group. 9. Defendant's 11th hour argument that First Layer is entitled to a credit for

accounts receivable unfairly prejudices Walker Group. Pursuant to this Court's Minute Order dated August 30, 2004, fact discovery closed on January 31, 2005. Because Defendant's new theory regarding First Layer's assets was identified after the close of discovery and on the eve of trial, Walker is denied the opportunity to investigate the nature of the accounts receivable, whether they existed, if they were made available to Walker, if they were assignable or even if they were collectible. 10. Federal Rule of Civil Procedure 16(f) provides that "[i]f a party or a party's

attorney fails to obey a scheduling or pretrial order . . . the judge upon motion or the judge's own initiative, may make such orders with regard thereto that are just, and among others any of the orders provided in Rule 37(b)(2)(B), (C), (D)." Rule 37(b)(2)(B) provides that a court may sanction a party by "prohibiting that party from introducing designated matters in evidence."

4

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

Document 167

Filed 10/17/2005

Page 5 of 7

"The primary focus of amended Rule 16 is on the mechanics of pretrial conferences and scheduling. . . . Certainly the sanctions concept contained in subsection (f) is a codification of the purpose to insist that the court, the lawyers and the parties abandon habits which unreasonably delay and otherwise interfere with the expeditious management of trial preparation." In re Matter of the Sanction of Baker, 744 F.2d 1438, 1441 (10th Cir. 1984), cert. denied, 471 U.S. 1014 (1985). 11. When faced with a similar circumstance in this case, Defendant's untimely

production of 510 pages of documents, Judge Watanabe struck Defendant's late discovery finding that: both sides have had adequate opportunity to complete discovery. To allow discovery to be re-opened at this late date would be prejudicial to [Walker Group]. It would, in essence, gut the effectiveness of the scheduling order that this court had entered at the outset of this case. See Royalty Petroleum Co. v. Arkla, Inc., 129 F.R.D. 674, 783 (W.D. Okla. 1990). (April 12, 2005 Minute Order). In this instance, Defendant introduces new evidence and a new theory in the case on the eve of trial. The prejudice to Walker Group is manifest. Consequently, Defendant should exclude any evidence relating to alleged accounts receivable of First Layer.

5

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

Document 167

Filed 10/17/2005

Page 6 of 7

WHEREFORE, Walker Group respectfully requests that the Court exclude all evidence relating or referring to First Layer's accounts receivable. 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 Defendant Walker Group, Inc. Joshua Maximon The Maximon Law Firm, LLC 12202 Airport Way, Suite 170 Broomfield, Colorado 80021 Telephone: (303) 991-3344
02560-207219 5501922.3

6

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

Document 167

Filed 10/17/2005

Page 7 of 7

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 REGARDING ACCOUNTS RECEIVABLE OF FIRST LAYER COMMUNICATIONS, INC. 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 Defendant Walker Group, Inc. Kilpatrick Stockton LLP 1001 West Fourth Street Winston-Salem, North Carolina 27101-2400 Telephone: (336) 607-7300 [email protected]
02560-207219 5501922.3