Leprino Foods Co v. Feldmeier Equip Inc Document 87: Motion in Limine

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Case 1:03-cv-02461-MSK-MEH Document 87 _~ Filed 04/11/2006 Page1 of6 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-cv-2461-MSK-MEH LEPRINO FOODS COMPANY, Plaintiff, Vv.

FELDMEIER EQUIPMENT, INC.,

Defendant.

DEFENDANT’S MOTION IN LIMINE RE: TORT CLAIMS AND PAROL EVIDENCE

Defendant, Feldmeier Equipment, Inc. (“Feldmeier”), by and through undersigned counsel, hereby submits its Motion in Limine re: Tort Claims and Parol Evidence, as follows:

RELIEF REQUESTED

Feldmeier seeks an order from the Court precluding Plaintiff, Leprino Foods Company (“Leprino”), from asserting claims for negligence and misrepresentation at trial, and from presenting any parol evidence regarding the parties’ negotiations of the contracts at issue. Leprino’s tort claims are barred by the doctrine of collateral estoppel and the parol evidence rule precludes admission of any evidence of the contract negotiations in reference to Leprino’s contract and warranty claims.

RELEVANT BACKGROUND

Leprino previously sued Feldmeier in Colorado state court (“State Court Action”), asserting essentially the same claims as in this action in regard to tanks purchased from Feldmeier and installed at a different facility than the one at issue in this federal court action. As

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Case 1:03-cv-02461-MSK-MEH Document 87 _ Filed 04/11/2006 Page2of6 noted by the Colorado Court of Appeals, the trial court correctly dismissed Leprino’s negligence and misrepresentation claims pursuant to the economic loss rule because the contracts at issue governed the same duties that Leprino asserted as the basis for its tort claims. Exhibit A (Judgment on Appeal dated Nov. 17, 2005) at 6-7. Specifically, the Court of Appeals ruled as follows:

The economic loss rule bars claims in tort when the damages suffered constitute solely economic loss from the breach of an express or implied contractual duty. However, the economic loss rule will not bar a tort claim is an independent duty of care exists under tort law. A.C. Excavating v. Yacht Club IT Homeowners Ass’n, 114 P.3d 862 (Colo. 2005).

A party’s negligent misrepresentation of material facts before the execution of a contract may provide the basis for an independent tort claim. Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69 (Colo. 1991). However, the economic loss rule bars negligent misrepresentation claims when the contract contains the duty that the party allegedly violated. BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004).

Here, Leprino asserts that it relied on Feldmeier’s representations that its goods “would be fit for the dairy manufacturing purpose intended, would be merchantable, would be of good quality, [and] would be free from defects, both patent and latent, and that the vent and overflow design would be capable of handling 800 GPM [gallons per minute] or more.” We initially note Leprino did not include a negligent misrepresentation claim in its complaint or amended complaint. Assuming, without deciding, Leprino alleged sufficient facts to support this claim, all the alleged misrepresentations are included in the parties’ contracts. Provisions 6.3 and 6.4 of the three contracts include fitness of purpose, merchantability, and quality wartanties. Moreover, the vent and overflow design specifications are part of the contract pursuant to provision 13, which expressly incorporates the “Feldmeier Advantage” flow specifications attached to the contract as an exhibit. Thus, the contracts contain all the duties that Feldmeier allegedly violated. See BRW, Inc. v. Dufficy & Sons, Inc., supra.

Accordingly, we conclude the trial court did not err in applying the economic loss rule and dismissing Leprino’s negligence claims.

Td.

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Leprino’s Amended Complaint in this federal action specifically notes that the contracts at issue warrant all goods, materials and equipment to be “fit for the purpose intended, merchantable, of good quality, new, free from faults and defects (whether patent or latent) in material and workmanship”, and that the contract also contain other specifications. Am. Compl. {{ 7-8. Leprino asserts the same general defect in this action as in the State Court Action, Le., “the vent and overflow arrangement is not capable of performing in accordance with the Agreements’ specifications and does not act as a failsafe mechanism as represented and agreed by Defendant.” Jd. § 10. Leprino asserts claims for breach of contract, negligence, breach of implied/express warranties, negligent misrepresentation/manufacturer’s liability based on negligence, and “strict product liability for misrepresentation” Jd., generally. Leprino alleges misrepresentations only regarding the quality of the tanks and failure of the tanks to perform to the represented standards.

Like the contracts at issuc in the State Court Action, the contracts at issue in this action contain specific warranties and specifications, including a specification regarding fill rate Exhibit B (contracts); see also Motion in Limine re. Overflow Rate (collateral estoppel bars argument that specification regarding fill rate is actually or also a specification regarding overflow rate).

ARGUMENT

The doctrine of collateral estoppel bars the re-litigation of essential factual or legal issues actually litigated and determined by a valid and final judgment. £-g., B-S Steel of Kansas, Inc. v. Texas Industries, Inc., 439 F.3d 653, 2006 U.S. App. LEXIS 5109 at *19 (10" Cir. 2006). The

doctrine applies where “(1) the issue previously decided is identical with the one presented in the

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action in question, (2) the prior action has been finally adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party, or in privity with a party, to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.” Id. at *20.

All four elements of collateral estoppel are present in this case. The issue regarding application of the economic loss rule to bar Leprino’s tort claims is the same in this case as the issue determined by the trial court and court of appeals in the State Court Action. The prior action has been finally adjudicated on the merits, in both the trial court and the court of appeals. The prior action was between the exact same parties. And, finally, Leprino had a full and fair opportunity to litigate the issue both in the trial court and in the court of appeals. As in the State Court Action, Leprino’s tort claims are based entirely on alleged duties/standards that are explicitly set forth in the contracts, and therefore are barred by the economic loss rule. In addition, this Court is precluded by the doctrine of collateral estoppel from considering the issue or resolving the issue differently than the Colorado state courts already have. Therefore, this Court should enter an order precluding Leprino from asserting those claims at trial or offering any testimony or other evidence in relation to those claims.

Moreover, parol evidence will be inadmissible to determine the remaining claims for

- breach of contract and breach of warranty. Parol evidence is inadmissible to interpret an unambiguous contract. Cheyenne Mountain School Dist. # 12 v. Thompson, 861 P.2d 711, 715 (Colo. 1993) (“A court should use parol evidence only when the agreement is so ambiguous that the intent of the parties is not clear.”). Even when admitted to interpret an ambiguous contract,

parol evidence can only be used to explain or supplement the terms of an agreement, but cannot

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Case 1:03-cv-02461-MSK-MEH Document 87 Filed 04/11/2006 Page5of6 be used to vary or contradict them. /d. In this case, the courts in the State Court Action have already rejected Leprino’s attempt to argue that the fill rate specification creates a standard for liquid going through the overflow pipe. See Motion in Limine re: Overflow Rate. Therefore, that argument is barred by collateral estoppel. Leprino cannot use parol evidence to revisit that issue, or any other issue regarding the unambiguous terms of the contracts between the parties.

CERTIFICATE OF COMPLIANCE

Pursuant to D.C.Colo.LCivR. 7.1, the undersigned has conferred with opposing counsel to resolve the disputed matter. The undersigned and opposing counsel had a conference call on April 11, 2006 to discuss these issues. The parties were not able to reach a resolution and Plaintiff opposes this Motion.

WHEREFORE, Feldmeier respectfully requests that the Court enter an order applying the doctrine of collateral estoppel to bar Leprino’s tort claims, precluding Leprino from presenting any testimony or other evidence in support of its tort claims, and also precluding Leprino from presenting any parol evidence in relation to the contract and warranty claims. Respectfully submitted this 11th day of April, 2006.

FOWLER, SCHIMBERG & FLANAGAN, P.C.

s/Catherine A. Tallerico Catherine A. Tallerico Timothy J. Flanagan 1640 Grant Street Denver, Colorado 80203 Telephone: 303.298.8603 ATTORNEYS FOR DEFENDANT

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CERTIFICATE OF SERVICE

I hereby certify that on this 1" day of April, 2006, I caused a true and correct copy of the foregoing DEFENDANT’S MOTION IN LIMINE RE: TORT CLAIMS AND PAROL EVIDENCE to be was filed with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the following email addresses:

Michael G. Bohn, Esq.

mbohn@campbellbohn.com

Mr. Jake Feldmeier

s/Michelle Rocke