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HAWTHORNE PTNRS. v. AT&T TECHS.

August 25, 1993

HAWTHORNE PARTNERS, an Illinois General Partnership, Plaintiff,
v.
AT&T TECHNOLOGIES, INC., a New York corporation, and ENSR CORPORATION, a Delaware corporation, Defendants.


Conlon


The opinion of the court was delivered by: SUZANNE B. CONLON

In this diversity action, plaintiff Hawthorne Partners sues defendants AT&T Technologies, Inc. ("AT&T") and ENSR Corporation ("ENSR") (collectively "defendants") to recover damages resulting from defendants' alleged breach of two contracts: (1) a real estate sales agreement between Hawthorne Partners and AT&T; and (2) a contract between AT&T and ENSR regarding an environmental audit and cleanup plan. Defendants jointly move in limine to (1) exclude expert opinions of Neil D. Williams on the reasonableness of the remedial work and the expected costs of designing and implementing soil and groundwater remediation efforts; (2) exclude evidence of the negotiations over and the terms of the effort to refinance the shopping center through Mutual of New York ("MONY"); (3) exclude evidence of the negotiations over and the terms of the failed sale of the shopping center to the State Teachers Retirement System of Ohio ("Teachers Retirement"); (4) exclude testimony as to any responsibility of AT&T or ENSR for remediation of building interiors on the Hawthorne Works property; (5) exclude evidence of agency relating to the conspiracy claim and for judgment as a matter of law on the conspiracy claim. AT&T also moves in limine to exclude evidence of purported pre-contract and post-contract representations and any specific reliance thereon in support of the detrimental reliance claim or, in the alternative, for judgment as a matter of law on the detrimental reliance claim. Hawthorne Partners moves to exclude changes to the deposition of Angelo Basile or, in the alternative, for leave to reopen the deposition.

 BACKGROUND

 In 1985, Hawthorne Partners agreed to purchase property known as the Hawthorne Works from AT&T. The real estate sales agreement ("the agreement") provided that AT&T would perform an environmental audit to identify material adverse environmental conditions on the property and would develop and implement a plan for the reasonable reduction of such conditions. AT&T hired ENSR to perform the audit, develop the plan, and supervise the remedial work. The property was contaminated by volatile organic compounds and remedial work was conducted. Thereafter, Hawthorne Partners constructed a shopping center on the Hawthorne Works property. Hawthorne Partners alleges that defendants breached their promise to reasonably reduce the adverse environmental conditions on the property and failed to comply with the technical specifications set forth in the audit and remediation plan. Hawthorne Partners asserts that it must remediate the soil to complete the work defendants failed to perform.

 MOTIONS IN LIMINE

 This court has the power to exclude evidence in limine only when evidence is clearly inadmissible on all potential grounds. Cf. Luce v. United States, 469 U.S. 38, 41 n.4, 83 L. Ed. 2d 443, 105 S. Ct. 460 (1984) (federal district courts have authority to make in limine rulings pursuant to their authority to manage trials). Unless evidence meets this high standard, evidentiary rulings should be deferred until trial so that questions of foundation, relevancy and potential prejudice may be resolved in proper context. See The Middleby Corp. v. Hussmann Corp., No. 90 C 2744, 1993 U.S. Dist. LEXIS 6150, at *1-2 (N.D. Ill. May 5, 1993). See generally 21 Charles A. Wright & Kenneth W. Graham, Jr., Federal Practice and Procedure PP 5037, 5042 (1977 & Supp. 1993). Denial of a motion in limine does not necessarily mean that all evidence contemplated by the motion will be admitted at trial. Denial merely means that without the context of trial, the court is unable to determine whether the evidence in question should be excluded. The court will entertain objections on individual proffers as they arise at trial, even though the proffer falls within the scope of a denied motion in limine. See United States v. Connelly, 874 F.2d 412, 416 (7th Cir. 1989), citing Luce, 469 U.S. at 41 ("Indeed, even if nothing unexpected happens at trial, the district judge is free, in the exercise of sound judicial discretion, to alter a previous in limine ruling.").

 1. Expert Opinions Of Neil D. Williams

 Hawthorne Partners has hired Dr. Neil D. Williams, the Chief Executive Officer and President of GeoSyntec Consultants, as an environmental consultant. Hawthorne Partners believes that Dr. Williams' testimony will aid the jury in deciding the adequacy of the environmental work performed by defendants and the costs of remedying the defendants' deficiencies. These are central issues in the case. Dr. Williams is expected to give his opinion of (1) the reasonableness of the remedial work and (2) the costs to Hawthorne Partners to complete the environmental audit ($ 110,000) and remedial work ($ 1,010,000). Defendants contend that Dr. Williams' opinions should be barred because (1) the agreement provided that an independent environmental consultant would be the arbiter of reasonableness and (2) Dr. Williams' $ 1,010,000 estimate of the cost of remedial work is speculation and conjecture.

 First, Hawthorne Partners is not barred by the agreement from having Dr. Williams testify as to the reasonableness of the environmental audit, plan, and remedial work. Defendants want the agreement language to encompass far more than its words plainly state. The agreement directs Hawthorne Partners and AT&T each to review the reasonableness of the audit, plan, and estimated costs and use their best efforts to agree on any changes to the plan within fifteen days after Hawthorne Partners' receipt of the information. Defendants' Williams Mot., Exh. B, P 5(b)(i). If the parties cannot agree within this time frame, the agreement instructs them immediately to submit the matter to a named environmental consultant or another mutually acceptable environmental consultant for resolution within 30 days. Id. Since it is now well past 15 days from the February 26, 1986 deadline for AT&T's delivery to Hawthorne Partners of the estimated costs of the remedial work, the agreement provision is ineffective. See id. Defendants' argument fails because the agreement does not provide that all disputes will be submitted to an independent environmental consultant; instead it provides a remedy for very specific disputes in a limited timeframe that has now passed.

 Second, defendants' claim that Dr. Williams' $ 1,010,000 estimate of the cost of completing the remedial work should be excluded also fails. Defendants argue that the estimate is mere speculation, but the estimate is based on defendants' own audit and related work papers. This court has broad discretion in determining the admissibility of expert testimony under Fed. R. Evid. 702. Stutzman v. CRST, Inc., 997 F.2d 291,1993 WL 218442, at *4 (7th Cir. June 21, 1993) (citations omitted). Rule 703 of the Federal Rules of Evidence allows experts to use material they would normally rely on in forming opinions when they form their opinions for trial. Id. at *5; United States v. Bramlet, 820 F.2d 851, 856 (7th Cir.), cert. denied, 484 U.S. 861, 98 L. Ed. 2d 129, 108 S. Ct. 175 (1987). Environmental consultants often use reports and audits prepared by other environmental consultants in forming their opinions, and Dr. Williams is allowed to follow that practice in this case. Dr. Williams may certainly form an opinion based on the information defendants themselves prepared. Dr. Williams' opinion that remedial work will cost $ 1,010,000 is not excluded as speculation. However, the weight to be accorded Dr. Williams' opinion is a matter for the jury to resolve. The accuracy of expert testimony is a matter of weight rather than admissibility. Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1308 (7th Cir. 1987), cert. denied, 492 U.S. 917, 106 L. Ed. 2d 588, 109 S. Ct. 3241 (1989). The proper time to challenge the accuracy and reliability of an expert opinion is at trial; defendants will have ample opportunity to challenge Dr. Williams on cross examination. See Harbor Ins. Co. v. Continental Bank Corp., 1991 U.S. Dist. LEXIS 15272, 1991 WL 222260, at *6 (N.D. Ill. Oct. 25, 1991).

 2. Negotiations Over And The Terms Of The Effort To Refinance The Shopping Center Through Mutual Of New York

 Hawthorne Partners contends that this court's denial of defendants' motions for summary judgment preserved this issue for the jury to decide at trial. Plaintiff's MONY and Teachers Retirement Resp. at 2. When this court denied the motions for summary judgment, it did not rule specifically on any particular issue; it merely stated that there were a number of contentious factual issues that could not be resolved on a motion for summary judgment. Minute Order, April 28, 1993. The denial of summary judgment does not automatically resolve this motion in limine in Hawthorne Partners' favor. It is necessary to consider the motion on its merits.

 Hawthorne Partners contends that refinancing was derailed by MONY's environmental concerns. MONY's environmental engineer investigated the property and the remedial work done by defendants as part of MONY's due diligence during the negotiations. An internal MONY memorandum disagrees with ENSR's conclusions that there is no groundwater contamination and that any remaining contamination is harmless. Id., Exh. 4.

 The evidence of the attempted refinancing through MONY is relevant under Fed. R. Evid. 402. Hawthorne Partners asserts that the evidence of the failed MONY deal confirms that the value of the property is diminished as a result of defendants' deficient work. Defendants claim this evidence is not probative of the diminution of the property's market value or the materiality of AT&T's breaches of its contract with Hawthorne Partners. Yet defendants do not explain why this evidence is not probative. The proffered evidence appears to buttress Hawthorne Partners' claims. If defendants dispute MONY's rationale for not completing the refinancing, they may impeach MONY on cross-examination.

 The probative value of this evidence is not substantially outweighed by prejudice. Fed. R. Evid. 403. Defendants argue that allowing this evidence would confuse the jury and unfairly prejudice defendants since the evidence may persuade the jury to award damages to Hawthorne Partners based on the failed MONY refinancing. However, as Hawthorne Partners points out, defendants may use Hawthorne Partners' own statements to impress upon the jury that Hawthorne Partners should not be awarded damages based on the failed MONY refinancing. See Defendants' MONY Mot., Exh. A, Plaintiff's Memorandum in Opposition to Defendant At&T's Summary Judgment Motion at ...


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