The opinion of the court was delivered by: MORTON DENLOW, Magistrate Judge
MEMORANDUM OPINION AND ORDER
The parties have completed discovery, filed their final pretrial
order, and are preparing for trial. This matter comes before the Court on
motions in limine filed by the parties in preparation for trial.
These motions were referred by District Judge Ronald A. Guzman for
resolution. This Court held oral arguments on the motions on April 12,
2004 and announced the rulings from the bench. This memorandum opinion
provides additional explanations for the Court's rulings.
On or about September 30, 1997, Mountain Funding, Inc. ("Plaintiff)
provided $3.8 million in subordinated financing to United Round Lake Land
Development, LLC ("United Round Lake") for the development of single and
multi family homes in Lake County, Illinois. This loan between
United Round Lake and Plaintiff (the " 1997 United Round Lake Loan") was
secured by a first mortgage lien on the property. United Round Lake
purchased the land upon which the homes were to be developed and was to
sell the individual lots to United Homes, Inc. ("United Homes"), the actual homebuilder, pursuant to
a lot purchase agreement (the "1997 Lot Purchase Agreement"). Plaintiff
agreed to subordinate its loan to Cole Taylor Bank, the site improvement
In February 1999, United Round Lake was in default of its obligation to
Plaintiff. In lieu of foreclosing on the 1997 United Round Lake Loan,
Plaintiff agreed to a restructuring of the loan agreement. In order to
facilitate the restructuring, on February 9, 1999, a new lot purchase
agreement (the " 1999 Lot Purchase Agreement") was entered into between
United Homes and United Round Lake whereby United Homes agreed to
purchase the lots specified therein on a certain timetable and at a
Additionally, as part of the restructuring, United Homes was required
to procure a land acquisition bond. United Homes procured the land
acquisition bond (the "Bond") on May 4, 1999 through Frontier Insurance
Company ("Defendant" or "Frontier"). Defendant was the surety for the
Bond, United Homes was the principal for the Bond, and United Round Lake
was the obligee. Later, Plaintiff was added as an additional obligee
because it was the funding source and the Bond was intended to protect it
in the event United Homes defaulted under its obligations. The Bond
indicated that in the event United Homes failed to perform its
obligations under the 1999 Lot Purchase Agreement, Defendant "guarantees
performance by United Homes, Inc. pursuant to the Agreement until such
time as all lots have been purchased, however, the Surety's liability
under this bond shall in no event exceed $5,000,000." Under the 1999 Lot Purchase Agreement, expected payments by United
Homes to United Round Lake would have been sufficient to pay off
Plaintiff and the senior lender, Cole Taylor Bank, However, in September
1999, United Homes defaulted under the 1999 Lot Purchase Agreement. In
September 1999, February 2000, March 2000, and July 2000, Mountain
Funding notified Frontier of the default and made its claim under the
Bond. Frontier has never paid Plaintiff any money under the Bond. On
March 9, 2000, United Homes filed for bankruptcy protection under Chapter
11 of the Bankruptcy Code.
In July 2000, Plaintiff informed Defendant that it was attempting to
mitigate its losses by allowing United Round Lake to negotiate agreements
with other purchasers. In September, August, and December of 2000, United
Round Lake was able to sell the remaining 454 bonded lots under the 1999
Lot Purchase Agreement to other parties in three separate transactions
for a total of $13,648,510.00.
Plaintiff is seeking $5,708,333.32 under the Bond plus interest
pursuant to the failure of United Homes or Defendant to purchase the
bonded lots under the 1999 Lot Purchase Agreement. Alternatively,
Plaintiff is seeking $2,242,920.61 the difference between the amount
owed by United Homes under the bonded 1999 Lot Purchase Agreement and the
actual amount received from third parties for the 414 bonded lots not
sold to United Homes.
A district court's authority to rule on motions in limine is pursuant
to its inherent authority to manage trials, even though such rulings are
not explicitly authorized by the Federal Rules of Evidence. Townsend v.
Benya, 287 F. Supp.2d 868, 871 (N.D. Ill. 2003). District judges have broad discretion in ruling on motions in limine.
Id. However, in order to exclude evidence on a motion in limine, the
evidence must be inadmissible on all potential grounds. Id. Otherwise,
rulings should be deferred to the time of trial to make possible the
resolution of questions of relevancy, foundation, and potential
prejudice. Id. A ruling on a motion in limine is not necessarily final.
Trial judges are free to alter previous in limine rulings, within the
bounds of sound judicial discretion. Id.
Plaintiff has filed four motions in limine. Defendant has filed one
motion in limine, For the following reasons, the Court grants in part and
denies in part Plaintiff's motion number 1; denies Plaintiff's motion
number 2 subject to the disclosures by Defendant as described below;
grants Plaintiff's motions numbered 3 and 4; and denies Defendant's
A. PLAINTIFF'S MOTIONS IN LIMINE
1. Defendant's financial condition and its ...