United States District Court, N.D. Illinois
April 22, 2004.
INTERNATIONAL PAPER COMPANY, a New York Corporation, Plaintiff
ANDROSCOGGIN ENERGY LLC, a Delaware Limited Liability Company; POLSKY ENERGY CORPORATION OF MAINE, an Illinois Corporation; and ANDROSCOGGIN ENERGY, INC., an Illinois Corporation; Defendants; ANDROSCOGGIN ENERGY LLC, Counter-Claimant; vs. INTERNATIONAL PAPER COMPANY, Counter-Defendant
The opinion of the court was delivered by: CHARLES KOCORAS, District Judge
Before the court are eight motions in limine brought by
Plaintiff International Paper Co. ("IP") and thirteen motions in
limine brought by Defendant Androscoggin Energy LLC ("AE"). For the
reasons set forth below, the parties' motions are granted in part and
denied in part. BACKGROUND
This case arises out of AE's breach of a steam generation and supply
contract entered into with IP. The facts of this case are detailed in our
previous decisions in International Paper Co. v. Androscoggin Energy
LLC. 2002 WL 31507176 (N.D. Ill. 2002); 2003 WL 22955995 (N.D. Ill.
2003). Discovery has been completed and the cased is poised for trial.
The parties have filed various motions in limine.
A federal district court's authority to manage trials includes the
power to exclude evidence pursuant to motions in limine.
Falk v. Kimberly Services, Inc., 1997 WL 201568, *1 (N.D. Ill.
1997). However, a court has the power to exclude evidence in
limine only when that evidence is clearly inadmissible on all
potential grounds. Hawthorne Partners v. AT & T Technologies.
Inc., 831 F. Supp. 1398, 1400 (N.D. Ill. 1993). A district court
should be mindful that some proposed evidentiary submissions cannot be
accurately evaluated in a pretrial context via a motion in
limine. Tzoumis v. Tempel Steel Co., 168 F. Supp.2d 871,
873 (N.D. Ill. 2001). For this reason, certain evidentiary rulings
should be deferred to trial so that questions of foundation, relevancy,
and potential prejudice may be resolved in proper context. Hawthorne
Partners at 1400. Denial of a motion in limine does not
automatically mean that all evidence contemplated by the motion will be
admitted at trial. Id. at 1401. Instead, the court will entertain objections to individual proffers as they
occur at trial. Id. In any event "the district judge is free,
in the exercise of sound judicial discretion, to alter a previous in
limine ruling." Luce v. U.S., 469 U.S. 38, 41-42 (1984).
IP has filed eight motions in limine, while AE has filed
IP's first motion seeks to exclude any evidence, argument, or
instruction regarding AE's anticipatory repudiation theory. Citing case
law from the Ninth Circuit, IP argues that, because AE breached the AESA
in May 1998, AE's December 1, 1998, communication about the loss of the
Rio Alto gas contract could not constitute an anticipatory breach "as a
matter of law." AE responds that it does not intend to argue that it
anticipatorily breached the AESA on December 1, 1998, but rather that the
date is significant for damages purposes as the date IP conclusively
learned that the AESA had been breached. AE suggests that because IP
became aware of the AE's loss of the Rio Alto contract on December 1,
1998, a repudiation of the AESA might be deemed to have occurred on that
date. We accept AE's statement that it does not intend to rely on any
anticipatory repudiation theory at trial, rendering IP's motion moot. IP's second motion seeks to bar the opinion and testimony of AE's
expert Jan van Egteren. AE plans to have Mr. van Egteren opine on the
availability of natural gas from other suppliers that could have been
obtained in response to the loss of the Rio Alto contract. Because we
find that this information is potentially relevant to the issue of
damages, including any duty on the part of IP to mitigate, this motion is
IP's third motion seeks to exclude evidence concerning the question
whether AE actually or intentionally terminated the Rio Alto contract.
The undisputed fact found previously by the court is that Rio Alto
actually terminated its contract with AE. The issue to be tried is
whether AE constructively terminated its contract with Rio Alto, not
whether AE actually or intentionally terminated the Rio Alto contract.
Constructive termination by AE is central to IP's breach claim as to
Section 6.01(j); the jury should be able to hear that Rio Alto, not AE,
actually terminated the contract. Since the jury will decide whether AE
had constructively terminated its contract with Rio Alto prior to the
AESA, the fact that Rio Alto actually terminated the contract will be
relevant in that it will help provide the jury a context for answering
the constructive termination question.
IP's fourth motion seeks to exclude the testimony of James Shield (an
AE manager who executed the AESA) and Patrick Scully (an AE attorney who
counseled AE on its contracts with IP). Because Mr. Shield negotiated and
executed the AESA, the contract at issue, his testimony is potentially relevant to the
case. In addition, he is listed as a "May Call" witness by IP in the
Final Pretrial Order. As for Mr. Scully, IP has included a letter he
authored as an exhibit for trial. Pl. Ex. 74. Since IP may potentially
introduce this letter at trial, we find that it is premature to prohibit
his testimony. Accordingly, IP's motion as to Mr. Shield and Mr. Scully
IP's fifth motion seeks to exclude the testimony, report, and opinion
of AE's expert witness Professor Ann Lousin. IP wants to bar Professor
Lousin's testimony because it will concern AE's theory of anticipatory
repudiation. AE responds that Professor Lousin will offer testimony on
subjects other than anticipatory repudiation. On that basis, we will not
bar Professor Lousin from testifying. Whether she will offer relevant
evidence is better decided at trial.
IP's sixth motion seeks to exclude evidence, argument, and instruction
regarding causation, and also asks us to deem the element of causation
established in IP's favor as a matter of law. However, we have already
stated that the causation element in IP's breach of contract claim has
yet to be determined, that genuine issues of fact exist concerning the
causal connection between AE's breach and IP's increased steam costs, and
that the causation question is one for the jury. Mem. Op. Dec. 11, 2003,
at 8-9. Because the question of causation is unsettled and is to be
answered by the jury, this motion is denied. IP's seventh motion seeks to exclude any evidence, argument, and
instruction concerning AE's affirmative defense of waiver. Motions in
limine are generally not proper vehicles for determining the
validity of affirmative defenses, as such questions require the
resolution of factual issues. Miles v. Barrington Motors Sales.
Inc., 2003 WL 22889373, *2 (N.D. Ill. 2003) (citing U.S. v.
Tokash. 282 F.3d 962, 967 (7th Cir. 2003)). IP's motion is,
IP's eighth motion seeks to bar AE from offering evidence, argument,
and instruction, concerning AE's affirmative defense of failure to
mitigate. However, as we have already determined that as a matter of law
AE is not precluded from raising the mitigation defense and that whether
a party should have mitigated damages is a jury question (Mem. Op. Dec.
11, 2003), this motion is denied.
AE's first motion seeks to bar introduction of its damages claim from
its unsuccessful arbitration action against its former counsel, Thelen
Reid & Priest, the firm that drafted its contract with Rio Alto. In
particular, AE seeks to bar the introduction of a report from John
Brickhill, that AE relied on for its damages calculations in its claim
against Thelen Reid. AE claims that damages reports for the arbitration
action against its former attorneys involve different issues of causation
and damages, and were formulated in early 2001. AE argues these reports
would be irrelevant or prejudicial in the present litigation. IP responds
that the reports in question, which address the availability and cost of
replacing natural gas at the time the Rio Alto contract was lost, are
relevant to issues at trial including causation, damages, and mitigation.
We agree that some of the information in Brickhill's report could be
potentially relevant to the above issues and will therefore deny AE's
blanket motion. Specific objections to material surrounding AE's
arbitration and Brickhill's report should be raised at trial.
AE's second motion seeks to bar the opinion and testimony of Harvey S.
Rosen, Ph.D. Dr. Rosen is an economist who IP proposes to testify
concerning its costs and expenses incurred in the exercise of its remedy,
in particular prosecuting this litigation. AE bases its motion on three
grounds: (1) IP's legal expenses are not relevant until a jury returns a
verdict in this trial; (2) IP has not produced its legal bills that Dr.
Rosen relies on to determine IP's expenses; and (3) Dr. Rosen is not
qualified to offer expert testimony under F.R.E. 702. IP objects that Dr.
Rosen is prepared to offer expert testimony concerning IP's internal
costs relating to this action, to which AE does not advance
discovery-related objections. Since internal costs are a legitimate
component of the damages that IP may seek to recover and because of the
broad range of expert opinion allowed under F.R.E. 702, AE's motion is
denied. Recovery for and reasonableness of attorneys' fees will be determined by the court
upon the return of a jury verdict in favor of IP.
AE's third motion seeks to bar IP's experts from opining on the issue
of causation. AE argues that two of IP's experts, one an energy
consultant with a background in finance and economics and the other a law
professor who studies contracts and the UCC, will not be able to assist
the jury in determining the factual question of causation. At this point
we are unable to conclude that either expert is unqualified to offer any
potential testimony as to causation, and would be better positioned to
answer AE's objection in the fuller context of trial. AE's motion is thus
AE's fourth motion seeks to bar certain testimony by Norman Davis, an
"Energy Purchasing Manager" for IP. At his deposition, Mr. Davis
testified that he had prepared "market strip" analysis as well as a Power
Point presentation concerning the impact of AE's loss of the Rio Alto
contract. Citing the attorney-client privilege, Davis refused to answer
questions relating to the result of his analysis and presentation. As IP
does not object to precluding Davis' testimony concerning these two
subjects, the motion is granted specifically as to the contents of the
market strip analysis and the Power Point presentation. AE's fifth motion seeks to exclude certain testimony by Michael
Chapman, IP's Senior Counsel for Energy and Logistics, who was a legal
advisor to the IP team that negotiated its project with AE. At his
deposition, Mr. Chapman cited the attorney-client privilege for not
answering certain questions concerning internal IP discussions or
communications relating to its energy project with AE. IP has also
withheld as privileged over 100 documents either authored by or written
to Mr. Chapman. AE contends that because he has asserted privilege to
questions relating to the following subjects, he should be precluded from
testifying about them at trial: (1) IP's rationale for entering into the
ESA and ASEA; (2) the impact to IP and IP's internal response stemming
from the loss of the Rio Alto contract; (3) the timing and contents of
IP's Notice of Default; and (4) IP's mitigation of damages. AE also
suggests that because Chapman was "merely legal advisor to IP's decision
makers" his testimony would be irrelevant, speculative, and prejudicial.
We find that AE's motion is overly board. Because Chapman did answer many
questions concerning the above subjects, he could potentially offer
testimony concerning them that would be relevant and admissible. If AE
wishes to advance more specific objections to particular topics of
Chapman's testimony, they will be entertained at trial.
AE's sixth motion seeks to exclude evidence of assurances,
representations, and explanations not written in the ESA and AESA that
were made by AE during the negotiations of the agreements. AE asserts that because of
integration clauses contained in the ESA and AESA, statements made during
their negotiations by AE should be precluded as irrelevant and
prejudicial.*fn1 IP counters that testimony regarding pre-contract
negotiations is admissible because the subjects of such negotiations are
relevant (1) to show the foreseeability of IP's damages, (2) to rebut
IP's purported defense to its Section 6.0 l(j) claim, and (3) because of
the potential ambiguity of certain contract terms.
Maine law clearly favors the enforcement of integration clauses. It
holds that the "parol evidence rule operates to exclude from judicial
consideration extrinsic evidence offered to alter, augment, or contradict
the unambiguous language of an integrated written agreement." Handy
Boat Service, Inc. v. Professional Services. Inc., 771 A.2d 1306,
1308-09 (Me. 1998). Where the language of a contract "is unambiguous with
respect to the existence and scope of integration, no extrinsic evidence
concerning integration may be presented by parties or considered by the
court." Id, at 1309. Additionally, a party cannot rely on
representations made during the negotiation of a contract if the contract includes an
integration clause. Stanley v. Miro. 540 A.2d 1123 (Me. 1988).
We find that integration clauses of the ESA and AESA unambiguously
mandate the exclusion of representations made during the contracts'
negotiations. Likewise, neither of the parties have argued, nor have we
yet to determine, that any language in the AESA is ambiguous. As such,
any request to include parol evidence would be premature. We therefore
grant AE's motion. If AE's evidence raises matters to which such
representations are responsive, they may be raised at trial.
AE's seventh motion seeks to prohibit the introduction of a Credit
Agreement between AE and its lenders, made in June 1998, that disclosed
AE's dispute with Rio Alto. AE contends that this document contains
information that is irrelevant to IP's two remaining claims. The Credit
Agreement contains AE's acknowledgment that Rio Alto was entitled to
terminate its contract with AE. For this reason, IP contends that the
Credit Agreement constitutes evidence that is relevant to (1) the
foreseeability element of the causation issue in that AE knew that higher
gas prices could ensue from the Rio Alto contract's loss, and (2) AE's
mitigation defense, namely that AE should have acted reasonably to seek
replacement gas. We agree and find that because the Credit Agreement
provides a date when AE was aware of the Rio Alto contract's demise, it may be used for the purposes suggested by IP. The motion
is accordingly denied.
AE's eighth motion seeks to bar IP from introducing into evidence
transcripts from AE's arbitration with its former counsel, Thelen Reid
& Priest. AE objects that the 1,600 page transcript is too voluminous
and was not proffered in accordance with the pretrial order. IP counters
that it has properly identified the specific portions of the arbitration
transcripts that it intends to introduce at trial, making AE's general
request as to the entirety of the transcripts unnecessary. Because it
appears that IP plans to use only limited portions of the arbitration
transcript, which AE concedes have been identified in the Pretrial Order,
we will deny AE's motion as overly board and entertain specific
objections as they arise.
AE's ninth motion seeks to bar IP from asserting or arguing that AE's
breach of AESA Section 2.02(f) was intentional. AE argues that because we
have already determined that AE breached Section 2,02(f), any argument
that AE's knowingly or intentionally provided a false representation in
the AESA would be irrelevant or prejudicial. IP counters that AE's
interest in keeping its breach of the AESA from IP is relevant in
determining when IP first learned of the breach, which relates to
arguments concerning waiver, mitigation, causation, and damages. IP also
asserts that whether AE's misrepresentation was intentional is relevant
to the credibility of AE's witnesses. AE claims that its intentions in May of 1998 are
irrelevant to whether IP became aware of the breach in December 1998, as
AE alleges. However, AE's alleged motivation to keep IP unaware of the
Rio Alto contract's loss is potentially relevant to IP's contention that
AE did not disclose the contract's loss until well after December 1998.
Also, IP may appropriately ask AE employees or agents who executed the
AESA if they knew that the Rio Alto contract had been lost at the time of
the AESA's signing, as this information could impact such witnesses'
credibility. The motion is accordingly denied.
AE's tenth motion seeks to bar evidence relating to the terms of the
stock sale between Polsky Energy Corporation and Calpine, and Michael
Polsky's separation agreement with Calpine. At the time this litigation
ensued, Polsky Energy Corp. was a member of AE. In the course of the
litigation, Calpine purchased the stock of Polsky Energy Corp. and
Michael Polsky became a member of Calpine's board. Later Polsky entered
into a separation agreement with Calpine and began his own company,
Invenergy. IP seeks to introduce as evidence a provision of Mr. Polsky's
separation agreement where Calpine released him from any claims resulting
from AE's dispute with IP. IP also seeks to introduce a schedule from the
stock purchase that contains a disclosure of the lawsuit. AE claims that
this evidence is irrelevant and prejudicial. However, the stock sale
agreement contains language that indicates that IP continued to make payments to AE though July 2000. For this reason, the
agreement is potentially relevant to the issue of damages, particularly
set-off arguments, and the motion is accordingly denied.
AE's eleventh motion seeks to bar evidence relating to its offer to IP
to participate in any recovery achieved in AE's arbitration with its
former counsel, Thelen Reid & Priest. AE states that Thelen Reid's
alleged negligence in its representation of AE relating to the Rio Alto
contract may have indirectly injured IP, which prompted AE to offer IP to
participate in any recovery from Thelen Reid. AE argues that its offer to
IP is not relevant to the present litigation, as the offer itself has no
bearing on any issues remaining for trial. Also, AE contends that because
the offer related to Thelen Reid's purported negligence, it could
prejudice and confuse the jury, which would be unable to distinguish AE's
two distinct disputes with IP and Thelen Reid. IP objects as it avers
that the March 2000 offer was the first time that it learned of AE's
breach of the AESA (as opposed to AE's contention of December 1998).
Because the date that IP became aware of AE's breach is a crucial
question in determining damages, we find that the relevance of AE's offer
is not substantially outweighed by its prejudicial effect. The motion is
AE's twelfth motion seeks to bar certain testimony of James Diemer, a
fuel consultant who was retained by one of AE's lenders to evaluate the
fuel supply for the AE-IP project. At his deposition Mr. Diemer gave testimony
regarding his understanding of the ESA between AE and IP. AE contends
that Mr. Diemer's testimony concerning his views of the rights and
obligations of the parties under the ESA is not relevant to the remaining
issues to be tried. IP wants to introduce evidence that Diemer advised AE
to obtain IP's consent to the termination of the Rio Alto contract. IP
suggests that Diemer's testimony is relevant to show (1) that AE never
obtained IP's consent to terminate the Rio Alto contract in the Spring of
1998; (2) that AE's mitigation defense is based on a false premise; and
(3) AE's intent to conceal the Rio Alto contract's loss from IP. We agree
with AE's contention that the interpretation of an unambiguous contract
is a question of law for the court, Acadia Ins. Co. v. Buck Constr.
Co., 756 A.2d 515, 517 (Me. 2000), and that Diemer's beliefs as to
AE's contractual obligations will be irrelevant to the jury as to the
question of breach. Testimony as to his legal understanding of the
contract terms will be precluded. However, because Diemer's November 2,
1998, advice that AE should inform IP of the Rio Alto contract's loss
could demonstrate IP's lack of awareness of the loss at that time, his
testimony could be relevant as to the issue of mitigation, particularly
whether IP acted reasonably. The motion is thus denied.
AE's thirteenth motion seeks to bar IP's expert witness Matthew
O'Loughlin, an energy consultant with a background in finance and
economics, from testifying at trial. AE argues that under the UCC and Seventh Circuit case law,
market-price damages, such as the ones sought by IP, are measured based
on market prices at the time the non-breaching party learns of the
breach. AE contends that for this reason, O'Loughlin's testimony that
damages should be measured based on IP's actual cost of purchasing
replacement steam will not assist the jury under F.R.E. 702. Because we
have yet to determine the proper method for measuring IP's damages' this
motion is denied as premature.
Based on the above analysis, the parties' motions in limine
are granted in part and denied in part.