The opinion of the court was delivered by: AMY J. ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Wafra Leasing Corporation 1999-A-1 ("Wafra") filed
suit against Defendants Prime Capital Corporation, Prime Leasing
Corporation, Prime Finance Corporation 1999-A-1, Prime Finance
Corporation 1999-A-2 (collectively, the "Prime Defendants"), KPMG
LLP ("KPMG"), Bischoff & Swabowski, LTD ("B&S"), Mark Bischoff,
James Friedman, Vern Landeck, Thomas Ehmann, William Smithburg,
and John Walter.*fn1 Defendants KPMG, Bischoff, Friedman,
Smithburg, Landeck, and Ehmann ("Moving Defendants") move the
Court in limine pursuant to Rules 402 and 403 of the Federal
Rules of Evidence to limit Wafra to its "out of pocket" damages
and cap those damages at $1,371,376. For the reasons set forth
below, the Moving Defendants' Motion is granted in part and deferred in
The Court's previous rulings regarding summary judgment, Wafra
Leasing Corp. 1999-A-1 v. Prime Capital Corp., 2004 WL 1977572
(N.D. Ill. Aug. 31, 2004) and the multiple motions to dismiss,
Wafra Leasing Corp. 1999-A-1 v. Prime Capital Corp.,
247 F.Supp. 2d 987 (N.D. Ill. 2002); Wafra Leasing Corp. 1999-A-1 v.
Prime Capital Corp., 192 F. Supp. 2d 852 (N.D. Ill. 2002),
address the procedural and factual background in detail. The
Court sets forth the facts relevant to this Motion below.
Defendant KPMG served as auditors and principal accounting firm
to Prime Capital. (R. 131-1, Third Am. Compl. ¶ 11.) Defendant
Bischoff was a member of the Board of Directors of Prime Capital
and of the Audit Committee of the Board, Secretary of the Board,
and Outside General Counsel to Prime Capital, as well as a large
shareholder in Prime Capital. (Id. ¶ 12.) Defendant Friedman
was a member of the Board of Directors and Chairman of the
Executive Committee of the Board, and the President and Chief
Executive Officer of Prime Capital, as well as its largest
shareholder. (Id. ¶ 14.) Defendant Landeck was Vice President
and Chief Financial Officer of Defendant Prime Capital. (Id. ¶
15.) Defendant Ehmann was Vice President of Finance of Prime
Capital. (Id. ¶ 16.) Defendant Smithburg was a member of the
Board of Directors of Prime Capital and of the Executive and
Audit Committees of the Board. (Id. ¶ 17.)
II. The 1999-A Securitization
Wafra invested $5,550,497 into the 1999-A Securitization, a
pool of financial contracts consisting of equipment leases,
loans, and installment purchase agreements from which promissory notes could be issued. (R. 258-1, Def.'s Mot. at 2; R.
131-1, Third Am. Compl. ¶ 34.) Under the 1999-A Securitization,
Wafra was to receive repayment of its principal, plus an
investment return consisting of interest payments until the
principal was paid. (R. 281-1, Pl.'s Resp. at 2.) Wafra purchased
the Owner Certificate from Prime Finance Corporation 1999-A-1 and
1999-A-2. The Owner Certificate is dated May 4, 1999 and signed
by an officer of Prime. (R. 131-1, Third Am. Compl. ¶ 37.) Prime
stopped making principal payments in May 2002, but continues to
make "interest" payments at a consistent rate. (R. 258-1, Def.'s
Mot. Ex. A.)
The Moving Defendants bring this motion in limine to limit
Plaintiff to its "out of pocket" damages of $1,373,376. It is
clear that courts have the power to exclude evidence in limine
under their authority to manage trials. Aguilar v. Dixon, No.
93 C 1936, 1995 WL 319621, at *3 (N.D. Ill. May 25, 1995)
("Pursuant to its power to manage trials, the court may exclude
evidence in limine"). Courts should grant such motions, however,
"only when evidence is clearly inadmissible on all potential
grounds." Hawthorne Partners v. AT & T Tech., Inc.,
831 F. Supp. 1398, 1400 (N.D. Ill. 1993). Furthermore, courts often
defer evidentiary rulings "until trial so that questions of
foundation, relevancy and potential prejudice may be resolved in
proper context." Id.; see also Noble v. Sheahan,
116 F.Supp.2d 966, 969 (N.D. Ill. 2000).
Because neither Section 10(b) of the Securities Exchange Act of
1934 ("the Act") nor Rule 10b-5 provide instructions concerning
damages, courts have applied the damages standard of Section 28
of the Act. Pelletier v. Stuart-James Co., 863 F.2d 1550, 1557
(11th Cir. 1989). Section 28(a) of the Act limits damages to
"actual damages." See Astor Chauffeured Limousine Co. v. Runnfeldt Inv. Corp., 910 F.2d 1540, 1551 (7th Cir.
1990) ("The federal securities laws allow victims of fraud to
recover their actual loss the difference between what they paid
for the stock and what it was worth.") The general rule for
calculating damages under Section 10(b) is to take the
plaintiff's "out of pocket" damages. See Madigan, Inc. v.
Goodman, 498 F.2d 233 (7th Cir. 1974). "Out of pocket"
damages are calculated as the difference between the plaintiff's
investment and any value the plaintiff received as a result of
that investment. Astor, 910 F.2d at 1551.
Nonetheless, courts have recognized certain exceptions to that
general rule. When a plaintiff can prove that it struck a bargain
for a reasonably certain and non-speculative expectation, the
plaintiff can seek to recover for the lost value of that
expectation. See Osofsky v. Zipf, 645 F.2d 107, 113 (2nd
Cir. 1981). These "benefit of the bargain" damages are calculated
by the difference between the value of what the plaintiff
received and what it was represented he or she would receive.
Medcom Holding Co. v. Baxter Travenol Labs., Inc., No. 87 C
9853, 1989 WL 134846, *3 (N.D. Ill. Oct. 19, 1989). Courts have
also departed ...