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Enslein v. DI Mase

United States District Court, W.D. Missouri, Western Division

September 11, 2019

JERALD S. ENSLEIN, in his capacity as Trustee for Xurex, Inc., Plaintiff,
v.
GIACOMO E. DI MASE, et al., Defendants.

          ORDER GRANTING IN PART, DENYING IN PART, AND DEFERRING IN PART PLAINTIFF'S MOTIONS IN LIMINE

          ORTRIE D. SMITH, SENIOR JUDGE.

         Pending are Plaintiff Jerald Enslein's motions in limine. Doc. #450. Defendants Dietmar Rose, Lee Kraus, Robert Olson, and Steve McKeon filed responses (Docs. #467, 478, 488) to Plaintiff's motions, but no other defendant has filed a response, and the time for doing so has passed. See Doc. #432. As set forth below, Plaintiff's motions in limine are granted in part, denied in part, and deferred in part.

         The parties are reminded these rulings are interlocutory. Thus, the denial of a request to bar evidence at this juncture preserves nothing for review, and the parties may re-assert their objections at trial if they deem it appropriate to do so. Evidence barred by this Order shall not be discussed in the jury's presence (including during opening statements) without leave of the Court. The parties are free to suggest (out of the jury's presence) that something has occurred during the trial justifying a change in the Court's interlocutory ruling.

         (1) Experts Not Disclosed

         Plaintiff moves to exclude any testimony that would constitute expert opinion from any person not disclosed as an expert by the deadline set by the Court. He contends the only experts who were timely disclosed are Michele Pavone, Robert Reilly, and Jamil Baghdachi. Doc. #250, at 2.

         Olson and McKeon do not object to this motion so long as the deposition testimony of former Xurex scientist John Lowry is not excluded. Doc. #488, at 2. Olson and McKeon contend Lowry did not proffer an expert opinion, and thus, this motion in limine should not limit his testimony. Id.[1]

         Rose, who is pro se, states he could not be expected to understand the Federal Rules of Civil Procedure, and know he should have disclosed that he wanted to offer expert opinion testimony. Doc. #467, at 3. He also argues he is “more than qualified as an expert in economic analysis and damage assessment to cross examine” Reilly. Id. Rose also states he did not know he would be excluded from cross-examining Reilly, but Plaintiff's motion does not limit Rose's ability to cross-examine any experts at trial.

         Kraus argues this motion opens the door to Plaintiff characterizing any witness's testimony as “expert opinion.” Doc. #478, at 8. Kraus also contends he “qualified as a financial expert who can offer expert opinion on valuation, ” and other witnesses, such as Lowry, may qualify as an expert. Id. While Kraus is pro se at this juncture in the case, he was represented by counsel when the Court's Scheduling and Trial Order, which is discussed infra, was entered.

         According to the Federal Rules of Civil Procedure, “a party must disclose to the other parties the identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705.” Fed.R.Civ.P. 26(a)(2)(A). This disclosure requirement was also outlined in the Court's Scheduling and Trial Order. Doc. #38, at 1-2. The requirement was also referenced in two other Orders. Doc. #120, at 1 (stating “the defendants shall designate any expert witnesses they intend to call at trial….”); Doc. #174, at 1 (stating “the defendants shall designate any expert witnesses [they] intend to call at trial…., ” and noting “[t]his paragraph applies to all witnesses from whom expert opinions will be elicited, regardless of whether or not the witness was specially retained to provide trial testimony.”). If a party fails to identify an expert witness, “the party is not allowed to use that…witness to supply evidence…at a trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1).

         If a party intended to call Lowry, Rose, and/or Kraus to offer expert testimony, the parties was required to disclose Lowry, Rose, and/or Kraus pursuant to Rule 26(a)(2)(A) and the Court's Scheduling and Trial Order. Because these individuals were not disclosed as expert witnesses, they are prohibited from testifying as expert witnesses at trial. Thus, Plaintiff's motion in limine is granted. The Court's ruling on this motion does not preclude Lowry, Rose, and Kraus from testifying as lay witnesses.

         (2) Test Reports

         Plaintiff asks the Court to “preclude admission of the contents of test reports (including…through admitting the reports themselves) of any Xurex products for the truth of the statements therein.” Doc. #450, at 3. He argues the reports are hearsay. He also maintains the reports were prepared by individuals who hold themselves out as experts, but those individuals were not designated as experts and were not deposed. Finally, he contends admitting the reports will lead to mini-trials regarding the preparation of materials sampled, formulations used, testing environment conditions, persons involved in the chain of custody, and testing methodology.

         Kraus objects to this motion arguing “the very core of this matter…[is] the question of commercial viability of Xurex products.” Doc. #478, at 9. He claims the Di Mases entered into licensing agreements and purchased DuraSeal Pipe based on the belief that Xurex's products were commercially viable. He argues evidence demonstrating the lack of viability of Xurex's products and the time that information was known to those involved in this matter are relevant.

         Olson and McKeon argue Plaintiff's motion is overbroad because it seeks to not only exclude the admission of the test reports but also prohibit Defendants from simply referring to the test reports. Olson and McKeon contend this evidence is relevant, probative, and admissible because it demonstrates what Defendants knew about the testing efforts. Also, the evidence “may be offered to show what information guided Defendants' decision-making process, as well as for rebuttal, corroboration of Defendants' testimony about…product performance [concerns], impeachment, and other non-hearsay purposes.” Doc. #488, at 5. Rose does not specifically object to this motion. See Doc. #467.

         Because at least some Defendants relied, in part, on one or more of the test reports when rendering business decisions, the test reports appear to be relevant. However, it is unclear if the test reports fall within an exception to the hearsay rule or if a foundation can be laid for the test reports. Without additional information, the Court cannot issue a ruling on this motion, and therefore, it defers consideration of this motion. To the extent a party seeks to present the test reports or inquire about the test reports, the party or its counsel (if the party is represented) must approach the bench prior to presenting evidence or inquiring about the test reports.

         (3) DuraSeal Pipe Customers' Statements

         Plaintiff moves to exclude evidence and argument about DuraSeal Pipe customers' out-of-court statements offered by Defendants to show the reasons why non-party customers did not purchase or ceased purchasing coatings from DuraSeal Pipe. Plaintiff's motion includes statements that a coated pipe failed, the coating failed, or a reason why the coating failed. Plaintiff argues DuraSeal Pipe never made a warranty claim on the Xurex products; DuraSeal Pipe, “with limited exception, ” did not discuss specific customer statements with Xurex; the statements are hearsay or double hearsay; and any probative value the statements have is outweighed by the time it would it would take to prove the existence of each statement and the circumstances from which each statement arose.

         Rose does not specifically object to this motion, but Kraus, Olson, and McKeon oppose the motion. Kraus maintains “[c]ompanies do not refuse to consider its customers' statements as a basis for why customers chose not to purchase a coating.” Doc. #478, at 10. He contends the information upon which a business relies to exercise its judgment “is not governed by the Federal Rules of Evidence, ” and the statements are relevant to this lawsuit. Id. at 10-11. Kraus refers to the statements Plaintiff seeks to suppress as “negative market feedback…that was heard from or ascribed to customers.” Id. Olson and McKeon argue the statements will be offered to illustrate Defendants' decision-making process, the facts known to them at the time they made decisions, and the context of events. They state the “ultimate issue at trial” will be whether the Xurex board members breached their fiduciary duties. Doc. #488, at 6. Thus, Defendants' “perception of product-related issues, including what they [were] told by others…is… relevant to, and admissible in, the trial of this action.

         If the statements are offered for the truth of the matters asserted therein, the statements are hearsay, and unless they satisfy an exception to the hearsay rule, they are not admissible. Fed.R.Evid. 802. In this regard, Plaintiff's motion is granted. However, if the statements are not offered for the truth of the matters asserted therein, it is unclear if Defendants can lay a foundation for admission of the statements. Similar to Plaintiff's Motion in Limine No. 2, the Court cannot issue a ruling on this motion at this time and defers consideration of this motion. To the extent a party seeks to present evidence of the statements or inquire about the statements, the party or its counsel (if the party is represented) must approach the bench prior to presenting evidence or inquiring about the statements.

         (4) Unpled Defenses or Unidentified Facts for Pled Defenses

         Plaintiff moves to prohibit evidence or argument regarding unpled defenses or unidentified facts for defenses that were pled. He represents Defendants were asked to provide the factual support for their affirmative defenses in interrogatories, and Defendants should be limited to the facts they identified in those interrogatory answers.

         Rose argues he “has a right to introduce all affirmative defenses and facts in this case without any restriction whatsoever.” Doc. #467, at 1. Kraus contends it is difficult to identify evidence and argument on defenses not made, and he argues Plaintiff uses this motion to exclude evidence Plaintiff missed. Doc. #478, at 11. Olson and McKeon did not respond to this motion.

         First, contrary to Rose's argument, a party does not have an unrestricted right to present affirmative defenses and facts. Instead, the Federal Rules of Civil Procedure require a party responding to a complaint to “affirmatively state any avoidance or affirmative defense.” Fed.R.Civ.P. 8(c)(1). If an affirmative defense was not pled, that defendant may not present evidence or argument about the unpled affirmative defense. Second, Defendants were asked to provide the facts supporting their affirmative defenses during discovery, and they were required to “fully” answer each interrogatory. Fed.R.Civ.P. 33(b)(3). If Defendants failed to provide facts supporting their affirmative defenses when they answered Plaintiff's interrogatories, they may not present evidence or argument about those undisclosed facts during trial. For these reasons, the Court grants Plaintiff's motion.

         (5) Previously Stricken or Withdrawn Defenses

         Plaintiff moves to exclude evidence and argument related to stricken or withdrawn defenses. Olson, McKeon, and Rose do not raise objections to this motion. Kraus argues withdrawn defenses should not be excluded “due to the prohibitive cost necessary to defend” DuraSeal Pipe and DuraSeal Holdings and “[e]vidence should not be suppressed…because a party could not afford to defend itself.” Doc. #478, at 11.

         At the time the Court considered the parties' summary judgment motions, all Defendants, except Jensvold, Rose, and Kaiser, were represented by counsel. Doc. #434, at 19. Defendants did not respond to Plaintiff's argument that he was entitled to summary judgment on Defendants' affirmative defenses of commercial frustration, impossibility of performance, ratification related to the 9/25/14 Amendment, and fraud in the inducement related to the 1/11/12 Amendment. Doc. #434, at 51-53. Also, Defendants voluntarily withdraw the affirmative defense of failure to mitigate. Id. at 52.

         Contrary to Kraus's position, he is not permitted to bring new defenses at trial. As explained in Motion in Limine No. 4, he was required to plead all affirmative defenses when he responded to Plaintiff's First Amended Complaint. Pursuant to Defendants' withdrawal and the Court's rulings, the Court grants Plaintiff's motion. No. party shall present evidence or argument related to the defenses of commercial frustration, impossibility of performance, ratification related to the 9/25/14 Amendment, fraud in the inducement related to the 1/11/12 Amendment, and failure to mitigate.

         (6) Law Firm's Relationship with Olson as Elected Official

         Plaintiff asks to preclude evidence that Polsinelli PC, the law firm representing him, or attorneys employed by Polsinelli contributed to Olson's past campaigns for public office or were involved in fundraisers for Olson. Plaintiff believes Olson will introduce evidence that Johnston (or his relatives or corporate entities) contributed to Olson's campaign before and after Johnston nominated Olson to the Xurex board to show he is not beholden to Johnston, although Plaintiff does not seem to argue the introduction of that evidence would be improper. However, Plaintiff notes Olson lists Polsinelli attorneys as rebuttal witnesses. Plaintiff argues that there is no suggestion that Polsinelli attorneys were involved in Olson being nominated to the Xurex board, and thus, this evidence is irrelevant, creates an “undue tendency to suggest decision on an improper basis, ” and is a personal attack on Plaintiff's counsel. Doc. #450, at 9-10.

         McKeon and Rose do not raise objections to this motion. Kraus contends Olson should “keep the right of rebuttal.” Doc. #478, at 12. Olson concedes evidence of campaign contributions made by Polsinelli attorneys and efforts by Polsinelli attorney to hold a campaign fundraiser on his behalf are relevant and admissible in this case only to counter Plaintiff's argument that Olson “sought to benefit DuraSeal and Johnston” with the 2012 Agreement because Johnston and DuraSeal contributed to his campaign. Doc. #488, at 7. Olson contends if Plaintiff presents evidence of Johnston's (or his relatives' or corporate entities') campaign contribution to demonstrate Olson's bias toward Johnston, Olson should be permitted to present evidence that he is not beholden to any campaign contributor, including Johnston and Polsinelli whose attorneys contributed to his campaign during this litigation. Id. at 7-9. Finally, Olson argues if this motion is granted, evidence of campaign contributions by any Defendant (or any family member of any Defendant) should also be excluded for the same reasons asserted by Plaintiff in support of his motion and because the evidence was not properly disclosed.

         Whether Polsinelli attorneys contributed to Olson's campaign or planned a fundraiser for Olson is not relevant to the claims being tried. To the extent these facts could be considered relevant, any probative value they may have is substantially outweighed by unfair prejudice, confusion, misleading the jury, and wasting the jury's time. Fed.R.Evid. 403. For these reasons, Plaintiff's motion is granted. Olson shall not present evidence or argument regarding any campaign contributions from Polsinelli or its attorneys to his campaign or Polsinelli attorneys planning a fundraiser for him.

         Olson did not file a motion in limine regarding Plaintiff's likely use of evidence that Johnston (or his relatives or corporate entities) or any other Defendant (or their relatives or corporate entities) contributed to his campaign. For this reason alone, Olson's request to exclude this evidence is denied. Moreover, this evidence is relevant to the claims being tried, and there is little to no risk that its probative value would be outweighed by unfair prejudice, confusion, ...


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