Oracle Corporation et al v. SAP AG et al
Filing
1157
Declaration of Tharan Gregory Lanier in Support of 1156 Opposition/Response to Motion Declaration of Tharan Gregory Lanier in Support of Defendants' Oppositions to Oracle's Motions in Limine filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23)(Related document(s) 1156 ) (Froyd, Jane) (Filed on 5/10/2012)
EXHIBIT 15
Page 1
Slip Copy, 2009 WL 2259734 (D.Ariz.)
(Cite as: 2009 WL 2259734 (D.Ariz.))
Only the Westlaw citation is currently available.NOT FOR PUBLICATION
United States District Court,
D. Arizona.
CONLON GROUP ARIZONA, LLC, Plaintiff,
v.
CNL Resort Biltmore Real Estate, Inc.; KSL Biltmore Resort, Inc., Defendants.
No. CV-08-0965-PHX-FJM.
July 27, 2009.
West KeySummaryLimitation of Actions 241
95(9)
241 Limitation of Actions
241II Computation of Period of Limitation
241II(F) Ignorance, Mistake, Trust, Fraud,
and Concealment or Discovery of Cause of Action
241k95 Ignorance of Cause of Action
241k95(9) k. Contracts; Warranties.
Most Cited Cases
Discovery rule did not apply when determining
when villa owner's claims against hotel for breach
of contract and breach of the implied covenant of
good faith and fair dealing accrued, for purposes of
six-year statute of limitations. Villa owner did not
exercise reasonable diligence in monitoring the
hotel's performance given that owners had right to
review hotel's rental pool books and records but
failed to review those records for many years until
owner's request. A.R.S. § 12-548.
Mariscal Weeks McIntyre & Friedlander PA,
Phoenix, AZ, for Plaintiff.
Monica Marie Ryden, Andrew Mark Federhar, Lori
Anne Higuera, Fennemore Craig PC, Phoenix, AZ,
for Defendants.
ORDER
FREDERICK J. MARTONE, District Judge.
*1 We now have before us defendants' (the
“Hotel”) Daubert motion to exclude the report and
testimony of expert Robert Keon (doc. 129), Conlon's response (doc. 142), and the Hotel's reply
(doc. 146); the Hotel's Daubert motion to exclude
the report and testimony of expert Renee Jenkins
(doc. 130), Conlon's response (doc. 143), and the
Hotel's reply (doc. 147). We also have before us the
Hotel's motion for summary judgment (doc. 132),
Conlon's response (doc. 149), and the Hotel's reply
(doc. 150).
I. Background
This case involves a dispute over rental pool
agreements between the Hotel and dozens of villa
owners. Under the agreements, the Hotel offers the
villa units as rental accommodations in addition to
rooms in the Hotel. The Hotel receives a percentage
of the villa rental revenue after deducting certain
expenses, including credit card and travel agent
fees. The balance of the revenue is then distributed
equally among the rental pool participants.
Conlon Group Arizona, LLC (“Conlon”) owns
six villa units and has been participating in the rental pool since 2003. Concerned that the Hotel was
improperly calculating the credit card and travel expense deductions, on June 19, 2006, Conlon, acting
in its individual capacity, sued the Hotel for an accounting of the rental pool books and records and
sought a judgment for the amount found to be owing under the rental pool agreement. Conlon Group
Arizona, LLC v. CNL Resort Biltmore Real Estate,
Inc. No. CV-06-2065-PHX-FJM (D.Ariz.2006) (
“Conlon I” ). Conlon alleged that the Hotel
breached the rental pool agreement by improperly
calculating (1) credit card expenses, and (2) travel
agent commissions, and by improperly providing
complimentary villa units (3) to Hotel employees,
and (4) to Hotel guests. Shortly before trial, the
parties reached agreement on the first three claims
and the trial proceeded on the only remaining issuewhether the Hotel abused its discretion by provid-
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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ing complimentary villa rooms to non-employee
guests. Following a bench trial on April 8, 2008, we
found in favor of the Hotel.
In early 2007, during the pendency of Conlon I,
Conlon's sole owner, Mark Finney, began soliciting
other rental pool participants to retain Conlon as
their agent to prosecute claims against the Hotel.
By mid-2007, twenty-nine rental pool participants
had entered into agency agreements with Conlon. In
mid-2008, these contracts were converted into assignment agreements. On February 26, 2008, again
while Conlon I proceeded, Conlon filed the present
action against the Hotel as agent of the other villa
owners (“Conlon II” ). This second action involves
the same claims asserted in Conlon I-the improper
calculation of credit card and travel agent expenses,
and excessive comping of rooms. The new lawsuit
is different from Conlon I in that it includes a new
claim that the Hotel's practice of capping villa revenue at 17% breaches the rental pool agreement,
and seeks damages for contract breaches dating
back to 1995.
II. Expert Witnesses
*2 Conlon hired Robert Keon to opine as to
whether the Hotel's management of the rental pool
agreement meets industry standards. Specifically,
Keon analyzed: (1) the Hotel's accounting system
for the rental pool; (2) the Hotel's calculation of
credit card expenses and travel agency commissions; (3) the lack of documentation supporting the
Hotel's 17% practice; (4) the Hotel's practice regarding complimentary rooms; (5) the Hotel's
group rate practices; and (6) the Hotel's villa rate
practices. The Hotel now challenges the reliability
of Keon's opinions.
Rule 702, Fed.R.Evid., allows admission of
“scientific, technical, or other specialized knowledge” by a qualified expert if it “will assist the trier of fact to understand the evidence or to determine a fact in issue.” We perform a “gatekeeping”
function in order “to ensure the reliability and relevancy of expert testimony.” Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167,
1176, 143 L.Ed.2d 238 (1999). This gatekeeping
obligation applies to both jury and bench trials, although its importance is limited when the judge is
the trier of fact and has an ongoing opportunity to
evaluate the admissibility and weight of expert
testimony.
The Hotel argues that Robert Keon's opinions
are unreliable because he lacks basic qualifications
to opine regarding industry standards or the Hotel's
practices. The Hotel contends that Keon has no
formal education in the hospitality industry, no specific experience with rental pools, no experience
with the Arizona hospitality market, and he has
never served as an expert. Each of these arguments
is without merit.
An individual can be “qualified as an expert by
knowledge, skill, experience, training, or education.” Fed.R.Evid. 702. Keon has more than twenty
years experience in the hotel industry. He served as
a food and beverage manager for several hotels in
New York City. He held senior financial positions
with the Four Seasons Hotel and was the chief financial officer for a spa and time-share resort. He
conducted research for the Trust Hotel Group,
which included a study of pooling agreements.
Since 2001, he has run his own hotel consulting
business. He has worked with hotels in six different
states. Response, exhibit A. He is clearly qualified
by virtue of his extensive hotel experience to testify
as an expert in this case.
We reject the Hotel's argument that Keon's
opinions are unreliable because they are based on
his own experience rather than reliable principles or
authoritative sources, such as “formal education,
treatises, books or other learned documents.” Motion re: Keon at 7. Daubert's reliability test “is
‘flexible,’ and [its] list of specific factors neither
necessarily nor exclusively applies to all experts or
in every case.” Kumho Tire Co. v. Carmichael, 526
U.S. 137, 141, 119 S.Ct. 1167, 1171, 143 L.Ed.2d
238 (1999). Keon's extensive experience in the
hotel industry will undoubtedly assist us in understanding the evidence and renders his opinions suf-
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(Cite as: 2009 WL 2259734 (D.Ariz.))
ficiently reliable to be admissible.
*3 The Hotel similarly challenges the opinion
testimony and report of expert Renee Jenkins regarding damages Conlon may have suffered as a
result of the Hotel's alleged breach of the rental
pool agreements. The Hotel contends that Jenkins, a
certified public accountant, is not qualified to offer
her opinions regarding damages because Jenkins
has no specific experience in the hospitality industry, no experience with hotel rental pools, and
no experience in the Arizona market.
Jenkins was engaged as an accountant to
provide an opinion regarding the calculation of
damages. She was not engage to evaluate the
Hotel's policies or practices regarding the risk pool
agreement. See Jenkins Depo at 11. “Ordinarily,
courts impose no requirement that an expert be a
specialist in a given field, although there may be a
requirement that he or she be of a certain profession, such as a doctor.” Doe v. Cutter Biological,
Inc., 971 F.2d 375, 385 (9th Cir.1992). There is
little doubt that as a certified public accountant,
Jenkins is qualified to render an opinion on damages. Although the Hotel also challenges the “rack
rate” methodology Jenkins used to calculate the
rental value of the condo villas, the Hotel's challenge goes to the weight given Jenkins' opinion, not
its admissibility.
It is clear that both Keon and Jenkins' reports
will “logically advance[ ] a material aspect of the
[plaintiff's] case,” Daubert v. Merrell Dow
Pharms., Inc., 43 F.3d 1311, 1315 (9th Cir.1995),
and “will assist the trier of fact to understand the
evidence or to determine a fact in issue.”
Fed.R.Evid. 702. The motions to exclude the reports and opinions of Robert Keon and Renee Jenkins are denied (doc. 129, 130).
III. Motion for Summary Judgment
A. Claim Preclusion
The Hotel argues that Conlon's current claims
are barred by the doctrine of claim preclusion.
When a final judgment is entered on the merits in a
prior action involving the same parties or their
privies, a second action on matters that were actually decided or could have been decided is barred.
Hall v. Lalli, 194 Ariz. 54, 57, 977 P.2d 776, 779
(1999). In evaluating the identity of parties, we
must consider “the capacity in which [the parties]
appear.” Matusik v. Ariz. Pub. Serv. Co., 141 Ariz.
1, 3, 684 P.2d 882, 884 (Ct.App.1984). Where a
party appears in one capacity, individually or as a
representative, he is not bound in a subsequent action in which he appears in another capacity. Restatement (Second) of Judgments § 36(2) (1982).
Conlon I has no preclusive effect on the present
action because there is no identity of the parties. It
is undisputed that Conlon brought Conlon I on its
own behalf, not in its representative capacity. See
id. § 36(1) (a party appears in his individual capacity unless “it is made evident that he appears in
some other capacity”). Although Mark Finney
began soliciting agency agreements from villa owners while Conlon I was pending, no agency agreement was executed until May 2007, almost a year
after Conlon I was filed. Our Rule 16 scheduling
order set March 31, 2007 as the deadline to amend
the complaint and to join additional parties. Had
Conlon sought leave to amend to add the assignor
villa owners after this date, its motion would have
likely been denied.
*4 The assignor villa owners were not parties
to Conlon I and there is no evidence that they consented to be bound by it, as evidenced by the fact
that they filed their own action while Conlon I was
pending. Due process dictates that these litigants
have a right to now be heard. Hall v. Lalli, 194 Ariz. at 57, 977 P.2d at 779.
B. Statute of Limitations
The Hotel also argues that Conlon's claims are
barred in part by the statute of limitations. Conlon
seeks damages for breach of contract and breach of
the covenant of good faith and fair dealing dating
back to 1995. The statute of limitations for claims
based on a written contract is six years. A.R.S. §
12-548. Therefore, the six-year limitations period
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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Slip Copy, 2009 WL 2259734 (D.Ariz.)
(Cite as: 2009 WL 2259734 (D.Ariz.))
applies to the breach of contract claim.
The Hotel contends, however, that Conlon's
breach of the covenant of good faith and fair dealing claim is actually a claim sounding in tort and
therefore the two-year statute of limitations under
A.R.S. § 12-542 is appropriate. We disagree. A
breach of the covenant of good faith and fair dealing arises in contract, unless “the contract creates a
relationship in which the law implies special duties
not imposed on other contractual relationships.”
Rawlings v. Apodaca, 151 Ariz. 149, 158, 726 P.2d
565, 574 (1986). The Hotel's claim that a special relationship exists in the present case is without merit. There is no “noncommercial” component to the
parties' relationship arising out of the rental pool
agreements. See id. at 159, 726 P.2d at 575. Conlon's claim for breach of the implied covenant of
good faith and fair dealing sounds in contract and
the six-year statute of limitations applies to this
claim as well.
The parties next dispute when the contract
causes of action accrued. As a general rule, a contract action accrues and the statute of limitations
begins to run when the breach occurred. Gust,
Rosenfeld & Henderson v. Prudential Ins. Co., 182
Ariz. 586, 588, 898 P.2d 964, 966 (1995). A limited
exception exists, however, “where circumstances
prevent [plaintiffs] from knowing they have been
harmed.” Id. at 589, 898 P.2d 964, 989 P.2d at 967.
In such a case, the “discovery rule” provides that “a
plaintiff's cause of action does not accrue until the
plaintiff knows or, in the exercise of reasonable diligence, should know the facts underlying the
cause.” Id. at 588, 989 P.2d at 966. The relevant inquiry in determining whether to apply the discovery
rule is “whether the plaintiff's injury or the conduct
causing the injury is difficult for plaintiff to detect.” Id. The discovery rule does not apply where a
party fails to “exercise[ ] reasonable diligence in
monitoring the performance of another under the
contract.” Id. at 591, 898 P.2d at 969.
This is not the case where a defendant concealed facts from the plaintiff, or where the
plaintiff's injury was undetectable even upon reasonable inquiry. Instead, this is a case where the
villa owners had a contractual right to review the
Hotel's rental pool books and records, yet no villa
owner sought to review those records until Conlon's
request in February 2004. This does not demonstrate the exercise of reasonable diligence required
for application of the discovery rule.
*5 Conlon commenced this action on behalf of
the assignor villa owners on February 26, 2008.
Therefore, pursuant to Arizona's six-year statute of
limitations, Conlon's breach of contract claim and
breach of the covenant of good faith and fair dealing claim are limited to those breaches occurring
after February 26, 2002.
C. Mitigation of Damages
On August 29, 2008, the Hotel issued refund
checks to all rental pool participants, including the
assignor villa owners. The refund payments included credit card and travel agent commission
overcharges, revenue for complimentary use of
villa rooms by Hotel employees in excess of one
week, and accrued interest. The Hotel informed the
assignor villa owners that if they had assigned their
claims to Conlon, they could transfer their refund to
Conlon. Mr. Finney directed the assignor villa owners to return the refund checks to the Hotel. Several
of the villa owners nevertheless accepted the refund
checks. The Hotel now argues that Conlon's damages should be reduced by the amount of the refund
payments.
“[I]t is clear that when notice of an assignment
is given to and received by the debtor that the debtor becomes liable to pay the assignee and that its
subsequent payment to the original obligee-assignor
does not relieve it of that liability.” Van Waters &
Rogers, Inc. v. Interchange Resources, Inc., 14 Ariz.App. 414, 417, 484 P.2d 26, 29 (Ct.App.1971). It
is undisputed that the Hotel had notice of the assignments at least as early as August 1, 2008, when
the parties stipulated to the substitution of Conlon
as the sole party plaintiff due to the assignment
agreements between the plaintiff villa owners and
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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Slip Copy, 2009 WL 2259734 (D.Ariz.)
(Cite as: 2009 WL 2259734 (D.Ariz.))
Conlon (doc. 8). Because the Hotel had notice of
the assignment agreements, its payments to the assignor villa owners does not relieve its liability to
Conlon and will not serve to mitigate damages in
this case.
IV. Conclusion
IT IS ORDERED DENYING the Hotel's
Daubert motion to exclude the report and testimony
of expert Robert Keon (doc. 129), and DENYING
the Hotel's Daubert motion to exclude the report
and testimony of expert Renee Jenkins (doc. 130).
IT IS FURTHER ORDERED GRANTING
IN PART AND DENYING IN PART the Hotel's
motion for summary judgment (doc. 132). The
Hotel's motion for summary judgment is granted
only to the extent it asserts that the statute of limitations bars claims occurring before February 26,
2002.
D.Ariz.,2009.
Conlon Group Arizona, LLC v. CNL Resort Biltmore Real Estate, Inc.
Slip Copy, 2009 WL 2259734 (D.Ariz.)
END OF DOCUMENT
© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.
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