Dollar Tree Stores, Inc. v. Toyama Partners, LLC et al

Filing 611

FINAL PRETRIAL SCHEDULING ORDER #476 #477 #478 #479 #480 #481 #482 #483 #484 #485 #487 #488 #489 #490 #491 #492 #493 #494 #495 #496 #497 #498 #499 #500 #501 #503 #504 #505 #506 #507 #508 #509 #510 #511 #513 #514 #515 #598 #603 (Illston, Susan) (Filed on 7/12/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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DOLLAR TREE STORES, INC.,

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United States District Court
For the Northern District of California

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Plaintiff,

FINAL PRETRIAL SCHEDULING
ORDER

v.
TOYAMA PARTNERS LLC, et al.,
Defendants.

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No. C 10-0325 SI

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On July 12, 2012, the Court held a final pretrial conference in the above captioned matter, which

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is set for jury trial beginning July 23, 2012. All parties were represented by counsel. The following
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matters were resolved:
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1.

Number of jurors and challenges: There shall be a jury of 8 members. Each side shall

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have up to four peremptory challenges.
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2.

Voir dire: The court will conduct general voir dire, and counsel for each side shall have

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up to 20 minutes total to question the panel.
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3.

Jury instructions: No later than Wednesday, July 18, 2012, counsel shall submit one

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complete set of proposed instructions, containing both agreed upon instructions (which shall be so
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noted), and contested instructions, all in the order in which they should be read to the jury. Where
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contested instructions are included, they should be annotated both with the proponent’s authority for
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seeking the instruction and the opponent’s reason for opposition.

Where feasible, competing

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instructions addressing the same point shall be included together in the single set of proposed
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instructions. The final submission shall be filed in hard copy and also submitted to the court on disk,

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suitable for reading by WordPerfect 100 (windows) on or before July 18, 2012.

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4.

Trial exhibits: No later than July 20, 2012, the parties shall submit their trial exhibits,

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in binders with numbered tabs separating and identifying each exhibit. The court shall be provided with

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three sets (for the court, the file and the witness) and each side shall provide one set for the other side.

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To the extent that original documents are to be used as exhibits in the case, they should be included in

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the set of exhibits for the court.

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United States District Court
For the Northern District of California

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5.

Timing of trial: The Court has estimated that the trial should take approximately 10

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days. Based on this estimate, each side shall have 45 minutes for opening statements; each side shall

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have 20 hours total for presentation of evidence, which includes direct and cross-examination and

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presentation of all exhibits; and each side shall have up to 60 minutes for closing argument.

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6.

Trial schedule: Jury trials are generally conducted Monday through Thursday; jury trials

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are generally not conducted on Fridays, although deliberating juries are free to deliberate on Fridays.

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The trial day runs from 8:30 a.m. until 3:30 p.m., with a 15 minute break at 10:00 a.m., a 45 minute

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break at 12:00 noon and a 15 minute break at 2:00 p.m., all times approximate. Court will not begin

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until 9:30 am on Wednesday, July 25, 2012.

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7.

Motions in limine: The parties filed 39 motions in limine, as follows:
Plaintiff’s No. 1: To exclude argument that Dollar Tree Claims to be a third-party

beneficiary of the sale agreement: GRANTED.

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Plaintiff’s No. 2: To exclude testimony and report of defense expert Gillespie re real

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estate industry practices: DENIED, without prejudice to specific objections to specific questions at

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trial. Expert reports are hearsay and are not admissible evidence as such. Further, no experts will be

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allowed to opine as to the law. As to the proposed testimony concerning industry standards and

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practices, however, there is no showing that Gillespie is not qualified to testify about the subject matter
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designated and plaintiff’s objections go to the weight and importance of his testimony, not its

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admissibility.

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Plaintiff’s No. 3: To exclude evidence that the late fee was referred to as a penalty:

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DENIED AS MOOT. The Court has found the liquidated damages provision to be unenforcable and

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has severed it from the balance of the Amended and Restated Lease (ARL). Evidence concerning it will

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not be relevant.

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Plaintiff’s No. 4: To exclude evidence of Peter Pau’s and Susanna Pau’s religious

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beliefs: Religious beliefs are irrelevant to issues of credibility of witnesses and will not be allowed as

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such; limiting instructions to this effect will be given upon appropriate request. Beyond this, the motion

United States District Court
For the Northern District of California

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is DENIED as overbroad.

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Plaintiff’s No. 5: To exclude argument re Comerica’s decision to proceed with short

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sale transaction: DENIED as overbroad. Witnesses with percipient knowledge of relevant information

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may testify to it. No witnesses will be allowed to speculate or opine about other people’s motivations.

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No argument will be allowed as to matters not in evidence.

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Plaintiff’s No. 6: To exclude argument that undercapitalization must be analyzed

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at time of incorporation: DENIED as overbroad. Relevant evidence will be admitted, and the parties

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may argue from the admitted, relevant evidence. No witnesses will be allowed to testify as to what the

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law is.

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Plaintiff’s No. 7: To exclude evidence that Comerica concluded that Toyama is

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adequately capitalized, creditworthy and properly formed as a legal entity: DENIED as overbroad.

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Witnesses with percipient knowledge of relevant information may testify to it. No witnesses will be

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allowed to speculate or opine about other people’s motivations. No argument will be allowed as to

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matters not in evidence.

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Plaintiff’s No. 8: To exclude evidence of settlement negotiations and mitigation of

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damages: DENIED, without prejudice to specific objections to specific questions. Evidence of

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mitigation (or lack thereof) may be relevant. Evidence of settlement discussions is inadmissible to prove

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liability or the amount of any claim, but may be relevant to other issues.

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Plaintiff’s No. 9: To exclude testimony and report of defense expert Brown re
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accounting procedures: DENIED, without prejudice to specific objections to specific questions at trial.

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Expert reports are hearsay and are not admissible evidence as such. Further, no experts will be allowed

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to opine as to the law. As to the proposed testimony concerning accounting practices and procedures,

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however, there is no showing that Brown is not qualified to testify about the subject matter designated

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and plaintiff’s objections go to the weight and importance of his testimony, not its admissibility.

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Plaintiff’s No. 10: To exclude argument that it is significant that the assignment

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attached to the sale agreement was not signed: DENIED as overbroad.. Relevant evidence will be

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admitted, and the parties may argue from the admitted, relevant evidence. No witnesses will be allowed

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to testify as to what the law is.

United States District Court
For the Northern District of California

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* * *

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Defendants’ No. 1: To exclude reference to orders issued in connection with

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plaintiff’s motion to compel production of withheld documents under the crime/fraud exception:

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GRANTED. Relevant documents will be admitted, but no party may elicit testimony or argue about

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discovery or other orders of the Court.

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Defendants’ No. 2: To exclude reference to discovery disputes:

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Relevant documents will be admitted, but no party may elicit testimony or argue about discovery or

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other orders of the Court.

GRANTED.

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Defendants’ No. 3: To exclude reference to the Court’s rulings on motions:

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GRANTED. Relevant documents will be admitted, but no party may elicit testimony or argue about

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orders of the Court. If either party seeks to use a representation or statement contained in moving papers

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or other pretrial documents for any purpose, leave of Court must first be sought and obtained.

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Defendants’ No. 4: To exclude evidence re alleged breach of original lease: DENIED

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as overbroad. Plaintiff has not sought and may not seek damages for breach of the original lease in this

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action; those claims were resolved by the ARL. However, evidence concerning the parties’ various

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actions prior to and after the ARL will be admitted if relevant to the claims in suit.

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Defendants’ No. 5: To exclude parol evidence to vary, alter or supplement terms of
ARL: DENIED as overbroad, without prejudice to specific objections to specific questions at trial.
Defendants’ No. 6: To exclude parol evidence to vary, alter or supplement terms of
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sale agreement: DENIED as overbroad, without prejudice to specific objections to specific questions

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at trial.

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Defendants’ No. 7: To exclude evidence of a unity of interest between some
defendants as showing a unity of interest with Toyama Partners: DENIED.
Defendants’ No. 8: To exclude evidence that Capella is the alter ego of Toyama or
any other defendant or insider of Toyama: DENIED.
Defendants’ No. 9: To exclude beneficiary, reliance or assumption evidence as to
sale agreement: DENIED.
Defendants’ No. 10: To exclude evidence that Capella is liable to Dollar Tree under

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United States District Court
For the Northern District of California

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privity of estate or operation of law: DENIED. This, like many of the motions in limine, amounts to

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little more than legal argument better reserved for jury instructions or motion practice, after relevant

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evidence is received.

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Defendants’ No. 11: To exclude evidence that the ARL is an asset under the UFTA:

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GRANTED. This issue was resolved and rendered moot by the Court’s summary judgment ruling

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rejecting treatment of the lease as an asset under the UFTA.

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Defendants’ No. 12: To exclude [evidence] of preferential payment to show

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fraudulent transfer: DENIED, as vague and overbroad, without prejudice to specific objections to

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specific questions at trial.

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Defendants’ No. 13: To exclude evidence that defendants made a transfer to an
insider under UFTA: DENIED.
Defendants’ No. 14: To exclude evidence that debtor retained possession under
UFTA: DENIED.
Defendants’ No. 15: To exclude evidence that the transfer was not disclosed or was
concealed under UFTA: DENIED.
Defendants’ No. 16: To exclude evidence that defendants absconded with any funds
under UFTA: DENIED.
Defendants’ No. 17: To exclude evidence that defendants removed or concealed
assets under UFTA: DENIED.
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Defendants’ No. 18: To exclude evidence of no reasonably equivalent value of sale
of center: DENIED.

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Defendants’ No. 19: To exclude testimony of plaintiff’s expert Wagner: DENIED,

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without prejudice to specific objections to specific questions at trial. Expert reports are hearsay and

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are not admissible evidence as such. No experts will be allowed to opine as to the law or as to legal

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conclusions, nor will they be allowed to speculate as to other people’s motives or understandings. As

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to Wagner’s proposed testimony, however, there is no showing that he is not qualified to testify about

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the subject matter designated and defendants’ objections go to the weight and importance of his

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testimony, not its admissibility.

United States District Court
For the Northern District of California

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Defendants’ No. 20: To exclude evidence of defendants’ settlement offers to show

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liability:

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settlement discussions is inadmissible to prove liability or the amount of any claim, but may be relevant

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to other issues; limiting instructions to this effect will be given upon appropriate request.

DENIED, without prejudice to specific objections to specific questions. Evidence of

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Defendants’ No. 21: To exclude evidence of defendants’ financial condition:

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DENIED, as vague and overbroad, without prejudice to specific objections to specific questions at trial.

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Defendants’ No. 22: To prohibit use of pejorative or prejudicial terms or phrases,

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such as “back date”: DENIED as framed, without prejudice to specific objections to specific questions

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at trial.

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Defendants’ No. 23: To prohibit misleading references to the defendants in the

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collective: DENIED as framed, without prejudice to specific objections to specific questions at trial.

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Defendants’ No. 24: To exclude evidence of actual damages: DENIED.

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Defendants’ No. 25: To exclude evidence of default interest on liquidated damages:

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DENIED as moot.
Defendants’ No. 26: To exclude trial counsel as witness: GRANTED, pending further
motion during trial.
Defendants’ No. 27: To exclude evidence for reformation or ARL: DENIED as moot;
no reformation issues will be presented to jury.
Defendants’ No. 28: To exclude evidence for enterprise theory of piercing the
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corporate veil: DENIED.

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Defendants’ No. 29: To exclude non-disclosed witnesses: DENIED, pending further
motion during trial.

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Further issues/motions:
Dollar Tree motion for clarification: DENIED. Dollar Tree seeks “clarification” that

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the Court’s June 25, 2012 summary judgment order does not preclude it from presenting a theory of

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fraudulent conveyance liability based upon Capella’s transfer of the amended lease to Toyama as an

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alleged “incurrence of an obligation” pursuant to California Civil Code § 3439.04. Dollar Tree also

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United States District Court
For the Northern District of California

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seeks clarification that the allegations of the first amended consolidated complaint state a claim for

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fraudulent conveyance based upon this theory. Alternatively, Dollar Tree requests leave to amend the

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first amended consolidated complaint to “conform to the evidence that Capella’s transfer of the amended

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lease to Toyama was the incurrence of an obligation” in violation of the UFTA. Dollar Tree’s motion

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seeking clarification is an untimely motion to amend the complaint, and it is DENIED. On the eve of

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trial, Dollar Tree seeks to assert an entirely new theory of fraudulent conveyance that was neither

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alleged in the first amended consolidated complaint nor asserted in the summary judgment briefing.

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Dollar Tree has consistently alleged that the amended lease was an “asset” that was fraudulently

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transferred, and Dollar Tree has never contended that the amended lease was an “obligation” under the

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UFTA. See FACC ¶¶ 176-188; Docket Nos. 365 at 22-23. Dollar Tree has not shown good cause for

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the amendment, and the Court finds that amendment would prejudice defendants.

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Motion concerning issues to be presented to jury: The parties have submitted briefs

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regarding whether the Court or the jury should decide Dollar Tree’s fraudulent conveyance and alter ego

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claims. “To determine whether a particular action will resolve legal rights, and therefore give rise to

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a jury trial right, we examine both the nature of the issues involved and the remedy sought.” Wooddell

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v. Int’t Broth. of Elec. Workers, Local 71, 502 U.S. 93, 97 (1991).

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---The Court concludes that the fraudulent conveyance claim should be decided by the

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Court, as the relief sought by Dollar Tree – avoidance of the Second Amendment; an attachment against

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the shopping center property; an injunction against any further disposition of the shopping center by
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defendants; and the appointment of a receiver to take charge of the shopping center and/or proceeds of

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its sale – are equitable in nature. If the parties would like the jury to answer special interrogatories

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regarding the fraudulent conveyance claim to assist the Court, the parties may submit proposed

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interrogatories for the Court’s consideration.

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---The Court concludes that the alter ego claim should be decided by the jury, as Dollar

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Tree seeks to pierce Toyama’s corporate veil and obtain monetary damages, a legal remedy, from the

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Pau defendants.
Issues concerning trial counsel: Plaintiff has listed certain defense counsel as trial

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witnesses; see Defendants’ Motion in Limine No. 26. California Rule of Professional Conduct 5-210(c)

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United States District Court
For the Northern District of California

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states that a lawyer shall not act as an advocate before a jury which will hear testimony from that lawyer

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unless the lawyer has the informed, written consent of the client. This is an amendment from an older

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rule which did not provide for an informed consent exception to the usual bar on trial counsel testifying.

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Even under the new rule, under Lyle v. Superior Court, 122 Cal. App. 3d 470 (Cal. Ct. App. 4th 1981),

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a court can deny a party’s choice “to accept less effective counsel because of the attorney’s testifying”

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upon a “convincing demonstration of detriment to the opponent or injury to the integrity of the judicial

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process.” At least one ethics opinion analyzing 5-210(c) has stated that “before permitting the attorney

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to assume the dual role of witness and advocate in a jury trial, the judge may ask to see the client’s

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written consent and may even question the client to determine whether the consent is sufficiently

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informed.” Ethics and Professional Responsibility Issues, 835 PLI/Pat 7 , 20. The opinion notes that

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“attorneys who testify as witnesses are placed in the position of having to argue their own credibility,

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which may jeopardize the client’s case before the jury.” Id.

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---The Court therefore orders defendants to provide informed, written consents in

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accordance with Rule 5-210(c) from all of their clients in this case, consenting to having trial counsel

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(potentially including both Mr. Rehon and Ms. Roberts) act as witnesses in this trial. Written consents

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must be provided from: Peter and Susanna Pau, Toyama Partners LLC and each of its members,

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Capella-Mowry LLC and each of its members, Sand Hill Property Company, and Sand Hill Property

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Management Company. Such written consents shall be filed no later than July 18, 2012.

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Further settlement conference: The parties shall participate in a further settlement

conference with Magistrate Judge Jacqueline Corley, prior to trial.

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IT IS SO ORDERED.
Dated: July 12, 2012

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_____________________________
SUSAN ILLSTON
United States District Judge

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United States District Court
For the Northern District of California

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