Goldberg v. 401 North Wabash Venture LLC et al

Filing 249

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 4/11/2013:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JACQUELINE GOLDBERG,

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Plaintiff,

v.
401 NORTH WABASH VENTURE LLC and
TRUMP CHICAGO MANAGING
MEMBER LLC,
Defendants.

Case No. 09 C 6455

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Before the Court is Defendants’ Motion in Limine No. 5 to exclude evidence of prior
litigation. For the following reasons, the Court grants in part and denies in part the Motion.
BACKGROUND
The Court assumes familiarity with the factual and procedural history of this litigation as
set forth in its October 16, 2012 Memorandum Opinion and Order. (R. 170, Order Granting in
Part and Denying in Part Summ. J) (“Summ. J. Order”). In sum, Plaintiff alleges that Defendants
“lured her into signing agreements to purchase two hotel condominium units (“HCUs”)” in the
Trump International Hotel and Tower (“Trump Tower”) “by misrepresenting that the units
included ownership of certain Trump-branded luxury hotel property and business operations that
would generate over $5 million in revenue.” (Summ. J. Order 1) (internal quotation marks and
alterations omitted).

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In its Motion in Limine No. 5, Defendants 401 North Wabash Venture LLC (“Wabash
LLC”) and Trump Chicago Managing Member LLC (collectively, “Defendants”) seek to
preclude Plaintiff Jacqueline Goldberg from “mentioning, inquiring about, adducing or
presenting evidence” relating to NKJ, LLC, et al. v. 401 N.Wabash Venture, LLC, et al., No. 08
CH02902 (Ill. Cir. Ct. 2008) (the “NKJ Litigation”) or “any other litigation filed against
Defendants or any of their affiliates.” (Defs.’ Mot. ¶¶ 1, 19.) Defendants contend such evidence
is either irrelevant under Federal Rule of Evidence 401 (“Rule 401”) or risks undue prejudice or
confusion under Federal Rule of Evidence Rule 403 (“Rule 403”).
LEGAL STANDARDS
Although the Federal Rules of Evidence do not explicitly authorize in limine rulings, the
practice has developed pursuant to the district court’s inherent authority to manage the course of
trials. Luce v. United States, 469 U.S. 38, 41 n. 4, 105 S. Ct. 460, 83 L. Ed. 2d 443 (1984). In
limine rulings avoid delay and allow the parties the opportunity to prepare themselves and
witnesses for the introduction or exclusion of the applicable evidence. See Wilson v. Williams,
182 F.3d 562, 566 (7th Cir. 1999); United States v. Connelly, 874 F.2d 412, 416 (7th Cir. 1989).
Trial courts have broad discretion in ruling on evidentiary issues before and during trial. See
Christmas v. City of Chicago, 682 F.3d 632, 640 (7th Cir. 2012). Moreover, regardless of the
Court’s initial ruling on a motion in limine, the Court may alter its discretionary ruling during
trial. See Luce, 469 U.S. at 41-42; Farfaras v. Citizens Bank & Trust of Chicago, 433 F.3d 558,
565 (7th Cir. 2006). The Court will only grant a motion in limine when the evidence is clearly
inadmissable for any purpose. See Jonasson v. Lutheran Child & Family Servs., 115 F.3d 436,
440 (7th Cir. 1997); Betts v. City of Chicago, Ill., 784 F. Supp. 2d 1020, 1023 (N.D. Ill. 2011).

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Pursuant to Federal Rule of Evidence 401, evidence is relevant if “it has any tendency to
make a fact more or less probable than it would be without the evidence” and “the fact is of
consequence in determining the action.” Fed. R. Evid. 401; United States v. Boros, 668 F.3d
901, 907 (7th Cir. 2012). Federal Rule of Evidence 402 “provides the corollary that, with certain
exceptions, ‘[r]elevant evidence is admissible’ and ‘[i]rrelevant evidence is not admissible.’”
Boros, 668 F.3d at 907; see also Fed. R. Evid. 402.
ANALYSIS
I.

NKJ Litigation
Defendants assert that in January of 2008, the same counsel representing Plaintiff in the

present case filed suit against Defendants on behalf of parties that “contracted to purchase [hotel
condominium units], refused to close and then sued to rescind their agreements.” The litigation
also “was premised upon the theory that Defendants concealed changes [Wabash LLC] made to
the Property Report and Rental Management Agreement in October 2007.” (R. 215, Defs.’ Mot.
¶ 5.) The NKJ Litigation “was resolved by confidential settlement with Defendants contesting
liability.” (Defs.’ Mot. ¶ 9.) Plaintiff contends that evidence of the existence of “the NKJ
Litigation” itself and the “fact that other HCU buyers in sworn pleadings made the exact same
allegations as Ms. Goldberg” is relevant for two purposes: (1) issues of materiality of the
Defendants’ representations and Plaintiff’s reasonable expectations as an HCU buyer; (2) to
rebut Defendants’ “self-serving” statements “touting their own good faith performance and
good-faith conduct” and various factual defenses. (R. 236, Pl.’s Resp. 16-18.) Plaintiff proffers
that the “proof of the existence of the NKJ Litigation will be provided by first-hand testimony
from Trump employees, among others.” (Id. at 20.) Finally, in anticipating an objection that the

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evidence is merely forbidden “propensity evidence” under Rule 404, Plaintiff claims that it is
admissible under Rule 404(b) as evidence of Defendants’ “motive, opportunity, intent, plan,
knowledge, identity, or absence of mistake.” (Id. at 19.)
In the alternative, Defendants argue that even if evidence of the existence of the NKJ
Litigation is relevant, the Court should exclude it under Rule 403 because any minimal probative
value of such evidence is substantially outweighed by the danger of unfair prejudice and
confusion. (Defs.’ Mot. ¶ 12.) Specifically, Defendants argue that the claims in the NKJ
Litigation are almost identical to those in the present suit and thus risk leaving the jury with the
mistaken impression that the mere existence of litigation against Defendants means that they
“did something wrong.” (Id. ¶ 12.) Defendants further contend that the risk of unfair prejudice
is “especially heightened” if the jury learns that Defendants settled the NKJ Litigation.1 (Id. ¶
13.)
A.

NKJ Litigation as Evidence of Reasonable Expectations or Materiality

A review of the background principles regarding the various use of prior litigation as
evidence is necessary. A statement made in one lawsuit can be evidence, but not a judicial
admission, in another law suit. Kohler v. Leslie Hindman, Inc., 80 F.3d 1181, 1185 (7th Cir.
1996). Moreover, while the “outcome of a lawsuit cannot be used in subsequent suits as
evidence of underlying facts . . . references to the existence of prior litigation may be allowed.”
Burbach Aquatics, Inc. v. City of Elgin, Ill., 08 CV 4061, 2011 WL 148394, at *2 (N.D. Ill. Jan.
18, 2011).

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This ruling does not address any obligations that may pertain to the parties under
confidential settlement agreements governing the litigation in question.
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Here, Plaintiff apparently seeks to offer the testimony of Trump employees “among
others” as evidence of both the existence of the NKJ Litigation and the fact that the NKJ
plaintiffs made the same allegations in sworn pleadings against Defendants as Plaintiff on the
issue of Plaintiff’s reasonable expectations and the materiality of Defendants’ representations.
To this extent, the Court agrees the probative value of such evidence, if any, is substantially
outweighed by the danger of unfair prejudice or confusion under Rule 403. In her Response,
Plaintiff does not identify any source for this evidence besides the first-hand testimony of Trump
employees. Thus, any testimony these employees could offer on the existence of the litigation is
only minimally probative as to the asserted purpose for the evidence–whether other buyers
regarded Defendants’ representations as to the revenue producing facilities of the hotel as
material and that they expected that the HCUs included interests in such facilities.
Moreover, the risk of unnecessary delay or confusion of the issues under Rule 403
substantially outweighs any slight probative value. See Manuel v. City of Chicago, 335 F.3d
592, 597 (7th Cir. 2003) (noting “potential for confusing or even misleading the jury by
engaging in a series of mini-trials” by admitting evidence of prior allegations against defendant).
The introduction of such evidence would consist of several mini-trials of the facts surrounding
these other buyers’ claims. Thus, the Court grants Defendants’ Motion in Limine No. 5 with
respect to any testimony of Trump employees2 referencing the NKJ Litigation.

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In their Reply, Defendants contend that the Court should not permit Plaintiff to testify
about “what she knows” about the NKJ Litigation. Because the same reasoning underlying this
ruling with respect to the Trump employees applies equally to Plaintiff, Plaintiff’s counsel may
not seek to elicit such testimony. Furthermore, it is likely that Plaintiff’s knowledge regarding
the NKJ Litigation is based merely on hearsay.
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B.

Relevance of Litigation to Rebut Self-Serving Good
Performance/Conduct Statements, Evidence that Other Buyers “Did
Not Care” about the Ownership Interest in the Revenue Producing
Facilities of the Hotel, and Evidence that Plaintiff Refused to Close on
the HCUs “For Reasons Unrelated to the Loss of Ownership”

Plaintiff similarly argues that evidence of the NKJ Litigation is relevant to rebut: (1)
“self-serving statements the [] Defendants injected into this case touting their own good
performance and good-faith conduct,” such as deposition testimony from Mr. Donald Trump that
he has been involved in “very little litigation from unit owners who are unhappy” and that he
“cares” about such matters; (2) evidence that other buyers did not care about the ownership
interest in the revenue producing facilities of the hotel; and (3) evidence that Plaintiff refused to
close on the HCUs “for reasons unrelated to the loss of ownership.” (Pl.’s Resp. 17-18.) In their
Reply, Defendants do not foreclose the possibility of offering the first category of such
testimony. With respect to the first category, Defendants assert that they will not offer such
testimony if the Court grants the present Motion. With respect to the second category, as this
concerns the subject of Plaintiff’s Motion in Limine No. 6 to exclude evidence that other HCU
buyers closed on their units, the Court will not address it in this ruling. Regarding the third
category–evidence of the NKJ Litigation is not relevant because the filing of a law suit by other
individuals does not make more or less probable the reasons why Plaintiff did not close on the
HCUs. If Mr. Trump or any other Trump employees testify that very little litigation has taken
place regarding the HCUs, they will open the door to cross examination on the NKJ Litigation.
If Plaintiff believes that any witness has opened the door with this testimony, she must first front
the issue with the Court outside the presence of the jury.

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C.

NKJ Litigation - Rule 404(b)

In an effort to head off any argument that their proffered use of NKJ Litigation evidence
is merely prohibited “propensity” evidence, Plaintiff contends that such evidence is also
admissible under Federal Rule of Evidence 404(b) as evidence of Defendants’ “motive,
opportunity, intent, plan, knowledge, identity, or absence of mistake or accident.” (Pl.’s Resp.
19.) According to Plaintiff, evidence of the allegations in the sworn pleadings of the NKJ
Litigation shows that 1) Defendants’ representations to Plaintiff were not “inadvertent”; 2) the
Defendants “planned and made a concerted effort to promote the HCUs as including ‘an
ownership interest in the revenue producing facilities of the hotel.’” (See Pl.’s Resp. 19.)
“Rule 404(b) provides that evidence of other acts is inadmissible ‘to prove the character
of a person in order to show action in conformity therewith’ but may be admissible for other
purposes, such as proof of motive, opportunity, intent, plan, knowledge, identity, or absence of
mistake or accident.” United States v. Hicks, 635 F.3d 1063, 1069 (7th Cir. 2011) (citation
omitted). When determining whether evidence is properly admitted under Rule 404(b), the
Court considers whether: (1) the evidence is directed toward establishing a matter at issue other
than the defendant’s propensity to commit the conduct in question, (2) the evidence shows that
the other act is similar and close enough in time to be relevant to the matter at issue, (3) the
evidence is sufficient to support a jury finding that the defendant committed the similar act, and
(4) the probative value of the evidence is not substantially outweighed by the danger of unfair
prejudice pursuant to Federal Rule of Evidence 403. See id.; see also United States v. Gomez, __
F. 3d __, 2013 WL 1352540, at *3 (7th Cir. Apr. 5, 2013); Duran v. Town of Cicero, Ill., 653
F.3d 632, 646 (7th Cir. 2011). Under the second factor, the question of “how similar is similar

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enough” depends on the theory that makes the evidence admissible, and courts reach this
decision on a case-by-case basis. See United States v. Foster, 652 F.3d 776, 785 (7th Cir. 2011)
(quoting United States v. Torres, 977 F.2d 321, 326 (7th Cir. 1992)). “Rule 404(b) involves a
discretionary decision for which the trial judge is best suited because of ‘his familiarity with the
case and ability to gauge the likely impact of the evidence in the context of the entire
proceeding.’” Okai v. Verfuth, 275 F.3d 606, 611 (7th Cir. 2001) (quotation omitted).
As an initial matter, the use of Rule 404(b) as a basis of admissibility is questionable.
Here, Plaintiff argues that “the fact that other HCU buyers in sworn pleadings made the exact
same allegations as Ms. Goldberg shows that the representations made . . . were not inadvertent.”
(Pl.’s Resp. 19.) Thus, Plaintiff’s purpose in admitting the evidence appears primarily to be to
establish the “existence” of the litigation. This scenario is distinguishable from other cases in
which courts have admitted Rule 404(b) evidence to show intentional misrepresentation based
upon past conduct. See Jannotta v. Subway Sandwich Shops, Inc., 125 F.3d 503, 517 (7th Cir.
1997) (upholding admission of Rule 404(b) evidence of testimony of other landlords that the
defendant had made similar misrepresentations to them in negotiating leases); Bone Care Int’l
LLC v. Pentech Pharms., Inc., No. 08-CV-1083, 2010 WL 4176983, at *4 (N.D. Ill. Oct. 19,
2010) (permitting expert testimony on drafter’s role in drafting patent ancestor applications with
purported misrepresentations to establish intent to deceive PTO during prosecution of related
patent). In addition, to the extent Plaintiff seeks to admit evidence of litigation concerning the
2007 amendment to the Property Report at issue here–Plaintiff is not strictly seeking to admit
evidence of “other” acts of Defendants, as much as to present evidence that other individuals
also claimed liability on the basis of the same acts involved here. Even if the NKJ Litigation

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involves some “other” acts of Defendants, the danger of unfair prejudice and confusion of the
issues because the allegations are “exactly the same” substantially outweighs any probative
value of such evidence under Rule 403. The Court will not admit evidence of the NKJ Litigation
under Rule 404(b).3
II.

Friends and Family Litigation
In their Motion, Defendants acknowledge that Wabash LLC has been a defendant in three

other kinds of lawsuit related to Trump Tower: (1) “suits by non-closing purchasers of
residential condominiums seeking to avoid the liquidated damages provision in their purchase
agreements; (2) “two suits by ‘friends and family’ of Defendants who purchased a residential
condominium in 2003-2004 at a discount and whose contract were later allegedly canceled by
Wabash”; and (3) “suits brought by contractors who worked on the construction of Trump
Tower.” (Defs.’ Mot. ¶ 4.) Defendants assert that “[m]ost of this [o]ther litigation has been
resolved by dismissal; some by confidential settlement,” and that “[n]one has resulted in a
judgment against Defendants.” (Id. ¶ 5.) In response, Plaintiff clarifies that she seeks to offer
evidence of the “Friends and Family Litigation.” (Pl.’s Resp. 21.)4 According to Plaintiff, that
litigation concerns allegations that Defendants “promoted the fact that they offered to their
‘friends and family’ when the project first began in 2003 the opportunity to buy condominiums

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The Court reminds the parties that as mere allegations, pleadings are not evidence. See
Tibbs v. City of Chicago, 469 F.3d 661, 663 n.2 (7th Cir. 2006). Moreover, to the extent Plaintiff
seeks to introduce the complaint to prove the truth of its allegations, the affidavit and the
statements within are hearsay. Pacheco v. Will County Sheriff’s Office, No. 08 C 5403, 2010
WL 3155983, at *5 (N.D. Ill. Aug. 9, 2010).
4

Because Plaintiff has not established the relevancy of the referenced litigation
concerning non-closing purchasers and liquidated damages or the Trump Tower contractors, the
Court grants Defendants’ Motion with respect to these lawsuits.
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at discounted prices in order to fuel early sales at the project” only to “cancel[] the discount deals
unilaterally” four years after their “friends and family” signed the Purchase Agreements. (Id.)
Plaintiff further contends that Defendants in their own defense “stated that the deals were
cancelled because it was no longer in their financial interest to fulfill those promises, and that
they had contract language in the deals to ‘cover them’ for the eventuality.” (Id.)
Defendants contend that any evidence of other litigation against Defendants is not
relevant and unfairly prejudicial under Rule 403. (Id. ¶ 16.) Plaintiff again invokes Rule 404(b)
and argues that such evidence is admissible to prove (1) the “bait and switch modus operandi of
the Trump Defendants to make big promises to generate publicity and fuel sales while privately
planning to change the deal after the promotional benefits expired”; and (2) the absence of
mistake on the part of Defendants’ in including “the ownership of the revenue producing
elements of the hotel over the course of four different iterations of the Property Reports.” (Id.)
Plaintiff’s reliance on Rule 404(b) similarly fails. Here, Plaintiff apparently argues that
the sworn pleadings are evidence of prior litigation,5 which in turn, is probative of Defendants’
absence of mistake in its alleged misrepresentation. Again, Plaintiff’s focus in her proffer of
evidence appears to be on establishing the existence of litigation–the filing of suit by other
individuals–and not any specific prior acts of Defendants from which a jury could infer the
absence of mistake or modus operandi because of their similarity to the acts in question here.
Moreover, even if the Court were to evaluate the evidence of the acts purportedly underlying the
Friends and Family litigation under Rule 404(b), it would not be admissible. Although, applying

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As with the NKJ Litigation, to the extent Plaintiff seeks to introduce the pleadings in
other litigation for the truth of the pleadings’ allegations, this use is inadmissible hearsay. See
Fed. R. Evid. 801, 802.
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the second factor, there is some similarity in kind and temporal proximity between the acts
because Defendants’ alleged cancellation of the contracts for their financial benefit pertains to
the same building and relative time period, this is not a sufficient similarity from which to infer
the absence of a mistake in Wabash LLC’s including or not including information in different
versions of the Property Report. United States v. Best, 250 F.3d 1084, 1092 (7th Cir. 2001)
(evidence of defendant’s crack possession at house defendant rented rebutted suggestion that his
presence in the crack house was the result of an innocent mistake). Under the third factor,
Plaintiff has not proffered sufficient evidence to prove the acts because she relies on hearsay and
allegations in other court proceedings. Finally, even more so than the NKJ Litigation, the danger
of delay and confusion of the issues would substantially outweigh the probative value of such
evidence under Rule 403. As with the NKJ Litigation, presentation of this evidence–which
would likely be subject to factual dispute–would unnecessarily insert a “mini-trial” into the
proceedings of little probative value. See Duran, 653 F.3d at 646.
Nor is the evidence admissible under Rule 404(b) to establish modus operandi. To
qualify under Rule 404(b), modus operandi evidence must be both “idiosyncratic” and “bear a
singular strong resemblance to the pattern of the offense charged.” United States v. Miller, 673
F.3d 688, 700 (7th Cir. 2012) (quoting United States v. Smith, 103 F.3d 600, 603 (7th Cir.
1996)). “Generic” patterns are insufficient, because allowing such evidence of modus operandi
“would gut the Rule, rendering it useless as a check on character evidence that would otherwise
be inadmissible.” United States v. Thomas, 321 F.3d 627, 635 (7th Cir. 2003). Here, Plaintiff
fails to explain how Defendants’ alleged cancellation of the purchase agreements for their own
financial benefit is particularly “idiosyncratic” or bears a “singular” resemblance to the pattern

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of the alleged misrepresentation here. Moreover, modus operandi evidence is generally only
admissible to prove the identity of the defendants, which here is not in dispute. Hill v. City of
Chicago, No. 06 C 6772, 2011 WL 3840336, at *3 (N.D. Ill. Aug. 30, 2011) (quoting Connelly,
874 F.2d at 417 n. 7 (“Rule 404(b) does not specifically enumerate modus operandi proof as an
exception for similar act evidence but this court has approved the introduction of modus
operandi evidence under the ‘identity’ exception to Rule 404(b).”)). Thus, the Court grants
Defendants’ Motion with respect to the evidence of the Friends and Family Litigation to prove
modus operandi or absence of mistake.
CONCLUSION
For the foregoing reasons, the Court grants in part and denies in part Defendants’ Motion.
DATED: April 11, 2013

ENTERED

___________________________________
AMY J. ST. EVE
United States District Court Judge

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