Coffeyville Resources Refining & Marketing, LLC v. Liberty Surplus Insurance Corporation et al

Filing 518

MEMORANDUM AND ORDER granting in part and denying in part 372 Motion in Limine; granting in part and denying in part 378 Motion in Limine; granting in part and denying in part 385 Motion in Limine; granting in part and denying in part 459 Motion in Limine; granting in part and denying in part 496 Motion in Limine; granting in part and denying in part 510 Motion in Limine. See Order for details. Signed by District Judge Monti L. Belot on 11/5/2014. (smg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

COFFEYVILLE RESOURCES REFINING
& MARKETING, LLC.,
Plaintiff,
v.
ILLINOIS UNION INSURANCE COMPANY
and NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA.,
Defendants.

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CIVIL ACTION
No.

08-1204

MEMORANDUM AND ORDER
Before the court are the following:
1.Illinois Union’s motions in limine (Docs. 372, 496);
2. Coffeyville’s motion in limine (Doc. 459);
3. National Union’s motions in limine (Docs. 377, 378, 385,
493)1;
4. Coffeyville’s motion to preclude challenges to standing (Doc.
510).
The parties have filed the foregoing motions seeking to prohibit
the admission of certain evidence at trial. To the extent it can with
the information before it, the court will rule on the motions. The
court cautions the parties, however, that nothing in this order will
preclude the admissibility of the excluded evidence if it otherwise
becomes relevant at trial. See Turley v. State Farm Mut. Ins. Co., 944
1

Documents 372, 377, 378, and 385 are before the court to the
extent they were taken under advisement in the order dated September
17, 2012 (Doc. 412).
Plaintiff’s additional motions for pre-judgment interest and
attorney’s fees (Docs. 444 and 448) will be addressed by the court
after the jury trial.

F.2d 669, 673 (10th Cir. 1991) (“The better practice would seem to be
that evidence of this nature ... should await development of the trial
itself.”). This is especially true here, because the court has no
clear idea how the parties expect to try the case to the jury. By the
same token, nothing said herein should be constituted as a final
ruling admitting evidence to which a valid objection is made at trial.

I. Illinois Union motion in limine (Docs. 372, 373 and 403).
A. Any mention of or evidence relating to the settlement between
Liberty and plaintiff, and the allocation of Liberty’s payment among
coverage categories. The court previously took under advisement
Illinois’ motion to exclude this evidence. (Doc. 412 at 15).
Illinois cites Rule 408 or alternatively, Rules 401 and 403, in
support of its motion. (Doc. 497 at 3). The court previously noted the
doubtful application of Rule 408 to the Liberty settlement and said
that if Illinois wanted to pursue this argument “it must clarify its
position and cite relevant case authority.” Doc. 512 at 15. Illinois
attempted to do so by string-citing cases from jurisdictions other
than Kansas (federal or state) and the Tenth Circuit. (Doc. 373 at 4).
It does not appear that any of the cases deal with the Rule 408
question as presented in this case. Plaintiff’s response as to why the
settlement is “admissible and necessary” is not particularly helpful,
either.
As a practical matter, the court doubts it will be feasible to
keep all references to Liberty and the Liberty settlement from being
mentioned at trial. At this juncture -- i.e. prior to trial -- it is
impossible to determine how the Liberty policy and settlement will be
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presented to the jury. The court expects any such evidence to be
limited and introduced only insofar as necessary to explain the
reasonableness of plaintiff’s settlements and perhaps to show the
amount of plaintiff’s uncompensated expenses.
Assuming the jury hears some reference to the Liberty policy or
settlement, Illinois Union will not be permitted at trial to challenge
plaintiff’s allocation of the Liberty settlement payments (or “undo”
them, as National argues). Nor will it be permitted to argue that the
Liberty policy was not in fact exhausted or that the Illinois policy
is not now primary coverage for property damage claims settled by
plaintiff. The ship has sailed on those matters. The best way to deal
with Liberty’s involvement and the settlement is through limiting
instructions. The court will consider any proposed instruction from
plaintiff and defendants explaining, among other things, that the
Liberty settlement does not preclude Illinois Union from showing that
plaintiff’s settlements relating to any unreimbursed expenses were
unreasonable. The proposed instruction(s) must be filed on or before
November 10 and should include appropriate modification to proposed
claims instructions. Illinois Union’s motion to exclude the evidence,
however, is denied.
II. Plaintiff’s Motion to Admit a Summary of Voluminous Records.
(Docs. 459, 460, 471, 473 and 490). Plaintiff moves to admit a summary
of its expenses, costs, payments, etc., relating to the oil release,
under the authority of Federal Rule of Evidence 1006 or Rule 611. It
argues the summary “will simplify presentation of $33,456,028.33 worth
of invoices, claim documentation, and payments, which will shorten the
trial and allow the jury to concentrate on the legal arguments and
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facts

necessary

to

determine

if

the

settlements

at

issue

were

reasonable.” Doc. 460 at 9.
Illinois Union and National Union both oppose the request. They
contend the summary is misleading because it “was drafted in part to
correspond with CRRM’s coverage position.” See Doc. 471 at 2. They
particularly object to what they contend are “slanted” cost categories
and headings developed by plaintiff for purposes of litigation. They
also contend plaintiff has not established the admissibility of the
underlying records, making the summary inadmissible under either Rule
1006 or Rule 611(a).
The court agrees with defendants that plaintiff’s summary does
not

qualify

for

admission

under

Rule

1006

because

it

reflects

plaintiff’s version of disputed matters. In some respects it contains
argument as well as a summary of evidence. See e.g., United States v.
Bray, 139 F.3d 1104, 1110 (6th Cir. 1998) (information in Rule 1006
summary must not be annotated with conclusions or inferences drawn by
proponent). Plaintiff’s suggestion for using the edited summary set
forth in Doc. 490-1 is well taken. See discussion, Doc. 490 at 5-6.
The edited version of the summary eliminates plaintiff’s comments
about coverage determinations in the summary judgment ruling, which
is not an issue for the jury to decide. But for reasons that follow
the

court

finds

that

an

appropriate

summary

(or

summaries)

is

absolutely essential to this case. This should not be construed as a
ruling that the edited summary is appropriate, either as an exhibit
which goes to the jury or as a demonstrative exhibit. The following
general rules provide guidance.
Rule 611(a) provides the court “should exercise reasonable
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control over the mode and order of examining witnesses and presenting
evidence so as to (1) make those procedures effective for determining
the truth; (2) avoid wasting time; and (3) protect witnesses from
harassment or undue embarrassment.” Fed. R. Evid. 611(a). The rule
allows for the use of summarized exhibits otherwise inadmissible under
Rule 1006. See United States v. Renteria,720 F.3d 1245, 1252 (10th
Cir. 2013).
A two-part test governs admissibility under Rule 611(a). First,
the court considers whether the summary aids the jury in ascertaining
the truth. Relevant factors include the length of the trial, the
complexity of the case, and the possible confusion generated by a
large number of exhibits. Renteria, 720 F.3d at 1253.
length of trial

The estimated

here is not overwhelming (2-3 weeks), but the

complexity of the case and possible confusion from the number of
exhibits weigh strongly in favor of admitting summaries. Indeed, it
may be that defendants will want to use summaries. The parties should
keep uppermost in mind that this case will be decided by a jury and
should plan to present their cases accordingly.
The second factor considers any resulting prejudice, including
whether the preparer is available for cross-examination and whether
limiting instructions can be given. Any potential for prejudice here
can be sufficiently limited by instructions to the jury, which the
parties may -- and should -- propose. The utility of plaintiff’s
modified proposed summary outweighs any potential prejudice resulting
from use of the summary. Moreover, defendants have now had several
years to familiarize themselves with plaintiff’s cost categories, and
they can hardly claim surprise on that count.
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The use of an appropriate expense summary will not only be
helpful in this case; in the court’s view it is essential. Illinois
Union’s

contrary

suggestion

that

plaintiff

must

present

the

evidentiary basis for each settlement, property-by-property, for 300
or 400 individual properties, is patently absurd.2

It

would

be

contrary to Fed. R. Evid. 102 and Fed. R. Civ. P. 1 and would totally
disregard the jury’s time and ability to focus on the issues. It would
take three months -- not three weeks -- to put on the underlying
evidence, and in the end the jury would be unable to render an
intelligent verdict with respect to each individual property. Kansas
law, not to mention common sense, does not require plaintiff to
proceed in that fashion. See Associated Wholesale Grocers, Inc. v.
Americold Corp., 261 Kan. 806, 841, 934 P.2d 65 (1997) (endorsing the
use of summary evidence such as affidavits supporting the amount of
claims and testimony evaluating the strengths and weaknesses of the
parties’ positions); 2 Allan D. Windt, Insurance Claims and Disputes
§6:29 (6th ed.) (“The reasonableness of the settlement should not be
determined by conducting the very trial that the settlement avoided.
The evidence should consist primarily of testimony by expert witnesses
and the counsel in the underlying case with regard to what the
plaintiff's likelihood of success had been and what the likely verdict
range would have been had the plaintiff prevailed.”). Plaintiff can
attempt to demonstrate the reasonableness of settlements through the

2

Illinois contends: “Instead of the Contention Chart, CRRM
should put on its evidence of the alleged reasonableness and alleged
covered status of each underlying settlement, and the insurers can
respond, so that the jury can determine on a settlement-by-settlement
basis what is reasonable and what is covered.” Doc. 473 at 14.
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use of summary testimony and/or by showing it used a common method or
general approach to settlements. Defendants can respond in kind, as
may be appropriate.
Finally, the court rejects defendants’ claim that plaintiff’s
documents supporting its summary exhibit are inadmissible. Defendants
argue that the underlying documents constitute or contain inadmissible
hearsay. E.g., Doc. 471 at 10; Doc. 473 at 16. It is true that the
documents must be admissible in order for plaintiff to use them in a
summary. United States v. Irvin, 682 F.3d 1254, 1262-63 (10th Cir.
2012). But defendants’ argument that the documents are inadmissible
is unpersuasive for several reasons. First, invoices and documents
that plaintiff received from contractors acting on its behalf in
responding to the spill appear to constitute business records within
the meaning of Rule 803(6). Plaintiff’s affidavit (Doc. 460-1) shows
that responding to an environmental release is now considered part of
the regularly activity of a refinery and that correspondence relating
to environmental claims are compiled and kept in the regular course
of practice for such businesses. Moreover, to the extent the documents
are used for purposes other than proving the truth of a declarant’s
statements, they are not hearsay. For example, records reflecting
observations or statements by a claimant alleging bodily injuries or
oil

damage

could

be

used

by

plaintiff

to

show

its

potential

liabilities and its basis for settlement, as opposed to attempting to
prove that the statements by the declarant about the extent of the
damage were, in fact, true. Moreover, statements of property owners
regarding their claims (e.g. damage to their property) are not
necessarily hearsay, depending on how they are presented. See e.g.,
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Fed. R. Evid. 703 and 807.
In sum, defendants’ motions in limine to exclude plaintiff’s cost
summary is denied. Plaintiff’s motion in limine for admission of an
appropriate summary of the voluminous records (Doc. 459) is granted.

III. Illinois Union Motion in Limine (Doc. 496, 497 and 509).
1. Any mention of Liberty settlement. This motion is denied for
the reasons previously stated.
2. Plaintiff’s cost summary. This motion is also denied for
reasons stated above.
3. Any mention of any party’s financial condition. Plaintiff
asserts that its “financial tribulations” relating to the release are
relevant because, due to Illinois and National’s failure to pay on
their

policies,

plaintiff

had

to

pay

“reasonable

and

prudent”

settlements out of its own pocket. (Doc. 509 at 4). The jury will
know, of course, that the companies declined to pay. The legal reasons
for their decisions are irrelevant to the issue the jury will decide,
i.e. reasonableness. The court is not in a position to make further
rulings at this point except to say that plaintiff’s damages to its
own refinery property are not relevant.
4. Any mention of the insurers’ claim handling, adjustment,
investigation or communications. The request to exclude these items
will be considered in context at trial. The request is vague and
overly broad. The court has ruled out waiver and estoppel issues, but
it is not clear from the briefs what evidence Illinois is concerned
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about or what evidence (and for what purpose) plaintiff might seek to
introduce relating to defendants’ actions. Plaintiff will be entitled
to explain why it made the settlements it did, subject to the rulings
herein. The court will consider any specific objections at trial, but
expects them to be minimal, short and to the point.
5.

Plaintiff’s

proposed

trial

animation.

Illinois

contends

plaintiff’s trial animation of the oil release is misleading because
it shows an oil slick spreading out towards the east tank farm, which
Illinois contends would not have happened with the river carrying the
oil downstream. Illinois contends this is a “critical defect” that
will give the false impression that the flooding and the oil release
happened contemporaneously.
A demonstrative exhibit will be excluded if its probative value
is

substantially

confusion,

a

presentation.

outweighed

propensity

to

by

the

danger

mislead,

or

of

unfair

prejudice,

needlessly

cumulative

See Dahlberg v. MCT Transp., LLC,

571 Fed.Appx. 641,

647 (10th Cir. 2014) (citing Rule 403). Illinois has not shown that
plaintiff’s animation presents a threat of misleading the jury such
that the exhibit should be excluded. It is undisputed that flooding
preceded the oil release and Illinois can easily put on evidence to
that effect. The court is not persuaded that the animation attempts
to or would lead the jury in believing otherwise. See Eastman v.
Coffeyville Res. Refining & Marketing, LLC, U.S. Dist. Ct., D. Kan.
No. 10-1216, Doc. 97 at 3-4 (denying motion to exclude animation;
noting Eastman could cross-examine and submit proposed instructions
regarding the jury’s consideration of the animation).
6. Any exhibits not identified with specificity in plaintiff’s
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exhibit disclosure. Illinois objects to plaintiff’s general statement
that it intends to “computer access and present if needed, each and
every document which we have previously produced to you.” Illinois
argues the court should exclude any exhibit not identified with
specificity by plaintiff.
The court will deny the motion, but without prejudice. Hundreds
of exhibits have been identified by the parties (and some are still
disputed, even at this late stage). The court has not seen the
exhibits.

Absent a concrete dispute about a particular exhibit or

exhibits, the court cannot make a ruling. As for plaintiff’s failure
to be more specific, the court notes that when defendants challenge
the reasonableness of each and every one of plaintiff’s settlements,
and argue that plaintiff must go property-by-property to establish the
damages suffered, they can hardly claim surprise that the entirety of
plaintiff’s files, more or less, are potential exhibits in the case.
7. Any expert witness plaintiff did not timely disclose. Illinois
argues that four witnesses “are likely to attempt to testify as
experts” but were not timely listed in plaintiff’s Rule 26(a)(2)
disclosures.
The court will deny the motion, but without prejudice. To the
extent any of these witnesses were engaged by plaintiff to assist in
the cleanup and remediation process and will testify about those
actions, they would likely be considered fact witnesses rather than
Rule 701 or 702 experts. The court will consider any objections
concerning their testimony if, as, and when necessary, but objections
will not be permitted to interrupt the flow of the case before the
jury. The parties should keep uppermost in mind that the court will
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respect the jurors’ time.
8. Plaintiff’s claims for attorney’s fees and costs. Illinois’
request to exclude this evidence is granted in part. The fact that
plaintiff has moved to recover attorney’s fees in this action is not
relevant to the jury’s determination. But the potential cost of
litigation to plaintiff in defending the underlying claims is a factor
the jury can consider in determining whether plaintiff’s settlements
with

property

damage

claimants

were

reasonable.

Plaintiff

can

therefore present evidence concerning litigation costs it incurred and
was facing on the underlying claims.
9. Plaintiff’s claim for prejudgment interest. Plaintiff’s claim
for prejudgment interest is a legal matter for the court to decide
after the jury trial. Illinois’ request to exclude it from the jury
trial is granted.
IV. National’s Motions in Limine. (Docs. 377, 378, 385, 493.).
National renews its prior motions in limine to the extent they
were not formally ruled on by the court. (Doc. 493).
1. Testimony regarding National’s obligation to pay fines or
penalties. (Doc. 377). Plaintiff’s response to this motion did not
address

the

substance

of

National’s

argument,

which

was

that

National’s policy excludes coverage for payment of any fines or
penalties. Doc. 377 at 1-2. Plaintiff simply argued that the jury
should determine the amount of each of its cost categories and that
National has not established prejudice from such evidence. (Doc. 404
at 2).
The language of the National policy plainly excludes coverage
with respect to any fines or penalties. National’s motion to exclude
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evidence supporting any argument that National has an obligation to
pay fines or penalties is granted.
2. Any attempt by plaintiff to recover costs previously allocated
to the Liberty settlement. (Doc. 378). This motion is granted. The
allocations made by plaintiff pursuant to the Liberty settlement will
not be an issue in the jury trial. Plaintiff will be limited to
attempting to recover its unreimbursed costs from the release.
3. Evidence or argument relating to waiver or estoppel. (Doc.
385). This motion is granted for the reasons stated by the court in
the memorandum and order of October 25, 2013 (Doc. 438). There are no
waiver or estoppel issues for the jury to decide.
V. Plaintiff’s motion to preclude challenges to standing (Docs.
510, 512).
Plaintiff seeks to preclude defendants from presenting evidence
concerning the real party in interest on underlying OPA claims settled
by plaintiff. Although defendants have yet to respond to the motion,
the court will tentatively rule on the matter given the short time
remaining before trial.
The court agrees with plaintiff that evidence concerning the real
party in interest on the OPA claims -- for example the relative
standing of tenant farmers and landlords to assert claims -- is a
legal matter that is not properly presented to the jury. The probative
value of any such evidence is substantially outweighed by the danger
of confusion of the issues. The motion is therefore granted, subject
to defendants making of showing of some special relevance of such
evidence.

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VI. Conclusion.
The parties’ motions in limine (Docs. 372, 377, 378, 385, 459,
493, 496, 510) are granted in part and denied in part as stated in
this order.
IT IS SO ORDERED.
Dated this 5th

day of November 2014, at Wichita, Kansas.

s/Monti Belot
Monti L. Belot
UNITED STATES DISTRICT JUDGE

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