Morales Electrical Contracting, Inc. v. Siemens Building Technologies, Inc.
Filing
130
MEMORANDUM OF DECISION AND ORDER - Upon review of the parties submissions, the Court has determined that a Daubert hearing is necessary with respect to the admissibility of the Plaintiffs damages experts. Accordingly, the Plaintiff is directed to pro duce Mr. Robert Rochlin and Ms. Lisa Chait for Daubert hearings to be held on Wednesday, September 5, 2012 at 9:30am. Jury selection will still be held on Tuesday September 4, 2012. However, to accommodate the Daubert hearings, the trial will commence on Thursday, September 6, 2012. Ordered by Judge Arthur D. Spatt on 8/30/2012. (Coleman, Laurie)
FILED
CLERK
8/30/2012 11:26 am
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------X
MORALES ELECTRICAL CONTRACTING,
INC.,
Plaintiff,
MEMORANDUM OF
DECISION AND ORDER
09-CV-2743 (ADS)(ETB)
-againstSIEMENS BUILDING TECHNOLOGIES,
INC.,
Defendant.
---------------------------------------------------------X
APPEARANCES:
Vandenberg & Feliu LLP
Attorneys for the Plaintiff
60 East 42nd Street, 51st Floor
New York, NY 10165
By: Raymond L. Vandenberg, Esq.
Robert B. Bernstein, Esq.
Debra Kobrin Levy, Esq.
John C. Ohman, Esq., Of Counsel
Venable LLP
Attorneys for the Defendant
1270 Avenue of the Americas
New York, NY 10020
By: Lawrence H. Cooke, III, Esq., Of Counsel
SPATT, District Judge.
This lawsuit arises out of a subcontract that Morales Electrical Contracting, Inc.
(“Morales” or “the Plaintiff”) entered into with Siemens Building Technologies, Inc. (“Siemens”
or “the Defendant”) for the purpose of performing electrical work on a project at the JetBlue
Airways terminal at John F. Kennedy International Airport (“JFK”). The facts of this case are
fully set forth in the Court’s order denying the Defendant’s motion for summary judgment. See
Morales Elec. Contracting, Inc. v. Siemens Bldg. Technologies, Inc. (“Morales I”), No. 09-CV1
2743, 2012 WL 1038865 (E.D.N.Y. March 28, 2012). Presently before the Court are the
following motions in limine by the Defendant: (1) Motion to Strike the Morales Jury Demand;
(2) Motion to Preclude Evidence of or Reference to the Death of Alan Smith; (3) Motion to
Preclude the Testimony of Hildigaris Morales-Smith; (4) Motion to Preclude Evidence
Concerning Duress; (5) Motion to Preclude Evidence of Unrecoverable Damages; (6) Motion to
Preclude Evidence of the Smiths’ Personal Losses; and (7) Daubert Motion to Exclude from
evidence the Testimony of Plaintiff’s Damage Witnesses. The Court’s rulings on these in limine
motions are set forth below.
I. MOTION TO STRIKE MORALES’ JURY DEMAND
Siemens moves to strike the Plaintiff’s jury demand with respect to the fraud and breach
of contract claims asserted against it, on the ground that the Subcontract includes an explicit
waiver of a jury trial. The relevant provision of the Subcontract is Article 10 governing
“Disputes”, which states in relevant part:
10.1 All questions arising under this Agreement shall be resolved
in the first instance by Contractor’s Project Manager. No claim for
additional compensation or extension of time shall be
considered unless presented to Contractor’s Project Manager in
writing within ten (10) calendar days after the occurrence giving
rise to the dispute. Any claim not satisfactorily resolved by
Contractor’s Project Manager in the first instance, and which is
presented in writing within the time provided, may be appealed
by notice in writing to Contractor’s Designated Representative
within ten (10) calendar days after the Project Manager’s initial
decision.
10.2 All claims, disputes and other matters in question which
are left unresolved after compliance with the foregoing, arising
out of or relating to this Subcontract or the breach thereof, except
for claims which have been waived by the making or acceptance of
final payment, may be litigated before any court of competent
jurisdiction, provided that the parties mutually agree to hereby
waive their rights to a jury trial with respect to any matter
arising hereunder.
2
(Cooke Decl., Exh. 1, Articles 10. 1 and 10.2) (emphasis added).) In arguing that the Plaintiff
waived its right to a jury, Siemens focuses solely on Article 10.2. However, as the emphasized
language above makes clear, the first sentence in Article 10.2 referencing disputes “left
unresolved after compliance with the foregoing” indicates that it must be read in combination
with the dispute resolution mechanism in Article 10.1. Accordingly, under the language of the
Subcontract, pursuant to Article 10.2, a party only waives their right to a jury in a litigation
following a failed attempt to resolve “All questions arising under th[e] Agreement” through the
dispute mechanism outlined in Article 10.1.
Although the Defendant now argues that the Plaintiff should have followed the
procedures set forth in Article 10.1 prior to commencing this action, the Defendant neither
moved to dismiss the complaint on this ground, nor did the Defendant assert the Plaintiff’s
failure to comply with this condition precedent as an affirmative defense. See Endovasc, Ltd. v.
J.P. Turner & Co., LLC, 169 F. App’x 655, 657 (2d Cir. 2006) (holding that state law applies to
“construing the affirmative defense provisions of the Federal Rules” and that “under New York
law, the failure of a plaintiff to comply with conditions precedent is an affirmative defense”)
(citations omitted); Columbia Artists Mgmt., LLC v. Alvarez, No. 08-Cv-11254, 2010 WL
5396097, at *6 (S.D.N.Y. Dec. 23, 2010) (“In New York, failure of a condition precedent is an
affirmative defense.”). Accordingly, the Court finds that the Defendant has waived the right to
invoke the jury waiver based on the Plaintiff’s alleged failure to comply with the condition
precedent set forth in Article 10.1.
The Seventh Amendment to the United States Constitution preserves the right to jury trial
on issues of fact in suits for breach of contract between private parties. See Northern Pipeline
Constr. Co. v. Marathon Pipe Line, 458 U.S. 50, 102 S. Ct. 2858, 73 L. Ed. 2d 598 (1982). A
3
party may, however, waive its right to a jury trial in civil cases. See Commodity Futures Trading
Comm'n v. Schor, 478 U.S. 833, 848, 106 S. Ct. 3245, 92 L.Ed.2d 675 (1972). Because the right
to a jury trial is “fundamental”, it is well-settled that “a presumption exists against its waiver”.
Nat’l Equipment Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977); Aetna Ins. Co. v.
Kennedy ex rel. Bogash, 301 U.S. 389, 393, 57 S. Ct. 809, 81 L. Ed. 1177 (1937) (“[A]s the right
of jury trial is fundamental, courts indulge every reasonable presumption against waiver.”).
Nevertheless, “a contractual waiver is enforceable if it is made knowingly, intentionally, and
voluntarily.” Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 188 (2d Cir.
2007).
Here, the jury waiver in Article 10 of the Subcontract is narrow and limited in scope, and
therefore it cannot be said that the Plaintiff “knowingly” and “voluntarily” agreed to waive a jury
with respect to all claims arising out of the Agreement that were not previously subject to the
dispute resolution mechanism in Article 10.1. Nevertheless, for the first time in its reply
submission, the Defendant appears to suggest that the Plaintiff submitted its claim for an
equitable adjustment to the dispute resolution mechanism in Article 10.1. Thus, the Defendant
argues that, because the equitable adjustment claim related to the same acceleration and scope
allegations that form the basis for the fraudulent inducement and fraudulent concealment claims,
the jury waiver in Article 10.2 applies.
The Court agrees that, if the Plaintiff did follow the dispute resolution mechanism set
forth in Article 10.1 with respect to the equitable adjustment claim prior to commencing this
litigation, there is at least some possibility that the jury waiver is binding with respect to some or
all of the claims asserted against Siemens in this lawsuit. However, because this issue was raised
for the first time in the Defendant’s reply brief, the Plaintiff has not had an opportunity to
4
respond. Accordingly, the Defendant’s motion in limine to strike the Plaintiff’s jury demand is
denied without prejudice. Although jury selection will go forward as scheduled on Tuesday,
September 4, 2012, the parties are directed to appear before the Court at 9:00am on September 4,
2012 in order to address the Defendant’s newly raised argument before jury selection
commences.
II. MOTIONS RELATED TO THE DEATH OF ALAN SMITH
Siemens moves to preclude evidence of or reference to the death of Alan Smith, the
principal of Morales during all times relevant to the instant litigation, who passed away in 2011.
In addition, to the extent it relates to Mr. Smith’s death, Siemens also moves to preclude the
testimony of Hildigaris Morales-Smith, who is Mr. Smith’s widow and the new corporate
representative. Although Siemens does not oppose a stipulation that Mr. Smith is no longer
alive, it opposes any evidence or testimony about Mr. Smith’s death that could be used to “evoke
sympathy or inflame the passions of the fact-finder”. (Def.’s Br. at 4.) Fueling this motion is a
purported email by Mr. Smith’s father accusing Siemens of causing Mr. Smith’s death through
their behavior and the recent decision by Morales to call Ms. Morales-Smith to testify.
For its part, Morales asserts that it does not intend to introduce statements by Mr. Smith’s
father, or any other witness, that would blame Siemens for the death of Mr. Smith, and that it
would limit any information presented to the jury to the fact that “that a key witness has died,
when he died, and who will be replacing him as Plaintiff’s corporate representative.” (Pl.’s Opp.
at 5.) With respect to the testimony of Ms. Morales-Smith, the Plaintiff asserts that it is
necessary “to explain why Mr. Smith is not present at trial, who she is and why she, who would
otherwise would be an unknown name and face to the jury, is present at counsel table during the
trial”. (Id. at 6.)
5
The Court agrees with Morales that the jury is entitled to know that Mr. Smith has died,
when he died, and who will be replacing him as the Plaintiff’s corporate representative.
Accordingly, the Court denies the Defendant’s motion to the extent it seeks to preclude such
evidence. The Court will address the proper method for presenting this information to the jury
with counsel prior to trial. However, the Court agrees with Siemens that disseminating this
information through the testimony of Ms. Morales-Smith would be unnecessarily prejudicial, and
therefore grants the motion to preclude her testimony in this regard. As a final note, the Plaintiff
is cautioned against introducing any statements or testimony that would lead a reasonable juror
to infer that Siemens is in any way responsible for the unfortunate, but unrelated act of Mr.
Smith’s passing.
III. MOTION TO EXCLUDE EVIDENCE OF UNRECOVERABLE DAMAGES
Siemens again moves to preclude evidence of what it characterizes as “unrecoverable
damages”. The Court says “again”, because the arguments in this motion are identical to those
raised by Siemens its motion for summary judgment. The Court attributes this request to
Siemens’ desire to assess its potential exposure going into the trial. However, as the Court
explained in its summary judgment decision, there are too many overlapping issues of fact to
resolve the question of available damages in this case prior to the trial. Accordingly, the Court
denies the Defendant’s motion to preclude evidence of allegedly “unrecoverable damages”,
without prejudice to renewal during or after the trial.
IV. MOTION TO PRECLUDE EVIDENCE CONCERNING DURESS
In this case, the Plaintiff contends that the Defendant breached the Subcontract in part by
refusing to pay fair value for the additional work reflected in four change orders and has refused
to compensate it for the additional work associated with ten other change orders. The Defendant
6
moved for summary judgment on this claim, arguing that, by signing the change orders, the
Plaintiff waived its right to additional compensation. In denying summary judgment to the
Defendant on this claim, the Court held in Morales I that:
while the Plaintiff may have signed the change orders, the Plaintiff
has submitted evidence that: (1) the parties were not adhering to
the change order procedure as set forth in the Subcontract because
the Plaintiff was directed to perform the additional work prior to
the change orders being signed and (2) the Defendant allegedly led
the Plaintiff to believe that any discrepancies between the amount
the Plaintiff believed was owed and the amount paid could be
resolved through an equitable adjustment at the conclusion of the
Work. Thus, the Court cannot say as a matter of law that the
Plaintiff waived its right to contest those change orders after the
fact.
2012 WL 1038865, at *16. In reaching this conclusion, the Court did not address an argument
raised by Morales for the first time in opposition to the Defendant’s motion for summary
judgment, namely that the change orders were not binding because they were signed under
economic duress. Now, Siemens moves to preclude Morales from offering any evidence or
argument that the change orders are invalid based on the ground that Morales signed them under
economic duress.
This motion in limine is essentially a second motion for summary judgment. As with the
first motion for summary judgment, there are issues of fact concerning the circumstances
surrounding each change order that have yet to be fully developed and presented to the Court. At
this stage in the proceedings, the Court in unwilling to preclude the Plaintiff from offering
evidence to support this breach of contract theory. Accordingly, the Court denies the
Defendant’s motion to preclude evidence or argument of economic duress.
V. MOTION TO PRECLUDE EVIDENCE OF PERSONAL LOSSES
As previously noted, the Court has reserved decision with respect to the Defendant’s
motion to preclude evidence of unrecoverable damages. However, the Defendant separately
7
moves to preclude the evidence of the personal losses of Alan Smith and Hildigaris MoralesSmith on the ground that the Plaintiff’s have failed to produce their tax returns. Siemens
contends that the Smiths’ tax returns are relevant because Morales seeks to recover for the
alleged personal losses of the Smiths, and the Plaintiff’s experts had the tax returns when
preparing their opinions. Therefore, the Defendant asserts that Siemens is unfairly prevented
from effectively cross-examining the Plaintiff’s witnesses without the tax returns.
“Although income tax returns provide a reliable source of financial information, they
reveal highly sensitive information, such as the social security numbers of the taxpayers, medical
and other deductions, and spousal financial information which may not be relevant to the
litigation.” Malinowski v. Wall Street Source, Inc., No. 09-CV-9592, 2011 WL 1226283, at *3
(S.D.N.Y. March 18, 2011) (internal quotations and citations omitted). Furthermore, “[t]ax
returns qualify as protected matter, and courts have been reluctant to require disclosure of tax
returns because of both the private nature of the sensitive information contained therein and the
public interest in encouraging the filing by taxpayers of complete and accurate returns.” Ellis v.
City of New York, 243 F.R.D. 109, 111 (S.D.N.Y. 2007) (internal quotations and citations
omitted). Accordingly, before a court will order the disclosure of tax returns, the moving party
must demonstrate to the court that: “1) the returns are relevant to the subject matter of the action
and 2) a compelling need for the information”. Id.
Although the tax returns are arguably relevant to the Plaintiff’s claims for loss wages,
based on the Court’s review of the parties’ submissions, the Defendant has not shown a
compelling need. Specifically, the Defendant has not explained what information is available in
the tax returns that it has been unable to obtain from the plethora of financial documents
produced during discovery. Furthermore, the Court agrees with the Defendant that, to the extent
8
the Plaintiff’s experts relied on the tax returns in forming their opinions, the Defendants would
be entitled to the same information. However, the testimony quoted by the Defendant in support
of the instant motion is that one of the Plaintiff’s experts relied on the Smiths’ W-2’s in forming
her opinion. This document is not a tax return. Malinowski, 2011 WL 1226283, at *4
(“Defendants fail to demonstrate that they were unable to obtain the information through less
intrusive means, such as by seeking production of W–2s and 1099s for the 2005–2009 period”).
Siemens has not argued that Morales failed to produce the requisite W-2 forms, and therefore the
production of those documents is not at issue on the instant motion.
Accordingly, the Court denies the Defendant’s motion to preclude the evidence of the
Smith’s personal losses without prejudice to renewal during the trial.
VI. DAUBERT MOTION TO EXCLUDE TESTIMONY OF PLAINTIFF’S DAMAGES
EXPERTS
Finally, Siemens brings a Daubert motion to exclude the testimony of the Plaintiff’s
damages experts, Mr. Robert Rochlin and Ms. Lisa Chait, who are both Certified Public
Accountants. According to Siemens, the Court should exclude the Plaintiff’s damages experts
from testifying because they are unqualified to render opinions on causation and they both
utilized flawed methodologies in their damage calculations because they simply assumed
causation. Morales opposes this motion on the ground that neither Rochlin nor Chait are being
offered to render opinions on causation, but rather to “give testimony regarding certain
computations and analysis that will guide the jury in its assessment of the proper quantum of
damages to be awarded in the event of a finding in Morales’ favor on the question of liability.”
(Pl.’s Opp. at 9–10.)
Upon review of the parties’ submissions, the Court has determined that a Daubert hearing
9
is necessary with respect to the admissibility of the Plaintiff’s damages experts. Accordingly, the
Plaintiff is directed to produce Mr. Robert Rochlin and Ms. Lisa Chait for Daubert hearings to be
held on Wednesday, September 5, 2012 at 9:30am. Jury selection will still be held on Tuesday
September 4, 2012. However, to accommodate the Daubert hearings, the trial will commence on
Thursday, September 6, 2012.
SO ORDERED.
Dated: Central Islip, New York
August 30, 2012
__/s/ Arthur D. Spatt_______
ARTHUR D. SPATT
United States District Judge
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?