Lumbermens Mutual Casualty Company v. Flow International Corporation et al
Filing
97
DECISION and ORDER granting 66 Motion in Limine; granting in part and denying in part 84 Motion in Limine; denying 86 Motion in Limine; granting 93 Motion in Limine. Signed by Judge David N. Hurd on 6/21/2013. (lah)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
-------------------------------LUMBERMENS MUTUAL CASUALTY
COMPANY,
Plaintiff,
5:08–CV–865 (LEAD)
-v-
FLOW INTERNATIONAL CORPORATION;
FLOW AUTOCLAVE SYSTEMS, INC.; FLOW
PRESSURE SYSTEMS; ABB PRESSURE
SYSTEMS; AVURE TECHNOLOGIES AB;
and AVURE TECHNOLOGIES, INC.,
Defendants.
-------------------------------FLOW AUTOCLAVE SYSTEMS, INC.; FLOW
PRESSURE SYSTEMS; ABB PRESSURE
SYSTEMS; AVURE TECHNOLOGIES AB;
and AVURE TECHNOLOGIES, INC.,
Plaintiffs,
-vLUMBERMENS MUTUAL CASUALTY
COMPANY and KEMPER INSURANCE
COMPANIES,
Defendants.
--------------------------------
5:08–CV–915 (MEMBER)
APPEARANCES:
OF COUNSEL:
HAVKINS ROSENFELD RITZERT &
VARRIALE, LLP
Attorneys for Lumbermens Mutual
Casualty Company & Kemper
Insurance Company
1065 Avenue of the Americas, Suite 800
New York, NY 10018
ABRAHAM E. HAVKINS, ESQ.
GREGG S. SCHARAGA, ESQ.
STEVEN H. ROSENFELD, ESQ.
LINDA FRIDEGOTTO, ESQ.
COSTELLO, COONEY, & FEARON, PLLC
Attorneys for Flow International Corporation,
Flow Autoclave Systems, Inc., Flow
Pressure Systems, ABB Pressure Systems,
Avure Technologies AB, & Avure
Technologies, Inc.
500 Plum Street, Suite 300
Syracuse, NY 13204
SHELLY L. DIBENEDETTO, ESQ.
ROBERT J. SMITH, ESQ.
DAVID N. HURD
United States District Judge
DECISION and ORDER
I. INTRODUCTION
Plaintiff Lumbermens Mutual Casualty Company ("Lumbermens" or "plaintiff")
brought this declaratory action against defendant Flow International Corporation ("Flow
International"); and defendants Flow Autoclave Systems, Inc. ("Flow Autoclave"), Flow
Pressure Systems ("Flow Pressure"), ABB Pressure Systems, Avure Technologies AB, and
Avure Technologies, Inc. (collectively the "Flow entities")1 (collectively with Flow International,
"defendants"). This case, Civil Action No. 5:08–CV–865, is the lead case.
1
The complaint alleges the Flow entities were Flow International's alter ego and each were the same
legal entity. Plaintiff contends that at all times relevant to this action, Flow Autoclave, Flow Pressure, ABB
Pressure Systems, Avure Technologies AB, and Avure Technologies, Inc. were owned by Flow International.
Defendants deny this.
-2-
In a separate action, the Flow entities asserted claims against Lumbermens,
Kemper Insurance Companies ("Kemper"), Crucible Materials Corporation ("Crucible"),
Travelers Property Casualty Company of America ("Travelers"), and Zurich American
Insurance Company ("Zurich"). Lumbermens and Kemper responded with counterclaims
against the Flow entities. That case, Civil Action No. 5:08–CV–915, is the member case.
Plaintiff and defendants previously moved for summary judgment in the lead case.
Those motions were granted in part and denied in part. See Lumbermens Mut. Cas. Co. v.
Flow Int'l Corp., 844 F. Supp. 2d 286 (N.D.N.Y. 2012). The lead complaint's remaining
causes of action seek a declaration that no coverage exists: (1) due to the Professional
Liability Exclusion ("PLE"); (2) for claims arising out of the loss of the Pressurized
Containment System ("PCS"); and (3) for property damage caused by the Flow entities' work.
No party moved with respect to the member case. Accordingly, the following claims remain
in the member complaint: (1) breach of contract based on Lumbermens' and Kemper's duty
to defend the underlying actions; (2) a declaration as to the rights and obligations of the
parties and a declaration that Lumbermens has an indemnification obligation in the
underlying lawsuits; and (3) attorneys' fees and disbursements resulting from the alleged
breach of contract. The member case's counterclaims seek a declaration that no coverage
exists: (1) due to the PLE; (2) for claims arising out of the loss of the PCS; and (3) for
property damage caused by the Flow entities' work.2
2
The counterclaims in the member case are the same as its claims in the lead complaint.
-3-
II. BACKGROUND
It is assumed the parties are familiar with the underlying facts as detailed in the
February 17, 2012, Memorandum-Decision and Order. See Lumbermens, 844 F. Supp. 2d
at 289–98.
III. DISCUSSION
Following the Memorandum-Decision and Order, trial was scheduled for February
11, 2013 in Utica, New York, with jury selection to commence on February 5, 2013. After
reviewing the numerous pre-trial in limine motions made by both parties, the trial was
adjourned without date and a hearing was held on February 6, 2013, at which time all
motions were heard. Decision was reserved.
A. Plaintiff's Motions in Limine
1. Preclude Christopher Thomas, Esq. from testifying
Lumbermens moves to preclude defendants from calling Christopher Thomas,
Esq., who has represented Crucible in the underlying actions since 2002. Plaintiff contends
he was never disclosed as a witness until defendants' September 24, 2012, pre-trial
disclosures.
Under Federal Rule of Civil Procedure 37(c)(1), a failure to timely and properly
disclose a witness results in precluding that witness's testimony unless the failure was
substantially justified or is harmless. The failure is harmless when there is no prejudice to
the party entitled to the disclosure. Lumbermens was well aware of Attorney Thomas's role
in the underlying litigation and the knowledge he possesses, and has not shown how it would
be prejudiced. This motion will be denied.
-4-
2. Preclude testimony of Joseph Tedorski and Peter Kahn
Lumbermens moves to preclude defendants from using at trial the depositions of
Joseph Tedorski, the adjuster for the underlying Travelers claim, and Peter Kahn, the
Certified Public Accountant for the Travelers and Zurich claims. Lumbermens contends their
testimony is irrelevant, confusing, hearsay, and was never disclosed during discovery.
Plaintiff also asserts it never had an opportunity to cross examine these witnesses.
According to defendants, plaintiff was present at the Tedorski deposition, as the
insurer for the Flow defendants, and waived its right to appear at the Kahn deposition.
Tedorski and Kahn's testimony is relevant as it goes to the amount of damages sustained at
the Crucible plant, and supports defendants' argument that there can be no allocation from
the underlying settlement. Further, their testimony is not offered to prove the truth of the
claims in the underlying actions, just that they were asserted, and thus the testimony is not
hearsay. This motion will be denied.
3. Preclude defendants from using Kibble & Prentice (K&P) documents
Lumbermens asserts that documents in Exhibit D-10 were improperly withheld
during discovery. Plaintiff subpoenaed documents from K&P, defendants' insurance broker.
K&P objected to the subpoena, claiming inter alia, privilege based on the insurance brokerclient relationship. Instead of forwarding the responsive documents to plaintiff, K&P sent
documents to defense counsel, who removed documents on the basis of both privilege and
work prepared in anticipation of litigation, and forwarded the remaining documents to plaintiff.
Plaintiff contends it never received the privilege log purportedly created by defense counsel,
and argues the withheld documents cannot now be used by defendants at trial.
-5-
Defendants assert that they were never served with the K&P subpoena as required
by Federal Rule of Civil Procedure 45, and thus could not move to quash it. Further, plaintiff
thereafter deposed a witness from K&P regarding all of the documents produced, and never
moved to enforce portions of the subpoena not complied with. This motion will be denied.
4. Preclude evidence of underlying settlement and terms
Lumbermens contends defendants should be precluded from asserting that the
cause of the misalignment cannot be established in this trial because the underlying cases
settled prior to a finding of liability.
The Release and Settlement Agreement dictated the terms of plaintiff's settlement
on behalf of the Flow entities for the underlying Crucible and subrogation actions. At the
time, experts could not definitively determine what caused the misalignment, and the
Agreement contained no admission of liability. There is no reason defendants cannot argue
this fact as they try to show that plaintiff cannot now meet its burden to establish the cause of
the misalignment, as required to prove the policy exclusions apply to bar coverage. Despite
plaintiff's contention, defendants' assertion that there was no admission of liability does not
diminish plaintiff's right to bring this action and contest coverage. This motion will be denied.
5. Preclude defendants from asserting failure to allocate argument
Lumbermens contends this argument is barred by the terms of the Release and
Settlement Agreement.
Simply because plaintiff disputes defendants' arguments regarding allocation does
not mean defendants are not entitled to argue the point. This motion will be denied.
-6-
6. Preclude defendants from arguing defense of "separation of insureds"
Lumbermens argues this defense was never raised in defendants' answer, initial
disclosure, or interrogatory answers.
This is not a defense but instead a matter of contract language as the policy makes
clear that all of the rights and duties under the policy apply separately to each named insured
as if each were the only one named. Even if it were a defense per se, plaintiff was on notice
that defendants would raise this argument, as the Flow entities have asserted since the
beginning of this suit that some of the policy exclusions do not apply to specific defendants.
This motion will be denied.
B. Defendants' Motions in Limine #1
1. Preclude plaintiff from introducing evidence as to Flow International
Defendants have repeatedly argued that Flow International is not a proper party to
this lawsuit and seek to preclude plaintiff from introducing evidence as to Flow International
at trial.
This issue was raised in the summary judgment motions. It appeared at that time
that Flow International was not involved in the underlying litigation nor the design or
manufacture of the PCS, but it was found that based on the relationship between Flow
International and the rest of the defendants, Flow International may be ultimately liable for
some or all of the remaining defendants' liability. That liability could not be established as a
matter of law during the summary judgment phase. However, it is now appropriate to dismiss
Flow International as a defendant based on its lack of involvement. Lumbermens is free to
later attempt to enforce against Flow International any judgment it may obtain from the Flow
entities. This motion will be granted.
-7-
2. Dismiss the case because plaintiff has no expert
As there will be no expert testimony, defendants contend Lumbermens' case must
be dismissed based upon its inability, as a matter fo law, to prove that a defective design
caused the misalignment of the PCS. According to defendants, this is so because the
subject matter of the testimony needed for plaintiff to prevail lies beyond the common or
ordinary knowledge, skill, and expertise of the trier of fact and thus an expert is necessary.
This is not a product defect case and an expert is not necessarily required. Jurors
are capable of comprehending facts and drawing conclusions from them. Plaintiff asserts
that it intends to introduce documents from the underlying litigation in which defendants' own
employees—purportedly more knowledgeable than experts—explain the design and
malfunction of the PCS. Plaintiff has proffered enough evidence to permit it to proceed to
trial. Defendants are free to make a motion at the conclusion of plaintiff's case if, at that
time, it has not offered sufficient evidence for the case to go to the jury. This motion will be
denied without prejudice.
3. Preclude plaintiff from using deposition testimony from the underlying
property damage actions
Defendants argue this testimony is hearsay because they did not have the same
motive and opportunity to cross examine these witnesses, and there was no similarity of
issues.3 It is undisputed that defendants were parties in the underlying actions (except Flow
International). Defendants contend at the time of the depositions, there was no declaratory
3
At a minimum, defendants argue they are entitled to a limiting instruction advising the jury that the
depositions are not admissible against Flow International. This point is moot as plaintiff will be precluded
from introducing evidence as to Flow International.
-8-
judgment action brought by Lumbermens and no reason to predict that their insurer would
later sue them and forego all depositions of parties during this declaratory judgment action.
Thus, they had no motive to cross-examine these witnesses as to their expectations of
insurance coverage.
According to plaintiff, most of the depositions are of defendants' employees (i.e.
agents) and are not hearsay as they are admissions by a party-opponent under Federal Rule
of Evidence 801. Further, defendants' claim that they would have had a different motivation
for cross-examination if they had known plaintiff would later sue them is without merit
because the issues in that action and in this action—namely defendants' design,
manufacture, and installation of the PCS—are the same. This motion will be denied.
4. Dismiss claim based on "Your Product" exclusion
This issue has already been litigated and decided on summary judgment. This
motion will be denied.
C. Defendants' Motions in Limine #2
1. Preclude plaintiff from admitting Exhibits A and D
According to defendants, documents in Exhibit A (primarily letters and e-mails
authored by defense counsel) and Exhibit D (computer notes written by a Federal employee),
which may otherwise qualify as business records are inadmissible because they contain
additional hearsay statements. Lumbermens asserts that documents prepared by defense
counsel constitute party admissions and are admissible under Federal Rule of Evidence 801.
Under Federal Rule of Evidence 805, hearsay within hearsay must be excluded
unless each part of the statement conforms with an exception to the hearsay rule. Further,
-9-
those documents relating to the cause of the misalignment of the PCS are nothing more than
attorney opinion and speculation, and cannot now be used by plaintiff as a sword against its
insured. This motion will be granted.
2. Preclude plaintiff from using documents authored by defense counsel
Defendants argue that Lumbermens essentially forced defense counsel in the
underlying actions to give their opinions regarding the then-pending claims, and threatened
to preclude coverage under the policy if defense counsel did not cooperate.
Any opinions of defense counsel relating to the cause of the misalignment are just
that—opinions, and not facts. Further, those statements would be highly prejudicial. This
motion will be granted.
3. Preclude plaintiff from using defense counsels' statements as "judicial
admissions"
Judicial admissions "are statements of fact rather than legal arguments made to a
court." N.Y.S. Nat'l Org. for Women v. Terry, 159 F.3d 86, 97 n.7 (2d Cir. 1998). Defense
counsel's legal theories of the case do not qualify as judicial admissions. This motion will be
granted.
4. Quash subpoena issued to Lauren Miller, Esq.
Attorney Miller is a former associate of defense counsel's law firm, and would
presumably testify as to documents in plaintiff's Exhibit A.
Her testimony is irrelevant, has no probative value, and would likely include
privileged communications or hearsay. This motion will be granted and the subpoena
quashed.
- 10 -
D. Defendants' Motion in Limine #3
Quash subpoenas issued to defendants
Lumbermens seeks additional discovery via trial subpoenas directed at Flow
International, Flow Pressure, and Avure Technologies.
Discovery in this action closed on December 17, 2010. Some of the documents
Lumbermens now seeks production of are documents not previously requested. The law is
clear that trial subpoenas cannot be used to obtain discovery not previously sought. See,
e.g., Hickey v. Myers, No. 09–CV–01307, 2013 WL 2418252, at *5 (N.D.N.Y. 2013)
(D'Agostino, J.) ("When a party issues subpoenas after the discovery deadline has passed to
obtain documents the party was aware of before the discovery cutoff date, the subpoenas
and discovery requests should be denied."). This motion will be granted and the subpoenas
quashed.
IV. CONCLUSION
Therefore, it is
ORDERED that
1. Plaintiff's motion in limine is DENIED in its entirety;
2. Defendants' motion in limine #1 is GRANTED as to the request to preclude
plaintiff from introducing evidence as to Flow International and DENIED as to defendants'
remaining requests;
3. Defendant Flow International Corporation is DISMISSED;
4. Defendants' motion in limine #2 is GRANTED in its entirety and the subpoena
issued to Lauren Miller, Esq. is QUASHED;
- 11 -
5. Defendants' motion in limine #3 is GRANTED in its entirety and the subpoenas
issued to defendants are QUASHED; and
6. Trial is scheduled for Monday, August 19, 2013.
IT IS SO ORDERED.
Dated: June 21, 2013
Utica, New York.
- 12 -
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?