LS Assocs. v. Runchero Corp.

• Decision Date: 07 March 2023
• Docket Number: Civil Action 3:19-cv-367-RGJ
• Parties: LS ASSOCIATES, LLC, IN ITS CAPACITY AS RECEIVER FOR THE ASSETS OF SAINT CATHARINE COLLEGE, INC., Plaintiff v. RUNCHERO CORPORATION, INC. and KEVIN RUNNER, Defendants
• Court: U.S. District Court — Western District of Kentucky

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LS ASSOCIATES, LLC, IN ITS CAPACITY AS RECEIVER FOR THE ASSETS OF SAINT CATHARINE COLLEGE, INC., Plaintiff v. RUNCHERO CORPORATION, INC. and KEVIN RUNNER, Defendants

Civil Action No. 3:19-cv-367-RGJ

United States District Court, W.D. Kentucky, Louisville Division

March 7, 2023

MEMORANDUM OPINION AND ORDER

REBECCA GRADY JENNINGS, DISTRICT JUDGE.

Defendants Runchero Corporation, Inc. (“Runchero”) and Kevin Runner (“Runner” together with Runchero “Defendants”) moved in limine to exclude evidence or testimony regarding the standard for damages for breach of a real estate contract [DE 78] and evidence or testimony regarding the circumstances of Defendants' breach of contract. [DE 79]. Plaintiff LS Associates, LLC (“Plaintiff”) responded [DE 114; DE 115] and Defendants did not reply. Defendants also moved to exclude Plaintiff's witness, Robert Leasure (“Leasure”), from testifying as an expert. [DE 80]. Plaintiff responded [DE 116] and Defendants did not reply. Plaintiff moved in limine to exclude evidence or testimony regarding appraisals of the property at issue [DE 82] and evidence or testimony challenging the resale process [DE 83]. Defendants responded [DE 111; DE 112] and Plaintiff did not reply. Plaintiff also moved to exclude testimony from Defendants' expert Steven J. Martens (“Martens”). [DE 84]. Defendants responded [DE 113] and Plaintiff did not reply. Finally, Plaintiff objected to items on Defendants' exhibit and witness lists. [DE 117]. Defendants did not respond.

Briefing is complete, and the matter is ripe. The Court also heard arguments from the parties at the final pretrial conference on February 21, 2023. [DE 119]. For the reasons below Defendants' Motion in Limine on the Measure of Damages [DE 78] is DENIED, Defendants' Motion in Limine to Exclude Certain Irrelevant Evidence [DE 79] is DENIED WITHOUT PREJUDICE, Defendants' Motion in Limine to Exclude Rebuttal Testimony of Expert Leasure [DE 80] is DENIED, Plaintiff's Motion in Limine to Exclude to Exclude Appraisals and Opinion Testimony of Valuation [DE 82] is GRANTED Plaintiff's Motion in Limine to Exclude Arguments Challenging Auction Sale Process [DE 83] is GRANTED in part and DENIED in part, and Plaintiff's Motion in Limine to Exclude Expert Testimony of Martens [DE 84] is GRANTED in part and DENIED in part.

I. BACKGROUND

The facts are detailed in the Court's Order on summary judgment. [DE 62]. The Court granted summary judgment in favor of Plaintiff on all but the damages element of its claim for breach of contract. [Id.]. This memorandum opinion and order addresses the remaining issues in the parties' pretrial motions and objections.

II. LEGAL STANDARD

Federal district courts have the power to exclude irrelevant, inadmissible, or prejudicial evidence in limine under their inherent authority to manage trials. Luce v. United States, 469 U.S. 38, 41 n. 4 (1984) (citing Fed.R.Evid. 103(c)). Yet, the “better practice” is to defer evidentiary rulings until trial unless the evidence is clearly inadmissible on all potential grounds. Sperberg v. Goodyear Tire & Rubber Co., 519 F.2d 708, 712 (6th Cir. 1975). Courts favor this posture so that “questions of foundation, relevancy and potential prejudice may be resolved in proper context.” Gresh v. Waste Servs. of Am., Inc., 738 F.Supp.2d 702, 706 (E.D. Ky. 2010) (internal citations omitted). When this Court issues a ruling in limine, it is “no more than a preliminary, or advisory, opinion.” United States v. Yannott, 42 F.3d 999, 1007 (6th Cir. 1994) (citing United States v. Luce, 713 F.2d 1236, 1239 (6th Cir. 1983), aff'd, 469 U.S. 38 (1984)). Thus, the Court may alter or amend a prior in limine ruling at trial. Luce, 713 F.2d at 1239.

III. DISCUSSION

Arguments from the parties indicated that most of the pretrial motions hinge on the Court's ruling on the motions to exclude expert testimony. Therefore, the Court will first address the motions to exclude Martens' and Leasure's expert testimony.

A. Plaintiff's Motion in Limine to Exclude Expert Testimony of Martens [DE 84]

Plaintiff argues that Martens' opinions should be excluded because they are irrelevant, false, and unduly prejudicial. [DE 84 at 1643]. Plaintiff also identifies Martens and exhibits included in Martens' expert report in its objection to the Defendants' witness and exhibit list. [DE 117]. Defendants contend that Plaintiff's arguments are without merit. [DE 113].

As a threshold matter, the parties disagree on the applicable standards and questions for the jury to ultimately calculate damages. The Court held that the measure of damages in this instance “is the difference between the contract price and the actual or market value at the time of the breach, provided actual value is less than the contract price, and plus any actual and related costs.” [DE 62 at 1512 (quoting Lawson v. Menefee, 132 S.W.3d 890, 893 (Ky. Ct. App. 2004) (emphasis in original)]. “[T]he amount received from a subsequent sale of real property following repudiation is merely evidence of the actual value at the time of the breach and the relevancy of that evidence would depend on whether the sale occurred under conditions comparable to those of the original contract and within a reasonable time after the breach.” Lawson, 132 S.W.3d at 893.

Therefore, the Court held that an issue of fact remained regarding the final sale was “substantially similar” to the initial sale. [DE 62 at 1513].

Defendants also contend that there is a genuine issue of fact regarding Plaintiff's efforts to mitigate damages. [DE 103 at 1813]. Mitigation was not addressed in the Court's Order on summary judgment. [DE 62]. The party committing the breach bears the burden of proving that the plaintiff failed to mitigate his damages. Bradley v. D & B Trucks & Equip., LLC, No. 1:16-CV-00159-HBB, 2018 WL 6706696, at *4 (W.D. Ky. Dec. 20, 2018) (citing Jones v. Marquis Terminal, Inc., 454 S.W.3d 849, 852 (Ky. Ct. App. 2014)). The duty to mitigate arises after a party breaches. See Am. Towers LLC v. BPI, Inc., 130 F.Supp.3d 1024, 1036 (E.D. Ky. 2015); see also DeVries Dairy, LLC v. White Eagle Co-op. Ass'n, 25 F.Supp.3d 1039 (N.D. Ohio 2014) (“[A] party's duty to mitigate damages does not arise until it knows a breach has actually occurred.”).“The duty to mitigate contract damages only requires reasonable care.” Stathis v. Lexington Selected Yearling Sales Co., LLC, No. 2019-CA-000275-MR, 2020 WL 3401184, at *5 (Ky. Ct. App. June 19, 2020). The Kentucky Supreme Court has explained that one cannot “stand idly by and permit the loss to accrue or increase, then hold him who breached it liable for the loss which he might have prevented by the use of reasonable efforts, expense, and diligence to prevent, or arrest, the loss.” United States Bond & Mortg. Corp. v. Berry, 61 S.W.2d 293, 298 (Ky. 1933). However, the reasonableness of a party's mitigation is a question of fact. See Am. Towers LLC v. BPI, Inc., 130 F.Supp.3d 1024, 1036 (E.D. Ky. 2015). Accordingly, the jury must decide whether Plaintiff exercised reasonable care to mitigate damages.

Turning to Martens' testimony, the admissibility of expert testimony is set forth in Rule 702 of the Federal Rules of Evidence. Rule 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

In Daubert v. Merrell Dow Pharm., Inc., “the Supreme Court established a general gatekeeping obligation for trial courts to exclude from trial expert testimony that is unreliable and irrelevant.” Conwood Co. v. U.S. Tobacco Co., 290 F.3d 768, 792 (6th Cir.2002) (alteration and internal quotation marks omitted).

Under Rule 702 of the Federal Rules of Evidence, ‘a proposed expert's opinion is admissible . . . if the opinion satisfies three requirements. First, the witness must be qualified by knowledge, skill, experience, training, or education. Second, the testimony must be relevant, meaning that it will assist the trier of fact to understand the evidence or to determine a fact in issue. Third, the testimony must be reliable.

Burgett v. Troy-Bilt LLC, 579 Fed.Appx. 372, 376 (6th Cir. 2014) (quoting In re Scrap Metal Antitrust Litig., 527 F.3d 517, 528-29 (6th Cir. 2008)).

The Court does “not consider ‘the qualifications of a witness in the abstract, but whether those qualifications provide a foundation for a witness to answer a specific question.'” Id. (quoting Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir. 1994)). The Court must determine whether the witness is qualified to offer an opinion on the specific area of expertise required. In re Welding Fume Prods. Liab. Litig., No. 1:03-CV-17000, 2005 WL 1868046, at * 33 (N.D. Ohio Aug. 8, 2005) (“An expert may be highly qualified to respond to certain questions and to offer certain opinions, but insufficiently qualified to respond to other, related questions, or to opine about other areas of knowledge.”). “Under the Federal Rules of Evidence, the only thing a court should be concerned with in determining the qualifications of an expert is whether the expert's knowledge of the subject matter is such that his opinion will likely assist the trier of fact in arriving at the truth. The weight of the expert's testimony must be for the trier of fact.” Mannino v. Int'l Mfg. Co., 650 F.2d 846, 851 (6th Cir. 1981).

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