Moses.Com Sec. v. Comprehensive Software

Decision Date11 May 2005
Docket NumberNo. 04-2054.,04-2054.
Citation406 F.3d 1052
PartiesMOSES.COM SECURITIES, INC., Appellant, v. COMPREHENSIVE SOFTWARE SYSTEMS, INC.; William W. Simpson; Southwest Securities, Inc.; David Glatstein; David Zeleniak, Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Counsel who presented argument on behalf of appellee Comprehensive Software was Mark B. Wiletsky of Boulder, CO. Peter M. Hamilton and Michelle R. Pafik of Boulder, CO appeared on the brief.

Before WOLLMAN, McMILLIAN, and BENTON, Circuit Judges.

WOLLMAN, Circuit Judge. (Moses) appeals from the district court's1 order denying a new trial and its judgment in favor of defendant Comprehensive Software Systems, Inc. (CSS), claiming that it was prejudiced by the exclusion of evidence at trial. Moses also appeals from the district court's dismissal of Moses's claims against defendants Southwest Securities, Inc. (Southwest), and David Glatstein and its refusal to grant Moses leave to file a third amended complaint. We affirm.


Moses planned to initiate a new business model as an online stock brokerage firm that would charge a monthly subscription fee to customers instead of a fee for each transaction. It began searching for a software company that could provide software with automated front- and back-office capabilities for stock trades that would comply with Securities and Exchange Commission and National Association of Security Dealers regulations. It began to work with CSS in 1999, and hired IMIS, Mastech, Inc., a technology consulting firm, to test and evaluate the CSS software system in light of Moses's needs. Mastech tested the system in May 1999 and produced for Moses a report — called a "gap analysis" — that highlighted the system's strengths and limitations, noting that several aspects of the back-office capabilities were still under development. After Mastech finished its testing, Moses and CSS executives met on June 2, 1999, to discuss goals and a potential time frame for the installation and initiation of the CSS system at Moses's facilities. The parties disagree over whether they agreed upon a particular time frame at the June 2 meeting.

Although Moses and CSS did not sign a formal contract, they negotiated a letter of intent to work together in establishing an appropriate software system for Moses's needs. Moses sought investors and initiated a costly marketing strategy that included advertising during the 2000 Super Bowl. Moses executives became dissatisfied with CSS's work, frustrated by the slow progress in providing the capabilities and functionality in the system that Moses expected. Moses claimed that CSS had represented that the system was already complete and functional at the June 2 meeting, and it expected a faster conversion.

Moses subsequently concluded that the CSS system did not work and asked CSS to leave its premises in February 2000. It filed suit in Missouri state court, raising state tort claims for fraudulent misrepresentation, negligent misrepresentation and negligence. CSS removed the case to federal court and moved to compel arbitration. The district court denied CSS's motion to compel arbitration, a ruling that we affirmed on appeal. v. Comprehensive Software Systems, Inc., 263 F.3d 783 (8th Cir.2001). Moses filed an amended complaint, adding several claims and additional defendants, including Southwest and Glatstein. After the district court found that Moses's allegations of conspiracy were too indefinite to resolve various motions to dismiss that had been raised, D. Ct. Order of Oct. 8, 2002, Moses filed a second amended complaint. When Southwest and Glatstein again filed a motion to dismiss, the district court dismissed the claims against them without prejudice under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. D. Ct. Order of Feb. 6, 2003. Moses moved to file a third amended complaint, adding more defendants and repleading the claims against Southwest and Glatstein. The district court denied leave to file the amended complaint. The remaining parties continued with discovery, during which the district court consistently denied Moses's discovery requests, which were designed to reveal the status and functionality of CSS software at Southwest and Scottsdale Securities, Inc. (Scottsdale), two companies that had also hired CSS to provide software for securities transactions.

The claims against CSS ultimately proceeded to a jury trial. During trial, the district court prohibited any discussion of Southwest and its relationship with CSS or its experience with CSS software. The district court submitted all the claims to the jury except the promissory estoppel claim. The jury returned a verdict for CSS on each of Moses's claims and also awarded $33,000 to CSS on its counter-claim seeking damages for unpaid work in quantum meruit. Moses filed a motion for a new trial — claiming prejudice in light of all the excluded evidence — which the district court denied.


As stated earlier, Moses appeals from the judgment in favor of CSS and from the denial of its motion for a new trial, alleging numerous errors that it claims resulted in prejudice. "A trial court must determine whether an evidentiary ruling was so prejudicial as to require a new trial which would be likely to produce a different result." O'Dell v. Hercules, Inc., 904 F.2d 1194, 1200 (8th Cir. 1990). We review a district court's denial of a motion for a new trial for abuse of discretion, giving great deference to the district court's ruling. Children's Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 867 (8th Cir.2004).

A party objecting to evidentiary rulings must specifically identify the alleged erroneous ruling and the improperly excluded evidence. Watson v. O'Neill, 365 F.3d 609, 614-15 (8th Cir.2004). We accord substantial deference to the district court's evidentiary rulings made at trial, and will reverse only if they amount to "a clear and prejudicial abuse of discretion." Lovett ex rel. Lovett v. Union Pac. R.R. Co., 201 F.3d 1074, 1081 (8th Cir.2000). Offers of proof are important to establish the purported relevance of the excluded evidence. See Watson, 365 F.3d at 616.


Moses first argues that the district court improperly excluded during trial much of its evidence relating to CSS's misrepresentations. Having granted CSS's "motion in limine to exclude reference, argument, and discussion of the installations and/or conversions that CSS was involved with at or about the similar time frames" at Southwest and Scottsdale, the district court heard and rejected numerous offers of proof by Moses as the trial proceeded, finding that such evidence was irrelevant and would serve only to distract the jury from the key issues. Moses asserts that several pieces of excluded evidence would have provided substantial support for its claims of intentional misrepresentation and concealment. In particular, it argues that the evidence that CSS made statements at the June 2, 1999, meeting and in subsequent conversations that its system worked at Southwest constituted the heart of the misrepresentation claim. Moses also argues that the evidence that Southwest's and Scottsdale's CSS back-office systems were not functioning properly was central to its ability to prove both that it was CSS's software and not Moses's mismanagement that caused the problems, and that CSS had prior knowledge of the problems within its system that it failed to communicate to Moses.

We conclude that the district court did not abuse its discretion by excluding the proffered evidence. It was reasonable for the district court to conclude that evidence involving two non-party companies could confuse the jury and was not probative of the central issues in the case, particularly when Moses had failed to establish an adequate basis for its assumptions that the other companies' systems were virtually identical to Moses's system. Without a showing that the systems were virtually identical, that the excluded statements included definitive promises, or that CSS was intentionally concealing the state of its software from Moses, the status of the CSS systems of other CSS clients is not clearly relevant.

The exclusion of the evidence was also not clearly prejudicial because there was substantial testimony about the communications between CSS and Moses regarding the particular system that CSS was installing for Moses. We cannot say that further evidence of statements by CSS referencing its work elsewhere would likely have produced a different outcome in the case. See O'Dell, 904 F.2d at 1200. Moses's chief executive officer, Jim Winkelmann, testified that he informed CSS of his desired timetables for public launch of his new business model at the June 2 meeting and that CSS told him that that would not be a problem. He testified that he understood CSS's assurance as a promise. In an offer of proof, Winkelmann further testified that he was told that the system worked at Southwest, and that he assumed based on that representation that the system was fully functioning. The statement about Southwest's system was neither clearly a promise nor an intended inducement, and it would have been unreasonable for Winkelmann to rely on it in light of the gap analysis report that stated that CSS's system was not complete and still had modules under development, a report that Winkelmann had already received at the time he made the decision to work with CSS.2 Accordingly, the district court did not abuse its discretion in excluding the proffered testimony that CSS had described its work with the system at Southwest as successful. Likewise, we conclude that the offers...

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