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Prime Finish, LLC v. ITW Deltar IPAC

United States District Court, E.D. Kentucky, Central Division, Lexington

May 12, 2017

ITW DELTAR IPAC, Defendant. and CAMEO, LLC, Intervenor Plaintiff,


          Gregory F. Van Tatenhove United States District Judge

         This matter is before the Court on various pretrial motions filed by Defendant ITW Deltar IPAC [R. 158, 159, 160] and Plaintiff, Cameo, LLC, [R. 190.] At the Second Final Pretrial Conference held on May 10, 2017, counsel orally indicated that all pending motions require the Court's attention but objections concerning deposition designations, counter designations, and exhibit issues may be resolved by the parties before trial. [See R. 161, 189.] As directed on the telephonic conference, the Court will address the remaining objections to proposed jury instructions at the charge conference during trial. During the charge conference, the Court will provide the parties with draft jury instructions, hear objections from both parties concerning the instructions, and issue a final ruling on the pending objections.


         Defendant ITW moves to exclude testimony from Alex Boone, an investor in Prime Finish, from testifying about Cameo's claimed damages. [R. 158.] Rule 26(e)(1)(A) requires parties to supplement or correct previous Rule 26(a) disclosures if they learn “that in some material respect the disclosure or response is incomplete or incorrect.” Fed.R.Civ.P. 26(e)(1)(A). Cameo had disclosed Alex Boone, in a May 4, 2009, filing, as “the majority member/owner of Prime Finish [that] was personally present in discussions with Nick Herbert Jones and Tim Stout wherein it was agreed that Cameo would receive any early termination penalty payment from ITW…” [R. 18 at 2-3.] ITW argues that, since this initial disclosure failed to mention Mr. Boone's knowledge of Cameo's claimed damages, Mr. Boone's testimony should be limited or excluded. [R. 158 at 2-3.]

         During the May 10, 2017, telephonic conference, counsel for Cameo notified the court that prior Rule 26 disclosures had provided more comprehensive notice concerning Mr. Boone's testimony. After further review, Counsel for Cameo notified the court that the Disclosures were filed in the Record as Exhibit 3 to Docket Entry 133. [See R. 133-3.] Cameo filed these initial disclosures in the record, which included a copy of an email sent on January 25, 2016, to Lee Rosenthal, and other attorneys of record for the Defendant. [R. 192-1.] In these disclosures “Alex Boone: former CEO of Prime Finish” was noticed as a former employee or officer of Prime Finish that is “believed to have knowledge of the course of dealing and arrangements entered between the parties, the quality of the products produced on the paint lines owned by Prime Finish, LLC (“Prime Finish”) and Cameo, the termination of the Product Supply Agreement between Prime Finish and ITW Delta [sic] IPAC (“ITW), and damages…” [R. 133-3 at 1-2; R. 192 at 2-3.]

         Nevertheless, ITW argues that it has been substantially prejudiced due to untimely disclosure by Cameo. [R. 158 at 4.] The Court's scheduling order [R. 101] required Rule 26(a)(1) disclosures to be completed by May 20, 2016, and supplemental disclosures within 30 days of discovery. Later, upon the parties' joint request, discovery deadlines were continued to December 30, 2016. [R. 120.] Therefore, ITW should have been aware of the more comprehensive testimony Cameo sought to elicit from Mr. Boone pursuant to the January 25, 2016, email sent by Lynette Mayo to Defense Counsel as this email was sent well before the Court's original and continued discovery deadlines.

         In Cameo's response to Defendant's Motion in Limine to Exclude Testimony from Alex Boone on Cameo's Damages [R. 168], Cameo clarifies the Plaintiff's identification of Mr. Boone “as a witness who will testify as to ‘damages incurred' was not intended to refer to the amount of Cameo's damages, but the fact of their existence.” [R. 168.] In light of Plaintiff's disclosures, Defendant ITW has not been unfairly prejudiced and Mr. Boone's testimony should not be excluded as there do not appear to be violations of Rule 26(a) by Plaintiff. ITW has been on notice, since December 28, 2016, of the scope of Alex Boone's testimony but has chosen not to depose the witness. Accordingly, Defendant's Motion in Limine [R. 158] is DENIED. Further objections, if any, as to Mr. Boone's testimony will be considered by the Court during the course of trial.


         Defendant ITW Deltar IPAC moves, in limine, for an order to Exclude Evidence and Argument by Plaintiff Cameo relating to Waiver. [R. 159.] This motion was raised after Cameo filed its Pretrial Memorandum which stated, “Cameo believes that the evidence to be adduced at trial may create a question of law as to whether ITW waived (or is estopped from asserting) any right to terminate the Agreement prior to the end of the contract term based upon the grounds set out in Section 3.4 of the Agreement.” [R. 148 at 6.] ITW argues that Cameo has not made a waiver or estoppel argument before and that Cameo was “affirmatively obligated to disclose information relating to this argument in a timely manner” in light of ITW's interrogatory that asked Cameo “for each fact or matters of opinion” that Cameo relied on to support its claim to early termination damages. [R. 159 at 2.]

         Rule 26(a)(1)(A)(i) requires parties to provide “the name . . . of each individual likely to have discoverable information -along with the subjects of that information-that the disclosing party may use to support its claims or defenses…” Fed.R.Civ.P. 26(a)(1)(A)(i). Also, parties must provide a copy “of all documents . . . that the disclosing party . . . may use to support its claims or defenses.” Fed.R.Civ.P. 26(a)(1)(A)(ii). ITW argues that Cameo violated “its affirmative and responsive discovery obligations” by raising this waiver and estoppel argument on the eve of trial and that Cameo should not be allowed to use “previously undisclosed documents” or offer witness testimony that supports the waiver argument. [R. 159 at 5.]

         On the May 10, 2017, telephonic conference, Defense Counsel stated that the original motion focused on three issues but that the primary focus of the motion relates to excluding Cameo from presenting argument relating to waiver. ITW believes that Cameo was required to plead the defense under Rule 8 which states that, in “responding to a pleading, a party must affirmatively state any . . . affirmative defenses, including . . . waiver . . . [or] estoppel.” [R. 159 at 6, quoting Fed.R.Civ.P. 8(c)(1).] Sixth Circuit precedent does state that, “[a]s a general rule, failure to plead an affirmative defense results in a waiver of that defense.” Old Line Life Ins. Co. of Am. v. Garcia, 418 F.3d 546, 550 (6th Cir. 2005). Although, Federal Rule of Civil Procedure 7 dictates that the only allowed pleadings are: complaints, an answer to a complaint, an answer to a counterclaim, an answer to a crossclaim, a third-party complaint, an answer to a third-party complaint, and if the court orders one, a reply to an answer. Fed.R.Civ.P. 7(a). In the instant action, the Court did not order Cameo to file a reply to ITW's Answer to Cameo's intervenor complaint.

         Cameo believes that the initial complaint filed by Prime Finish [R. 1] and Cameo's intervening complaint (which incorporated Prime's complaint) [R. 16] adequately provided notice to Defendant that Plaintiff will argue that ITW breached the contract and terminated the Product Supply Agreement early. [See R. 167 at 1-2.] In answer to the Prime Finish Complaint, ITW raised affirmative defenses stating that “[t]he Complaint is barred by Prime Finish's own breach of contract” and “ITW asserts any defense associated with the terms of the Product Supply Agreement, the Amendment, and Addendum.” [R. 4 at 3.] These affirmative defenses were reiterated in ITW's Answer to Cameo's Intervening Complaint, where ITW stated that the “Intervening Complaint . . . is barred by Prime Finish's or Cameo's own breach of contract, relating to each other or to ITW, ” and “ITW asserts any defense associated with the terms of the Product Supply Agreement with Prime Finish, the Amendment and Addendum thereto, along with any applicable language of any agreements between Cameo and Prime Finish.” [R. 17 at 3.] Cameo now argues that any evidence or arguments that relate to waiver are responsive to ITW's affirmatively pled defenses.

         The Product Supply Agreement made between ITW and Prime Finish did not contain a “no waiver” provision. [See R. 129-4.] Plaintiff believes that ITW has not specifically identified a “single exhibit or line of testimony that Cameo might offer in support of waiver that appears on Cameo's Exhibit list yet has not been previously disclosed.” [R. 167 at 4.] This Court is also not aware of additional evidence or documents that ITW believes to be untimely disclosed. Federal Rule of Civil Procedure 8 details the “General Rules of Pleading.” Fed.R.Civ.P. 8. The Rule details Affirmative Defenses under heading (c)(1) which states, “In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense including… estoppel . . . [and] waiver.” Id. at Rule 8(c)(1). As mentioned before, Defendant ITW responded to the complaints filed by Prime Finish and Cameo by raising several affirmative defenses against Cameo's claims. [R. 17 at 3.] Now, in response to Defendant's affirmative defenses, Plaintiff Cameo seeks to argue that they did not breach the contract because ITW waived any breach that may have occurred. Since ITW raised the affirmative defense that suggests Prime or Cameo breached the contract, ITW is essentially demanding that Plaintiff proactively plead the response of waiver or estoppel before ITW raised the affirmative defense that would trigger that necessity. The Federal Rules of Civil Procedure do not go this far, as the rules only require affirmative defenses to be raised by a party that is “responding to a pleading.” Fed.R.Civ.P. 8(c)(1).

         In the initial interrogatories, Defendant ITW's Interrogatory No. 4 stated:

Please state each fact or matters of opinion upon which you rely in support of the averments contained in the prayer for relief of your Intervening Complaint that the "ITW owes a Penalty Payment for its early termination of the Prime Finish Product Supply Agreement before the expiration of its terms equal to the sum of Three Hundred Seventy-Five Thousand Dollars ($375, 000)." In regard to said averments:
a. State the name and present address of each person whom you believe to have knowledge or information ...

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