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Rezac Livestock Commission Co., Inc. v. Pinnacle Bank

United States District Court, D. Kansas

December 23, 2019

PINNACLE BANK, et al., Defendants.


          Daniel D. Crabtree, United States District Judge.

         Plaintiff Rezac Livestock Commission Co., Inc., asserts claims against defendants Dinsdale Bros., Inc., (“Dinsdale”) and Pinnacle Bank (“Pinnacle”) arising from a cattle sale gone wrong. The alleged facts underlying plaintiff's claims are briefly summarized as follows: Plaintiff sold cattle at an auction to Charles Leonard. Mr. Leonard wrote a check to plaintiff. Mr. Leonard sold those cattle to Dinsdale. And, Dinsdale wired funds to Mr. Leonard's bank account at Pinnacle. Ultimately, Mr. Leonard's check to plaintiff, presented against that same bank account, bounced when plaintiff tried to deposit it. Plaintiff asserts conversion, unjust enrichment, quantum meruit, and civil conspiracy claims. Dinsdale has counterclaimed seeking a declaratory judgment about its title to the cattle.

         On December 19, 2019, the court held a final pretrial conference for the trial scheduled to begin in early January. At that conference the court provided rulings on certain pending motions in limine and heard argument from the parties on others. Below, the court memorializes its rulings on all motions in limine filed. And, the court briefly addresses the claims remaining for trial.

         Five pending Motions in Limine (Docs. 170, 172, 175, 176, 178) are before the court. As the court explained at the pretrial conference, the rulings below are subject to change if the circumstances at trial merit a different conclusion. Any good faith arguments to that end by the parties must be raised with the court outside the presence of the jury. But, the court has considered the parties' arguments asserted in their briefings on these motions carefully and memorializes its rulings based on the current state of affairs below.

         1. Plaintiff's Motion in Limine to Exclude Testimony of John Barthel (Doc. 175)

         Plaintiff's motion to exclude the testimony of defendant Dinsdale's expert witness, John Barthel, is granted. This expert's testimony addresses whether Mr. Leonard acted as an agent of Dinsdale when he purchased the cattle in September 2015. Because the court ruled on summary judgment that the evidence was insufficient to support a finding that Mr. Leonard acted in an agent capacity, the court grants the motion to exclude his testimony.

         2. Plaintiff's Motion in Limine to Exclude Evidence Regarding Collateral Source Payment by Other Rezac Entities (Doc. 176)

         Plaintiff's motion to exclude evidence about collateral source payment by other related entities is granted. The collateral source rule bars evidence of payments made by a party independent of the tortfeasor to an injured party to cover damages caused by a tortfeasor. See Gregory v. Carey, 791 P.2d 1329, 1333 (Kan. 1990) (“[T]he collateral source rule provides that benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer.”).

         Defendant Dinsdale argues the timing of the payments between plaintiff and its related entities makes the collateral source rule inapplicable to this case. But, the court is not persuaded. Plaintiff alleges to have suffered damages when it sold cattle at auction to Mr. Leonard, paid the parties who provided the cattle to be auctioned, then never received payment for the cattle it sold. The parties do not dispute that plaintiff is the one who was owed over $980, 000 from the cattle sale but never was paid, and thus plaintiff is the “real party in interest.” See R.J. Enstrom Corp. v. Interceptor Corp., 520 F.2d 1217, 1219 (10th Cir. 1975). Defendant has not shown how the movement of money between plaintiff and related corporate affiliates to cover the payments due to the cattle sellers/owners until plaintiff receives the payment owed from its transaction with Mr. Leonard eradicates plaintiff's status as the interested party or otherwise eliminates plaintiff's damages. Thus, the court grants plaintiff's motion.

         3. Defendant Dinsdale's Motion in Limine to Exclude Evidence of Direct Payment Measure (Doc. 170)

         Defendant Dinsdale moves to exclude evidence of its direct payment measure. Defendant Pinnacle, who is alleged to have conspired with Dinsdale, asserts a similar argument in its Motion in Limine (Doc. 178). Dinsdale argues the court should exclude evidence of its practice of paying sale barns directly for certain purchases as a subsequent remedial measure because it was instituted after the events at issue here. Dinsdale also argues such evidence is irrelevant to the issues here, and even if relevant, would confuse the jury and unfairly prejudice Dinsdale. Dinsdale contends such evidence is not probative to determine whether it acted in good faith at the time of the initial transaction.

         Plaintiff responds that such evidence is not remedial, but shows what is required to observe reasonable commercial standards of fair dealing. Plaintiff argues such evidence is relevant to both Dinsdale's counterclaim for a declaration that it has clear title to the cattle as a good faith purchaser and to plaintiff's conversion claim. Plaintiff characterizes this evidence as an admission of a party-opponent, showing that Dinsdale knew it would not have good title to the cattle at issue here if it didn't pay plaintiff directly. And, even if the evidence was determined to be remedial, plaintiff argues such evidence shows the feasibility of direct payment-i.e., that Dinsdale could have paid plaintiff directly.[1] Plus, plaintiff believes the impeachment exception under Fed.R.Evid. 407 will apply here-it plans to use such evidence to impeach testimony from Dinsdale that it had no obligation to pay plaintiff directly to secure good title to the cattle.

         Under Fed.R.Evid. 407, evidence of a subsequent remedial measure is not admissible to prove culpable conduct. Fed.R.Evid. 407; see also Kan. Stat. Ann. § 60-451 (“When after the occurrence of an event remedial or precautionary measures are taken, which, if taken previously would have tended to make the event less likely to occur, evidence of such subsequent measures is not admissible to prove negligence or culpable conduct in connection with the event.”); Stahl v. Bd. of Cty. Comm'rs of the Unified Gov't of Wyandotte Cty./Kansas City, Kan., 101 Fed.Appx. 316, 321-322 (10th Cir. 2004) (upholding district court's exclusion of evidence that defendant suspended use of a fitness test under Rule 407 over plaintiff's arguments such evidence establishes a pretext for gender discrimination because Rule 407 forbids admission of subsequent remedial measures to prove culpable conduct). “But the court may admit this evidence for another purpose, such as impeachment or-if disputed-proving ownership, control, or the feasibility of precautionary measures.” Fed.R.Evid. 407; see also Minter v. Prime Equip. Co., 451 F.3d 1196, 1212-13 (10th Cir. 2006) (explaining that the “impeachment exception to Rule 407 is necessary to prevent litigants from taking unfair advantage of the Rule by adopting a position at trial that is inconsistent with their previous decision to take remedial measures after” the incident in question, but also that this exception “must be read narrowly” and used only where “necessary to prevent the jury from being misled” (internal citations and quotation omitted)); Hull v. Chevron U.S.A., Inc., 812 F.2d 584, 586-87 (10th Cir. 1987) (describing how Rule 407 seeks to balance competing interests of admitting evidence for probative purposes with encouraging people to take remedial measures).

         Evidence showing Dinsdale contemplated paying plaintiff directly for the sale at issue here appears relevant and admissible. Whether evidence of direct payments to sale barns after this particular sale is admissible is a tougher question. Under Fed.R.Evid. 104(a), “[t]he court must decide any preliminary question about whether . . . evidence is admissible.” And, under Fed.R.Evid. 104(c)(3), the court “must conduct any hearing on a preliminary question so that the jury cannot hear it if . . . justice so requires.” At present, defendants have not met their burden for the court to exclude such direct payment evidence. But, in the words of Rule 104, “justice requires” a hearing of the evidence about those direct payment measures-and how plaintiff will use that evidence-outside the presence of the jury, before the court can determine its admissibility. After hearing the evidence, the court will be in a better position to determine whether these direct payments are a subsequent remedial measure that is being offered to prove culpable conduct. The court thus grants the motion in part and denies it in part. It denies any aspect of the motion seeking to exclude evidence that Dinsdale contemplated paying plaintiff directly for the Rezac cattle. It grants the remainder of the motion, however, until it can conduct a hearing on the threshold question whether Dinsdale's policy change is a subsequent remedial measure.

         The court will hold such hearing as early during the trial as the parties' schedules permit. If a ruling is needed before jury selection, the court can conduct the hearing at 8:15 a.m. on the first day of trial. Otherwise, the court could conduct the hearing over the lunch hour, at the end of the day, or in the morning before bringing the jurors into the courtroom. The parties are directed to coordinate with one another and contact the Courtroom Deputy about which scheduled trial day and time they will use to present the direct payment evidence to the court.

         4. Defendant Dinsdale's Motion in Limine to Exclude Evidence of Unrelated Dealings (Doc. 172)

         Defendant Dinsdale's motion to exclude evidence of unrelated dealings is denied. Dinsdale asks the court to exclude evidence of livestock joint ownership and financing dealings between Dinsdale and Mr. Leonard. Dinsdale contends such evidence is irrelevant and will confuse the jury and result in unfair prejudice to Dinsdale. The court finds Dinsdale's previous dealings with Mr. Leonard likely will provide probative value at trial. The court will be able to determine more appropriately whether and to what extent such dealings should be admissible in context, at trial. As discussed at the pretrial conference, the court ...

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